UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2012 |
OR
¨ |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
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Registrant, Address of |
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I.R.S. Employer |
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Principal Executive Offices |
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Identification |
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State of |
Commission File Number |
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and Telephone Number |
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Number |
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Incorporation |
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1-08788 |
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NV ENERGY, INC. |
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88-0198358 |
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Nevada |
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6226 West Sahara Avenue |
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Las Vegas, Nevada 89146 |
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(702) 402-5000 |
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2-28348 |
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NEVADA POWER COMPANY d/b/a |
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88-0420104 |
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Nevada |
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NV ENERGY |
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6226 West Sahara Avenue |
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Las Vegas, Nevada 89146 |
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(702) 402-5000 |
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0-00508 |
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SIERRA PACIFIC POWER COMPANY d/b/a |
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88-0044418 |
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Nevada |
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NV ENERGY |
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P.O. Box 10100 |
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(6100 Neil Road) |
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Reno, Nevada 89520-0400 (89511) |
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(775) 834-4011 |
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Indicate by check mark whether 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 þ No o (Response applicable to all registrants)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o (Response applicable to all registrants)
Indicate by check mark whether any registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer", "accelerated filer", "non-accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
NV Energy, Inc.: |
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Large accelerated filer þ |
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Accelerated filer o |
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Non-accelerated filer o |
Smaller reporting company o |
Nevada Power Company: |
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Large accelerated filer o |
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Accelerated filer o |
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Non-accelerated filer þ |
Smaller reporting company o |
Sierra Pacific Power Company: |
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Large accelerated filer o |
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Accelerated filer o |
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Non-accelerated filer þ |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ (Response applicable to all registrants)
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.
Class |
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Outstanding at May 7, 2012 |
Common Stock, $1.00 par value of NV Energy, Inc. |
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235,999,750 Shares |
NV Energy, Inc. is the sole holder of the 1,000 shares of outstanding Common Stock, $1.00 stated value, of Nevada Power Company.
NV Energy, Inc. is the sole holder of the 1,000 shares of outstanding Common Stock, $3.75 stated value, of Sierra Pacific Power Company.
This combined Quarterly Report on Form 10-Q is separately filed by NV Energy, Inc., Nevada Power Company and Sierra Pacific Power Company. Information contained in this document relating to Nevada Power Company is filed by NV Energy, Inc. and separately by Nevada Power Company on its own behalf. Nevada Power Company makes no representation as to information relating to NV Energy, Inc. or its subsidiaries, except as it may relate to Nevada Power Company. Information contained in this document relating to Sierra Pacific Power Company is filed by NV Energy, Inc. and separately by Sierra Pacific Power Company on its own behalf. Sierra Pacific Power Company makes no representation as to information relating to NV Energy, Inc. or its subsidiaries, except as it may relate to Sierra Pacific Power Company.
NV ENERGY, INC. NEVADA POWER COMPANY SIERRA PACIFIC POWER COMPANY QUARTERLY REPORTS ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2012
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION |
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Acronyms & Terms |
3 |
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ITEM 1. |
Financial Statements |
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NV Energy, Inc. |
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Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2012 and 2011 |
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Consolidated Balance Sheets – March 31, 2012 and December 31, 2011 |
6 |
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Consolidated Statements of Cash Flows - Three Months Ended March 31, 2012 and 2011 |
8 |
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Consolidated Statements of Shareholders’ Equity - Three Months Ended March 31, 2012 and 2011 |
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Nevada Power Company |
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Consolidated Statements of Comprehensive Loss – Three Months Ended March 31, 2012 and 2011 |
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Consolidated Balance Sheets – March 31, 2012 and December 31, 2011 |
11 |
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Consolidated Statements of Cash Flows - Three Months Ended March 31, 2012 and 2011 |
13 |
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Consolidated Statements of Shareholder’s Equity - Three Months Ended March 31, 2012 and 2011 |
14 |
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Sierra Pacific Power Company |
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Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2012 and 2011 |
15 |
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Consolidated Balance Sheets – March 31, 2012 and December 31, 2011 |
16 |
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Consolidated Statements of Cash Flows - Three Months Ended March 31, 2012 and 2011 |
18 |
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Consolidated Statements of Shareholder’s Equity - Three Months Ended March 31, 2012 and 2011 |
19 |
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Condensed Notes to Financial Statements |
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Note 1. Summary of Significant Accounting Policies |
20 |
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Note 2. Segment Information |
21 |
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Note 3. Regulatory Actions |
22 |
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Note 4. Long-Term Debt |
23 |
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Note 5. Fair Value of Financial Instruments |
25 |
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Note 6. Retirement Plan and Post-Retirement Benefits |
26 |
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Note 7. Commitments and Contingencies |
27 |
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Note 8. Earnings per Share (NVE) |
29 |
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Note 9. Dividends |
29 |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
30 |
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NV Energy, Inc. |
36 |
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Nevada Power Company |
40 |
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Sierra Pacific Power Company |
48 |
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ITEM 3. |
Quantitative and Qualitative Disclosures about Market Risk |
57 |
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ITEM 4. |
Controls and Procedures |
58 |
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PART II – OTHER INFORMATION |
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ITEM 1. |
Legal Proceedings |
58 |
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ITEM 1A. |
Risk Factors |
58 |
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ITEM 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
58 |
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ITEM 3. |
Defaults Upon Senior Securities |
58 |
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ITEM 4. |
Mine Safety Disclosures |
58 |
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ITEM 5. |
Other Information |
58 |
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ITEM 6. |
Exhibits |
59 |
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Signature Page and Certifications |
61 |
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2
ACRONYMS AND TERMS |
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(The following common acronyms and terms are found in multiple locations within the document) |
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Acronym/Term |
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Meaning |
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2011 Form 10-K |
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NVE’s, NPC’s and SPPC’s Annual Report on Form 10-K for the year ended December 31, 2011 |
AFUDC-debt |
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Allowance for Borrowed Funds Used During Construction |
AFUDC-equity |
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Allowance for Equity Funds Used During Construction |
BOD |
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Board of Directors |
BTER |
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Base Tariff Energy Rate |
BTGR |
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Base Tariff General Rate |
CAISO |
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California Independent System Operator Corporation |
California Assets |
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SPPC's California electric distribution and generation assets |
CWIP |
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Construction Work-in-Progress |
dba |
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Doing business as |
DEAA |
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Deferred Energy Accounting Adjustment |
DSM |
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Demand Side Management |
Dth |
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Decatherm |
EEIR |
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Energy Efficiency Implementation Rate |
EEPR |
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Energy Efficiency Program Rate |
EPA |
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Environmental Protection Agency |
EPS |
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Earnings per Share |
FASB |
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Financial Accounting Standards Board |
FASC |
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FASB Accounting Standards Codification |
FERC |
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Federal Energy Regulatory Commission |
Fitch |
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Fitch Ratings, Ltd. |
GAAP |
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Generally Accepted Accounting Principles in the United States |
GBT |
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Great Basin Transmission, LLC, a wholly owned subsidiary of Texas Nevada Transmission, LLC |
GBT-South |
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Great Basin Transmission South, LLC, a wholly owned subsidiary of GBT |
GRC |
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General Rate Case |
Harry Allen Generating Station |
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142 megawatt nominally rated Harry Allen Generating Station, expanded in 2011 to 642 total MWs |
Higgins Generating Station |
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598 megawatt nominally rated Walter M. Higgins, III Generating Station |
IRP |
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Integrated Resource Plan |
kV |
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Kilovolt |
Lenzie Generating Station |
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1,102 megawatt nominally rated Chuck Lenzie Generating Station |
LIBOR |
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London Interbank Offered Rate |
Mohave Generating Station |
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1,580 megawatt nominally rated Mohave Generating Station |
Moody’s |
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Moody’s Investors Services, Inc. |
MW |
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Megawatt |
MWh |
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Megawatt hour |
Navajo Generating Station |
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255 megawatt nominally rated Navajo Generating Station |
NEICO |
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Nevada Electric Investment Company |
NERC |
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North American Electric Reliability Corporation |
Ninth Circuit |
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United States Court of Appeals for the Ninth Circuit |
NOL |
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Net Operating Loss |
NPC |
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Nevada Power Company d/b/a NV Energy |
NPC Credit Agreement |
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$500 million Revolving Credit Facility entered into in March 2012 between NPC and Wells Fargo Bank, N.A., |
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as administrative agent for the lenders a party thereto |
NPC’s Indenture |
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NPC’s General and Refunding Mortgage Indenture dated as of May 1, 2001, between NPC and the Bank of |
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New York Mellon Trust Company, N.A., as Trustee |
NRSRO |
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Nationally Recognized Statistical Rating Organization |
NVE |
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NV Energy, Inc. |
NV Energize |
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A smart grid infrastructure that is expected to enable the widespread use of Smart Meters that will provide |
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customers the ability to more directly manage their energy usage |
ON Line |
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250 mile 500 kV transmission line connecting NVE’s northern and southern service territories |
PEC |
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Portfolio Energy Credit |
Portfolio Standard |
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Nevada Renewable Energy Portfolio Standard |
PUCN |
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Public Utilities Commission of Nevada |
Reid Gardner Generating Station |
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325 megawatt nominally rated Reid Gardner Generating Station |
REPR |
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Renewable Energy Program Rate |
ROE |
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Return on Equity |
ROR |
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Rate of Return |
S&P |
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Standard & Poor’s |
Salt River |
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Salt River Project |
SEC |
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United States Securities and Exchange Commission |
Silverhawk Generating Station |
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395 megawatt nominally rated Silverhawk Generating Station |
Smart Meters |
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Advanced service delivery meters installed as part of the NV Energize project |
SNWA |
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Southern Nevada Water Authority |
SPPC |
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Sierra Pacific Power Company d/b/a NV Energy |
SPPC Credit Agreement |
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$250 million Revolving Credit Facility entered into in March 2012 between SPPC and Wells Fargo Bank, N.A., |
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as administrative agent for the lenders a party thereto |
SPPC’s Indenture |
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SPPC’s General and Refunding Mortgage Indenture, dated as of May 1, 2001, between SPPC and the Bank of |
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New York Mellon Trust Company, N.A., as Trustee |
3
Term Loan |
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$195 million loan agreement entered into on October 7, 2011 between NVE and JPMorgan Chase Bank, N.A., |
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as administrative agent for the lenders a party thereto |
TMWA |
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Truckee Meadows Water Authority |
Tracy Generating Station |
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541 megawatt nominally rated Frank A. Tracy Generating Station |
TRED |
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Temporary Renewable Energy Development |
TUA |
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Transmission Use and Capacity Exchange Agreement with GBT-South |
U.S. |
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United States of America |
Utilities |
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Nevada Power Company and Sierra Pacific Power Company |
Valmy Generating Station |
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261 megawatt nominally rated Valmy Generating Station |
VIE |
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Variable Interest Entity |
WSPP |
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Western Systems Power Pool |
4
ITEM 1. FINANCIAL STATEMENTS |
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NV ENERGY, INC. |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
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(Dollars in Thousands, Except Share Amounts) |
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(Unaudited) |
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Three Months Ended |
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March 31, |
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2012 |
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2011 |
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OPERATING REVENUES |
$ |
611,420 |
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$ |
640,983 |
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OPERATING EXPENSES: |
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Fuel for power generation |
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117,035 |
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146,338 |
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Purchased power |
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117,116 |
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135,016 |
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Gas purchased for resale |
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31,617 |
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52,632 |
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Deferred energy |
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(11,739) |
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(1,952) |
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Energy efficiency program costs |
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19,425 |
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- |
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Other operating expenses |
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103,601 |
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105,974 |
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Maintenance |
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32,526 |
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29,762 |
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Depreciation and amortization |
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90,862 |
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83,102 |
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Taxes other than income |
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14,509 |
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16,245 |
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Total Operating Expenses |
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514,952 |
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567,117 |
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OPERATING INCOME |
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96,468 |
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73,866 |
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OTHER INCOME (EXPENSE): |
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Interest expense |
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(net of AFUDC-debt: $1,595 and $6,210) |
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(77,931) |
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(77,343) |
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Interest income (expense) on regulatory items |
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(2,202) |
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(888) |
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AFUDC-equity |
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1,932 |
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7,642 |
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Other income |
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4,194 |
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2,984 |
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Other expense |
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(3,060) |
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(4,656) |
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Total Other Income (Expense) |
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(77,067) |
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(72,261) |
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Income Before Income Tax Expense |
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19,401 |
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1,605 |
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Income tax expense (benefit) |
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7,228 |
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(725) |
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NET INCOME |
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12,173 |
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2,330 |
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Other comprehensive income (loss): |
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Change in compensation retirement benefits liability and amortization |
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(Net of taxes $(89) and $(615)) |
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155 |
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1,142 |
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Change in market value of risk management assets and liabilities |
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(Net of taxes $141 in 2012) |
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(246) |
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- |
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OTHER COMPREHENSIVE INCOME (LOSS) |
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(91) |
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1,142 |
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COMPREHENSIVE INCOME |
$ |
12,082 |
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$ |
3,472 |
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Amount per share basic and diluted - (Note 8) |
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Net income per share - basic and diluted |
$ |
0.05 |
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$ |
0.01 |
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Weighted Average Shares of Common Stock Outstanding - basic |
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235,999,750 |
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235,526,425 |
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Weighted Average Shares of Common Stock Outstanding - diluted |
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237,526,863 |
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236,784,658 |
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Dividends Declared Per Share of Common Stock |
$ |
0.13 |
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$ |
0.12 |
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The accompanying notes are an integral part of the financial statements. |
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5
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NV ENERGY, INC. |
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CONSOLIDATED BALANCE SHEETS |
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(Dollars in Thousands, Except Share Amounts) |
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(Unaudited) |
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March 31, |
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December 31, |
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2012 |
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2011 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ |
100,335 |
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$ |
145,944 |
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Accounts receivable less allowance for uncollectible accounts: |
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2012 - $6,453; 2011 - $8,150 |
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325,388 |
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355,091 |
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Materials, supplies and fuel, at average cost |
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130,628 |
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129,663 |
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Current income taxes receivable |
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82 |
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82 |
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Deferred income taxes |
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117,079 |
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104,958 |
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Other current assets |
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49,802 |
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36,782 |
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Total Current Assets |
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723,314 |
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772,520 |
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Utility Property: |
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Plant in service |
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11,955,428 |
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11,923,717 |
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Construction work-in-progress |
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556,170 |
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487,427 |
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Total |
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12,511,598 |
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12,411,144 |
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Less accumulated provision for depreciation |
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3,240,688 |
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3,184,071 |
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Total Utility Property, Net |
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9,270,910 |
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9,227,073 |
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Investments and other property, net |
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59,273 |
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57,021 |
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Deferred Charges and Other Assets: |
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Deferred energy (Note 3) |
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99,566 |
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102,525 |
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Regulatory assets |
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1,174,069 |
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1,186,127 |
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Regulatory asset for pension plans |
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212,259 |
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215,656 |
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Other deferred charges and assets |
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88,020 |
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|
74,206 |
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Total Deferred Charges and Other Assets |
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1,573,914 |
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1,578,514 |
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TOTAL ASSETS |
$ |
11,627,411 |
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$ |
11,635,128 |
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(Continued) |
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6
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NV ENERGY, INC. |
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CONSOLIDATED BALANCE SHEETS |
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(Dollars in Thousands, Except Share Amounts) |
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(Unaudited) |
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March 31, |
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December 31, |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
2012 |
|
2011 |
||||
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
||
|
|
Current maturities of long-term debt (Note 4) |
$ |
138,048 |
|
$ |
139,985 |
|
|
|
Accounts payable |
|
270,828 |
|
|
312,990 |
|
|
|
Accrued expenses |
|
97,816 |
|
|
128,144 |
|
|
|
Deferred energy (Note 3) |
|
233,071 |
|
|
245,164 |
|
|
|
Other current liabilities |
|
68,489 |
|
|
65,572 |
|
|
Total Current Liabilities |
|
808,252 |
|
|
891,855 |
||
|
|
|
|
|
|
|
|
|
|
Long-term debt (Note 4) |
|
5,035,066 |
|
|
5,008,931 |
||
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 7) |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Deferred Credits and Other Liabilities: |
|
|
|
|
|
||
|
|
Deferred income taxes |
|
1,311,996 |
|
|
1,306,510 |
|
|
|
Deferred investment tax credit |
|
15,500 |
|
|
16,140 |
|
|
|
Accrued retirement benefits |
|
94,572 |
|
|
92,351 |
|
|
|
Regulatory liabilities |
|
503,911 |
|
|
486,259 |
|
|
|
Other deferred credits and liabilities |
|
470,633 |
|
|
427,003 |
|
|
Total Deferred Credits and Other Liabilities |
|
2,396,612 |
|
|
2,328,263 |
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Shareholders' Equity: |
|
|
|
|
|
||
|
|
Common stock, $1.00 par value; 350 million shares authorized |
|
|
|
|
|
|
|
|
235,999,750 issued and outstanding for 2012 and 2011 |
|
236,000 |
|
|
236,000 |
|
|
|
Other paid-in capital |
|
2,713,736 |
|
|
2,713,736 |
|
|
|
Retained earnings |
|
445,770 |
|
|
464,277 |
|
|
|
Accumulated other comprehensive loss |
|
(8,025) |
|
|
(7,934) |
|
|
Total Shareholders' Equity |
|
3,387,481 |
|
|
3,406,079 |
||
|
|
|
|
|
|
|
||
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
11,627,411 |
|
$ |
11,635,128 |
||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Concluded) |
7
|
NV ENERGY, INC. |
|
|||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|||||||
|
(Dollars in Thousands) |
|
|||||||
|
(Unaudited) |
|
|||||||
|
|
|
|
For the Three Months Ended, |
|
||||
|
|
|
|
March 31, |
|
||||
|
|
|
|
2012 |
|
2011 |
|
||
|
CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
|
|
Net Income |
$ |
12,173 |
|
$ |
2,330 |
|
|
|
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
90,862 |
|
|
83,102 |
|
|
|
|
Deferred taxes and deferred investment tax credit |
|
(5,183) |
|
|
(414) |
|
|
|
|
AFUDC-equity |
|
(1,932) |
|
|
(7,642) |
|
|
|
|
Deferred energy |
|
(9,134) |
|
|
3,118 |
|
|
|
|
Amortization of other regulatory assets |
|
39,028 |
|
|
38,839 |
|
|
|
|
Deferred rate increase |
|
2,691 |
|
|
15,334 |
|
|
|
|
Other, net |
|
1,575 |
|
|
3,269 |
|
|
|
Changes in certain assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
31,208 |
|
|
38,185 |
|
|
|
|
Materials, supplies and fuel |
|
(874) |
|
|
(8,639) |
|
|
|
|
Other current assets |
|
(13,021) |
|
|
(5,653) |
|
|
|
|
Accounts payable |
|
(37,825) |
|
|
(23,364) |
|
|
|
|
Accrued retirement benefits |
|
2,221 |
|
|
3,521 |
|
|
|
|
Other current liabilities |
|
(29,348) |
|
|
(34,708) |
|
|
|
|
Other deferred assets |
|
(1,602) |
|
|
(511) |
|
|
|
|
Other regulatory assets |
|
4,164 |
|
|
(18,608) |
|
|
|
|
Other deferred liabilities |
|
(17,687) |
|
|
(2,636) |
|
|
Net Cash from Operating Activities |
|
67,316 |
|
|
85,523 |
|
||
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED BY) INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
|
|
|
Additions to utility plant (excluding AFUDC-equity) |
|
(115,817) |
|
|
(144,097) |
|
|
|
|
Proceeds from sale of asset |
|
- |
|
|
131,789 |
|
|
|
|
Customer advances for construction |
|
(184) |
|
|
(672) |
|
|
|
|
Contributions in aid of construction |
|
26,052 |
|
|
20,178 |
|
|
|
|
Investments and other property - net |
|
48 |
|
|
286 |
|
|
Net Cash from (used by) Investing Activities |
|
(89,901) |
|
|
7,484 |
|
||
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED BY) FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
|
|
|
Proceeds from issuance of long-term debt, net of costs |
|
10,951 |
|
|
- |
|
|
|
|
Retirement of long-term debt |
|
(3,295) |
|
|
(18,481) |
|
|
|
|
Sale of Common Stock |
|
- |
|
|
5,353 |
|
|
|
|
Dividends paid |
|
(30,680) |
|
|
(28,276) |
|
|
Net Cash used by Financing Activities |
|
(23,024) |
|
|
(41,404) |
|
||
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents |
|
(45,609) |
|
|
51,603 |
|
||
|
Beginning Balance in Cash and Cash Equivalents |
|
145,944 |
|
|
86,189 |
|
||
|
Ending Balance in Cash and Cash Equivalents |
$ |
100,335 |
|
$ |
137,792 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
|
||
|
|
Cash paid during period for: |
|
|
|
|
|
|
|
|
|
|
Interest |
$ |
88,606 |
|
$ |
92,323 |
|
|
|
|
Income taxes |
$ |
- |
|
$ |
1 |
|
|
|
Significant non-cash transactions: |
|
|
|
|
|
|
|
|
|
|
Accrued construction expenses as of March 31, |
$ |
85,850 |
|
$ |
77,033 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|
8
NV ENERGY, INC. |
||||||||||||||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY |
||||||||||||||||||
(Dollars in Thousands, Except Share Amounts) |
||||||||||||||||||
(Unaudited) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Common |
|
Common |
|
Other |
|
|
|
|
Other |
|
Total |
||||
|
|
|
Stock |
|
Stock |
|
Paid-in |
|
Retained |
|
Comprehensive |
|
Shareholders' |
|||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Earnings |
|
Income (Loss) |
|
Equity |
|||||
December 31, 2010 |
235,322,553 |
|
$ |
235,323 |
|
$ |
2,705,954 |
|
$ |
416,432 |
|
$ |
(6,891) |
|
$ |
3,350,818 |
||
|
Net Income |
- |
|
|
- |
|
|
- |
|
|
2,330 |
|
|
- |
|
|
2,330 |
|
|
Dividend Reinvestment and Employee Benefits |
450,852 |
|
|
450 |
|
|
4,591 |
|
|
- |
|
|
- |
|
|
5,041 |
|
|
Tax benefit from stock options exercised |
- |
|
|
- |
|
|
312 |
|
|
- |
|
|
- |
|
|
312 |
|
|
Change in compensation retirement benefits liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization (net of taxes $(615)) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,142 |
|
|
1,142 |
|
|
Dividends Declared |
- |
|
|
- |
|
|
- |
|
|
(28,276) |
|
|
- |
|
|
(28,276) |
|
March 31, 2011 |
235,773,405 |
|
$ |
235,773 |
|
$ |
2,710,857 |
|
$ |
390,486 |
|
$ |
(5,749) |
|
$ |
3,331,367 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
235,999,750 |
|
$ |
236,000 |
|
$ |
2,713,736 |
|
$ |
464,277 |
|
$ |
(7,934) |
|
$ |
3,406,079 |
||
|
Net Income |
- |
|
|
- |
|
|
- |
|
|
12,173 |
|
|
- |
|
|
12,173 |
|
|
Change in compensation retirement benefits liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization (net of taxes $(89)) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
155 |
|
|
155 |
|
|
Change in market value of risk management assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and liabilities (net of taxes $141) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(246) |
|
|
(246) |
|
|
Dividends Declared |
- |
|
|
- |
|
|
- |
|
|
(30,680) |
|
|
- |
|
|
(30,680) |
|
March 31, 2012 |
235,999,750 |
|
$ |
236,000 |
|
$ |
2,713,736 |
|
$ |
445,770 |
|
$ |
(8,025) |
|
$ |
3,387,481 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
9
|
NEVADA POWER COMPANY |
|
||||||
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS |
|
||||||
|
(Dollars in Thousands) |
|
||||||
|
(Unaudited) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
March 31, |
|
||||
|
|
|
2012 |
|
2011 |
|
||
|
|
|
|
|
|
|
|
|
|
OPERATING REVENUES |
$ |
395,688 |
|
$ |
390,068 |
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
Fuel for power generation |
|
80,549 |
|
|
101,070 |
|
|
|
Purchased power |
|
81,531 |
|
|
95,566 |
|
|
|
Deferred energy |
|
2,171 |
|
|
6,730 |
|
|
|
Energy efficiency program costs |
|
15,774 |
|
|
- |
|
|
|
Other operating expenses |
|
66,462 |
|
|
65,101 |
|
|
|
Maintenance |
|
23,073 |
|
|
22,337 |
|
|
|
Depreciation and amortization |
|
64,990 |
|
|
57,673 |
|
|
|
Taxes other than income |
|
8,454 |
|
|
10,058 |
|
|
Total Operating Expenses |
|
343,004 |
|
|
358,535 |
|
|
|
OPERATING INCOME |
|
52,684 |
|
|
31,533 |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
(net of AFUDC-debt: $1,179 and $5,790) |
|
(54,405) |
|
|
(52,033) |
|
|
|
Interest income (expense) on regulatory items |
|
(2,016) |
|
|
635 |
|
|
|
AFUDC-equity |
|
1,413 |
|
|
7,098 |
|
|
|
Other income |
|
1,709 |
|
|
1,546 |
|
|
|
Other expense |
|
(1,346) |
|
|
(2,732) |
|
|
Total Other Expense |
|
(54,645) |
|
|
(45,486) |
|
|
|
Loss Before Income Tax Expense |
|
(1,961) |
|
|
(13,953) |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
(645) |
|
|
(4,933) |
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
(1,316) |
|
|
(9,020) |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Change in compensation retirement benefits liability and amortization |
|
|
|
|
|
|
|
|
(Net of taxes $(32) and $(405)) |
|
63 |
|
|
753 |
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS |
$ |
(1,253) |
|
$ |
(8,267) |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|
10
|
NEVADA POWER COMPANY |
|
|||||||
|
CONSOLIDATED BALANCE SHEETS |
|
|||||||
|
(Dollars in Thousands, Except Share Amounts) |
|
|||||||
|
(Unaudited) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
||
|
|
|
|
2012 |
|
2011 |
|
||
|
ASSETS |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
||
|
|
Cash and cash equivalents |
$ |
38,710 |
|
$ |
65,887 |
|
|
|
|
Accounts receivable less allowance for uncollectible accounts: |
|
|
|
|
|
|
|
|
|
|
2012 - $4,981; 2011 - $6,751 |
|
210,654 |
|
|
233,096 |
|
|
|
Materials, supplies and fuel, at average cost |
|
74,829 |
|
|
72,529 |
|
|
|
|
Deferred income taxes |
|
101,492 |
|
|
88,782 |
|
|
|
|
Other current assets |
|
37,617 |
|
|
28,943 |
|
|
|
Total Current Assets |
|
463,302 |
|
|
489,237 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Utility Property: |
|
|
|
|
|
|
||
|
|
Plant in service |
|
8,355,133 |
|
|
8,345,771 |
|
|
|
|
Construction work-in-progress |
|
410,417 |
|
|
352,541 |
|
|
|
|
|
Total |
|
8,765,550 |
|
|
8,698,312 |
|
|
|
Less accumulated provision for depreciation |
|
1,950,742 |
|
|
1,906,617 |
|
|
|
|
|
Total Utility Property, Net |
|
6,814,808 |
|
|
6,791,695 |
|
|
|
|
|
|
|
|
|
|
|
|
Investments and other property, net |
|
52,595 |
|
|
50,768 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Deferred Charges and Other Assets: |
|
|
|
|
|
|
||
|
|
Deferred energy (Note 3) |
|
99,566 |
|
|
102,525 |
|
|
|
|
Regulatory assets |
|
851,458 |
|
|
852,989 |
|
|
|
|
Regulatory asset for pension plans |
|
106,877 |
|
|
108,528 |
|
|
|
|
Other deferred charges and assets |
|
61,834 |
|
|
46,855 |
|
|
|
Total Deferred Charges and Other Assets |
|
1,119,735 |
|
|
1,110,897 |
|
||
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
8,450,440 |
|
$ |
8,442,597 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Continued) |
|
11
|
NEVADA POWER COMPANY |
|
|||||||
|
CONSOLIDATED BALANCE SHEETS |
|
|||||||
|
(Dollars in Thousands, Except Share Amounts) |
|
|||||||
|
(Unaudited) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
||
|
|
|
|
2012 |
|
2011 |
|
||
|
LIABILITIES AND SHAREHOLDER'S EQUITY |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
||
|
|
Current maturities of long-term debt (Note 4) |
$ |
137,929 |
|
$ |
139,985 |
|
|
|
|
Accounts payable |
|
161,525 |
|
|
182,183 |
|
|
|
|
Accounts payable, affiliated companies |
|
35,511 |
|
|
28,429 |
|
|
|
|
Accrued expenses |
|
60,796 |
|
|
89,311 |
|
|
|
|
Deferred energy (Note 3) |
|
160,890 |
|
|
159,799 |
|
|
|
|
Other current liabilities |
|
54,744 |
|
|
50,725 |
|
|
|
Total Current Liabilities |
|
611,395 |
|
|
650,432 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (Note 4) |
|
3,346,026 |
|
|
3,319,605 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 7) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Deferred Credits and Other Liabilities: |
|
|
|
|
|
|
||
|
|
Deferred income taxes |
|
1,003,426 |
|
|
997,921 |
|
|
|
|
Deferred investment tax credit |
|
5,743 |
|
|
6,098 |
|
|
|
|
Accrued retirement benefits |
|
11,027 |
|
|
9,454 |
|
|
|
|
Regulatory liabilities |
|
287,747 |
|
|
274,951 |
|
|
|
|
Other deferred credits and liabilities |
|
376,352 |
|
|
335,159 |
|
|
|
Total Deferred Credits and Other Liabilities |
|
1,684,295 |
|
|
1,623,583 |
|
||
|
|
|
|
|
|
|
|
||
|
Shareholder's Equity: |
|
|
|
|
|
|
||
|
|
Common stock, $1.00 par value; 1,000 shares authorized |
|
|
|
|
|
|
|
|
|
issued and outstanding for 2012 and 2011 |
|
1 |
|
|
1 |
|
|
|
|
Other paid-in capital |
|
2,308,219 |
|
|
2,308,219 |
|
|
|
|
Retained earnings |
|
504,558 |
|
|
544,874 |
|
|
|
|
Accumulated other comprehensive loss |
|
(4,054) |
|
|
(4,117) |
|
|
|
Total Shareholder's Equity |
|
2,808,724 |
|
|
2,848,977 |
|
||
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY |
$ |
8,450,440 |
|
$ |
8,442,597 |
|
||
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Concluded) |
|
12
|
NEVADA POWER COMPANY |
|
|||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|||||||
|
(Dollars in Thousands) |
|
|||||||
|
(Unaudited) |
|
|||||||
|
|
|
|
For the Three Months Ended, |
|
||||
|
|
|
|
March 31, |
|
||||
|
|
|
|
2012 |
|
2011 |
|
||
|
CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES: |
|
|
|
|
|
|||
|
|
Net Loss |
$ |
(1,316) |
|
$ |
(9,020) |
|
|
|
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
64,990 |
|
|
57,673 |
|
|
|
|
Deferred taxes and deferred investment tax credit |
|
(6,349) |
|
|
(4,725) |
|
|
|
|
AFUDC-equity |
|
(1,413) |
|
|
(7,098) |
|
|
|
|
Deferred energy |
|
4,050 |
|
|
9,980 |
|
|
|
|
Amortization of other regulatory assets |
|
18,301 |
|
|
18,870 |
|
|
|
|
Deferred rate increase |
|
2,691 |
|
|
15,334 |
|
|
|
|
Other, net |
|
(796) |
|
|
2,288 |
|
|
Changes in certain assets and liabilities: |
|
|
|
|
|
|
||
|
|
|
Accounts receivable |
|
22,441 |
|
|
35,397 |
|
|
|
|
Materials, supplies and fuel |
|
(2,209) |
|
|
(2,971) |
|
|
|
|
Other current assets |
|
(8,674) |
|
|
(6,075) |
|
|
|
|
Accounts payable |
|
(14,248) |
|
|
(15,946) |
|
|
|
|
Accrued retirement benefits |
|
1,572 |
|
|
1,313 |
|
|
|
|
Other current liabilities |
|
(27,419) |
|
|
(25,513) |
|
|
|
|
Other deferred assets |
|
(1,288) |
|
|
(781) |
|
|
|
|
Other regulatory assets |
|
9,880 |
|
|
(12,328) |
|
|
|
|
Other deferred liabilities |
|
(7,495) |
|
|
(1,911) |
|
|
Net Cash from Operating Activities |
|
52,718 |
|
|
54,487 |
|
||
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED BY) INVESTING ACTIVITIES: |
|
|
|
|
|
|||
|
|
|
Additions to utility plant (excluding AFUDC-equity) |
|
(66,843) |
|
|
(120,455) |
|
|
|
|
Customer advances for construction |
|
654 |
|
|
(211) |
|
|
|
|
Contributions in aid of construction |
|
15,951 |
|
|
16,479 |
|
|
|
|
Investments and other property - net |
|
40 |
|
|
278 |
|
|
Net Cash used by Investing Activities |
|
(50,198) |
|
|
(103,909) |
|
||
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED BY) FINANCING ACTIVITIES: |
|
|
|
|
|
|||
|
|
|
Proceeds from issuance of long-term debt, net of costs |
|
12,432 |
|
|
- |
|
|
|
|
Retirement of long-term debt |
|
(3,129) |
|
|
(3,007) |
|
|
|
|
Additional investment by parent company |
|
- |
|
|
54,000 |
|
|
|
|
Dividends paid |
|
(39,000) |
|
|
- |
|
|
Net Cash from (used by) Financing Activities |
|
(29,697) |
|
|
50,993 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents |
|
(27,177) |
|
|
1,571 |
|
||
|
Beginning Balance in Cash and Cash Equivalents |
|
65,887 |
|
|
60,077 |
|
||
|
Ending Balance in Cash and Cash Equivalents |
$ |
38,710 |
|
$ |
61,648 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
|
||
|
|
Cash paid during period for: |
|
|
|
|
|
|
|
|
|
|
Interest |
$ |
71,276 |
|
$ |
69,936 |
|
|
|
|
Income taxes |
$ |
- |
|
$ |
1 |
|
|
|
Significant non-cash transactions: |
|
|
|
|
|
|
|
|
|
|
Accrued construction expenses as of March 31, |
$ |
72,179 |
|
$ |
66,894 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|
13
NEVADA POWER COMPANY |
|||||||||||||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY |
|||||||||||||||||
(Dollars in Thousands, Except Share Amounts) |
|||||||||||||||||
(Unaudited) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Common |
|
Common |
|
Other |
|
|
|
|
Other |
|
Total |
||||
|
|
Stock |
Stock |
|
Paid-in |
|
Retained |
|
Comprehensive |
|
Shareholder's |
||||||
|
|
Shares |
|
Amount |
|
Capital |
|
Earnings |
|
Income (Loss) |
|
Equity |
|||||
December 31, 2010 |
1,000 |
|
$ |
1 |
|
$ |
2,254,219 |
|
$ |
511,288 |
|
$ |
(3,876) |
|
$ |
2,761,632 |
|
|
Net Loss |
- |
|
|
- |
|
|
- |
|
|
(9,020) |
|
|
- |
|
|
(9,020) |
|
Capital contribution from parent |
- |
|
|
- |
|
|
54,000 |
|
|
- |
|
|
- |
|
|
54,000 |
|
Change in compensation retirement benefits liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization (net of taxes $(405)) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
753 |
|
|
753 |
March 31, 2011 |
1,000 |
|
$ |
1 |
|
$ |
2,308,219 |
|
$ |
502,268 |
|
$ |
(3,123) |
|
$ |
2,807,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
1,000 |
|
$ |
1 |
|
$ |
2,308,219 |
|
$ |
544,874 |
|
$ |
(4,117) |
|
$ |
2,848,977 |
|
|
Net Loss |
- |
|
|
- |
|
|
- |
|
|
(1,316) |
|
|
- |
|
|
(1,316) |
|
Change in compensation retirement benefits liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization (net of taxes $(32)) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
63 |
|
|
63 |
|
Dividends Declared |
- |
|
|
- |
|
|
- |
|
|
(39,000) |
|
|
- |
|
|
(39,000) |
March 31, 2012 |
1,000 |
|
$ |
1 |
|
$ |
2,308,219 |
|
$ |
504,558 |
|
$ |
(4,054) |
|
$ |
2,808,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
14
|
SIERRA PACIFIC POWER COMPANY |
|
||||||
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|
||||||
|
(Dollars in Thousands) |
|
||||||
|
(Unaudited) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
March 31, |
|
||||
|
|
|
2012 |
|
2011 |
|
||
|
OPERATING REVENUES: |
|
|
|
|
|
|
|
|
|
Electric |
$ |
169,806 |
|
$ |
178,617 |
|
|
|
Gas |
|
45,922 |
|
|
72,294 |
|
|
Total Operating Revenues |
|
215,728 |
|
|
250,911 |
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
Fuel for power generation |
|
36,486 |
|
|
45,268 |
|
|
|
Purchased power |
|
35,585 |
|
|
39,450 |
|
|
|
Gas purchased for resale |
|
31,617 |
|
|
52,632 |
|
|
|
Deferral of energy - electric - net |
|
(12,670) |
|
|
(11,931) |
|
|
|
Deferral of energy - gas - net |
|
(1,240) |
|
|
3,249 |
|
|
|
Energy efficiency program costs |
|
3,651 |
|
|
- |
|
|
|
Other operating expenses |
|
36,432 |
|
|
40,216 |
|
|
|
Maintenance |
|
9,453 |
|
|
7,425 |
|
|
|
Depreciation and amortization |
|
25,872 |
|
|
25,429 |
|
|
|
Taxes other than income |
|
5,863 |
|
|
6,024 |
|
|
Total Operating Expenses |
|
171,049 |
|
|
207,762 |
|
|
|
OPERATING INCOME |
|
44,679 |
|
|
43,149 |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
(net of AFUDC-debt: $416 and $420) |
|
(16,973) |
|
|
(16,946) |
|
|
|
Interest income (expense) on regulatory items |
|
(186) |
|
|
(1,523) |
|
|
|
AFUDC-equity |
|
519 |
|
|
544 |
|
|
|
Other income |
|
2,183 |
|
|
1,264 |
|
|
|
Other expense |
|
(1,335) |
|
|
(1,594) |
|
|
Total Other Income (Expense) |
|
(15,792) |
|
|
(18,255) |
|
|
|
Income Before Income Tax Expense |
|
28,887 |
|
|
24,894 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
10,243 |
|
|
8,318 |
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
18,644 |
|
|
16,576 |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
Change in compensation retirement benefits liability and amortization |
|
|
|
|
|
|
|
|
(Net of taxes $(23) and $(841)) |
|
42 |
|
|
1,561 |
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
$ |
18,686 |
|
$ |
18,137 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|
15
|
SIERRA PACIFIC POWER COMPANY |
|
|||||||
|
CONSOLIDATED BALANCE SHEETS |
|
|||||||
|
(Dollars in Thousands, Except Share Amounts) |
|
|||||||
|
(Unaudited) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
||
|
|
|
|
2012 |
|
2011 |
|
||
|
ASSETS |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
||
|
|
Cash and cash equivalents |
$ |
23,852 |
|
$ |
55,195 |
|
|
|
|
Accounts receivable less allowance for uncollectible accounts: |
|
|
|
|
|
|
|
|
|
2012 - $1,472; 2011 - $1,399 |
|
114,499 |
|
|
121,863 |
|
|
|
|
Materials, supplies and fuel, at average cost |
|
55,799 |
|
|
57,134 |
|
|
|
|
Intercompany income taxes receivable |
|
10,351 |
|
|
10,351 |
|
|
|
|
Deferred income taxes |
|
26,362 |
|
|
32,311 |
|
|
|
|
Other current assets |
|
12,069 |
|
|
7,504 |
|
|
|
Total Current Assets |
|
242,932 |
|
|
284,358 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Utility Property: |
|
|
|
|
|
|
||
|
|
Plant in service |
|
3,600,295 |
|
|
3,577,946 |
|
|
|
|
Construction work-in-progress |
|
145,753 |
|
|
134,886 |
|
|
|
|
|
Total |
|
3,746,048 |
|
|
3,712,832 |
|
|
|
Less accumulated provision for depreciation |
|
1,289,946 |
|
|
1,277,454 |
|
|
|
|
|
Total Utility Property, Net |
2,456,102 |
|
|
2,435,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments and other property, net |
|
6,326 |
|
|
5,901 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Deferred Charges and Other Assets: |
|
|
|
|
|
|
||
|
|
Regulatory assets |
|
322,611 |
|
|
333,138 |
|
|
|
|
Regulatory asset for pension plans |
|
102,497 |
|
|
104,159 |
|
|
|
|
Other deferred charges and assets |
|
19,890 |
|
|
21,074 |
|
|
|
Total Deferred Charges and Other Assets |
|
444,998 |
|
|
458,371 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
3,150,358 |
|
$ |
3,184,008 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Continued) |
|
16
|
SIERRA PACIFIC POWER COMPANY |
|
|||||||
|
CONSOLIDATED BALANCE SHEETS |
|
|||||||
|
(Dollars in Thousands, Except Share Amounts) |
|
|||||||
|
(Unaudited) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
||
|
|
|
|
2012 |
|
2011 |
|
||
|
LIABILITIES AND SHAREHOLDER'S EQUITY |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
||
|
|
Current maturities of long-term debt (Note 4) |
$ |
120 |
|
$ |
- |
|
|
|
|
Accounts payable |
|
86,494 |
|
|
99,897 |
|
|
|
|
Accounts payable, affiliated companies |
|
18,506 |
|
|
27,788 |
|
|
|
|
Accrued expenses |
|
27,566 |
|
|
32,840 |
|
|
|
|
Deferred energy (Note 3) |
|
72,181 |
|
|
85,365 |
|
|
|
|
Other current liabilities |
|
13,744 |
|
|
14,846 |
|
|
|
Total Current Liabilities |
|
218,611 |
|
|
260,736 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (Note 4) |
|
1,179,041 |
|
|
1,179,326 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 7) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Deferred Credits and Other Liabilities: |
|
|
|
|
|
|
||
|
|
Deferred income taxes |
|
395,885 |
|
|
398,787 |
|
|
|
|
Deferred investment tax credit |
|
9,757 |
|
|
10,042 |
|
|
|
|
Accrued retirement benefits |
|
74,664 |
|
|
74,297 |
|
|
|
|
Regulatory liabilities |
|
216,164 |
|
|
211,308 |
|
|
|
|
Other deferred credits and liabilities |
|
83,008 |
|
|
74,970 |
|
|
|
Total Deferred Credits and Other Liabilities |
|
779,478 |
|
|
769,404 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholder's Equity |
|
|
|
|
|
|
||
|
|
Common stock, $3.75 par value; 20,000,000 shares authorized |
|
|
|
|
|
|
|
|
|
1,000 shares issued and outstanding for 2012 and 2011 |
|
4 |
|
|
4 |
|
|
|
|
Other paid-in capital |
|
1,111,262 |
|
|
1,111,262 |
|
|
|
|
Retained deficit |
|
(136,696) |
|
|
(135,340) |
|
|
|
|
Accumulated other comprehensive loss |
|
(1,342) |
|
|
(1,384) |
|
|
|
Total Shareholder's Equity |
|
973,228 |
|
|
974,542 |
|
||
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY |
$ |
3,150,358 |
|
$ |
3,184,008 |
|
||
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Concluded) |
|
17
|
SIERRA PACIFIC POWER COMPANY |
|
|||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|||||||
|
(Dollars in Thousands) |
|
|||||||
|
(Unaudited) |
|
|||||||
|
|
|
|
For the Three Months Ended, |
|
||||
|
|
|
|
March 31, |
|
||||
|
|
|
|
2012 |
|
2011 |
|
||
|
CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
|
|
Net Income |
$ |
18,644 |
|
$ |
16,576 |
|
|
|
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
25,872 |
|
|
25,429 |
|
|
|
|
Deferred taxes and deferred investment tax credit |
|
3,537 |
|
|
8,109 |
|
|
|
|
AFUDC-equity |
|
(519) |
|
|
(544) |
|
|
|
|
Deferred energy |
|
(13,184) |
|
|
(6,862) |
|
|
|
|
Amortization of other regulatory assets |
|
20,668 |
|
|
19,944 |
|
|
|
|
Other, net |
|
2,249 |
|
|
1,136 |
|
|
|
Changes in certain assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
8,869 |
|
|
2,837 |
|
|
|
|
Materials, supplies and fuel |
|
1,335 |
|
|
(5,668) |
|
|
|
|
Other current assets |
|
(4,564) |
|
|
(479) |
|
|
|
|
Accounts payable |
|
(17,675) |
|
|
4,835 |
|
|
|
|
Accrued retirement benefits |
|
367 |
|
|
1,703 |
|
|
|
|
Other current liabilities |
|
(5,388) |
|
|
(8,667) |
|
|
|
|
Other deferred assets |
|
(314) |
|
|
270 |
|
|
|
|
Other regulatory assets |
|
(5,716) |
|
|
(6,280) |
|
|
|
|
Other deferred liabilities |
|
(4,214) |
|
|
(104) |
|
|
Net Cash from Operating Activities |
|
29,967 |
|
|
52,235 |
|
||
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED BY) INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
|
|
|
Additions to utility plant (excluding AFUDC-equity) |
|
(48,974) |
|
|
(23,642) |
|
|
|
|
Proceeds from sale of asset |
|
- |
|
|
131,789 |
|
|
|
|
Customer advances for construction |
|
(838) |
|
|
(461) |
|
|
|
|
Contributions in aid of construction |
|
10,101 |
|
|
3,699 |
|
|
|
|
Investments and other property - net |
|
8 |
|
|
8 |
|
|
Net Cash from (used by) Investing Activities |
|
(39,703) |
|
|
111,393 |
|
||
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED BY) FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
|
|
|
Proceeds from issuance of long-term debt, net of costs |
|
(1,441) |
|
|
- |
|
|
|
|
Retirement of long-term debt |
|
(166) |
|
|
(15,390) |
|
|
|
|
Dividends paid |
|
(20,000) |
|
|
(92,000) |
|
|
Net Cash used by Financing Activities |
|
(21,607) |
|
|
(107,390) |
|
||
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents |
|
(31,343) |
|
|
56,238 |
|
||
|
Beginning Balance in Cash and Cash Equivalents |
|
55,195 |
|
|
9,552 |
|
||
|
Ending Balance in Cash and Cash Equivalents |
$ |
23,852 |
|
$ |
65,790 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
|
||
|
|
Cash paid during period for: |
|
|
|
|
|
|
|
|
|
|
Interest |
$ |
15,944 |
|
$ |
15,925 |
|
|
|
Significant non-cash transactions: |
|
|
|
|
|
|
|
|
|
|
Accrued construction expenses as of March 31, |
$ |
13,671 |
|
$ |
10,139 |
|
|
The accompanying notes are an integral part of the financial statements. |
|
18
SIERRA PACIFIC POWER COMPANY |
|||||||||||||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY |
|||||||||||||||||
(Dollars in Thousands, Except Share Amounts) |
|||||||||||||||||
(Unaudited) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Common |
|
Common |
|
Other |
|
|
|
|
Other |
|
Total |
||||
|
|
Stock |
|
Stock |
|
Paid-In |
|
Retained |
|
Comprehensive |
|
Shareholder's |
|||||
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Income (Loss) |
|
Equity |
|||||
December 31, 2010 |
1,000 |
|
$ |
4 |
|
$ |
1,111,262 |
|
$ |
(135,226) |
|
$ |
(2,620) |
|
$ |
973,420 |
|
|
Net Income |
- |
|
|
- |
|
|
- |
|
|
16,576 |
|
|
- |
|
|
16,576 |
|
Tax benefit from stock options exercised |
- |
|
|
- |
|
|
312 |
|
|
- |
|
|
- |
|
|
312 |
|
Change in compensation retirement benefits liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization (net of taxes $(841)) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,561 |
|
|
1,561 |
|
Dividends Declared |
- |
|
|
- |
|
|
- |
|
|
(38,000) |
|
|
- |
|
|
(38,000) |
March 31, 2011 |
1,000 |
|
$ |
4 |
|
$ |
1,111,574 |
|
$ |
(156,650) |
|
$ |
(1,059) |
|
$ |
953,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
1,000 |
|
$ |
4 |
|
$ |
1,111,262 |
|
$ |
(135,340) |
|
$ |
(1,384) |
|
$ |
974,542 |
|
|
Net Income |
- |
|
|
- |
|
|
- |
|
|
18,644 |
|
|
- |
|
|
18,644 |
|
Change in compensation retirement benefits liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization (net of taxes $(23)) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
42 |
|
|
42 |
|
Dividends Declared |
- |
|
|
- |
|
|
- |
|
|
(20,000) |
|
|
- |
|
|
(20,000) |
March 31, 2012 |
1,000 |
|
$ |
4 |
|
$ |
1,111,262 |
|
$ |
(136,696) |
|
$ |
(1,342) |
|
$ |
973,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
19
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies for both utility and non-utility operations are as follows:
The consolidated financial statements include the accounts of NV Energy, Inc. and its wholly-owned subsidiaries, NPC, SPPC, Sierra Pacific Communications, Lands of Sierra, Inc., NVE Insurance Company, Inc. and Sierra Gas Holding Company. All intercompany balances and transactions have been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities. These estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of certain revenues and expenses during the reporting period. Actual results could differ from these estimates.
In the opinion of the management of NVE, NPC and SPPC, the accompanying unaudited interim consolidated financial statements contain normal and recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows for the periods shown. These consolidated financial statements do not contain the complete detail concerning accounting policies and other matters, which are included in full year financial statements; therefore, they should be read in conjunction with the audited financial statements included in the 2011 Form 10-K.
The results of operations and cash flows of NVE, NPC and SPPC for the three months ended March 31, 2012, are not necessarily indicative of the results to be expected for the full year.
Reclassifications
Certain financial statement line items for prior periods have been reclassified to conform with current year presentation. The reclassifications have not affected previously reported reports of operations, statements of financial position or shareholders’ equity.
Accounting Policies
Consolidations of VIEs
To identify potential variable interests, management reviewed contracts under leases, long-term purchase power contracts, tolling contracts and jointly owned facilities. The Utilities identified certain long-term purchase power contracts that could be defined as variable interests. However, the Utilities are not the primary beneficiary as they primarily lacked the power to direct the activities of the entity, including the ability to operate the generating facilities and make management decisions. The Utilities' maximum exposure to loss is limited to the cost of replacing these purchase power contracts if the providers are unable to deliver power. However, the Utilities believe their exposure is mitigated as they would likely recover these costs through their deferred energy accounting mechanism. As of March 31, 2012, the carrying amount of assets and liabilities in the Utilities’ balance sheets that relate to their involvement with VIEs are predominately related to working capital accounts and generally represent the amounts owed by the Utilities for the deliveries associated with the current billing cycle under the contracts.
Derivatives and Hedging Activities
NVE, NPC and SPPC apply the accounting guidance as required by the Derivatives and Hedging Topic of the FASC. The accounting guidance for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities, requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position, measure those instruments at fair value, and recognize changes in the fair value of the derivative instruments in earnings in the period of change, unless the derivative meets certain defined conditions and qualifies as an effective hedge. The accounting guidance for derivative instruments also provides a scope exception for commodity contracts that meet the normal purchases and normal sales criteria specified in the standard. The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that are designated as normal purchases and normal sales are accounted for under deferred energy accounting and not recorded on the consolidated balance sheets of NVE and the Utilities at fair value. As a result of the suspension of the Utilities’ hedging program, derivative transactions were immaterial for the period ended March 31, 2012.
20
NOTE 2. SEGMENT INFORMATION
The Utilities operate three regulated business segments, NPC electric, SPPC electric and SPPC natural gas service, which are reported in accordance with Segment Reporting of the FASC. Electric service is provided to Las Vegas and surrounding Clark County by NPC, and to northern Nevada by SPPC. Natural gas services are provided by SPPC in the Reno-Sparks area of Nevada. Other information includes amounts below the quantitative thresholds for separate disclosure.
Operational information of the different business segments is set forth below based on the nature of products and services offered. NVE evaluates performance based on several factors, of which the primary financial measure is business segment gross margin. Gross margin, which the Utilities calculate as operating revenues less energy and energy efficiency program costs, provides a measure of income available to support the other operating expenses of the Utilities. Energy efficiency program costs are conservation costs being recovered from ratepayers through EEPR revenues which were implemented in July 2011 (See Note 3, Regulatory Actions, of the Notes to Financial Statements in 2011 Form 10-K). Costs incurred prior to the implementation of the EEPR are recovered through general rates and amortized to other operating expense. The EEPR mechanism is designed such that conservation costs are equal to revenues collected and any over/under collection is deferred as a regulatory asset/liability until rates are reset. As a result, amounts related to EEPR do not have an effect on gross margin, operating income or net income.
Operating expenses are provided by segment in order to reconcile to operating income as reported in the consolidated financial statements (dollars in thousands).
Three Months Ended |
|
|
|
|||||||||||||||
March 31, 2012 |
|
NVE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
NVE Other |
|
NPC Electric |
|
SPPC Total |
|
SPPC Electric |
|
SPPC Gas |
||||||
Operating Revenues |
$ |
611,420 |
|
$ |
4 |
|
$ |
395,688 |
|
$ |
215,728 |
|
$ |
169,806 |
|
$ |
45,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel for power generation |
|
117,035 |
|
|
- |
|
|
80,549 |
|
|
36,486 |
|
|
36,486 |
|
|
- |
|
Purchased power |
|
117,116 |
|
|
- |
|
|
81,531 |
|
|
35,585 |
|
|
35,585 |
|
|
- |
|
Gas purchased for resale |
|
31,617 |
|
|
- |
|
|
|
|
|
31,617 |
|
|
- |
|
|
31,617 |
|
Deferred energy |
|
(11,739) |
|
|
- |
|
|
2,171 |
|
|
(13,910) |
|
|
(12,670) |
|
|
(1,240) |
Energy efficiency program costs |
|
19,425 |
|
|
- |
|
|
15,774 |
|
|
3,651 |
|
|
3,651 |
|
|
|
|
Total Costs |
$ |
273,454 |
|
$ |
- |
|
$ |
180,025 |
|
$ |
93,429 |
|
$ |
63,052 |
|
$ |
30,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin |
$ |
337,966 |
|
$ |
4 |
|
$ |
215,663 |
|
$ |
122,299 |
|
$ |
106,754 |
|
$ |
15,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses |
|
103,601 |
|
|
707 |
|
|
66,462 |
|
|
36,432 |
|
|
|
|
|
|
|
Maintenance |
|
32,526 |
|
|
- |
|
|
23,073 |
|
|
9,453 |
|
|
|
|
|
|
|
Depreciation and amortization |
|
90,862 |
|
|
- |
|
|
64,990 |
|
|
25,872 |
|
|
|
|
|
|
|
Taxes other than income |
|
14,509 |
|
|
192 |
|
|
8,454 |
|
|
5,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
$ |
96,468 |
|
$ |
(895) |
|
$ |
52,684 |
|
$ |
44,679 |
|
|
|
|
|
|
Three Months Ended |
|
|
|
|||||||||||||||
March 31, 2011 |
|
NVE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
NVE Other |
|
NPC Electric |
|
SPPC Total |
|
SPPC Electric |
|
SPPC Gas |
||||||
Operating Revenues |
$ |
640,983 |
|
$ |
4 |
|
$ |
390,068 |
|
$ |
250,911 |
|
$ |
178,617 |
|
$ |
72,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel for power generation |
|
146,338 |
|
|
- |
|
|
101,070 |
|
|
45,268 |
|
|
45,268 |
|
|
- |
|
Purchased power |
|
135,016 |
|
|
- |
|
|
95,566 |
|
|
39,450 |
|
|
39,450 |
|
|
- |
|
Gas purchased for resale |
|
52,632 |
|
|
- |
|
|
|
|
|
52,632 |
|
|
- |
|
|
52,632 |
|
Deferred energy |
|
(1,952) |
|
|
- |
|
|
6,730 |
|
|
(8,682) |
|
|
(11,931) |
|
|
3,249 |
Energy efficiency program costs |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Total Costs |
$ |
332,034 |
|
$ |
- |
|
$ |
203,366 |
|
$ |
128,668 |
|
$ |
72,787 |
|
$ |
55,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin |
$ |
308,949 |
|
$ |
4 |
|
$ |
186,702 |
|
$ |
122,243 |
|
$ |
105,830 |
|
$ |
16,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses |
|
105,974 |
|
|
657 |
|
|
65,101 |
|
|
40,216 |
|
|
|
|
|
|
|
Maintenance |
|
29,762 |
|
|
- |
|
|
22,337 |
|
|
7,425 |
|
|
|
|
|
|
|
Depreciation and amortization |
|
83,102 |
|
|
- |
|
|
57,673 |
|
|
25,429 |
|
|
|
|
|
|
|
Taxes other than income |
|
16,245 |
|
|
163 |
|
|
10,058 |
|
|
6,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
$ |
73,866 |
|
$ |
(816) |
|
$ |
31,533 |
|
$ |
43,149 |
|
|
|
|
|
|
21
NOTE 3. REGULATORY ACTIONS
NPC and SPPC follow deferred energy accounting. See Note 3, Regulatory Actions, of the Notes to Financial Statements in the 2011 Form 10-K for additional information regarding deferred energy accounting by the Utilities.
The following deferred energy amounts were included in the consolidated balance sheets as of March 31, 2012 (dollars in thousands):
|
|
|
March 31, 2012 |
|
||||||||||
|
|
|
NVE Total |
|
NPC Electric |
|
SPPC Electric |
|
SPPC Gas |
|
||||
|
Deferred Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Balance as of December 31, 2011 |
$ |
(260,079) |
|
$ |
(174,714) |
|
$ |
(56,337) |
|
$ |
(29,028) |
|
|
|
2012 Amortization |
|
77,059 |
|
|
38,126 |
|
|
25,498 |
|
|
13,435 |
|
|
|
2012 Deferred Energy Over Collections (1) |
|
(64,975) |
|
|
(39,226) |
|
|
(13,213) |
|
|
(12,536) |
|
|
Deferred Energy Balance at March 31, 2012 - Subtotal |
$ |
(247,995) |
|
$ |
(175,814) |
|
$ |
(44,052) |
|
$ |
(28,129) |
|
|
|
Reinstatement of deferred energy (effective 6/07, 10 years) |
|
114,490 |
|
|
114,490 |
|
|
- |
|
|
- |
|
|
|
|
Total Deferred Energy |
$ |
(133,505) |
|
$ |
(61,324) |
|
$ |
(44,052) |
|
$ |
(28,129) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred energy |
$ |
99,566 |
|
$ |
99,566 |
|
$ |
- |
|
$ |
- |
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred energy |
|
(233,071) |
|
|
(160,890) |
|
|
(44,052) |
|
|
(28,129) |
|
|
|
Total Deferred Energy |
$ |
(133,505) |
|
$ |
(61,324) |
|
$ |
(44,052) |
|
$ |
(28,129) |
|
These deferred energy over collections are subject to quarterly rate resets as discussed in Note 3, Regulatory Actions, of the Notes to Financial Statements in the 2011 Form 10-K. |
Pending Regulatory Actions
Nevada Power Company
NPC 2012 DEAA, TRED and REPR, Rate Filings
In March 2012, NPC filed an application for the PUCN to review fuel and purchased power transactions for the 12-month period ending December 31, 2011, to reset the TRED and REPR rate elements and to retire the unamortized balance of NPC’s 2008 GRC deferred rate increase, as discussed in Note 3, Regulatory Actions, of the Notes to Financial Statements in the 2011 Form 10-K. The recoveries requested in this filing result in an overall increase in revenue requirement of approximately $30.1 million. The March 2012 application includes the following (dollars in millions):
|
|
|
|
Anticipated |
|
Requested |
|
Present |
|
$ Change in |
|
|||
|
|
|
|
Effective |
|
Revenue |
|
Revenue |
|
Revenue |
|
|||
|
|
|
|
Date |
|
Requirement |
|
Requirement |
|
Requirement |
|
|||
|
Revenue Requirement Subject To Change: |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
2008 GRC Deferred Rate Increase(1) |
Oct. 2012 |
|
$ |
13.1 |
|
$ |
- |
|
$ |
13.1 |
|
|
|
|
REPR |
Oct. 2012 |
|
|
28.2 |
|
|
8.5 |
|
|
19.7 |
|
|
|
|
TRED |
Oct. 2012 |
|
|
15.3 |
|
|
18.0 |
|
|
(2.7) |
|
|
|
|
|
Total Revenue Requirement |
|
|
$ |
56.6 |
|
$ |
26.5 |
|
$ |
30.1 |
|
(1) |
This rate request represents revenues previously recorded as a result of NPC’s 2008 GRC. As such, NPC will not record further revenue related to this rate request, but does expect to collect such amounts from its customers. Reference Note 3, Regulatory Actions, NPC 2008 GRC, of the Notes to Financial Statements in the 2011 Form 10-K. |
NPC 2012 EEIR, EEPR Rate Filings
Subsequent to filing NPC’s DEAA, TRED, and REPR rate filings in March 2012, the PUCN issued a final order in NPC’s Annual Demand Side Management Update Report, requiring NPC to revise all lighting-specific calculations used in the EEIR and EEPR rate applications. As a result, in a pre-hearing conference on April 10, 2012, the parties agreed to bifurcate the EEIR and EEPR portions of the March filing to allow NPC to amend in July 2012 the EEIR and EEPR rate requests using revised lighting-specific calculations and to hold a separate hearing on these components. It is anticipated upon final hearing and approval of the amendments by the PUCN, rates for the EEIR and EEPR components would become effective January 2013.
22
NPC Petition for Declaratory Order and Accounting Guidance- Telecommunication Tower Sale
In March 2012, NPC filed a petition with the PUCN to obtain a declaratory order and the accounting guidance necessary to establish a regulatory account for the gain on sale of NPC’s telecommunication towers to Global Tower Partners, LLC in August 2011 as discussed in Note 16, Assets Held for Sale, of the Notes to Financial Statements of the 2011 Form 10-K. NPC seeks authorization to apportion approximately $14 million of the $32 million gain on sale to ratepayers with amortization of the gain to coincide with the rate effective date of NPC’s next GRC, which is mandated in 2015.
Sierra Pacific Power Company
SPPC 2012 Electric DEAA, TRED and REPR Rate Filings
In March 2012, SPPC filed an application for the PUCN to review fuel and purchased power transactions for the 12-month period ending December 31, 2011 and to reset the TRED and REPR rate elements. The recoveries requested in this filing result in an overall decrease in revenue requirement of approximately $7.1 million. The March 2012 application includes the following (dollars in millions):
|
|
|
|
Anticipated |
|
Requested |
|
Present |
|
$ Change in |
|
|||
|
|
|
|
Effective |
|
Revenue |
|
Revenue |
|
Revenue |
|
|||
|
|
|
|
Date |
|
Requirement |
|
Requirement |
|
Requirement |
|
|||
|
Revenue Requirement Subject To Change: |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
REPR |
Oct. 2012 |
|
$ |
34.5 |
|
$ |
38.5 |
|
$ |
(4.0) |
|
|
|
|
TRED |
Oct. 2012 |
|
|
6.1 |
|
|
9.2 |
|
|
(3.1) |
|
|
|
|
|
Total Revenue Requirement |
|
|
$ |
40.6 |
|
$ |
47.7 |
|
$ |
(7.1) |
|
SPPC 2012 EEIR, EEPR Rate Filings
Subsequent to filing SPPC’s DEAA, TRED, and REPR rate filings in March 2012, the PUCN issued a final order in SPPC’s Annual Demand Side Management Update Report, requiring SPPC to revise all lighting-specific calculations used in the EEIR and EEPR rate applications. As a result, in a pre-hearing conference on April 10, 2012, the parties agreed to bifurcate the EEIR and EEPR portions of the March filing to allow SPPC to amend in July 2012 the EEIR and EEPR rate requests using revised lighting-specific calculations and to hold a separate hearing on these components. It is anticipated upon final hearing and approval of the amendments by the PUCN, rates for the EEIR and EEPR components would become effective January 2013.
SPPC 2012 Nevada Gas DEAA
In March 2012, SPPC filed an application for the PUCN to review the physical gas, transportation and financial gas transactions that were recorded during the 12-month period ending December 31, 2011 and to reset the REPR. The recoveries requested in this filing result in an overall increase of $0.2 million.
NOTE 4. LONG-TERM DEBT
Maturities of Long-Term Debt
As of March 31, 2012, NPC’s, SPPC’s and NVE’s aggregate annual amount of maturities for long-term debt (including obligations related to capital leases) for the next five years and thereafter are shown below (dollars in thousands):
|
|
|
|
NVE |
|
NVE |
|
|
|
|
|
|
|
||
|
|
|
|
|
Consolidated |
|
|
Holding Co. |
|
NPC |
|
SPPC |
|
||
|
2012(1) |
$ |
132,929 |
|
$ |
- |
|
$ |
132,841 |
|
$ |
88 |
|
||
|
2013 |
|
256,585 |
|
|
- |
|
|
6,517 |
|
|
250,068 |
|
||
|
2014 |
|
324,153 |
|
|
195,000 |
|
|
129,142 |
|
|
11 |
|
||
|
2015 |
|
251,579 |
|
|
- |
|
|
251,567 |
|
|
12 |
|
||
|
2016 |
|
661,682 |
|
|
- |
|
|
211,677 |
|
|
450,005 |
|
||
|
|
Total Debt 2012-2016 |
|
1,626,928 |
|
|
195,000 |
|
|
731,744 |
|
|
700,184 |
|
|
|
Thereafter |
|
3,544,214 |
|
|
315,000 |
|
|
2,762,784 |
|
|
466,430 |
|
||
|
|
Total Debt Before Unamortized Premium (Discount) |
|
5,171,142 |
|
|
510,000 |
|
|
3,494,528 |
|
|
1,166,614 |
|
|
|
Unamortized Premium (Discount) Amount |
|
1,972 |
|
|
(2) |
|
|
(10,573) |
|
|
12,547 |
|
||
|
|
Total Debt |
$ |
5,173,114 |
|
$ |
509,998 |
|
$ |
3,483,955 |
|
$ |
1,179,161 |
|
23
(1) |
Amounts may differ from current portion of long-term debt as reported on the consolidated balance sheet due to the timing difference of payments and the change in obligation. |
Substantially all utility plant is subject to the liens of the NPC Indenture and the SPPC Indenture under which their respective General and Refunding Mortgage bonds are issued.
Nevada Power Company
$500 Million Revolving Credit Facility
In March 2012, NPC terminated its $600 million secured revolving credit facility which would have expired in April 2013 and replaced it with a $500 million revolving credit facility, maturing in March 2017 and secured by NPC’s General and Refunding Mortgage Bond, Series Z, in an aggregate principal amount of $500 million (the “NPC Credit Agreement”). The administrative agent for the NPC Credit Agreement remains Wells Fargo Bank, National Association. NPC may use the facility for general corporate purposes and for the issuance of letters of credit.
The rate for outstanding loans under the NPC Credit Agreement will be at either an applicable base rate (defined as the highest of the Prime Rate, the Federal Funds Rate plus 0.5% and the LIBOR Base Rate plus 1.0%) plus a margin, or a LIBOR rate plus a margin. The margin varies based upon NPC’s secured debt credit rating by S&P and Moody’s. Currently, NPC’s applicable base rate margin is 0.50% and the LIBOR rate margin is 1.50%. The rate for outstanding letters of credit will be at the LIBOR rate margin plus a fee for the issuing bank.
The NPC Credit Agreement contains one financial maintenance covenant that requires NPC to maintain a ratio of consolidated indebtedness to consolidated capital, determined as of the last day of each fiscal quarter, not to exceed 0.68 to 1.00. In the event that NPC did not meet the financial maintenance covenant or there is a different event of default, the NPC Credit Agreement would restrict dividends to NVE. Moreover, so long as NPC's senior secured debt remains rated investment grade by S&P and Moody's (in each case, with a stable or better outlook), a representation concerning no material adverse change in NPC's business, assets, property or financial condition would not be a condition to the availability of credit under the facility. In the event that NPC's senior secured debt rating were rated below investment grade by either S&P or Moody's, or investment grade by either S&P or Moody's but with a negative outlook, a representation concerning no material adverse change in NPC's business, assets, property or financial condition would be a condition to borrowing under the revolving credit facility.
The NPC Credit Agreement provides for an event of default if there is a failure under NPC's other financing agreements to meet certain payment terms or to observe other covenants that would result in an acceleration of payments due.
Similar to the $600 million secured revolving credit facility that it replaced, the NPC Credit Agreement places certain restrictions on debt incurrence, liens and dividends. These restrictions are discussed in Note 8, Debt Covenant and Other Restrictions, of the Notes to Financial Statements in the 2011 Form 10-K.
The NPC Credit Agreement contains a provision which reduces the availability under the credit facility by the negative mark-to-market exposure for hedging transactions with credit facility lenders or their energy trading affiliates. The reduction in availability limits the amount that NPC can borrow or use for letters of credit and would require that NPC prepay any amount in excess of that limitation. The amount of the reduction is calculated by NPC on a monthly basis, and after calculating such reduction, the NPC Credit Agreement provides that the reduction in availability under the revolving credit facility to NPC shall in no event exceed 50% of the total commitments then in effect under the revolving credit facility. As a result of the suspension of the Utilities' hedging program, there was no negative mark-to-market exposure for NPC as of May 7, 2012 that would impact borrowings.
Maturity of General and Refunding Mortgage Notes, Series I
In April 2012, NPC used $120 million from its revolving credit facility along with cash on hand to pay for the maturity of its General and Refunding Mortgage Notes, Series I, in an aggregate principal amount of $130 million.
Sierra Pacific Power Company
$250 Million Revolving Credit Facility
In March 2012, SPPC terminated its $250 million secured revolving credit facility which would have expired in April 2013 and replaced it with a $250 million revolving credit facility, maturing in March 2017 and secured by SPPC’s General and Refunding Mortgage Bond, Series S, in an aggregate principal amount of $250 million (the “SPPC Credit Agreement”). The administrative agent for the SPPC Credit Agreement is Wells Fargo Bank, National Association. SPPC may use the facility for general corporate purposes and for the issuance of letters of credit.
24
The rate for outstanding loans under the SPPC Credit Agreement will be at either an applicable base rate (defined as the highest of the Prime Rate, the Federal Funds Rate plus 0.5% and the LIBOR Base Rate plus 1.0%) plus a margin, or a LIBOR rate plus a margin. The margin varies based upon SPPC’s secured debt credit rating by S&P and Moody’s. Currently, SPPC’s applicable base rate margin is 0.50% and the LIBOR rate margin is 1.50%. The rate for outstanding letters of credit will be at the LIBOR rate margin plus a fee for the issuing bank.
The SPPC Credit Agreement contains one financial maintenance covenant that requires SPPC to maintain a ratio of consolidated indebtedness to consolidated capital, determined as of the last day of each fiscal quarter, not to exceed 0.68 to 1.00. In the event that SPPC did not meet the financial maintenance covenant or there is a different event of default, the SPPC Credit Agreement would restrict dividends to NVE. Moreover, so long as SPPC's senior secured debt remains rated investment grade by S&P and Moody's (in each case, with a stable or better outlook), a representation concerning no material adverse change in SPPC's business, assets, property or financial condition would not be a condition to the availability of credit under the facility. In the event that SPPC's senior secured debt rating were rated below investment grade by either S&P or Moody's, or investment grade by either S&P or Moody's but with a negative outlook, a representation concerning no material adverse change in SPPC's business, assets, property or financial condition would be a condition to borrowing under the revolving credit facility.
The SPPC Credit Agreement provides for an event of default if there is a failure under SPPC's other financing agreements to meet certain payment terms or to observe other covenants that would result in an acceleration of payments due.
Similar to the $250 million secured revolving credit facility that it replaced, the SPPC Credit Agreement places certain restrictions on debt incurrence, liens and dividends. These restrictions are discussed in Note 8, Debt Covenant and Other Restrictions, of the Notes to Financial Statements in the 2011 Form 10-K.
The SPPC Credit Agreement contains a provision which reduces the availability under the credit facility by the negative mark-to-market exposure for hedging transactions with credit facility lenders or their energy trading affiliates. The reduction in availability limits the amount that SPPC can borrow or use for letters of credit and would require that SPPC prepay any amount in excess of that limitation. The amount of the reduction is calculated by SPPC on a monthly basis, and after calculating such reduction, the SPPC Credit Agreement provides that the reduction in availability under the revolving credit facility to SPPC shall in no event exceed 50% of the total commitments then in effect under the revolving credit facility. As a result of the suspension of the Utilities' hedging program, there was no negative mark-to-market exposure for SPPC as of May 7, 2012 that would impact borrowings.
NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS
The March 31, 2012 carrying amount of cash and cash equivalents, current assets, accounts receivable, accounts payable and current liabilities approximate fair value due to the short-term nature of these instruments. As reported in Note 4, Investments in Subsidiaries & Other Property, of the Notes to Financial Statements in the 2011 Form 10-K, investments held in Rabbi Trust and cash surrender value of life insurance policies continue to be considered Level 1 and Level 2, respectively, in the fair value hierarchy.
The total fair value of NVE’s consolidated long-term debt at March 31, 2012, is estimated to be $5.9 billion based on quoted market prices for the same or similar issues or on the current rates offered to NVE for debt of the same remaining maturities. The total fair value was estimated to be $6.0 billion as of December 31, 2011.
The total fair value of NPC’s consolidated long-term debt at March 31, 2012, is estimated to be $4.1 billion based on quoted market prices for the same or similar issues or on the current rates offered to NPC for debt of the same remaining maturities. The total fair value was estimated to be $4.1 billion at December 31, 2011.
The total fair value of SPPC’s consolidated long-term debt at March 31, 2012, is estimated to be $1.3 billion based on quoted market prices for the same or similar issues or on the current rates offered to SPPC for debt of the same remaining maturities. The total fair value was estimated to be $1.3 billion as of December 31, 2011.
25
NOTE 6. RETIREMENT PLAN AND POST-RETIREMENT BENEFITS
NVE has a single employer defined benefit pension plan covering substantially all employees of NVE and the Utilities. NVE allocates the unfunded liability and the net periodic benefit costs for its pension benefit and other postretirement benefit plans to NPC and SPPC based upon the current, or in the case of the retirees, previous, employment location. Certain grandfathered and union employees are covered under a benefit formula based on years of service and the employee's highest compensation for a period prior to retirement, while most employees are covered under a cash balance formula with vesting after three years of service. NVE also has other postretirement plans, including a defined contribution plan which provides medical and life insurance benefits for certain retired employees. A summary of the components of net periodic pension and other postretirement costs for the three months ended March 31 follows. This summary is based on a December 31 measurement date (dollars in thousands):
NVE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits |
|
|
Other Postretirement Benefits |
|||||||
|
|
|
For the Three Months Ended March 31, |
|
|
For the Three Months Ended March 31, |
||||||
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
Service cost |
|
$ |
4,406 |
|
$ |
4,607 |
|
$ |
595 |
|
$ |
653 |
Interest cost |
|
|
10,228 |
|
|
10,169 |
|
|
1,905 |
|
|
2,090 |
Expected return on plan assets |
|
|
(12,447) |
|
|
(12,192) |
|
|
(1,563) |
|
|
(1,596) |
Amortization of prior service cost |
|
|
(724) |
|
|
(738) |
|
|
(987) |
|
|
(987) |
Amortization of net loss |
|
|
3,473 |
|
|
4,155 |
|
|
731 |
|
|
1,083 |
Net periodic benefit cost |
|
$ |
4,936 |
|
$ |
6,001 |
|
$ |
681 |
|
$ |
1,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The average percentage of NVE net periodic costs capitalized during 2012 and 2011 was 33.2% and 32.2%, respectively. |
NPC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Pension Benefits |
|
Other Postretirement Benefits |
||||||||
|
|
|
For the Three Months Ended March 31, |
|
|
For the Three Months Ended March 31, |
||||||
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
Service cost |
|
$ |
2,358 |
|
$ |
2,445 |
|
$ |
350 |
|
$ |
363 |
Interest cost |
|
|
4,881 |
|
|
4,880 |
|
|
602 |
|
|
615 |
Expected return on plan assets |
|
|
(6,237) |
|
|
(6,169) |
|
|
(592) |
|
|
(590) |
Amortization of prior service cost |
|
|
(456) |
|
|
(470) |
|
|
229 |
|
|
229 |
Amortization of net loss |
|
|
1,363 |
|
|
1,690 |
|
|
221 |
|
|
302 |
Net periodic benefit cost |
|
$ |
1,909 |
|
$ |
2,376 |
|
$ |
810 |
|
$ |
919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The average percentage of NPC net periodic costs capitalized during 2012 and 2011 was 35.6% and 37.2%, respectively. |
SPPC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits |
|
Other Postretirement Benefits |
||||||||
|
|
For the Three Months Ended March 31, |
|
For the Three Months Ended March 31, |
||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
||||
Service cost |
|
$ |
1,695 |
|
$ |
1,840 |
|
$ |
227 |
|
$ |
271 |
Interest cost |
|
|
5,043 |
|
|
5,013 |
|
|
1,283 |
|
|
1,457 |
Expected return on plan assets |
|
|
(5,937) |
|
|
(5,741) |
|
|
(941) |
|
|
(976) |
Amortization of prior service cost |
|
|
(277) |
|
|
(277) |
|
|
(1,220) |
|
|
(1,219) |
Amortization of net loss |
|
|
2,026 |
|
|
2,412 |
|
|
504 |
|
|
773 |
Net periodic benefit cost |
|
$ |
2,550 |
|
$ |
3,247 |
|
$ |
(147) |
|
$ |
306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The average percentage of SPPC net periodic costs capitalized during 2012 and 2011 was 33% and 29.3%, respectively. |
During the three months ended March 31, the company made no contributions to the pension plan and $0.9 million in contributions to the other postretirement benefits plan. At the present time, it is not anticipated that additional funding will be required for either plan in 2012 in order to meet the minimum funding level requirements defined by the Pension Protection Act of 2006. However, NVE and the Utilities have included in their 2012 assumptions funding levels similar to the 2011 funding. The amounts to be contributed in 2012 may change subject to market conditions.
26
NOTE 7. COMMITMENTS AND CONTINGENCIES
Environmental
NPC
NEICO
NEICO, a wholly-owned subsidiary of NPC, owns property in Wellington, Utah, which was the site of a coal washing and load-out facility. The site has a reclamation estimate supported by a bond of approximately $5 million with the Utah Division of Oil and Gas Mining, which management believes is sufficient to cover reclamation costs. Management is continuing to evaluate various options including reclamation and sale.
Reid Gardner Generating Station
On October 4, 2011, NPC received a request for information from the EPA-Region 9 under Section 114 of the Federal Clean Air Act requesting current and historical operations and capital project information for NPC’s Reid Gardner Generating Station located near Moapa, Nevada. NPC operates the facility and owns Units 1-3. Unit 4 of the facility is co-owned with the California Department of Water Resources. The EPA’s Section 114 information request does not allege any incidents of non-compliance at the plant. Responses were provided back to the EPA in February 2012. At this time, NPC cannot predict the impact, if any, associated with this information request.
SPPC
Valmy Generating Station
On June 22, 2009, SPPC received a request for information from the EPA-Region 9 under Section 114 of the Federal Clean Air Act requesting current and historical operations and capital project information for SPPC’s Valmy Generating Station located in Valmy, Nevada. SPPC co-owns and operates this coal-fired plant. Idaho Power Company owns the remaining 50%. The EPA’s Section 114 information request does not allege any incidents of non-compliance at the plant, and there have been no other new enforcement-related proceedings that have been initiated by the EPA relating to the plant. SPPC completed its response to the EPA in December 2009, and will continue to monitor developments relating to this Section 114 request. SPPC cannot predict the impact, if any, associated with this information request.
Other Environmental Matters
NVE and the Utilities are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal and other environmental matters. NVE and the Utilities continue to comply with these environmental commitments. As of March 31, 2012, environmental expenditures did not change materially from those disclosed in the 2011 Form 10-K.
Litigation Contingencies
NPC
Peabody Western Coal Company – Royalty Claim
NPC owns an 11% interest in the Navajo Generating Station which is located in northern Arizona and is operated by Salt River. Other participants in the Navajo Generating Station are Arizona Public Service Company, Los Angeles Department of Water and Power and Tucson Electric Power Company (together with Salt River and NPC, the “Navajo Joint Owners”). NPC also owns a 14% interest in the Mohave Generating Station which is located in Laughlin, Nevada and was operated by Southern California Edison (SCE) prior to the time it became non-operational on December 31, 2005.
In October 2004, the Navajo Generating Station’s coal supplier, Peabody Western Coal Company (Peabody WC), filed a complaint against the Navajo Joint Owners in Missouri State Court in St. Louis, alleging, among other things, a declaration that the Navajo Joint Owners are obligated to reimburse Peabody WC for any royalty, tax or other obligations arising out of a lawsuit that the Navajo Nation filed against Salt River, several Peabody Coal Company entities (including Peabody WC and collectively referred to as “Peabody”) and SCE in June 1999 in the U.S. District Court for the District of Columbia (DC Lawsuit).
The Navajo Joint Owners were first served in the Missouri lawsuit in January 2005. The operating agent for the Navajo Generating Station, Salt River, defended the suit on behalf of the Navajo Joint Owners. In July 2008, the Court dismissed all counts
27
against NPC, two without prejudice to their possible refiling at a later date. NPC is unable to predict whether any liability may arise from any of these matters, including from the ultimate outcome of the DC Lawsuit.
NPC is not a party to the DC Lawsuit although, as noted above, it is a participant in both the Navajo Generating Station and the Mohave Generating Station. The DC Lawsuit consists of various claims relating to the renegotiations of coal royalty and lease agreements and alleges, among other things, that the defendants obtained a favorable coal royalty rate for the lease agreements under which Peabody mines coal for both the Navajo Generating Station and the Mohave Generating Station by improperly influencing the outcome of a federal administrative process pursuant to which the royalty rate was to be adjusted. Initially, the DC Lawsuit sought $600 million in damages, treble damages and punitive damages of not less than $1.0 billion, and the ejection of defendants from all possessory interests and Navajo Tribal lands arising out of the primary coal lease. In July 2001, the U.S. District Court dismissed all claims against Salt River. In April 2010, the Navajo Nation amended their complaint; it no longer seeks treble damages. Factual discovery was completed in October 2010, after which the parties engaged in settlement discussions. In April 2011, SCE indicated that it reached a settlement in the DC Lawsuit in principle. On August 1, 2011, the Navajo Nation, Peabody, Salt River and SCE executed a written settlement agreement in return for dismissal of all claims by the Navajo Nation. Salt River has asked that the Navajo Joint Owners, including NPC, contribute towards the settlement based on its 11% ownership stake in the Navajo Generating Station. NPC has paid Salt River the requested contribution, which did not have a material impact on the financial statements. SCE has asked that the Mohave Joint Owners, including NPC, contribute towards the settlement based upon their ownership stake in the Mohave Generating Station. NPC has not agreed to pay SCE the requested contribution. Management is currently negotiating a settlement with SCE, but does not believe the impact of such settlement will be material to NPC at this time.
SPPC
Farad Dam
SPPC sold four hydro generating units (10.3 MW total capacity), located in Nevada and California, for $8 million to TMWA in June 2001. The Farad Hydro (2.8 MW), has been out of service since the summer of 1996 due to a collapsed flume. The current estimate to rebuild the diversion dam, if management decides to proceed, is approximately $20 million. Under the terms of the contract with TMWA, SPPC is not entitled to receive the proceeds of sale relating to Farad unless and until it has reconstructed the Farad facility in a manner reasonably acceptable to TMWA or, alternatively SPPC assigns its casualty loss claim to TMWA and TMWA is reasonably satisfied regarding its rights with respect to such claim.
SPPC filed a claim with the insurers Hartford Steam Boiler Inspection and Insurance Company and Zurich-American Insurance Company (collectively, the "Insurers") for the Farad Dam. In 2003, SPPC initiated federal court litigation against the insurers of the failed unit, who contested the extent and amount of insurance coverage. Coverage has been established through this litigation, but the matter remains pending before the Ninth Circuit Court of Appeals for determination of the amount of coverage which could range from approximately $1.3 million to the estimated cost to rebuild the diversion dam, which is estimated to be in excess of $20 million. The Ninth Circuit is expected to make a decision in 2012, which may be followed by further proceedings. Management cannot assess or predict the outcome or the impact of the court decisions at this time, but they are not expected to be material to SPPC as a whole.
Other Legal Matters
NVE and its subsidiaries, through the course of their normal business operations, are currently involved in a number of other legal actions, none of which, in the opinion of management, is expected to have a significant impact on their financial positions, results of operations or cash flows.
Other Commitments
NPC and SPPC
ON Line TUA
During the second quarter of 2011, NVE began to construct Phase 1 of ON Line, which is a joint project between the Utilities and GBT-South. Construction of Phase 1 consists of the initial 500 kV interconnection between the Robinson Summit substation on the SPPC system and the Harry Allen Generating Station on the NPC system. NVE does not anticipate that ON Line will be placed in service until the latter part of 2013. The Utilities will own a 25% interest in Phase 1 and have entered into a TUA with GBT-South for its 75% interest in Phase 1. Under the terms of the TUA, NVE’s future lease payments are adjusted for construction costs, including cost overruns; therefore, for accounting purposes NVE is treated as the owner of the construction project in accordance with Lease Accounting, The Effect of Lessee Involvement in Asset Construction of the FASC. As a result, as of March 31, 2012, NVE has
28
capitalized construction costs associated with GBT’s 75% interest of approximately $199.2 million, or $184.0 and $15.2 million at NPC and SPPC, respectively, in CWIP with a corresponding credit to other deferred liabilities.
NOTE 8. EARNINGS PER SHARE (NVE)
The difference, if any, between basic EPS and diluted EPS is due to potentially dilutive common shares resulting from stock options, the employee stock purchase plan, performance and restricted stock plans, and the non-employee director stock plan.
|
|
|
|
Three Months Ended March 31, |
|
||||
|
|
|
|
2012 |
|
2011 |
|
||
|
Basic EPS |
|
|
|
|
|
|
||
|
|
Numerator ($000) |
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
12,173 |
|
$ |
2,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
235,999,750 |
|
|
235,526,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Amounts |
|
|
|
|
|
|
|
|
|
|
Net Income per share - basic |
$ |
0.05 |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
|
|
||
|
|
Numerator ($000) |
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
12,173 |
|
$ |
2,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator(1) |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding before dilution |
|
235,999,750 |
|
|
235,526,425 |
|
|
|
|
Stock options |
|
35,283 |
|
|
33,399 |
|
|
|
|
Non-Employee Director stock plan |
|
153,686 |
|
|
163,902 |
|
|
|
|
Employee stock purchase plan |
|
10,888 |
|
|
14,345 |
|
|
|
|
Restricted Shares |
|
497,750 |
|
|
101,240 |
|
|
|
|
Performance Shares |
|
829,506 |
|
|
945,347 |
|
|
|
Diluted Weighted Average Number of Shares |
|
237,526,863 |
|
|
236,784,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Amounts |
|
|
|
|
|
|
|
|
|
|
Net Income per share - diluted |
$ |
0.05 |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The denominator does not include stock equivalents for options issued under the non-qualified stock option plan due to conversion prices being higher than market prices for all periods. If the conditions for conversion were met under this plan, 466,183 and 581,757 shares would be included for the three months ended March 31, 2012 and 2011, respectively. |
||||||||
|
|||||||||
|
Dividends
The following dividend declarations were made by the BOD of NVE:
|
Declaration Date |
|
|
Amount Per Share |
|
Payable Date |
|
Shareholders of Record Date |
|
|
|
|
|
|
|
|
|
|
|
|
May 7, 2012 |
|
$ |
0.17 |
|
June 20, 2012 |
|
June 5, 2012 |
|
On May 7, 2012, NPC declared dividends to NVE for $40 million.
29
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements and Risk Factors
The information in this Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters.
Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “objective” and other similar expressions identify those statements that are forward-looking. These statements are based on management’s beliefs and assumptions and on information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such statements, factors that could cause the actual results of NVE, NPC or SPPC (NPC and SPPC are collectively referred to as the “Utilities”) to differ materially from those contemplated in any forward-looking statement include, among others, the following:
(1) |
economic conditions, inflation rates, monetary policy, unemployment rates, customer bankruptcies, including major gaming customers with significant debt maturities, weaker housing markets, a decrease in tourism, each of which affect customer growth, customer collections, customer demand and usage patterns; |
(2) |
changes in the rate of industrial, commercial and residential growth in the service territories of the Utilities, and the impact of energy conservation programs, which could affect the Utilities’ ability to accurately forecast electric and gas demand; |
(3) |
construction risks, including but not limited to those associated with ON Line, such as difficulty in securing adequate skilled labor, cost and availability of materials and equipment, third-party disputes, equipment failure, engineering and design failure, work accidents, fire or explosions, business interruptions, possible cost overruns, delay of in-service dates, and pollution and environmental damage; |
(4) |
unseasonable or severe weather, drought, wildfire and other natural phenomena, which could affect the Utilities’ customers’ demand for power, seriously impact the Utilities’ ability and/or cost to procure adequate supplies of fuel or purchased power, affect the amount of water available for electric generating plants in the southwestern U.S., and could have other adverse effects on our business; |
(5) |
changes in and/or implementation of environmental laws or regulations, including the imposition of limits on emissions of carbon or other pollutants from electric generating facilities, which could significantly affect the Utilities existing operations as well as our construction program; |
(6) |
security breaches of our information technology or supervising control and data systems, or the systems of others upon which the Utilities rely, whether through cyber-attack, cyber-crime, sabotage, accident or other means, which may affect our ability to prevent system or service disruptions, generating facility shutdowns or disclosure of confidential corporate or customer information; |
(7) |
unfavorable rulings in rate or other cases filed or to be filed by the Utilities with the PUCN, including, GRCs, the periodic applications to recover costs for fuel and purchased power that have been recorded by the Utilities in their deferred energy accounts, deferred natural gas costs recorded by SPPC for its gas distribution business, renewable energy and energy efficiency recovery programs; |
(8) |
whether the Utilities will be able to continue to obtain fuel and power from their suppliers on favorable payment terms and favorable prices, particularly in the event of unanticipated power demands, current suspension of their hedging programs, physical availability, sharp increases in the prices for fuel (including increases in long-term transportation costs) and/or power, or a ratings downgrade; |
(9) |
employee workforce factors, changes in and renewals of collective bargaining unit agreements, strikes or work stoppages, an aging workforce, the ability to adjust the labor cost structure to changes in growth within our service territories; |
(10) |
whether the Utilities’ newly installed advanced metering system will integrate with other computer information systems, perform as expected, and in all other respects, meet operational, commercial and regulatory requirements; |
30
(11) |
changes in and/or implementation of FERC and NERC mandatory reliability, security, and other requirements for system infrastructure, which could significantly affect existing and future operations; |
(12) |
wholesale market conditions, including availability of power on the spot market and the availability to enter into commodity financial hedges with creditworthy counterparties, including the impact as a result of the Dodd-Frank Act on counterparties who are lenders under our revolving credit facilities, which may affect the prices the Utilities have to pay for power as well as the prices at which the Utilities can sell any excess power; |
(13) |
explosions, fires, accidents and mechanical breakdowns that may occur while operating and maintaining an electric and natural gas system in the Utilities’ service territory that can cause unplanned outages, reduce generating output, damage the Utilities’ assets or operations, subject the Utilities to third-party claims for property damage, personal injury or loss of life, or result in the imposition of civil, criminal, or regulatory fines or penalties on the Utilities; |
(14) |
the effect of existing or future Nevada, or federal laws or regulations affecting the electric industry, including those which could allow additional customers to choose new electricity suppliers, or use alternative sources of energy, or change the conditions under which they may do so; |
(15) |
the ability and terms upon which NVE, NPC and SPPC will be able to access the capital markets to support their capital needs, particularly in the event of: volatility in the global credit markets as a result of the viability of European sovereign debt or other problems, changes in availability and cost of capital either due to market conditions or as a result of unfavorable rulings by the PUCN, a downgrade of the current debt ratings of NVE, NPC or SPPC, and/or interest rate fluctuations; |
(16) |
whether NVE's BOD will declare NVE's common stock dividends based on the BOD’s periodic consideration of factors ordinarily affecting dividend policy, such as current and prospective financial condition, earnings and liquidity, prospective business conditions, regulatory factors, and restrictions in NVE's and the Utilities' agreements; |
(17) |
whether the Utilities will be able to continue to pay NVE dividends under the terms of their respective financing and credit agreements and limitations imposed by the Federal Power Act; |
(18) |
whether the Utilities can procure, obtain, and/or maintain sufficient renewable energy sources in each compliance year to satisfy the Portfolio Standard in the State of Nevada; |
(19) |
the extent to which NVE or the Utilities incurs costs in connection with third-party claims or litigation that are not recoverable through insurance, rates, or from other third parties; |
(20) |
changes in the business of the Utilities’ major customers engaged in gold mining or gaming, including availability and cost of capital or power demands, which may result in changes in the demand for the Utilities’ services, including the effect on the Nevada gaming industry from the opening of additional gaming establishments in other states and internationally; |
(21) |
further increases in the unfunded liability or changes in actuarial assumptions, the interest rate environment and the actual return on plan assets for our pension and other postretirement plans, which can affect future funding obligations, costs and pension and other postretirement plan liabilities; |
(22) |
the effect that any future terrorist attacks, wars, threats of war or pandemics may have on the tourism and gaming industries in Nevada, particularly in Las Vegas, as well as on the national economy in general; |
(23) |
changes in tax or accounting matters or other laws and regulations to which NVE or the Utilities are subject or which change the rate of federal or state taxes payable by our shareholders or common stock dividends; |
(24) |
whether, following the Great Basin Water Network, et al. v. Nevada State Engineer litigation, certain permitted water rights of the SNWA that are used to supply water to the Utilities’ power production plants and service territories could be re-opened, which could adversely impact the operations of those plants and future growth and customer usage patterns; and |
(25) |
unusual or unanticipated changes in normal business operations, including unusual maintenance or repairs. |
31
Other factors and assumptions not identified above may also have been involved in deriving forward-looking statements, and the failure of those other assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected. NVE, NPC and SPPC assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking statements.
NOTE REGARDING RELIANCE ON STATEMENTS IN OUR CONTRACTS
In reviewing the agreements filed as exhibits to this Quarterly Report on Form 10-Q, please remember that they are filed to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about NVE, the Utilities or the other parties to the agreements. The agreements contain representations and warranties by each of the parties that are specific to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
• |
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties to the agreement if those statements prove to be inaccurate; |
• |
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
• |
may apply standards of materiality in a way that is different from what may be viewed as material to investors; and |
• |
were made only as of the date of the applicable agreement or such other date or dates as may be specified in such agreements and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
NOTE REGARDING STATISTICAL DATA
The statistical data used throughout this 10-Q, other than data relating specifically to NVE and its subsidiaries, are based upon independent industry publications, government publications, reports by market research firms or other published independent sources. NVE and the Utilities did not commission any of these publications or reports. These publications generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy or completeness of such information. While NVE and the Utilities believe that each of these studies and publications is reliable, NVE and the Utilities have not independently verified such data and make no representation as to the accuracy of such information.
32
EXECUTIVE OVERVIEW
Management’s Discussion and Analysis of Financial Condition and Results of Operations explains the general financial condition and the results of operations of NVE and its two primary subsidiaries, NPC and SPPC, collectively referred to as the “Utilities” (references to “we,” “us” and “our” refer to NVE and the Utilities collectively), and includes discussion of the following:
• |
|
Critical Accounting Policies and Estimates: |
||
|
• |
|
|
Recent Pronouncements |
|
|
|
||
• |
|
For each of NVE, NPC and SPPC: |
||
|
• |
|
|
Results of Operations |
|
• |
|
|
Analysis of Cash Flows |
|
• |
|
|
Liquidity and Capital Resources |
NVE’s Utilities operate three regulated business segments which are NPC electric, SPPC electric and SPPC natural gas. The Utilities are public utilities engaged in the generation, transmission, distribution and sale of electricity and, in the case of SPPC, sale of natural gas. Other operations consist mainly of unregulated operations and the holding company operations. The Utilities are the principal operating subsidiaries of NVE and account for substantially all of NVE’s assets and revenues. NVE, NPC and SPPC are separate filers for SEC reporting purposes and as such this discussion has been divided to reflect the individual filers (NVE, NPC and SPPC), except for discussions that relate to all three entities or the Utilities.
NVE recognized net income of $12.2 million for the three months ended March 31, 2012, compared to net income of $2.3 million for the same period in 2011. The increase is primarily due to an increase in gross margin. The increase in gross margin is primarily due to increased BTGR rates, effective January 1, 2012, as a result of NPC’s 2011 GRC. The increase was partially offset by an increase in depreciation and a reduction in AFUDC primarily due to the completion of the Harry Allen Generating Station in May 2011, which is now included in rates. See Note 3, Regulatory Actions, of the Notes to Financial Statements in the 2011 Form 10-K for further discussion of NPC’s 2011 GRC.
The Utilities are regulated by the PUCN. The FERC has jurisdiction under the Federal Power Act with respect to wholesale rates, service, interconnection, accounting, and other matters in connection with the Utilities’ sale of electricity for resale and interstate transmission. The FERC also has jurisdiction over the natural gas pipeline companies from which the Utilities take service. As a result of regulation, many of the fundamental business decisions of the Utilities, as well as the ROR they are permitted to earn on their utility assets, are subject to the approval of governmental agencies.
The Utilities’ revenues and operating income are subject to fluctuations during the year due to impacts that seasonal weather, rate changes, and customer usage patterns have on demand for electric energy and resources. NPC is a summer peaking utility experiencing its highest retail energy sales in response to the demand for air conditioning. SPPC’s electric system peak typically occurs in the summer, while its gas business typically peaks in the winter. The variations in energy usage due to varying weather, customer growth and other energy usage patterns, including energy efficiency and conservation measures, which necessitates a continual balancing of loads and resources and purchases and sales of energy under short and long term contracts. As a result, the prudent management and optimization of available resources has a direct effect on the operating and financial performance of the Utilities. Additionally, the timely recovery of purchased power and fuel costs, and other costs, and the ability to earn a fair return on investments are essential to the operating and financial performance of the Utilities.
Future Challenges
In 2012, NVE and the Utilities must continue to balance the needs of our customers and regulatory requirements while still providing value to our shareholders. As customer growth and demand have stabilized, the Utilities are transitioning from an emphasis on capital investment to an emphasis on optimizing our assets and resources. The Utilities believe they are entering a period of decreasing need for rate relief, more stable earnings, improving returns and sustained free cash flow. We expect that this transition will allow NVE to build shareholder value through a combination of increasing its common stock dividend payout ratio, strengthening its capital structure and considering new investment opportunities. As a result, on May 7, 2012, the BOD voted to increase the quarterly dividend to $0.17 per share, and approved a dividend policy which targets a dividend payout ratio of 55% to 65%. However, this transition may be affected by certain challenges including:
|
• |
Economic conditions in Nevada; |
|
|
• |
Executing the evolution of energy strategy; and |
|
|
• |
Managing our regulatory environment. |
|
33
Economic Conditions
Economic conditions in Nevada are beginning to stabilize; however, leading economic indicators for Nevada and Southern Nevada suggest that improvements in economic conditions will be very slow. Although the unemployment rate in Nevada remains above the national average, it has improved over the past year.
Economic conditions in Nevada have significant influence on NVE’s business decisions as we consider various interrelated factors including:
|
• |
customer growth; |
|
• |
customer usage; |
|
• |
load factors; |
|
• |
managing operating and maintenance expenses within projected revenue without compromising safety, reliability and efficiency; |
|
• |
pressure on regulators to limit necessary rate increases or otherwise lessen rate impacts upon customers; |
|
• |
collections on accounts receivable; and |
|
• |
future capital projects and capital requirements. |
Executing the Evolution of the Energy Strategy
As discussed in their 2011 Form 10-K, NVE and the Utilities have transitioned from their three part energy strategy to the evolution of energy strategy outlined below, with less emphasis on capital investment to more emphasis on optimizing our assets and resources.
Evolution of Energy Strategy:
|
• |
Empower customers through more focused energy efficiency programs |
|
• |
Pursue cost-effective renewable energy initiatives |
|
• |
Optimize generation efficiency and transmission facilities |
|
• |
Engage employees to improve processes, reduce costs, and enhance performance |
Empower customers through more focused energy efficiency programs
The Utilities will continue with the implementation of NV Energize which not only provides metering and customer service operating savings, but will also provide customers with better opportunities to become more energy efficient. NVE’s traditional conservation and energy efficiency programs, which have focused on behavioral change and technology replacement, will be enhanced by the new features enabled by NV Energize. Customers will have access to better information to help them manage their usage and select from enhanced energy efficiency options, including demand response and pricing programs. NVE has installed approximately 800,000 Smart Meters in southern Nevada and expects to have 1.4 million installed statewide by the end of 2012. The NV Energize capabilities will allow NVE to help customers implement the most cost-effective mix of energy efficiency and conservation options that will also qualify toward fulfillment of the Portfolio Standard.
Pursue cost-effective renewable energy initiatives
NVE must strive to effectively balance the need to meet the Portfolio Standard, with the changes in load forecast and the uncertainty of renewable energy project development, either for financial or resource related reasons. In 2011, Nevada’s Portfolio Standard was 15%. Both NPC and SPPC surpassed the minimum requirement delivering 16.7% and 24.9%, respectively. This represented the culmination of several years of developing a portfolio of diverse renewable resources throughout Nevada. While NVE is better positioned to meet the continued challenge based on recent renewable successes, NVE remains committed to incorporating clean, cost-effective renewable energy into its portfolio. As part of this continued commitment, NVE will continue to seek the best and most cost effective opportunities that will benefit our state, customers and environment. Depending on its needs and continuous analysis of the existing portfolio, NVE has a number of tools available to seek renewable energy values for our customers. These tools may include issuing requests for proposals for new renewable energy contracts, exploring opportunities to either jointly construct or develop projects using wind, geothermal and solar, undertaking additional short-term purchases from existing renewable facilities and restructuring existing renewable relationships for the benefit of our customers.
The Portfolio Standard requires a specific percentage of an electric service provider’s total retail energy sales to be obtained from renewable energy resources. Renewable resources include biomass, geothermal, solar, waterpower, wind and qualified recovered energy generation projects. In addition, the Portfolio Standard allows energy efficiency measures from qualified conservation programs to meet up to 25% of the portfolio percentage. In 2012, the Utilities are required to obtain an amount of PECs equivalent to
34
15% of their total retail energy from renewables. Currently, the Portfolio Standard increases to 18% for 2013 and 2014, to 20% in 2015, after which it increases to 22% for the years 2020 through 2024, and to 25% for 2025 and beyond. Moreover, not less than 5% of the total Portfolio Standard must be satisfied from solar resources until 2016 when a minimum of 6% must be solar.
The Utilities acquire PECs through competitively-priced purchase power contracts, investments in renewable generating facilities and DSM programs. NVE seeks to meet the standard using the most cost-effective means for our customers and to pursue the best-value options that are available to the Utilities. In addition to the foregoing, this may also include economical short-term purchases of PECs (usually from outside of Nevada) to fulfill projected shortfalls due to the attrition or timing of development of renewable energy projects, weather variability or other supplier issues.
Optimize generation efficiency and transmission facilities
Since 2006, when NVE began its energy independence initiative, we have added over 3,800 MWs (nominally rated) of internal generation and, with the completion of Harry Allen Generating Station, NVE has the ability to obtain approximately 80% of its energy from internal generation. In 2012, NVE’s management continues to strive to optimize the Utilities’ energy portfolio in order to meet load obligations in a cost effective and reliable manner. In addition, to the extent the Utilities have the economical opportunity to sell excess capacity or energy, they may enter into such transactions to reduce overall energy costs. NVE anticipates it will have sufficient resources to meet its forecasted load requirements for 2012. However, resource adequacy could be affected by a number of factors, including the retirement of generating stations, plant outages, the timing of commercial operation of renewable energy projects and associated purchase power agreements, customer behavior with respect to energy efficiency and conservation programs, and environmental regulations which may limit our ability to operate certain generating units.
The construction of the ON Line will enable us to optimize our transmission capabilities. Upon completion, the ON Line will connect NVE’s southern and northern service territories and, pending certain state and federal regulatory approvals, will provide the ability to jointly dispatch energy throughout the state and provide access to renewable energy resources in parts of northern and eastern Nevada, which will enhance NVE’s ability to manage its Portfolio Standard, discussed above, and optimize its generating facilities.
ON Line is Phase 1 of a Joint Project between the Utilities and GBT-South. The Joint Project consists of two phases. In Phase 1 of the Joint Project, the parties would complete construction of a 500 kV interconnection between the Robinson Summit substation on the SPPC system and the Harry Allen substation on the NPC system. The Utilities own a 25% interest in ON Line and have entered into a TUA with GBT-South for its 75% interest in ON Line. The Utilities’ 25% interest in ON Line, which approximates $127 million, will be allocated 95% and 5% to NPC and SPPC, respectively. The Utilities will have rights to 100% of the capacity of ON Line, which is estimated to be approximately 600 MW. If GBT elects to construct Phase 2, it would construct two additional transmission segments at either end of ON Line: one extending from Robinson Summit north to Midpoint, Idaho, and the other commencing at the Harry Allen substation and interconnecting south to the Eldorado substation. GBT would pay for and own 100% of Phase 2 facilities. However, NPC and SPPC would have rights to additional transmission capacity from Midpoint to Eldorado (for a total of approximately 760 MW based on a rating of 2,000 MW for the complete path).
In March 2012, NVE announced that the in service date for the ON Line will be delayed due to on-going efforts to address wind-related damage sustained by some of the tower structures erected for the project. As a result, NVE is also further delaying the merger application of the Utilities. At this time, NVE does not anticipate that ON Line will be placed in service until the latter half of 2013.
Engage employees to improve processes, reduce costs, and enhance performance
The Utilities will continue to control operating, maintenance and capital costs through diligent review and process improvement initiatives by providing appropriate tools to our employees to find ways to reduce costs, improve processes, and enhance performance. This is particularly important at a time when customer growth is low. Going forward this will continue to be an over-arching theme of our energy strategy. Our goal is to maintain, reduce, or eliminate upward pressure on our customers’ prices while always delivering safe and reliable energy and assure compliance with all laws and regulations.
Managing Regulatory Environment
The Utilities’ most recent GRC’s provide an opportunity to earn a 10% ROE and 10.1% ROE for NPC and SPPC, respectively. However, assets not currently included in rate base or that the Utilities are not allowed to earn a return, affect their ability to achieve their allowed ROE. See Note 3, Regulatory Actions, of the Notes to Financial Statements in the 2011 Form 10-K, for details of regulatory assets not included in rate base or not earning a return. Other items which may not earn a return are certain plant assets completed between GRC filings or that were not requested in a GRC. The Utilities are required to file rate cases every three years to adjust general rates in order to recover their cost of service and return on investment. In addition, the Utilities are
35
required to file a triennial IRP which is a comprehensive plan that considers customer energy requirements and proposes the resources to meet that requirement. Historically, resource additions approved by the PUCN in the resource planning process are deemed prudent for ratemaking purposes. Between IRP filings, the Utilities may seek PUCN approval for modifications to their resource plans and for power purchases. The Utilities remain focused on communicating with regulators the necessity of investments to better serve our customers, the prudency of the costs incurred, and the importance of a reasonable return on investment for our shareholders. In 2012, the Utilities will continue to focus on reducing regulatory lag and stabilizing cash flow by filing quarterly applications to reset the BTER and DEAA rates. Furthermore, the Utilities will file annual EEIR and EEPR base rate and amortization applications in an effort to recover these amounts in a timely manner.
2012 Goals
Management cannot predict when economic recovery may occur in Nevada, but expects that the Nevada economy will continue to struggle for the next several years. As such, our primary goals will focus on meeting the challenges discussed above by:
|
• |
Effectively adjusting our business decisions based on economic conditions in Nevada; |
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|
• |
Building a sustainable foundation for future requirements by executing our evolution of energy strategy: |
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|
|
• |
Continuing to meet system deployment milestones in order to achieve NV Energize project completion by 2012; |
|
|
• |
Empower customers through more focused energy efficiency programs; |
|
|
• |
Pursue cost effective renewable energy initiatives; |
|
|
• |
Continued investment in cost effective energy efficiency and conservation programs; |
|
|
• |
Optimizing the use of generation facilities; |
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|
• |
Construction of ON Line; |
|
|
• |
Engage employees to improve processes, reduce costs, enhance performance; and |
|
• |
Managing our regulatory environment. |
NV ENERGY, INC.
NV Energy, Inc. and Other Subsidiaries
NVE (Holding Company)
The operating results of NVE primarily reflect those of NPC and SPPC, discussed later. The holding company’s (stand alone) operating results included approximately $6.3 million and $8.2 million of long term debt interest costs for the three months ended March 31, 2012 and 2011, respectively.
For the period ended March 31, 2012, NPC and SPPC paid $39 million and $20 million respectively in dividends to NVE.
On May 7, 2012, NPC declared dividends of $40 million.
Other Subsidiaries
Other subsidiaries of NVE, except for NPC and SPPC, did not contribute materially to the consolidated results of operations of NVE.
ANALYSIS OF CASH FLOWS
NVE’s cash flows decreased during the three months ended March 31, 2012, compared to the same period in 2011, due to a decrease in cash from operating and investing activities, offset partially by a reduction in cash used by financing activities.
Cash From Operating Activities. The decrease in cash from operating activities was primarily due to quarterly BTER adjustments and negative DEAA rates to refund prior period over collected balances to customers. Also contributing to this decrease was a change in payment terms with energy counterparties from weekly to monthly settlements in mid-2011, expiration of rates to collect the deferred rate increase from NPC’s 2008 GRC, timing of property tax payments and open market purchases of common stock to settle stock awards. These decreases were partially offset by higher BTGR rates resulting from NPC’s 2011 GRC, EEIR, over collections under the EEPR, a reduction in employee incentive pay and a reduction in purchases of coal for the Valmy Generating Station.
36
Cash From Investing Activities. The change in cash from investing activities was primarily due to the receipt of proceeds from the sale of California Assets in 2011 and a decrease in the use of cash as a result of a decrease in construction activity primarily for the Harry Allen Generating Station expansion.
Cash Used By Financing Activities. Cash used by financing activities decreased due to the repayment of draws under SPPC’s revolving credit facility in 2011 and a draw on NPC’s revolving credit facility in 2012.
LIQUIDITY AND CAPITAL RESOURCES (NVE CONSOLIDATED)
Overall Liquidity
NVE’s consolidated operating cash flows are primarily derived from the operations of NPC and SPPC. The primary source of operating cash flows for the Utilities is revenues (including the recovery of previously deferred energy costs and natural gas costs) from sales of electricity and, in the case of SPPC, natural gas. Significant uses of cash flows from operations include the purchase of electricity and natural gas, other operating expenses, capital expenditures and interest. Another significant use of cash is the refunding of previously over-collected amounts from customers. Operating cash flows can be significantly influenced by factors such as weather, regulatory outcomes, and economic conditions. Available liquidity as of March 31, 2012 was as follows (in millions):
|
Available Liquidity as of March 31, 2012 (in millions) |
|
||||||||||||
|
|
|
|
|
|
NVE |
|
NPC |
|
SPPC |
|
|||
|
Cash and Cash Equivalents |
|
$ |
33.4 |
|
$ |
38.7 |
|
$ |
23.9 |
|
|||
|
|
Balance available on Revolving Credit Facilities(1) |
|
|
N/A |
|
|
464.4 |
|
|
239.5 |
|
||
|
|
|
Less Reduction for Hedging Transactions(2) |
|
|
N/A |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
$ |
33.4 |
|
$ |
503.1 |
|
$ |
263.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As of May 7, 2012, NPC and SPPC had approximately $359.4 million and $239.5 million available under their revolving credit facilities, which includes reductions for letters of credit and hedging transactions, as discussed further under NPC's and SPPC's Financing Transactions. |
|||||||||||
|
|
|
||||||||||||
|
(2) |
|
Reduction for hedging transactions reflects balances as of February 29, 2012. NPC and SPPC are currently unhedged. |
|
NVE and the Utilities attempt to maintain their cash and cash equivalents in highly liquid investments, such as U.S. Treasury Bills and bank deposits. In addition to cash on hand, the Utilities may use their revolving credit facilities in order to meet their liquidity needs. Alternatively, depending on the usage of their revolving credit facilities, the Utilities may issue debt, subject to certain restrictions as discussed in Factors Affecting Liquidity, Ability to Issue Debt, below.
NVE has no debt maturities in either 2012 or 2013. In April 2012, NPC used $120 million from its revolving credit facility along with cash on hand to pay for the maturity of its General and Refunding Mortgage Notes, Series I, in an aggregate principal amount of $130 million. NPC does not have any other debt maturities in 2012; however, NPC is required to redeem approximately $98.1 million of its variable rate debt, due 2020, prior to ON Line’s commercial operation date, expected in late 2013. SPPC has no debt maturities in 2012. However, SPPC’s $250 million 5.45% General and Refunding Notes, Series Q, will mature on September 1, 2013.
In prior years, NVE and the Utilities required significant amounts of liquidity due to the magnitude of capital expenditures needed to support a growing customer base and to support unstable energy markets. As NVE and the Utilities transition to more steady growth the amount of capital expenditures is expected to decline significantly. Additionally, NVE’s and the Utilities’ investment in generating stations in the past several years and more stable energy markets have positioned the Utilities to better manage and optimize their resources. As a result, NVE and the Utilities anticipate that they will be able to meet short term operating costs and capital expenditures with internally generated funds and the use of the Utilities revolving credit facilities. Furthermore, with new investments now in rates, the decrease of hedging costs, more current rate recovery of deferred energy costs, various rate reset mechanisms, current federal tax NOL and a decrease in capital expenditures, NVE and the Utilities expect to generate free cash flow. The free cash flow may be used to reduce debt, increase dividend payout and for potential investment opportunities. To meet long term maturing debt obligations, the Utilities may use a combination of internally generated funds, the Utilities’ revolving credit facilities, the issuance of long-term debt and/or equity and, in the case of the Utilities, capital contributions from NVE.
However, if energy costs rise at a rapid rate, or the Utilities were to experience a credit rating downgrade resulting in the posting of collateral as discussed below under Gas Supplier Matters and Financial Gas Hedges, the amount of liquidity available to the Utilities could be significantly less. In order to maintain sufficient liquidity under such circumstances, NVE and the Utilities may be required to delay capital expenditures, re-finance debt or issue equity at NVE.
37
The ability to issue debt, as discussed later, is subject to certain covenant calculations which include net income of NVE and the Utilities. As a result of these covenant calculations and the seasonality of the Utilities’ business, the ability to issue debt can vary from quarter to quarter and the Utilities’ utilization of their revolving credit facilities may be limited. Additionally, disruptions in the banking and capital markets not specifically related to NVE or the Utilities may affect their ability to access funding sources or cause an increase in the interest rates paid on newly issued debt.
As of May 7, 2012, NVE has approximately $22.9 million payable of debt service obligations remaining for 2012, which it intends to pay through dividends from subsidiaries. (See Factors Affecting Liquidity-Dividends from Subsidiaries, below). For the three months ended, March 31, 2012, NPC and SPPC paid dividends to NVE of approximately $39 million and $20 million, respectively. On May 7, 2012, NPC declared dividends payable to NVE of $40 million.
NVE designs operating and capital budgets to control operating costs and capital expenditures. In addition to operating expenses, NVE has continuing commitments for capital expenditures for construction, environmental compliance, improvement and maintenance of facilities.
During the three months ended March 31, 2012, there were no material changes to contractual obligations as set forth in NVE’s 2011 Form 10-K.
Factors Affecting Liquidity
Ability to Issue Debt
Certain debt of NVE (holding company) places restrictions on debt incurrence and liens, unless, at the time the debt is incurred, the ratio of cash flow to fixed charges for NVE’s (consolidated) most recently ended four-quarter period on a pro forma basis is at least 1.50 to 1.00 and the ratio of consolidated total indebtedness to consolidated capitalization does not exceed .70 to 1.00. Under these covenant restrictions, as of March 31, 2012, NVE (consolidated) would be allowed to incur up to $2.7 billion of additional indebtedness. The amount of additional indebtedness allowed would likely be impacted if there is a change in current market conditions or material change in our financial condition. NPC’s and SPPC’s Ability to Issue Debt sections further discuss their limitations on their ability to issue debt.
Effect of Holding Company Structure
As of March 31, 2012, NVE (on a stand-alone basis) had outstanding debt and other obligations including, but not limited to: $195 million Term Loan due 2014; and $315 million of its unsecured 6.25% Senior Notes due 2020.
Due to the holding company structure, NVE’s right as a common shareholder to receive assets of any of its direct or indirect subsidiaries upon a subsidiary’s liquidation or reorganization is junior to the claims against the assets of such subsidiary by its creditors. Therefore, NVE’s debt obligations are effectively subordinated to all existing and future claims of the creditors of NPC and SPPC and its other subsidiaries, including trade creditors, debt holders, secured creditors, taxing authorities and guarantee holders.
As of March 31, 2012, NVE, NPC, SPPC and their subsidiaries had approximately $5.2 billion of debt and other obligations outstanding, consisting of approximately $3.5 billion of debt at NPC, approximately $1.2 billion of debt at SPPC and approximately $510 million of debt at the holding company and other subsidiaries. Although NVE and the Utilities are parties to agreements that limit the amount of additional indebtedness they may incur, NVE and the Utilities retain the ability to incur substantial additional indebtedness and other liabilities.
Dividends from Subsidiaries
Since NVE is a holding company, substantially all of its cash flow is provided by dividends paid to NVE by NPC and SPPC on their common stock, all of which is owned by NVE. Since NPC and SPPC are public utilities, they are subject to regulation by state utility commissions, which impose limits on investment returns or otherwise impact the amount of dividends that the Utilities may declare and pay.
In addition, certain agreements entered into by the Utilities set restrictions on the amount of dividends they may declare and pay and restrict the circumstances under which such dividends may be declared and paid. As a result of the Utilities’ credit rating on their senior secured debt being rated investment grade by S&P and Moody’s, these restrictions are suspended and no longer in effect so long as such debt remains investment grade by both rating agencies. In addition to the restrictions imposed by specific agreements, the Federal Power Act prohibits the payment of dividends from “capital accounts.” Although the meaning of this provision is unclear, the Utilities believe that the Federal Power Act restriction, as applied to their particular circumstances, would not be construed or applied by the FERC to prohibit the payment of dividends for lawful and legitimate business purposes from current year earnings, or
38
in the absence of current year earnings, from other/additional paid-in capital accounts. If, however, the FERC were to interpret this provision differently, the ability of the Utilities to pay dividends to NVE could be jeopardized.
Credit Ratings
The liquidity of NVE and the Utilities, the cost and availability of borrowing by the Utilities under their respective credit facilities, the potential exposure of the Utilities to collateral calls under various contracts and the ability of the Utilities to acquire fuel and purchased power on favorable terms are all directly affected by the credit ratings for the companies’ debt. NPC’s and SPPC’s senior secured debt is rated investment grade by three NRSRO’s: Fitch, Moody’s and S&P. As of March 31, 2012, the ratings are as follows:
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|
Rating Agency |
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||||
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|
|
|
Fitch(1) |
|
Moody’s(2) |
|
S&P(3) |
|
|
NVE |
|
Sr. Unsecured Debt |
|
BB |
|
Ba2 |
|
BB+ |
|
|
NPC |
|
Sr. Secured Debt |
|
BBB* |
|
Baa2* |
|
BBB* |
|
|
SPPC |
|
Sr. Secured Debt |
|
BBB* |
|
Baa2* |
|
BBB* |
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Investment grade |
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|
|
|
|
(1) |
Fitch’s lowest level of “investment grade” credit rating is BBB-. |
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|
(2) |
Moody’s lowest level of “investment grade” credit rating is Baa3. |
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|||||||
|
(3) |
S&P’s lowest level of “investment grade” credit rating is BBB-. |
|
Fitch’s, Moody’s and S&P’s rating outlook for NVE, NPC and SPPC is Stable.
A security rating is not a recommendation to buy, sell or hold securities. Security ratings are subject to revision and withdrawal at any time by the assigning rating organization. Each security rating agency has its own methodology for assigning ratings, and, accordingly, each rating should be evaluated in the context of the applicable methodology, independently of all other ratings. The rating agencies provide ratings at the request of the company being rated and charge the company fees for their services.
Energy Supplier Matters
With respect to NPC’s and SPPC’s contracts for purchased power, NPC and SPPC purchase and sell electricity with counterparties under the WSPP agreement, an industry standard contract that NPC and SPPC use as members of the WSPP. The WSPP contract is posted on the WSPP website.
Under these contracts, a material adverse change, which includes a credit rating downgrade of NPC and SPPC, may allow the counterparty to request adequate financial assurance, which, if not provided within three business days, could cause a default. Most contracts and confirmations for purchased power have been modified or separate agreements have been made to either shorten the normal payment due date or require payment in advance of delivery in response to requests for financial assurance. A default must be declared within 30 days of the event, giving rise to the default becoming known. A default will result in a termination payment equal to the present value of the net gains and losses for the entire remaining term of all contracts between the parties aggregated to a single liquidated amount due within three business days following the date the notice of termination is received. The mark-to-market value, which is substantially based on quoted market prices, can be used to roughly approximate the termination payment and benefit at any point in time. The net mark-to-market value as of March 31, 2012 for all suppliers continuing to provide power under a WSPP agreement would approximate a $36.5 million payment or obligation to NPC. No amounts would be due to or from SPPC. These contracts qualify for the normal purchases scope exception under the Derivatives and Hedging Topic of the FASC, and as such, are not required to be marked-to-market on the balance sheet. Refer to Note 9, Derivatives and Hedging Activities, of the Notes to Financial Statements in the 2011 Form 10-K for further discussion.
Gas Supplier Matters
With respect to the purchase and sale of natural gas, NPC and SPPC use several types of standard industry contracts. The natural gas contract terms and conditions are more varied than the electric contracts. Consequently, some of the contracts contain language similar to that found in the WSPP agreement and other agreements have unique provisions dealing with material adverse changes, which primarily means a credit rating downgrade below investment grade. Most contracts and confirmations for natural gas purchases have been modified or separate agreements have been made to either shorten the normal payment due date or require payment in advance of delivery in response to requests for financial assurances. Forward physical gas supplies are purchased under index based pricing terms and as such do not carry forward mark-to-market exposure.
39
Gas transmission service is secured under FERC tariffs or custom agreements. These service contracts and tariffs require the user to establish and maintain creditworthiness to obtain service or otherwise post cash or a letter of credit to be able to receive service. Service contracts are subject to FERC approved tariffs, which, under certain circumstances, require the Utilities to provide collateral to continue receiving service. NPC has a transmission counterparty for which it is required to post cash collateral or a letter of credit in the event of credit rating downgrades. As of March 31, 2012, the maximum amount of additional collateral NPC would be required to post under these contracts in the event of credit rating downgrades was approximately $54.3 million. Of this amount, approximately $19.6 million would be required if NPC’s Senior Unsecured ratings are rated below BB (S&P) or Ba3 (Moody’s) and an additional amount of approximately $34.7 million would be required if NPC’s Senior Secured ratings are downgraded to below investment grade.
Financial Gas Hedges
The Utilities may enter into certain hedging contracts with various counterparties to manage the gas price risk inherent in purchased power and fuel contracts. As discussed under NPC’s and SPPC’s Financing Transactions, the availability under NPC’s and SPPC’s Credit Agreement is reduced for net negative mark-to-market positions on hedging contracts with counterparties who are lenders under the revolving credit facilities, provided that the reduction of availability under the revolving credit facilities shall at no time exceed 50% of the total commitments then in effect under the credit facilities. As a result of the suspension of the Utilities hedging programs, there was no negative mark-to-market exposure for NPC and SPPC as of May 7, 2012, that would impact credit availability. If deemed prudent, the Utilities may still purchase hedging instruments in the event circumstances occur that may have the potential to increase the cost of fuel and purchased power.
Cross Default Provisions
None of the Utilities’ financing agreements contain a cross default provision that would result in an event of default by that Utility upon an event of default by NVE or the other Utility under any of their respective financing agreements. Certain of NVE’s financing agreements, however, do contain cross-default provisions that would result in an event of default by NVE upon an event of default by the Utilities under their respective financing agreements. In addition, certain financing agreements of each of NVE and the Utilities provide for an event of default if there is a failure under other financing agreements of that entity to meet payment terms or to observe other covenants that would result in an acceleration of payments due. Most of these default provisions (other than ones relating to a failure to pay other indebtedness) provide for a cure period of 30-60 days from the occurrence of a specified event, during which time NVE or the Utilities may rectify or correct the situation before it becomes an event of default.
NEVADA POWER COMPANY
RESULTS OF OPERATIONS
NPC recognized a net loss of approximately $1.3 million during the three months ended March 31, 2012, compared to a net loss of approximately $9.0 million for the same period in 2011.
For the period ended March 31, 2012, NPC paid $39 million in dividends to NVE. On May 7, 2012, NPC declared a dividend of $40 million to NVE.
Gross margin is presented by NPC in order to provide information that management believes aids the reader in determining how profitable the electric business is at the most fundamental level. Gross margin, which is a “non-GAAP financial measure” as defined in accordance with SEC rules, provides a measure of income available to support the other operating expenses of the business and is a key factor utilized by management in its analysis of its business.
NPC believes presenting gross margin allows the reader to assess the impact of NPC’s regulatory treatment and its overall regulatory environment on a consistent basis. Gross margin, as a percentage of revenue, is primarily impacted by the fluctuations in electric and natural gas supply costs versus the fixed rates collected from customers. While these fluctuating costs impact gross margin as a percentage of revenue, they only impact gross margin amounts if the costs cannot be passed through to customers. Gross margin, which NPC calculates as operating revenues less energy and energy efficiency program costs, provides a measure of income available to support the other operating expenses of NPC. For reconciliation to operating income, see Note 2, Segment Information, of the Condensed Notes to Financial Statements. Gross margin changes are primarily due to general base rate adjustments (which are required by statute to be filed every three years).
40
The components of gross margin were (dollars in thousands):
|
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
Operating Revenues: |
$ |
395,688 |
|
$ |
390,068 |
|
1.4 |
% |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Costs: |
|
|
|
|
|
|
|
|
|
||
|
|
Fuel for power generation |
|
80,549 |
|
|
101,070 |
|
(20.3) |
% |
|
|
|
|
Purchased power |
|
81,531 |
|
|
95,566 |
|
(14.7) |
% |
|
|
|
|
Deferred energy |
|
2,171 |
|
|
6,730 |
|
(67.7) |
% |
|
|
|
Energy efficiency program costs |
|
15,774 |
|
|
- |
|
N/A |
|
|
||
|
|
|
Total Costs |
$ |
180,025 |
|
$ |
203,366 |
|
(11.5) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin |
$ |
215,663 |
|
$ |
186,702 |
|
15.5 |
% |
|
Gross margin increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to an increase in BTGR revenue as a result of NPC’s 2011 GRC effective January 1, 2012. See Note 3, Regulatory Actions, of the Notes to the Financial Statements in the 2011 Form 10-K.
The causes for significant changes in specific lines comprising the results of operations for NPC for the respective periods are provided below (dollars in thousands except for amounts per unit):
|
Operating Revenue |
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||
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|
|
|
Three Months Ended March 31, |
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|
|
Change from |
|
|
|
Operating Revenues: |
2012 |
|
2011 |
|
Prior Year % |
|
|||||
|
|
Residential |
$ |
194,489 |
|
$ |
184,973 |
|
5.1 |
% |
|
|
|
|
Commercial |
|
87,735 |
|
|
85,856 |
|
2.2 |
% |
|
|
|
|
Industrial |
|
99,914 |
|
|
103,475 |
|
(3.4) |
% |
|
|
|
|
|
Retail revenues |
|
382,138 |
|
|
374,304 |
|
2.1 |
% |
|
|
|
Other |
|
13,550 |
|
|
15,764 |
|
(14.0) |
% |
|
|
|
|
|
Total Operating Revenues |
$ |
395,688 |
|
$ |
390,068 |
|
1.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail sales in thousands of MWhs |
|
|
|
|
|
|
|
|
|
||
|
|
Residential |
|
1,536 |
|
|
1,528 |
|
0.5 |
% |
|
|
|
|
Commercial |
|
957 |
|
|
915 |
|
4.6 |
% |
|
|
|
|
Industrial |
|
1,652 |
|
|
1,697 |
|
(2.7) |
% |
|
|
|
Retail sales in thousands of MWhs |
|
4,145 |
|
|
4,140 |
|
0.1 |
% |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average retail revenue per MWh |
$ |
92.19 |
|
$ |
90.41 |
|
2.0 |
% |
|
NPC’s retail revenues increased for the three months ended March 31, 2012, as compared to the same period in 2011 due to the implementation of new BTGR rates effective January 1, 2012 as a result of NPC’s 2011 GRC (See Note 3, Regulatory Actions, of the Notes to the Financial Statements in the 2011 Form 10-K). Also contributing to the increase was the implementation of EEPR rates effective July 1, 2011 (See Note 3, Regulatory Actions, of the Notes to the Financial Statements in the 2011 Form 10-K). These increases were partially offset by decreases in energy rates from NPC’s various BTER quarterly updates and the Deferred Energy case effective October 1, 2011 (see Note 3, Regulatory Actions, of the Notes to the Financial Statements in the 2011 Form 10-K). The average number of retail customers increased by 1.4%, consisting of an increase in residential and commercial customers of 1.5% and 0.1%, respectively, and a decrease in industrial customers of 2.5%, compared to the same period in the prior year.
Electric Operating Revenues – Other decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to a decrease in rental income as a result of the sale of the wireless communications towers in 2011 and a decrease in connection fees.
41
Energy Costs
Energy Costs include fuel for generation and purchased power. Energy costs are dependent upon several factors which may vary by season or period. As a result, NPC’s usage and average cost per MWh of fuel for generation versus purchased power to meet demand can vary significantly. Factors that may affect energy costs include, but are not limited to:
• |
|
Weather |
• |
|
Generation efficiency |
• |
|
Plant outages |
• |
|
Total system demand |
• |
|
Resource constraints |
• |
|
Transmission constraints |
• |
|
Natural gas constraints |
• |
|
Long-term contracts |
• |
|
Mandated power purchases; and |
• |
|
Volatility of commodity prices |
|
|
|
Three Months Ended March 31, |
|
|
|||||||
|
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|
|||
|
Energy Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel for power generation |
$ |
80,549 |
|
$ |
101,070 |
|
(20.3) |
% |
|
|
|
|
Purchased power |
|
81,531 |
|
|
95,566 |
|
(14.7) |
% |
|
|
|
Total Energy Costs |
$ |
162,080 |
|
$ |
196,636 |
|
(17.6) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MWhs |
|
|
|
|
|
|
|
|
|
|
|
|
|
MWhs Generated (in thousands) |
|
3,287 |
|
|
2,773 |
|
18.5 |
% |
|
|
|
|
Purchased Power (in thousands) |
|
1,026 |
|
|
1,583 |
|
(35.2) |
% |
|
|
|
Total MWhs |
|
4,313 |
|
|
4,356 |
|
(1.0) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average cost per MWh |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average fuel cost per MWh of Generated Power |
$ |
24.51 |
|
$ |
36.45 |
|
(32.8) |
% |
|
|
|
|
Average cost per MWh of Purchased Power |
$ |
79.46 |
|
$ |
60.37 |
|
31.6 |
% |
|
|
|
|
Average total cost per MWh |
$ |
37.58 |
|
$ |
45.14 |
|
(16.8) |
% |
|
|
Energy Costs and the average cost per MWh decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to a decrease in costs associated with hedging activities and lower natural gas prices.
• |
Fuel for generation costs and the average cost per MWh decreased for the three months ended March 31, 2012, primarily due to a decrease in costs associated with hedging activities and lower natural gas prices. Volume increased due to the addition of the Harry Allen Generating Station in May of 2011. |
|
|
• |
Purchased power costs and MWhs decreased for the three months ended March 31, 2012, primarily due to increased internal generation. The average cost per MWh increased for the three months ended March 31, 2012, primarily due to an increase in renewable energy purchases, as mandated by the Portfolio Standard, and a decrease in traditional power purchases due to increased self generation, discussed above. |
Deferred Energy |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred energy |
$ |
2,171 |
|
$ |
6,730 |
|
(67.7) |
% |
|
|
Deferred energy represents the difference between actual fuel and purchased power costs incurred during the period and amounts recoverable through current rates. To the extent actual costs exceed amounts recoverable through current rates, the excess is recognized as a reduction in costs. Conversely, to the extent actual costs are less than amounts recoverable through current rates, the difference is recognized as an increase in costs. Deferred energy also includes the current amortization of fuel and purchased power
42
costs previously deferred. Reference Note 3, Regulatory Actions, of the Condensed Notes to Financial Statements for further detail of deferred energy balances.
Amounts for the three months ended March 31, 2012 and 2011 include amortization of deferred energy of $(35.2) million and $(17.9) million, respectively; and an over-collection of amounts recoverable in rates of $37.3 million and $24.6 million, respectively.
Other Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
Energy efficiency program costs |
$ |
15,774 |
|
$ |
- |
|
N/A |
|
|
|
Other operating expenses |
$ |
66,462 |
|
$ |
65,101 |
|
2.1 |
% |
|
|
Maintenance |
$ |
23,073 |
|
$ |
22,337 |
|
3.3 |
% |
|
|
Depreciation and amortization |
$ |
64,990 |
|
$ |
57,673 |
|
12.7 |
% |
|
Energy efficiency program costs are conservation costs being recovered from ratepayers through EEPR revenues which were implemented in July 2011 (See Note 3, Regulatory Actions, of the Notes to Financial Statements in the 2011 Form 10-K). Costs incurred prior to the implementation of the EEPR are recovered through general rates and amortized to other operating expense discussed below. The EEPR mechanism is designed such that conservation costs are equal to revenues collected and any over/under collection is deferred as a regulatory asset/liability until rates are reset. As a result, amounts related to EEPR do not have an effect on gross margin, operating income or net income.
Other operating expense increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to amortization of energy efficiency and conservation costs and a reduction in capitalized costs as a result of a decrease in construction activity. The increase was partially offset by lower lease expenses, bad debt expense and systems support costs.
Maintenance expense increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to planned maintenance outages at the Higgins, Lenzie and Silverhawk Generating Stations, offset by planned maintenance outages that occurred in 2011 at the Reid Gardner and Navajo Generating Stations.
Depreciation and amortization increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to the expansion at Harry Allen Generating Station placed in service in May 2011, a January 2012 change in depreciation rates resulting from a recent depreciation study and other general plant in service increases.
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
(net of AFUDC-debt: $1,179 and $5,790) |
$ |
(54,405) |
|
$ |
(52,033) |
|
4.6 |
% |
|
Interest expense increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to a decrease in AFUDC as a result of the completion of the Harry Allen Generating Station in May 2011 and the issuance of the $250 million, Series Y, General and Refunding Mortgage Notes in May 2011. The increase was partially offset by a reduction in interest expense due to the redemption of the $350 million, Series A, General and Refunding Mortgage Notes in June 2011.
Other Income (Expense) |
||||||||||
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense) on regulatory items |
$ |
(2,016) |
|
$ |
635 |
|
(417.5) |
% |
|
|
AFUDC-equity |
$ |
1,413 |
|
$ |
7,098 |
|
(80.1) |
% |
|
|
Other income |
$ |
1,709 |
|
$ |
1,546 |
|
10.5 |
% |
|
|
Other expense |
$ |
(1,346) |
|
$ |
(2,732) |
|
(50.7) |
% |
|
43
The change in interest income (expense) on regulatory items for the three months ended March 31, 2012, compared to the same period in 2011, is primarily due to a decrease in interest income related to the deferred BTGR balance, discussed in Note 3, Regulatory Actions, of the Notes to Financial Statements in the 2011 Form 10-K and increased interest costs related to the deferred gain on NPC’s wireless towers sold in 2011 that is subject to the final accounting approval by the PUCN. See Note 16, Assets Held for Sale, of the Notes to Financial Statements in the 2011 Form 10-K.
AFUDC-equity decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to completion of the Harry Allen Generating Station in May 2011.
Other income increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to an increase in income from investments.
Other expense decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to a decrease in donations and an adjustment for a deferred energy settlement in 2011.
Analysis of Cash Flows
NPC’s cash flows decreased during the three months ended March 31, 2012, compared to the same period in 2011, due to a decrease in cash from operating and financing activities, offset partially by a reduction in cash used by investing activities.
Cash From Operating Activities. The decrease in cash from operating activities was primarily due to quarterly BTER adjustments and negative DEAA rates to refund prior period over collected balances. Also contributing to the decrease was the expiration of rates to collect the deferred rate increase from NPC’s 2008 GRC, the timing of property tax and interest payments and open market purchases of common stock to settle stock awards. These decreases were partially offset by higher BTGR rates resulting from NPC’s 2011 GRC, EEIR and over collections under the EEPR.
Cash Used By Investing Activities. The decrease in cash used by investing activities was primarily due to the completion of construction at the Harry Allen Generating Station in May 2011.
Cash From Financing Activities. Cash from financing activities decreased primarily due to a reduction in capital contribution from NVE and an increase in dividends paid to NVE. These decreases were partially offset by a draw on NPC’s revolving credit facility in 2012.
LIQUIDITY AND CAPITAL RESOURCES
Overall Liquidity
NPC’s primary source of operating cash flows is electric revenues, including the recovery of previously deferred energy costs. Significant uses of cash flows from operations include the purchase of electricity and natural gas, other operating expenses, capital expenditures and the payment of interest on NPC’s outstanding indebtedness. Another significant use of cash is the refunding of previously over-collected amounts from customers. Operating cash flows can be significantly influenced by factors such as weather, regulatory outcome, and economic conditions. Available liquidity as of March 31, 2012 was as follows (in millions):
|
Available Liquidity as of March 31, 2012 (in millions) |
|
||||||||
|
|
|
|
|
|
|
NPC |
|
|
|
|
Cash and Cash Equivalents |
|
|
$ |
38.7 |
|
|
|||
|
|
Balance available on Revolving Credit Facility(1) |
|
|
|
464.4 |
|
|
||
|
|
|
Less Reduction for Hedging Transactions(2) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
$ |
503.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
As of May 7, 2012, NPC had approximately $359.4 million available under its revolving credit facility which includes reductions for letters of credit and hedging transactions, as discussed below under Financing Transactions. |
|
|
||||||
|
|
|
|
|
||||||
|
(2) |
Reduction for hedging transactions reflects balances as of February 29, 2012. NPC is currently unhedged. |
|
|
NPC attempts to maintain its cash and cash equivalents in highly liquid investments, such as U.S. Treasury Bills and bank deposits. In addition to cash on hand, NPC may use its revolving credit facility in order to meet its liquidity needs. Alternatively, depending on the usage of the revolving credit facility, NPC may issue debt, subject to certain restrictions as discussed in Factors Affecting Liquidity, Ability to Issue Debt, below.
44
In April 2012, NPC used $120 million from its revolving credit facility along with cash on hand to pay for the maturity of its General and Refunding Mortgage Notes, Series I, in an aggregate principal amount of $130 million. NPC does not have any other debt maturities in 2012; however, NPC is required to redeem approximately $98.1 million of its variable rate debt, due 2020, prior to ON Line’s commercial operation date, expected in late 2013. As of May 7, 2012, NPC has $120 million in borrowings on its revolving credit facility, not including letters of credit.
In prior years, NPC required significant amounts of liquidity due to the magnitude of capital expenditures needed to support a growing customer base and to support unstable energy markets. As NPC transitions to more steady growth, the amount of capital expenditures is expected to decline significantly. Additionally, NPC’s investment in generating stations in the past several years and more stable energy markets have positioned NPC to better manage and optimize its resources. As a result, NPC anticipates that they will be able to meet short term operating costs and capital expenditures with internally generated funds and the use of its revolving credit facility. Furthermore, with new investments now in rates, the decrease of hedging costs, more current rate recovery of deferred energy costs, various rate reset mechanisms, current federal tax NOL and a decrease in capital expenditures, NPC expects to generate free cash flow. The free cash flow may be used to reduce debt, increase dividend payout and for potential investment opportunities. To meet long term maturing debt obligations, NPC may use a combination of internally generated funds, its revolving credit facility, the issuance of long-term debt or capital contributions from NVE.
However, if energy costs rise at a rapid rate, or NPC were to experience a credit rating downgrade resulting in the posting of collateral as discussed below under Gas Supplier Matters and Financial Gas Hedges, the amount of liquidity available NPC could be significantly less. In order to maintain sufficient liquidity under such circumstances, NPC may be required to delay capital expenditures, re-finance debt or receive capital contributions from NVE.
The ability to issue debt, as discussed later, is subject to certain covenant calculations which include consolidated net income of NVE and the Utilities. As a result of these covenant calculations and the seasonality of the Utilities’ business, the ability to issue debt can vary from quarter to quarter, and the Utilities may not be able to fully utilize the availability on their revolving credit facilities. Additionally, disruptions in the banking and capital markets not specifically related to NPC may affect its ability to access funding sources or cause an increase in the interest rates paid on newly issued debt.
During the three months ended March 31, 2012, NPC paid dividends to NVE of $39 million. On May 7, 2012, NPC declared a dividend to NVE of $40 million.
NPC designs operating and capital budgets to control operating costs and capital expenditures. In addition to operating expenses, NPC has continuing commitments for capital expenditures for construction, environmental compliance, improvement and maintenance of facilities.
During the three months ended March 31, 2012, there were no material changes to contractual obligations as set forth in NPC’s 2011 Form 10-K.
Financing Transactions
$500 Million Revolving Credit Facility
In March 2012, NPC terminated its $600 million secured revolving credit facility which would have expired in April 2013 and replaced it with a $500 million revolving credit facility, maturing in March 2017 and secured by NPC’s General and Refunding Mortgage Bond, Series Z, in the aggregate principal amount of $500 million (the “NPC Credit Agreement”). The administrative agent for the NPC Credit Agreement remains Wells Fargo Bank, National Association. NPC may use the facility for general corporate purposes and for the issuance of letters of credit.
The rate for outstanding loans under the NPC Credit Agreement will be at either an applicable base rate (defined as the highest of the Prime Rate, the Federal Funds Rate plus 0.5% and the LIBOR Base Rate plus 1.0%) plus a margin, or a LIBOR rate plus a margin. The margin varies based upon NPC’s secured debt credit rating by S&P and Moody’s. Currently, NPC’s applicable base rate margin is 0.50% and the LIBOR rate margin is 1.50%. The rate for outstanding letters of credit will be at the LIBOR rate margin plus a fee for the issuing bank.
The NPC Credit Agreement contains one financial maintenance covenant that requires NPC to maintain a ratio of consolidated indebtedness to consolidated capital, determined as of the last day of each fiscal quarter, not to exceed 0.68 to 1.00. In the event that NPC did not meet the financial maintenance covenant or there is a different event of default, the NPC Credit Agreement would restrict dividends to NVE. Moreover, so long as NPC's senior secured debt remains rated investment grade by S&P and Moody's (in each case, with a stable or better outlook), a representation concerning no material adverse change in NPC's business, assets, property or financial condition would not be a condition to the availability of credit under the facility. In the event that NPC's
45
senior secured debt rating were rated below investment grade by either S&P or Moody's, or investment grade by either S&P or Moody's but with a negative outlook, a representation concerning no material adverse change in NPC's business, assets, property or financial condition would be a condition to borrowing under the revolving credit facility.
The NPC Credit Agreement provides for an event of default if there is a failure under NPC's other financing agreements to meet certain payment terms or to observe other covenants that would result in an acceleration of payments due.
Similar to the $600 million secured revolving credit facility that it replaced, the NPC Credit Agreement places certain restrictions on debt incurrence, liens and dividends. These restrictions are discussed in Note 8, Debt Covenant and Other Restrictions, of the Notes to Financial Statements in the 2011 Form 10-K.
The NPC Credit Agreement contains a provision which reduces the availability under the credit facility by the negative mark-to-market exposure for hedging transactions with credit facility lenders or their energy trading affiliates. The reduction in availability limits the amount that NPC can borrow or use for letters of credit and would require that NPC prepay any amount in excess of that limitation. The amount of the reduction is calculated by NPC on a monthly basis, and after calculating such reduction, the NPC Credit Agreement provides that the reduction in availability under the revolving credit facility to NPC shall in no event exceed 50% of the total commitments then in effect under the revolving credit facility. As a result of the suspension of the Utilities' hedging program, there was no negative mark-to-market exposure for NPC as of May 7, 2012 that would impact borrowings.
Maturity of General and Refunding Mortgage Notes, Series I
In April 2012, NPC used $120 million from its revolving credit facility along with cash on hand to pay for the maturity of its General and Refunding Mortgage Notes, Series I, in an aggregate principal amount of $130 million.
Factors Affecting Liquidity
Ability to Issue Debt
NPC’s ability to issue debt is impacted by certain factors such as financing authority from the PUCN, financial covenants in its financing agreements and its revolving credit facility agreement, and the terms of certain NVE debt. As of March 31, 2012, the most restrictive of the factors below is the PUCN authority. As such, NPC may issue up to $725 million in long-term debt, in addition to the use of its existing credit facility. However, depending on NVE’s or SPPC’s issuance of long-term debt or the use of the Utilities’ revolving credit facilities, the PUCN authority may not remain the most restrictive factor. The factors affecting NPC’s ability to issue debt are further detailed below:
a. |
Financing authority from the PUCN - As of March 31, 2012, NPC has financing authority from the PUCN for the period ending December 31, 2013, consisting of authority (1) to issue additional long-term debt securities of up to $725 million; (2) to refinance up to approximately $322.5 million of long-term debt securities. However, with the maturity of the General and Refunding Mortgage Notes, Series I, discussed above, such amount is reduced to $192.5 million of refinancing authority; and (3) ongoing authority to maintain a revolving credit facility of up to $1.3 billion. |
|
|
b. |
Financial covenants within NPC’s financing agreements – Under the NPC Credit Agreement, NPC must maintain a ratio of consolidated indebtedness to consolidated capital, determined as of the last day of each fiscal quarter, not to exceed 0.68 to 1.00. Based on March 31, 2012 financial statements, NPC was in compliance with this covenant and could incur up to $2.5 billion of additional indebtedness. |
|
|
|
All other financial covenants contained in NPC’s financing agreements are suspended as NPC’s senior secured debt is currently rated investment grade. However, if NPC’s senior secured debt ratings fall below investment grade by either Moody’s or S&P, NPC would again be subject to the limitations under these additional covenants; and |
|
|
c. |
Financial covenants within NVE’s Term Loan – As discussed in NVE’s Ability to Issue Debt, NPC is also subject to NVE’s cap on additional consolidated indebtedness of $2.7 billion. |
Ability to Issue General and Refunding Mortgage Securities
To the extent that NPC has the ability to issue debt under the most restrictive covenants in its and NVE’s financing agreements and has financing authority to do so from the PUCN, NPC’s ability to issue secured debt is still limited by the amount of bondable property or retired bonds that can be used to issue debt under the NPC Indenture.
46
The NPC Indenture creates a lien on substantially all of NPC’s properties in Nevada. As of March 31, 2012, $4.0 billion of NPC’s General and Refunding Mortgage Securities were outstanding. NPC had the capacity to issue $1.5 billion of General and Refunding Mortgage Securities as of March 31, 2012. That amount is determined on the basis of:
1. |
70% of net utility property additions; and/or |
2. |
The principal amount of retired General and Refunding Mortgage Securities. |
Property additions include plant in service and specific assets in CWIP. The amount of bond capacity listed above does not include eligible property in CWIP.
NPC also has the ability to release property from the lien of the NPC Indenture on the basis of net property additions, cash and/or retired bonds. To the extent NPC releases property from the lien of NPC’s Indenture, it will reduce the amount of securities issuable under the NPC Indenture.
Credit Ratings
The liquidity of NPC, the cost and availability of borrowing by NPC under the NPC Credit Agreement, the potential exposure of NPC to collateral calls under various contracts and the ability of NPC to acquire fuel and purchased power on favorable terms are all directly affected by the credit ratings for NPC’s debt. NPC’s senior secured debt is rated investment grade by three NRSRO’s: Fitch, Moody’s and S&P. As of March 31, 2012, the ratings are as follows:
|
|
|
|
|
Rating Agency |
|
||||
|
|
|
|
|
Fitch(1) |
|
Moody’s(2) |
|
S&P(3) |
|
|
NPC |
|
Sr. Secured Debt |
|
BBB* |
|
Baa2* |
|
BBB* |
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Investment grade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Fitch’s lowest level of “investment grade” credit rating is BBB-. |
|
|||||||
|
(2) |
Moody’s lowest level of “investment grade” credit rating is Baa3. |
|
|||||||
|
(3) |
S&P’s lowest level of “investment grade” credit rating is BBB-. |
|
Fitch’s, Moody’s and S&P’s rating outlook for NPC is Stable.
A security rating is not a recommendation to buy, sell or hold securities. Security ratings are subject to revision and withdrawal at any time by the assigning rating organization. Each security rating agency has its own methodology for assigning ratings, and accordingly, each rating should be evaluated in the context of the applicable methodology, independently of all other ratings. The rating agencies provide ratings at the request of the company being rated and charge the company fees for their services.
Energy Supplier Matters
With respect to NPC’s contracts for purchased power, NPC purchases and sells electricity with counterparties under the WSPP agreement, an industry standard contract that NPC uses as a member of the WSPP. The WSPP agreement is posted on the WSPP website.
Under these contracts, a material adverse change, which includes a credit rating downgrade, in NPC may allow the counterparty to request adequate financial assurance, which, if not provided within three business days, could cause a default. Most contracts and confirmations for purchased power have been modified or separate agreements have been made to either shorten the normal payment due date or require payment in advance of delivery in response to requests for financial assurance. A default must be declared within 30 days of the event giving rise to the default becoming known. A default will result in a termination payment equal to the present value of the net gains and losses for the entire remaining term of all contracts between the parties aggregated to a single liquidated amount due within three business days following the date the notice of termination is received. The mark-to-market value, which is substantially based on quoted market prices, can be used to roughly approximate the termination payment and benefit at any point in time. The net mark-to-market value as of March 31, 2012 for all suppliers continuing to provide power under a WSPP agreement would approximate a $36.5 million payment or obligation to NPC. These contracts qualify for the normal purchases and normal sales scope exception under the Derivatives and Hedging Topic of the FASC, and as such, are not required to be marked-to-market on the balance sheet. Refer to Note 9, Derivatives and Hedging Activities, of the Notes to Financial Statements in the 2011 Form 10-K for further discussion.
47
Gas Supplier Matters
With respect to the purchase and sale of natural gas, NPC uses several types of standard industry contracts. The natural gas contract terms and conditions are more varied than the electric contracts. Consequently, some of the contracts contain language similar to that found in the WSPP agreement and other agreements have unique provisions dealing with material adverse changes, which primarily means a credit rating downgrade below investment grade. Most contracts and confirmations for natural gas purchases have been modified or separate agreements have been made to either shorten the normal payment due date or require payment in advance of delivery in response to requests for financial assurances. Forward physical gas supplies are purchased under index based pricing terms and as such do not carry forward mark-to-market exposure.
Gas transmission service is secured under FERC tariffs or custom agreements. These service contracts and tariffs require the user to establish and maintain creditworthiness to obtain service or otherwise post cash or a letter of credit to be able to receive service. Service contracts are subject to FERC approved tariffs, which, under certain circumstances, require the Utilities to provide collateral to continue receiving service. NPC has one transmission counterparty for which it is required to post cash collateral or a letter of credit in the event of credit rating downgrades. As of March 31, 2012, the maximum amount of additional collateral NPC would be required to post under these contracts in the event of credit rating downgrades was approximately $54.3 million. Of this amount, approximately $19.6 million would be required if NPC’s Senior Unsecured ratings are rated below BB (S&P) or Ba3 (Moody’s) and an additional amount of approximately $34.7 million would be required if NPC’s Senior Secured ratings are downgraded to below investment grade.
Financial Gas Hedges
NPC enters into certain hedging contracts with various counterparties to manage the gas price risk inherent in purchased power and fuel contracts. As discussed under NPC’s Financing Transactions, the availability under NPC’s Credit Agreement is reduced by the amount of net negative mark-to-market positions on hedging contracts with counterparties who are lenders to the revolving credit facility, provided that the reduction in availability under the revolving credit facility shall at no time exceed 50% of the total commitments then in effect under the revolving credit facility. As a result of the suspension of NPC’s hedging program, there was no negative mark-to-market exposure for NPC as May 7, 2012 that would impact credit availability. If deemed prudent, NPC may purchase hedging instruments in the event circumstances occur that may have the potential to increase the cost of fuel and purchased power.
Cross Default Provisions
None of the financing agreements of NPC contain a cross default provision that would result in an event of default by NPC upon an event of default by NVE or SPPC under any of its financing agreements. In addition, certain financing agreements of NPC provide for an event of default if there is a failure under other financing agreements of NPC to meet payment terms or to observe other covenants that would result in an acceleration of payments due. Most of these default provisions (other than ones relating to a failure to pay such other indebtedness when due) provide for a cure period of 30-60 days from the occurrence of a specified event during which time NPC may rectify or correct the situation before it becomes an event of default.
Sierra Pacific Power Company
SPPC recognized net income of $18.6 million for the three months ended March 31, 2012 compared to net income of $16.6 million for the same period in 2011.
For the period ended March 31, 2012, SPPC paid $20 million in dividends to NVE.
Gross margin is presented by SPPC in order to provide information by segment that management believes aids the reader in determining how profitable the electric and gas businesses are at the most fundamental level. Gross margin, which is a “non-GAAP financial measure” as defined in accordance with SEC rules, provides a measure of income available to support the other operating expenses of the business and is utilized by management in its analysis of its business.
SPPC believes presenting gross margin allows the reader to assess the impact of SPPC’s regulatory treatment and its overall regulatory environment on a consistent basis. Gross margin, as a percentage of revenue, is primarily impacted by the fluctuations in regulated electric and natural gas supply costs versus the fixed rates collected from customers. While these fluctuating costs impact gross margin as a percentage of revenue, they only impact gross margin amounts if the costs cannot be passed through to customers. Gross margin, which SPPC calculates as operating revenues less energy and energy efficiency program costs, provides a measure of income available to support the other operating expenses of SPPC. For reconciliation to operating income, see Note 2, Segment
48
Information, of the Condensed Notes to Financial Statements. Gross margin changes are primarily due to general base rate adjustments (which are required by statute to be filed every three years).
The components of gross margin were (dollars in thousands):
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Electric |
$ |
169,806 |
|
$ |
178,617 |
|
(4.9) |
% |
|
|
Gas |
|
45,922 |
|
|
72,294 |
|
(36.5) |
% |
|
|
|
$ |
215,728 |
|
$ |
250,911 |
|
(14.0) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Energy Costs: |
|
|
|
|
|
|
|
|
|
|
|
Fuel for power generation |
|
36,486 |
|
|
45,268 |
|
(19.4) |
% |
|
|
Purchased power |
|
35,585 |
|
|
39,450 |
|
(9.8) |
% |
|
|
Gas purchased for resale |
|
31,617 |
|
|
52,632 |
|
(39.9) |
% |
|
|
Deferral of energy - electric - net |
|
(12,670) |
|
|
(11,931) |
|
6.2 |
% |
|
|
Deferral of energy - gas - net |
|
(1,240) |
|
|
3,249 |
|
(138.2) |
% |
|
Energy efficiency program costs |
|
3,651 |
|
|
- |
|
N/A |
% |
|
|
|
Total Costs |
$ |
93,429 |
|
$ |
128,668 |
|
(27.4) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost by Segment: |
|
|
|
|
|
|
|
|
|
|
|
Electric |
$ |
63,052 |
|
$ |
72,787 |
|
(13.4) |
% |
|
|
Gas |
|
30,377 |
|
|
55,881 |
|
(45.6) |
% |
|
|
|
$ |
93,429 |
|
$ |
128,668 |
|
(27.4) |
% |
|
Gross Margin by Segment: |
|
|
|
|
|
|
|
|
|
|
|
Electric |
$ |
106,754 |
|
$ |
105,830 |
|
0.9 |
% |
|
|
Gas |
|
15,545 |
|
|
16,413 |
|
(5.3) |
% |
|
|
$ |
122,299 |
|
$ |
122,243 |
|
- |
% |
|
Electric gross margin increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to a marginal increase in usage per customer among the industrial class, offset by a slight decrease in customer growth for commercial and industrial customers.
Gas gross margin decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to decreased customer usage as a result of warmer weather.
The causes of significant changes in specific lines comprising the results of operations are provided below (dollars in thousands except for amounts per unit):
Electric Operating Revenue |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
|
Change from |
|
|
Operating Revenues: |
2012 |
|
2011 |
|
Prior Year % |
|
|||||
|
Residential |
$ |
61,360 |
|
$ |
64,047 |
|
(4.2) |
% |
|
|
|
Commercial |
|
58,712 |
|
|
62,087 |
|
(5.4) |
% |
|
|
|
Industrial |
|
33,070 |
|
|
34,491 |
|
(4.1) |
% |
|
|
|
|
Retail revenues |
|
153,142 |
|
|
160,625 |
|
(4.7) |
% |
|
|
Other |
|
16,664 |
|
|
17,992 |
|
(7.4) |
% |
|
|
|
|
Total Operating Revenues |
$ |
169,806 |
|
$ |
178,617 |
|
(4.9) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail sales in thousands of MWhs |
|
|
|
|
|
|
|
|
|
||
|
Residential |
|
600 |
|
|
595 |
|
0.8 |
% |
|
|
|
Commercial |
|
659 |
|
|
655 |
|
0.6 |
% |
|
|
|
Industrial |
|
633 |
|
|
603 |
|
5.0 |
% |
|
|
Retail sales in thousands of MWhs |
|
1,892 |
|
|
1,853 |
|
2.1 |
% |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Average retail revenue per MWh |
$ |
80.94 |
|
$ |
86.68 |
|
(6.6) |
% |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
SPPC’s retail revenues decreased for the three months ended March 31, 2012 as compared to the same period in 2011, primarily due to decreases in retail energy rates as a result of SPPC’s various BTER quarterly updates and the annual Deferred Energy
49
Case effective October 1, 2011, which also provided for quarterly DEAA updates beginning January 1, 2012. (See Note 3, Regulatory Actions of the Notes to Financial Statements in the 2011 Form 10-K). These decreases were partially offset by increased retail rates due to the implementation of EEPR rates effective July 1, 2011. (See Note 3, Regulatory Actions of the Notes to Financial Statements in the 2011 Form 10-K). The average number of retail customers increased 0.3%, consisting of an increase in residential customers of 0.6% while commercial and industrial customers decreased by 1.1% and 3.7%, respectively.
Electric Operating Revenues – Other decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to decreased sales of wholesale power to other utilities as a result of warmer winter weather.
Gas Operating Revenue |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||||
|
Gas Operating Revenues: |
|
|
|
|
|
|
|
|
|
||
|
|
Residential |
$ |
26,557 |
|
$ |
39,177 |
|
(32.2) |
% |
|
|
|
|
Commercial |
|
10,966 |
|
|
17,277 |
|
(36.5) |
% |
|
|
|
|
Industrial |
|
2,715 |
|
|
4,786 |
|
(43.3) |
% |
|
|
|
|
|
Retail Revenues |
|
40,238 |
|
|
61,240 |
|
(34.3) |
% |
|
|
|
Wholesale Revenues |
|
4,830 |
|
|
10,178 |
|
(52.5) |
% |
|
|
|
|
Miscellaneous |
|
854 |
|
|
876 |
|
(2.5) |
% |
|
|
|
|
|
Total Gas Revenues |
$ |
45,922 |
|
$ |
72,294 |
|
(36.5) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail sales in thousands of Dths |
|
|
|
|
|
|
|
|
|
||
|
|
Residential |
|
3,708 |
|
|
3,962 |
|
(6.4) |
% |
|
|
|
|
Commercial |
|
1,879 |
|
|
2,001 |
|
(6.1) |
% |
|
|
|
|
Industrial |
|
476 |
|
|
571 |
|
(16.6) |
% |
|
|
|
Retail sales in thousands of Dths |
|
6,063 |
|
|
6,534 |
|
(7.2) |
% |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average retail revenue per Dth |
$ |
6.64 |
|
$ |
9.37 |
|
(29.2) |
% |
|
SPPC’s retail gas revenues decreased for the three months ended March 31, 2012, compared to the same period in 2011 primarily due to decreased retail energy rates as a result of SPPC’s various BTER quarterly updates and the annual Natural Gas and Propane Deferred Rate Case effective October 1, 2011 which also provided for quarterly DEAA updates beginning January 1, 2012. (See Note 3, Regulatory Actions of the Notes to Financial Statements in the 2011 Form 10-K). Retail revenues also decreased due to lower customer usage as a result of warmer 2012 winter weather. For the three months ended March 31, 2012, the average number of retail customers increased 0.6%, consisting of an increase in residential customers of 0.6% and a decrease in the average number of commercial and industrial customers of 0.1% and 8.4%, respectively.
Wholesale revenues decreased for the three months ended March 31, 2012, compared to the same period in 2011 primarily due to less excess supply of gas.
Energy Costs
Energy Costs include purchased power and fuel for generation. These costs are dependent upon many factors which may vary by season or period. As a result, SPPC’s usage and average cost per MWh of purchased power versus fuel for generation can vary significantly as the company meets the demands of the season. These factors include, but are not limited to:
• |
|
Weather |
• |
|
Plant outages |
• |
|
Total system demand |
• |
|
Resource constraints |
• |
|
Transmission constraints |
• |
|
Gas transportation constraints |
• |
|
Natural gas constraints |
• |
|
Long-term contracts |
• |
|
Mandated power purchases |
• |
|
Generation efficiency; and |
• |
|
Volatility of commodity prices |
50
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
Energy Costs |
|
|
|
|
|
|
|
|
|
|
|
|
Fuel for power generation |
$ |
36,486 |
|
$ |
45,268 |
|
(19.4) |
% |
|
|
|
Purchased power |
|
35,585 |
|
|
39,450 |
|
(9.8) |
% |
|
|
Total Energy Costs |
$ |
72,071 |
|
$ |
84,718 |
|
(14.9) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MWhs |
|
|
|
|
|
|
|
|
|
|
|
|
MWhs Generated (in thousands) |
|
1,178 |
|
|
1,049 |
|
12.3 |
% |
|
|
|
Purchased Power (in thousands) |
|
1,011 |
|
|
1,099 |
|
(8.0) |
% |
|
|
Total MWhs |
|
2,189 |
|
|
2,148 |
|
1.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average cost per MWh |
|
|
|
|
|
|
|
|
|
|
|
|
Average fuel cost per MWh of Generated Power |
$ |
30.97 |
|
$ |
43.15 |
|
(28.2) |
% |
|
|
|
Average cost per MWh of Purchased Power |
$ |
35.20 |
|
$ |
35.90 |
|
(1.9) |
% |
|
|
|
Average total cost per MWh |
$ |
32.92 |
|
$ |
39.44 |
|
(16.5) |
% |
|
Energy costs and average cost per MWh decreased for the three months ended March 31, 2012, compared to the same period in 2011 primarily due to lower natural gas prices and a decrease in costs associated with hedging activities.
• |
The average cost per MWh of generated power decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to lower natural gas costs and a decrease in costs associated with hedging activities. Fuel for generation volume increased due to higher reliance on internal generation. |
|
|
• |
Purchased power costs and average cost per MWh decreased due to lower market prices, driven by lower natural gas costs. Purchased power volume decreased due to the reliance on internal generation. |
Gas Purchased for Resale |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
Gas purchased for resale |
$ |
31,617 |
|
$ |
52,632 |
|
(39.9) |
% |
|
|
Gas purchased for resale (in thousands of Dths) |
|
8,274 |
|
|
9,149 |
|
(9.6) |
% |
|
|
Average cost per Dth |
$ |
3.82 |
|
$ |
5.75 |
|
(33.6) |
% |
|
Gas purchased for resale and average cost per Dth decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to lower natural gas prices and a decrease in costs associated with hedging activities. The volume of gas purchased for resale decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to warmer weather in 2012.
Deferred Energy |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferral of energy - electric - net |
$ |
(12,670) |
|
$ |
(11,931) |
|
6.2 |
% |
|
|
|
Deferral of energy - gas - net |
|
(1,240) |
|
|
3,249 |
|
(138.2) |
% |
|
|
|
|
$ |
(13,910) |
|
$ |
(8,682) |
|
|
|
|
|
Deferred energy represents the difference between actual fuel and purchased power costs incurred during the period and amounts recoverable through current rates. To the extent actual costs exceed amounts recoverable through current rates the excess is recognized as a reduction in costs. Conversely to the extent actual costs are less than amounts recoverable through current rates the difference is recognized as an increase in costs. Deferred energy also includes the current amortization of fuel and purchased power costs previously deferred. Reference Note 3, Regulatory Actions, of the Condensed Notes to Financial Statements for further detail of deferred energy balances.
51
Deferred energy – electric for the three months ended March 31, 2012 and 2011 reflect amortization of deferred energy costs of ($25.5) million and ($25.1) million respectively; and an over-collection of amounts recoverable in rates of $12.8 million and $13.1 million, respectively.
Deferred energy - gas for the three months ended March 31, 2012 and 2011 reflect amortization of deferred energy of ($13.4) million, and ($7.4) million, respectively; and an over-collection of amounts recoverable in rates of $12.2 million and $10.6 million respectively.
Other Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
Energy efficiency program costs |
$ |
3,651 |
|
$ |
- |
|
N/A |
% |
|
|
Other operating expenses |
$ |
36,432 |
|
$ |
40,216 |
|
(9.4) |
% |
|
|
Maintenance |
$ |
9,453 |
|
$ |
7,425 |
|
27.3 |
% |
|
|
Depreciation and amortization |
$ |
25,872 |
|
$ |
25,429 |
|
1.7 |
% |
|
Energy efficiency program costs are conservation costs being recovered from ratepayers through EEPR revenues which were implemented in July 2011 (See Note 3, Regulatory Actions, of the Notes to Financial Statements of the 2011 Form 10-K). Costs incurred prior to the implementation of the EEPR are recovered through general rates and amortized to other operating expense discussed below. The EEPR mechanism is designed such that conservation costs expense are equal to revenues collected and any over/under collection is deferred as a regulatory asset/liability until rates are reset. As a result, amounts related to EEPR do not have an effect on gross margin, operating income or net income.
Other operating expense decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to lower compensation costs, employee pension and benefit expenses, and to a lesser degree, a decrease in system support costs and lower uncollectible rates.
Maintenance expense increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to planned maintenance at the Tracy Generating Station.
Depreciation and amortization for the three months ended March 31, 2012, compared to the same period in 2011, did not change materially.
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
(net of AFUDC-debt: $416 and $420) |
$ |
(16,973) |
|
$ |
(16,946) |
|
0.2 |
% |
|
Interest expense did not change materially for the three months ended March 31, 2012, compared to the same period in 2011. See Note 6, Long-Term Debt, of the Notes to Financial Statements in the 2011 Form 10-K for additional information regarding long-term debt.
Other Income (Expense) |
||||||||||
|
|
Three Months Ended March 31, |
|
|||||||
|
|
|
|
|
|
|
|
Change from |
|
|
|
|
2012 |
|
2011 |
|
Prior Year % |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense) on regulatory items |
$ |
(186) |
|
$ |
(1,523) |
|
(87.8) |
% |
|
|
AFUDC-equity |
$ |
519 |
|
$ |
544 |
|
(4.6) |
% |
|
|
Other income |
$ |
2,183 |
|
$ |
1,264 |
|
72.7 |
% |
|
|
Other expense |
$ |
(1,335) |
|
$ |
(1,594) |
|
(16.2) |
% |
|
Interest income (expense) on regulatory items decreased for the three months ended March 31, 2012, compared to the same period in 2011, due to lower over-collected deferred energy balances in 2012.
52
AFUDC-equity did not change materially for the three months ended March 31, 2012, compared to the same period in 2011.
Other income increased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to the settlement with CALISO in 2011, recognized in 2012. See Note 3, Regulatory Actions, FERC Matters, in the Notes to Financial Statements, in the 2011 Form 10-K.
Other expense decreased for the three months ended March 31, 2012, compared to the same period in 2011, primarily due to a decrease in donations in 2012.
Analysis of Cash Flows
SPPC’s cash flows decreased during the three months ended March 31, 2012, compared to the same period in 2011, due to a decrease in cash from operating and investing activities, offset partially by a reduction in cash used by financing activities.
Cash From Operating Activities. The decrease in cash from operating activities was primarily due to a change in payment terms with energy counterparties from weekly to monthly settlements in mid-2011, and the receipt of cash in 2011 under the affiliate tax sharing agreement. Also contributing to the reduction were higher negative DEAA rates to refund prior period over collected balances to customers, the timing of property tax payments and open market purchases of common stock to settle stock awards. These decreases were partially offset by collections for wholesale energy sales and a reduction in purchases of coal for the Valmy Generating Station.
Cash From Investing Activities. The change in cash from investing activities was primarily due to the receipt of proceeds from the sale of California Assets in 2011 and an increased capital expenditure for the NV Energize project in 2012.
Cash Used By Financing Activities. The decrease in cash used by financing activities is primarily due to a reduction in dividends to NVE and the repayment of draws under SPPC’s revolving credit facility in 2011.
LIQUIDITY AND CAPITAL RESOURCES
Overall Liquidity
SPPC’s primary source of operating cash flows is electric revenues, including the recovery of previously deferred energy costs. Significant uses of cash flows from operations include the purchase of electricity and natural gas, other operating expenses, capital expenditures and the payment of interest on SPPC’s outstanding indebtedness. Another significant use of cash is the refunding of previously over-collected amounts from customers. Operating cash flows can be significantly influenced by factors such as weather, regulatory outcome and economic conditions. Available liquidity as of March 31, 2012 was as follows (in millions):
|
Available Liquidity as of March 31, 2012 (in millions) |
|
||||||||
|
|
|
|
|
|
|
SPPC |
|
|
|
|
Cash and Cash Equivalents |
|
|
$ |
23.9 |
|
|
|||
|
|
Balance available on Revolving Credit Facility(1) |
|
|
|
239.5 |
|
|
||
|
|
|
Less Reduction for Hedging Transactions(2) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
$ |
263.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As of May 7, 2012, SPPC had approximately $239.5 million available under its revolving credit facility which includes reductions for letters of credit and hedging transactions, as discussed below under Financing Transactions. |
|
|
|||||
|
|
|
|
|||||||
|
(2) |
|
Reduction for hedging transactions reflects balances as of February 29, 2012. SPPC is currently unhedged. |
|
|
SPPC attempts to maintain its cash and cash equivalents in highly liquid investments, such as U.S. Treasury Bills and bank deposits. In addition to cash on hand, SPPC may use its revolving credit facility in order to meet its liquidity needs. Alternatively, depending on the usage of the revolving credit facility, SPPC may issue debt, subject to certain restrictions as discussed in Factors Affecting Liquidity, Ability to Issue Debt, below.
SPPC has no significant debt maturities in 2012. However, SPPC’s $250 million 5.45% General and Refunding Notes, Series Q, will mature on September 1, 2013. As of May 7, 2012, SPPC has no borrowings outstanding on its revolving credit facility, not including letters of credit.
53
In prior years, SPPC required significant amounts of liquidity due to the magnitude of capital expenditures needed to support a growing customer base and to support unstable energy markets. As SPPC transitions to more steady growth the amount of capital expenditures is expected to decline significantly. Additionally, SPPC’s investment in generating stations in the past several years and more stable energy markets have positioned SPPC to better manage and optimize its resources. As a result, SPPC anticipates that they will be able to meet short term operating costs and capital expenditures with internally generated funds and the use of its revolving credit facility. Furthermore, with significant investments in rates, the decrease of hedging costs, more current rate recovery of deferred energy costs, various rate reset mechanisms, current federal tax NOL and a decrease in capital expenditures, SPPC expects to generate free cash flow. The free cash flow may be used to reduce debt, increase dividend payout and for potential investment opportunities. To meet long term maturing debt obligations, SPPC may use a combination of internally generated funds, its revolving credit facility, the issuance of long-term debt or capital contributions from NVE.
However, if energy costs rise at a rapid rate, or SPPC were to experience a credit rating downgrade resulting in the posting of collateral as discussed below under Gas Supplier Matters and Financial Gas Hedges, the amount of liquidity available SPPC could be significantly less. In order to maintain sufficient liquidity under such circumstances, SPPC may be required to delay capital expenditures, refinance debt or receive capital contributions from NVE.
The ability to issue debt, as discussed later, is subject to certain covenant calculations which include consolidated net income of NVE and the Utilities. As a result of these covenant calculations and the seasonality of the Utilities’ business, the ability to issue debt can vary from quarter to quarter, and the Utilities may not be able to fully utilize the availability on their revolving credit facilities. Additionally, disruptions in the banking and capital markets not specifically related to SPPC may affect its ability to access funding sources or cause an increase in the interest rates paid on newly issued debt.
During the three months ended March 31, 2012, SPPC paid dividends to NVE of $20 million.
SPPC designs operating and capital budgets to control operating costs and capital expenditures. In addition to operating expenses, SPPC has continuing commitments for capital expenditures for construction, environmental compliance, improvement and maintenance of facilities.
During the three months ended March 31, 2012, there were no material changes to contractual obligations as set forth in SPPC’s 2011 Form 10-K.
Financing Transactions
$250 Million Revolving Credit Facility
In March 2012, SPPC terminated its $250 million secured revolving credit facility which would have expired in April 2013 and replaced it with a $250 million revolving credit facility, maturing in March 2017 and secured by SPPC’s General and Refunding Mortgage Bond, Series S, in the aggregate principal amount of $250 million (the “SPPC Credit Agreement”). The administrative agent for the SPPC Credit Agreement is Wells Fargo Bank, National Association. SPPC may use the facility for general corporate purposes and for the issuance of letters of credit.
The rate for outstanding loans under the SPPC Credit Agreement will be at either an applicable base rate (defined as the highest of the Prime Rate, the Federal Funds Rate plus 0.5% and the LIBOR Base Rate plus 1.0%) plus a margin, or a LIBOR rate plus a margin. The margin varies based upon SPPC’s secured debt credit rating by S&P and Moody’s. Currently, SPPC’s applicable base rate margin is 0.50% and the LIBOR rate margin is 1.50%. The rate for outstanding letters of credit will be at the LIBOR rate margin plus a fee for the issuing bank.
The SPPC Credit Agreement contains one financial maintenance covenant that requires SPPC to maintain a ratio of consolidated indebtedness to consolidated capital, determined as of the last day of each fiscal quarter, not to exceed 0.68 to 1.00. In the event that SPPC did not meet the financial maintenance covenant or there is a different event of default, the SPPC Credit Agreement would restrict dividends to NVE. Moreover, so long as SPPC's senior secured debt remains rated investment grade by S&P and Moody's (in each case, with a stable or better outlook), a representation concerning no material adverse change in SPPC's business, assets, property or financial condition would not be a condition to the availability of credit under the facility. In the event that SPPC's senior secured debt rating were rated below investment grade by either S&P or Moody's, or investment grade by either S&P or Moody's but with a negative outlook, a representation concerning no material adverse change in SPPC's business, assets, property or financial condition would be a condition to borrowing under the revolving credit facility.
The SPPC Credit Agreement provides for an event of default if there is a failure under SPPC's other financing agreements to meet certain payment terms or to observe other covenants that would result in an acceleration of payments due.
54
Similar to the $250 million secured revolving credit facility that it replaced, the SPPC Credit Agreement places certain restrictions on debt incurrence, liens and dividends. These restrictions are discussed in Note 8, Debt Covenant and Other Restrictions, of the Notes to Financial Statements in the 2011 Form 10-K.
The SPPC Credit Agreement contains a provision which reduces the availability under the credit facility by the negative mark-to-market exposure for hedging transactions with credit facility lenders or their energy trading affiliates. The reduction in availability limits the amount that SPPC can borrow or use for letters of credit and would require that SPPC prepay any amount in excess of that limitation. The amount of the reduction is calculated by SPPC on a monthly basis, and after calculating such reduction, the SPPC Credit Agreement provides that the reduction in availability under the revolving credit facility to SPPC shall in no event exceed 50% of the total commitments then in effect under the revolving credit facility. As a result of the suspension of the Utilities' hedging program, there was no negative mark-to-market exposure for SPPC as of May 7, 2012 that would impact borrowings.
Factors Affecting Liquidity
Ability to Issue Debt
SPPC’s ability to issue debt is impacted by certain factors such as financing authority from the PUCN, financial covenants in its financing agreements and its revolving credit facility agreement, and the terms of certain NVE debt. As of March 31, 2012, the most restrictive of the factors below is the PUCN authority. Based on this restriction, SPPC may issue up to $350 million of long term debt securities, and maintain a credit facility of up to $600 million. However, depending on NVE’s or NPC’s issuance of long-term debt or the use of the Utilities’ revolving credit facilities, the PUCN authority may not remain the most restrictive factor. The factors affecting SPPC’s ability to issue debt are further detailed below:
a. |
Financing authority from the PUCN - As of March 31, 2012, SPPC has financing authority from the PUCN for the period ending December 31, 2012, consisting of authority (1) to issue additional long term debt securities of up to $350 million; (2) to refinance approximately $348 million of long-term debt securities; and (3) ongoing authority to maintain a revolving credit facility of up to $600 million; |
|
|
b. |
Financial covenants within SPPC’s financing agreements – Under the SPPC Credit Agreement, the Utility must maintain a ratio of consolidated indebtedness to consolidated capital, determined as of the last day of each fiscal quarter, not to exceed 0.68 to 1.00. Based on March 31, 2012 financial statements, SPPC was in compliance with this covenant and could incur up to $878.4 million of additional indebtedness; |
|
|
|
All other financial covenants contained in SPPC’s financing agreements are suspended as SPPC’s senior secured debt is currently rated investment grade. However, if SPPC’s senior secured debt ratings fall below investment grade by either Moody’s or S&P, SPPC would again be subject to the limitations under these additional covenants; and |
|
|
c. |
Financial covenants within NVE’s Term Loan – As discussed in NVE’s Ability to Issue Debt, SPPC is also subject to NVE’s cap on additional consolidated indebtedness of $2.7 billion. |
Ability to Issue General and Refunding Mortgage Securities
To the extent that SPPC has the ability to issue debt under the most restrictive covenants in its and NVE’s financing agreements and has financing authority to do so from the PUCN, SPPC’s ability to issue secured debt is still limited by the amount of bondable property or retired bonds that can be used to issue debt under the SPPC Indenture.
The SPPC Indenture creates a lien on substantially all of SPPC’s properties in Nevada. As of March 31, 2012, $1.5 billion of SPPC’s General and Refunding Mortgage Securities were outstanding. SPPC had the capacity to issue $773.0 million of additional General and Refunding Mortgage Securities as of March 31, 2012. That amount is determined on the basis of:
1. |
70% of net utility property additions; and/or |
2. |
The principal amount of retired General and Refunding Mortgage Securities. |
Property additions include plant in service and specific assets in CWIP. The amount of bond capacity listed above does not include eligible property in CWIP.
SPPC also has the ability to release property from the lien of the SPPC Indenture on the basis of net property additions, cash and/or retired bonds. To the extent SPPC releases property from the lien of SPPC’s Indenture, it will reduce the amount of securities issuable under the SPPC Indenture.
55
Credit Ratings
The liquidity of SPPC, the cost and availability of borrowing by SPPC under the SPPC Credit Agreement, the potential exposure of SPPC to collateral calls under various contracts, and the ability of SPPC to acquire fuel and purchased power on favorable terms are all directly affected by the credit ratings for SPPC’s debt. SPPC’s senior secured debt is rated investment grade by three NRSROs: Fitch, Moody’s and S&P. As of March 31, 2012, the ratings are as follows:
|
|
|
|
Rating Agency |
|
|
||||
|
|
|
|
Fitch(1) |
|
Moody’s(2) |
|
S&P(3) |
|
|
|
SPPC |
Sr. Secured Debt |
|
BBB* |
|
Baa2* |
|
BBB* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Investment grade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Fitch’s lowest level of “investment grade” credit rating is BBB-. |
|
|
||||||
|
(2) |
Moody’s lowest level of “investment grade” credit rating is Baa3. |
|
|
||||||
|
(3) |
S&P’s lowest level of “investment grade” credit rating is BBB-. |
|
|
Fitch’s, Moody’s and S&P’s rating outlook for SPPC is Stable.
A security rating is not a recommendation to buy, sell or hold securities. Security ratings are subject to revision and withdrawal at any time by the assigning rating organization. Each security rating agency has its own methodology for assigning ratings, and, accordingly, each rating should be evaluated in the context of the applicable methodology, independently of all other ratings. The rating agencies provide ratings at the request of the company being rated and charge the company fees for their services.
Energy Supplier Matters
With respect to SPPC’s contracts for purchased power, SPPC purchases and sells electricity with counterparties under the WSPP agreement, an industry standard contract that SPPC uses as a member of the WSPP. The WSPP contract is posted on the WSPP website.
Under these contracts, a material adverse change, which includes a credit rating downgrade, in SPPC may allow the counterparty to request adequate financial assurance, which, if not provided within three business days, could cause a default. Most contracts and confirmations for purchased power have been modified or separate agreements have been made to either shorten the normal payment due date or require payment in advance of delivery in response to requests for financial assurance. A default must be declared within 30 days of the event, giving rise to the default becoming known. A default will result in a termination payment equal to the present value of the net gains and losses for the entire remaining term of all contracts between the parties aggregated to a single liquidated amount due within three business days following the date the notice of termination is received. The mark-to-market value, which is substantially based on quoted market prices, can be used to roughly approximate the termination payment and benefit at any point in time. According to the net mark-to-market value as of March 31, 2012, no amounts would be due to or from SPPC for all suppliers continuing to provide power under a WSPP agreement. These contracts qualify for the normal purchases and normal sales scope exception as defined by the Derivatives and Hedging Topic of the FASC, and as such, are not required to be mark-to-market on the balance sheet. Refer to Note 9, Derivatives and Hedging Activities, of the Notes to Financial Statements in the 2011 Form 10-K for further discussion.
Gas Supplier Matters
With respect to the purchase and sale of natural gas, SPPC uses several types of standard industry contracts. The natural gas contract terms and conditions are more varied than the electric contracts. Consequently, some of the contracts contain language similar to that found in the WSPP agreement and other agreements have unique provisions dealing with material adverse change, which primarily means a credit rating downgrade below investment grade. Forward physical gas supplies are purchased under index based pricing terms and as such do not carry forward mark-to-market exposure. Most contracts and confirmations for natural gas purchases have been modified or separate agreements have been made to either shorten the normal payment due date or require payment in advance of delivery. At the present time, no counterparties require payment in advance of delivery.
Gas transmission service is secured under FERC tariffs or custom agreements. These service contracts and tariffs require the user to establish and maintain creditworthiness to obtain service or otherwise post cash or a letter of credit to be able to receive service. Service contracts are subject to FERC approved tariffs, which, under certain circumstances, require the Utilities to provide collateral to continue receiving service.
56
Financial Gas Hedges
SPPC enters into certain hedging contracts with various counterparties to manage the gas price risk inherent in purchased power and fuel contracts. As discussed under SPPC’s Financing Transactions, the availability under SPPC’s Credit Agreement is reduced by the amount of net negative mark-to-market positions on hedging contracts with counterparties who are lenders to the revolving credit facility, provided that the reduction in availability under the revolving credit facility shall at no time exceed 50% of the total commitments then in effect under the revolving credit facility. As a result of the suspension of SPPC’s hedging program, there was no negative mark-to-market exposure for SPPC as of May 7, 2012 that would impact credit availability. If deemed prudent, SPPC may purchase hedging instruments in the event circumstances occur that may have the potential to increase the cost of fuel and purchased power.
Cross Default Provisions
None of the financing agreements of SPPC contain a cross default provision that would result in an event of default by SPPC upon an event of default by NVE or NPC under any of its financing agreements. In addition, certain financing agreements of SPPC provide for an event of default if there is a failure under other financing agreements of SPPC to meet payment terms or to observe other covenants that would result in an acceleration of payments due. Most of these default provisions (other than ones relating to a failure to pay such other indebtedness when due) provide for a cure period of 30-60 days from the occurrence of a specified event during which time SPPC may rectify or correct the situation before it becomes an event of default.
RECENT PRONOUNCEMENTS
See Note 1, Summary of Significant Accounting Policies, of the Notes to Financial Statements and in the 2011 Form 10-K for discussion of accounting policies and recent pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
As of March 31, 2012, NVE, NPC and SPPC have evaluated their risk related to financial instruments whose values are subject to market sensitivity. Such instruments are fixed and variable rate debt. Fair market value is determined using quoted market price for the same or similar issues or on the current rates offered for debt of the same remaining maturities (dollars in thousands):
|
|
|
|
|
2012 |
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
Expected Maturities |
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair |
|
|
|
|
2012 |
|
2013 |
|
2014 |
|
2015 |
|
2016 |
|
Thereafter |
|
Total |
|
|
Value |
|||||||
Long-Term Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
NVE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Fixed Rate |
$ |
- |
|
$ |
- |
|
$ |
195,000 |
|
$ |
- |
|
$ |
- |
|
$ |
315,000 |
|
$ |
510,000 |
|
$ |
536,851 |
||
|
|
Average Interest Rate |
|
- |
|
|
- |
|
|
2.81 |
% |
|
- |
|
|
- |
|
|
6.25 |
% |
|
4.93 |
% |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Fixed Rate |
$ |
130,000 |
|
$ |
- |
|
$ |
125,000 |
|
$ |
250,000 |
|
$ |
210,000 |
|
$ |
2,545,000 |
|
$ |
3,260,000 |
|
$ |
3,917,837 |
||
|
|
Average Interest Rate |
|
6.5 |
% |
|
- |
|
|
7.38 |
% |
|
5.88 |
% |
|
5.95 |
% |
|
6.47 |
% |
|
6.42 |
% |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Rate |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
188,775 |
|
$ |
188,775 |
|
$ |
182,699 |
||
|
|
Average Interest Rate |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
0.84 |
% |
|
0.84 |
% |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPPC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Fixed Rate |
$ |
- |
|
$ |
250,000 |
|
$ |
- |
|
$ |
- |
|
$ |
450,000 |
|
$ |
251,742 |
|
$ |
951,742 |
|
$ |
1,118,517 |
||
|
|
Average Interest Rate |
|
- |
|
|
5.5 |
% |
|
- |
|
|
- |
|
|
6.00 |
% |
|
6.75 |
% |
|
6.05 |
% |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Rate |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
214,675 |
|
$ |
214,675 |
|
$ |
190,989 |
||
|
|
Average Interest Rate |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
0.73 |
% |
|
0.73 |
% |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL DEBT |
$ |
130,000 |
|
$ |
250,000 |
|
$ |
320,000 |
|
$ |
250,000 |
|
$ |
660,000 |
|
$ |
3,515,192 |
|
$ |
5,125,192 |
|
$ |
5,946,893 |
Commodity Price Risk
See the 2011 Form 10-K, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, Commodity Price Risk, for a discussion of Commodity Price Risk. No material changes in commodity risk have occurred since December 31, 2011.
57
Credit Risk
The Utilities monitor and manage credit risk with their trading counterparties. Credit risk is defined as the possibility that a counterparty to one or more contracts will be unable or unwilling to fulfill its financial or physical obligations to the Utilities because of the counterparty’s financial condition. The Utilities’ credit risk associated with trading counterparties was approximately $41.6 million as of March 31, 2012, which compares to balances of $40.7 million at December 31, 2011.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
NVE, NPC and SPPC’s principal executive officers and principal financial officers, based on their evaluation of the registrants’ disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) have concluded that, as of March 31, 2012, the registrants’ disclosure controls and procedures were effective.
(b) Change in internal controls over financial reporting.
There were no changes in the registrants’ internal controls over financial reporting in the first quarter of 2012 that have materially affected, or are reasonably likely to materially affect, the registrants’ internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other Legal Matters
NVE and its subsidiaries, through the course of their normal business operations, are currently involved in a number of other legal actions, none of which has had, or in the opinion of management, is expected to have a significant impact on their financial positions or results of operations. See Note 7, Commitments and Contingencies, of the Condensed Notes to Financial Statements for further discussion of other legal matters.
ITEM 1A. RISK FACTORS
For the purposes of this section, the terms “we,” “us” and “our” refer to NVE on a consolidated basis (including NPC and SPPC). The following information updates, and should be read in conjunction with, the information disclosed in Item 1A, “Risk Factors,” of our 2011 Form 10-K. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that are not presently known or that we currently believe to be less significant may also adversely affect us.
As of the date of this report, there have been no material changes with regard to the Risk Factors disclosed in NVE’s, NPC’s and SPPC’s 2011 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
58
ITEM 6. EXHIBITS
(a) Exhibits filed with this Form 10-Q:
(10) NV Energy, Inc.:
10.1 |
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Credit Agreement entered into on March 23, 2012, between Nevada Power Company d/b/a NV Energy and Wells Fargo Bank, National Association, as administrative agent, swingline lender and issuing bank, and the other lenders parties thereto. |
10.2 |
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Credit Agreement entered into on March 23, 2012, between Sierra Pacific Power Company d/b/a NV Energy and Wells Fargo Bank, National Association, as administrative agent, swingline lender and issuing bank, and the other lenders parties thereto. |
(12) NV Energy, Inc.:
12.1 |
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Statement regarding computation of Ratios of Earnings to Fixed Charges. |
Nevada Power Company:
12.2 |
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Statement regarding computation of Ratios of Earnings to Fixed Charges. |
Sierra Pacific Power Company:
12.3 |
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Statement regarding computation of Ratios of Earnings to Fixed Charges. |
(31) NV Energy, Inc., Nevada Power Company and Sierra Pacific Power Company
31.1 |
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Certification of Principal Executive Officer of NV Energy, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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31.2 |
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Certification of Principal Executive Officer of Nevada Power Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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31.3 |
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Certification of Principal Executive Officer of Sierra Pacific Power Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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31.4 |
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Certification of Principal Financial Officer of NV Energy, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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31.5 |
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Certification of Principal Financial Officer of Nevada Power Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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31.6 |
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Certification of Principal Financial Officer of Sierra Pacific Power Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
(32) NV Energy, Inc., Nevada Power Company and Sierra Pacific Power Company
32.1 |
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Certification of Principal Executive Officer of NV Energy, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2 |
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Certification of Principal Executive Officer of Nevada Power Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.3 |
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Certification of Principal Executive Officer of Sierra Pacific Power Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.4 |
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Certification of Principal Financial Officer of NV Energy, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.5 |
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Certification of Principal Financial Officer of Nevada Power Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.6 |
|
Certification of Principal Financial Officer of Sierra Pacific Power Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
59
(101) NV Energy, Inc., Nevada Power Company and Sierra Pacific Power Company
*101.INS |
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XBRL Instance Document |
*101.SCH |
|
XBRL Taxonomy Schema |
*101.CAL |
|
XBRL Calculation Linkbase |
*101.LAB |
|
XBRL Label Linkbase |
*101.PRE |
|
XBRL Presentation Linkbase |
*101.DEF |
|
XBRL Definition Linkbase |
* XBRL information will be considered to be furnished, not filed, for the first two years of a company’s submission of XBRL information.
60
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
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NV Energy, Inc. |
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(Registrant) |
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Date: May 8, 2012 |
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By: |
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/s/ Dilek L. Samil |
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Dilek L. Samil |
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Chief Financial Officer |
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(Principal Financial Officer) |
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Date: May 8, 2012 |
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By: |
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/s/ E. Kevin Bethel |
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E. Kevin Bethel |
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Chief Accounting Officer |
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(Principal Accounting Officer) |
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Nevada Power Company d/b/a NV Energy |
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(Registrant) |
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Date: May 8, 2012 |
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By: |
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/s/ Dilek L. Samil |
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Dilek L. Samil |
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Chief Financial Officer |
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(Principal Financial Officer) |
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Date: May 8, 2012 |
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By: |
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/s/ E. Kevin Bethel |
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E. Kevin Bethel |
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Chief Accounting Officer |
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(Principal Accounting Officer) |
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Sierra Pacific Power Company d/b/a NV Energy |
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(Registrant) |
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Date: May 8, 2012 |
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By: |
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/s/ Dilek L. Samil |
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Dilek L. Samil |
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Chief Financial Officer |
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(Principal Financial Officer) |
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Date: May 8, 2012 |
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By: |
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/s/ E. Kevin Bethel |
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E. Kevin Bethel |
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Chief Accounting Officer |
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(Principal Accounting Officer)
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61
EXHIBIT 10.1
$500,000,000
CREDIT AGREEMENT
Dated as of March 23, 2012
among
NEVADA POWER COMPANY d/b/a NV ENERGY,
as Borrower
and
THE LENDERS PARTY HERETO
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent, Swingline Lender and an Issuing Bank
WELLS FARGO SECURITIES, LLC,
J.P. MORGAN SECURITIES LLC
and
MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED
as Joint Lead Arrangers and Joint Bookrunners
BANK OF AMERICA, N.A. and
JPMORGAN
CHASE BANK, N.A.
each as a Syndication Agent
and
THE BANK OF NOVA SCOTIA and
UNION
BANK, N.A.
each as a documentation agent
Table of Contents
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Page |
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS |
1 |
||
|
Section 1.1 |
Certain Defined Terms |
1 |
|
Section 1.2 |
Computation of Time Periods; Construction |
21 |
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Section 1.3 |
Accounting Matters |
21 |
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Section 1.4 |
Letter of Credit Amounts |
22 |
ARTICLE II. COMMITMENTS |
22 |
||
|
Section 2.1 |
Commitments |
22 |
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Section 2.2 |
Fees |
22 |
|
Section 2.3 |
Reduction of the Commitments |
23 |
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Section 2.4 |
Computations of Outstandings |
24 |
|
Section 2.5 |
Optional Increase of the Commitments |
24 |
ARTICLE III. LOANS |
25 |
||
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Section 3.1 |
Revolving Loans |
25 |
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Section 3.2 |
Conversion of Loans |
27 |
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Section 3.3 |
Interest Periods |
27 |
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Section 3.4 |
Other Terms Relating to the Making and Conversion of Loans |
28 |
|
Section 3.5 |
Repayment of Loans; Interest |
30 |
|
Section 3.6 |
Additional Interest on LIBOR Rate Loans |
30 |
|
Section 3.7 |
Default Rate |
31 |
|
Section 3.8 |
Swingline Loans |
31 |
ARTICLE IV. LETTERS OF CREDIT |
34 |
||
|
Section 4.1 |
The Letter of Credit Commitment |
34 |
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Section 4.2 |
Procedures for Issuance and Amendment of Letters of Credit; |
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|
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Evergreen Letters of Credit |
36 |
|
Section 4.3 |
Drawings and Reimbursements; Funding of Participants |
37 |
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Section 4.4 |
Repayment of Participations |
38 |
|
Section 4.5 |
Obligations Absolute |
39 |
|
Section 4.6 |
Role of Issuing Banks |
40 |
|
Section 4.7 |
Applicability of ISP and UCP |
40 |
|
Section 4.8 |
Letter of Credit Fees |
40 |
|
Section 4.9 |
Fronting Fee and Processing Charges Payable to Issuing Banks |
41 |
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Section 4.10 |
Conflict with Issuing Bank Agreements |
41 |
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Section 4.11 |
Letters of Credit Issued for Subsidiaries |
41 |
ARTICLE V. PAYMENTS, COMPUTATIONS AND YIELD PROTECTION |
41 |
||
|
Section 5.1 |
Payments and Computations |
41 |
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Section 5.2 |
Interest Rate Determination |
43 |
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Section 5.3 |
Prepayments |
43 |
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Section 5.4 |
Yield Protection |
44 |
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Section 5.5 |
Sharing of Payments, Etc. |
45 |
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Section 5.6 |
Taxes |
46 |
ARTICLE VI. CONDITIONS PRECEDENT |
49 |
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Section 6.1 |
Conditions Precedent to Effectiveness of this Agreement |
49 |
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Section 6.2 |
Conditions Precedent to Each Extension of Credit |
51 |
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Section 6.4 |
Reliance on Certificates |
51 |
ARTICLE VII. REPRESENTATIONS AND WARRANTIES |
51 |
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Section 7.1 |
Representations and Warranties of the Borrower |
51 |
ARTICLE VIII. COVENANTS OF THE BORROWER |
58 |
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Section 8.1 |
Affirmative Covenants |
58 |
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Section 8.2 |
Negative Covenants |
61 |
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Section 8.3 |
Financial Covenant |
68 |
i
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Page |
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ARTICLE IX. DEFAULTS |
68 |
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Section 9.1 |
Events of Default |
68 |
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Section 9.2 |
Remedies |
71 |
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Section 9.3 |
Rights and Remedies Cumulative; Non-Waiver; etc. |
72 |
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Section 9.4 |
Crediting of Payments and Proceeds |
72 |
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Section 9.5 |
Administrative Agent May File Proofs of Claim |
73 |
ARTICLE X. THE ADMINISTRATIVE AGENT |
73 |
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Section 10.1 |
Appointment and Authority |
73 |
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Section 10.2 |
Rights as a Lender |
73 |
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Section 10.3 |
Exculpatory Provisions |
74 |
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Section 10.4 |
Reliance by the Administrative Agent |
74 |
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Section 10.5 |
Delegation of Duties |
75 |
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Section 10.6 |
Resignation of Administrative Agent |
75 |
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Section 10.7 |
Non-Reliance on Administrative Agent and Other Lenders |
76 |
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Section 10.8 |
No Other Duties, etc. |
76 |
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Section 10.9 |
Collateral and Guaranty Matters |
76 |
ARTICLE XI. MISCELLANEOUS |
77 |
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Section 11.1 |
Amendments, Etc. |
77 |
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Section 11.2 |
Notices, Etc. |
78 |
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Section 11.3 |
No Waiver of Remedies |
78 |
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Section 11.4 |
Costs, Expenses and Indemnification |
78 |
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Section 11.5 |
Right of Set-Off; Payments Set Aside |
80 |
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Section 11.6 |
Binding Effect |
81 |
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Section 11.7 |
Successors and Assigns; Participations |
81 |
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Section 11.8 |
Confidentiality |
84 |
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Section 11.9 |
Waiver of Jury Trial |
85 |
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Section 11.10 |
Governing Law; Submission to Jurisdiction |
85 |
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Section 11.11 |
Relation of the Parties; No Beneficiary |
86 |
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Section 11.12 |
Execution in Counterparts |
86 |
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Section 11.13 |
Survival of Agreement |
86 |
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Section 11.14 |
Survival of Indemnities |
86 |
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Section 11.15 |
Patriot Act Notice |
87 |
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Section 11.16 |
Severability |
87 |
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Section 11.17 |
Electronic Execution of Assignments and Certain Other Documents |
87 |
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Section 11.18 |
Defaulting Lenders |
87 |
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Section 11.19 |
Cash Collateral |
89 |
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Section 11.20 |
Press Releases and Related Matters |
90 |
ii
Exhibits |
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EXHIBIT A-1 |
Form of Revolving Note |
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EXHIBIT A-2 |
Form of Swingline Note |
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EXHIBIT A-3 |
Form of Notice of Revolving Borrowing |
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EXHIBIT A-4 |
Form of Notice of Swingline Borrowing |
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EXHIBIT B |
Form of Notice of Conversion |
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EXHIBIT C |
Form of Assignment and Assumption |
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EXHIBIT D |
Form of Officer’s Certificate |
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EXHIBIT E |
Form of Secretary’s Certificate |
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EXHIBIT F |
Form of Mark-to-Market Exposure Certificate |
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Schedules |
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SCHEDULE 1.1(A) |
Existing Letters of Credit |
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SCHEDULE 1.1(B) |
Commitments and Percentages |
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SCHEDULE 7.1(c) |
Legal Name, Etc. |
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SCHEDULE 7.1(d) |
Consents, Authorizations, Filings and Notices |
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SCHEDULE 7.1(f) |
Material Litigation |
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SCHEDULE 7.1(p) |
Subsidiaries |
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SCHEDULE 8.1(d) |
Contractual Obligations; Compliance with Law |
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SCHEDULE 8.2(b)(vi) |
Existing Liens |
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SCHEDULE 8.2(g) |
Affiliate Transactions |
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SCHEDULE 11.2 |
Certain Addresses for Notices; Applicable Lending Offices |
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iii
THIS CREDIT AGREEMENT, dated as of March 23, 2012 is made by and among:
(i) Nevada Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”),
(ii) the banks and other financial institutions listed on the signature pages of this Agreement and the other Lenders (as hereinafter defined) and Issuing Banks (as hereinafter defined) from time to time party hereto, and
(iii) Wells Fargo Bank, National Association, as administrative agent (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”) for the Lenders hereunder, as Swingline Lender and as an Issuing Bank.
PRELIMINARY STATEMENTS
The Borrower has requested that the Lenders provide credit facilities for the purposes set forth herein, and the Lenders are willing to do so on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
“Acquired Debt” means, with respect to any specified Person, (a) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person and (b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.
“Administrative Agent” has the meaning assigned to that term in the preamble hereto.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account, as set forth on Schedule 11.2 or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
1
“Aggregate Negative Mark-to-Market Exposure” means, as of any date of determination, an amount equal to the sum of the Negative Mark-to-Market Exposure existing on such date of determination under each Hedge Agreement without giving effect to any netting other than netting as between two or more Hedge Agreements each by and between the Borrower or any Subsidiary, on the one hand, and the same legal entity (or any Affiliate thereof), on the other hand, that is contractually available to the Borrower or such Subsidiary.
“Agreement” means this Credit Agreement, as amended, modified, restated, supplemented or replaced from time to time in accordance with the terms hereof.
“Applicable Lending Office” means, with respect to each Lender, (a) such Lender’s Domestic Lending Office, in the case of a Base Rate Loan, and (b) such Lender’s Eurodollar Lending Office, in the case of a LIBOR Rate Loan.
“Applicable Margin” means, with respect to Loans, Letters of Credit and the Commitment Fee, the corresponding percentages per annum as set forth below based on the applicable Secured Debt Ratings:
Level |
Secured Debt Rating |
Applicable LIBOR Rate and LIBOR Market Index Rate Margin |
Applicable Base Rate Margin |
Commitment Fee |
Letter of Credit Fee |
I |
A- or higher from S&P/A3 or higher from Moody’s |
1.125% |
0.125% |
0.125% |
1.125% |
II |
BBB+ from S&P/Baa1 from Moody’s |
1.25% |
0.25% |
0.175% |
1.25% |
III |
BBB from S&P/Baa2 from Moody’s |
1.50% |
0.50% |
0.225% |
1.50% |
IV |
BBB- from S&P/Baa3 from Moody’s |
1.75% |
0.75% |
0.275% |
1.75% |
V |
BB+ or lower from S&P/Ba1 or lower from Moody’s/unrated by S&P and Moody’s |
2.00% |
1.00% |
0.325% |
2.00% |
In all cases in determining the Applicable Margin, the Commitment Fee and the Letter of Credit Fee, if the Secured Debt Ratings established by the Rating Agencies shall fall within different levels, the applicable Secured Debt Rating shall be based on the higher of the two applicable Secured Debt Ratings unless one of the two applicable Secured Debt Ratings is two or more levels lower than the other, in which case the applicable Secured Debt Rating shall be determined by reference to the level one lower than the higher of the two applicable Secured Debt Ratings. The Applicable Margins, Commitment Fee and Letter of Credit Fee shall be increased or decreased in accordance with this definition upon any change in the applicable Secured Debt Rating, and such increased or decreased Applicable Margins, Commitment Fee and Letter of Credit Fee shall be effective from the date of announcement of any such new Secured Debt Rating until the next such change. The Borrower agrees to notify the Administrative Agent promptly after each change in any Secured Debt Rating. If the rating system of any Rating Agency shall change, or if any such Rating Agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect
2
such changed rating system or the non-availability of Secured Debt Ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable Margin, the Commitment Fee and the Letter of Credit Fee shall be determined by reference to the Secured Debt Rating most recently in effect prior to such change or cessation.
“Applicable Rate” means:
(a) in the case of each Base Rate Loan, a rate per annum equal at all times to the sum of the Base Rate in effect from time to time plus the Applicable Margin in effect from time to time;
(b) in the case of each LIBOR Rate Loan comprising part of the same Borrowing, a rate per annum during each Interest Period equal at all times to the sum of the LIBOR Rate for such Interest Period plus the Applicable Margin in effect from time to time during such Interest Period; and
(c) in the case of each LIBOR Market Index Rate Loan, a rate per annum equal at all times to the sum of the LIBOR Market Index Rate in effect from time to time plus the Applicable Margin in effect from time to time.
“Approved Fund” means any Person (other than a natural Person), including, without limitation, any special purpose entity, that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business; provided, that such Approved Fund must be administered, managed or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.7), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.
“Bank of America” means Bank of America, N.A., a national banking association.
“Base Rate” means, at any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 1/2 of 1% and (c) the LIBOR Base Rate plus 1.0%. Any change in the Base Rate due to a change in any of the foregoing will become effective on the effective date of such change in the Federal Funds Rate, the Prime Rate or the LIBOR Base Rate.
“Base Rate Loan” means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 3.5(b)(i).
“Board” means the Board of Governors of the Federal Reserve System of the United States of America (or any successor).
“Board of Directors” means (a) with respect to a corporation, the board of directors of the corporation, (b) with respect to a partnership, the Board of Directors of the general partner of the partnership and (c) with respect to any other Person, the board or committee of such Person serving a similar function.
3
“Borrower” has the meaning assigned to that term in the preamble hereto.
“Borrower Materials” has the meaning assigned to that term in Section 8.1(g).
“Borrowing” means a borrowing consisting of Loans of the same Type and in the case of LIBOR Rate Loans, having the same Interest Period, and made or Converted on the same day by the Lenders, ratably in accordance with their respective Percentages. Any Borrowing consisting of Loans of a particular Type may be referred to as being a Borrowing of such “Type”. All Loans of the same Type and, in the case of LIBOR Rate Loans, having the same Interest Period and made or Converted on the same day shall be deemed a single Borrowing hereunder until repaid or next Converted.
“Borrowing Limit” means, as of any date of determination, the lesser of (a) the Commitments and (b) an amount equal to (i) the Commitments minus (ii) Aggregate Negative Mark-to-Market Exposure as of the last day of the calendar month most recently ended as set forth in the certificate of a Responsible Officer of the Borrower delivered pursuant to Section 8.1(b)(iii); provided, that, (i) in no event shall the amount calculated in clause (b) above be less than 50% of the Commitments then in effect and (ii) with respect to the determination of the Borrowing Limit on the Closing Date, Aggregate Negative Mark-to-Market Exposure, if any, shall be as set forth in the certificate of a Responsible Officer of the Borrower delivered pursuant to Section 6.1(i). For the avoidance of doubt, the Borrowing Limit shall be re-calculated as of each calendar month.
“Business Day” means (a) for all purposes other than as covered by clause (b) below, a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York, Charlotte, North Carolina or Dallas, Texas are authorized or required by law to close and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, LIBOR Rate Loans, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.
“Capital Lease Obligations” means, with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP; for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.
“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.
“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, an Issuing Bank, the Swingline Lender (as applicable) and the Lenders, as collateral for LC Obligations, Obligations in respect of Swingline Loans or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if an Issuing Bank or Swingline Lender benefitting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and (b) an Issuing Bank or the Swingline Lender (as applicable). “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“Cash Equivalents” means (a) United States dollars, (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United
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States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition, (c) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any commercial bank having capital and surplus in excess of $500,000,000 and a Thomson Bank Watch Rating of “B” or better, (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above, (e) commercial paper having the highest rating obtainable from Moody’s or S&P and in each case maturing within 270 days after the date of acquisition and (f) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (e) of this definition.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” means the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 20% of the outstanding common stock of NV Energy, Inc.; or (b) NV Energy, Inc. shall cease to own and control, of record and beneficially, directly, 100% of each class of outstanding Capital Stock of the Borrower (other than non-voting preferred Capital Stock of the Borrower in an amount not to exceed 10% of all Capital Stock of the Borrower; provided that such preferred Capital Stock may become voting upon an event of default with respect to such preferred stock) free and clear of all Liens.
“Closing Date” means the date of this Agreement.
“Code” means the Internal Revenue Code of 1986, and the rules and regulations thereunder, each as amended or modified from time to time.
“Commitment” means, as to each Lender, its obligation to (a) make Revolving Loans to the Borrower pursuant to Section 2.1, (b) purchase participations in LC Obligations and (c) purchase participations in Swingline Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1.1(B) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
“Commitment Fee” has the meaning assigned to that term in Section 2.2(a).
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“Commitments” mean the Commitments of all the Lenders. The aggregate principal amount of all the Commitments in effect on the Closing Date is FIVE HUNDRED MILLION DOLLARS ($500,000,000).
“Commonly Controlled Entity” means an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.
“Consolidated” means, when used with reference to financial statements or financial statement items of any Person, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP.
“Consolidated Assets” means, at any date of determination, the total amount of consolidated assets of the Borrower and its Subsidiaries, as determined in accordance with GAAP.
“Consolidated Capital” means, at any date of determination, the sum of (a) Consolidated Indebtedness plus (b) Consolidated equity of the common stockholders of the Borrower and its Subsidiaries plus (c) trust-originated or partnership-originated preferred securities of the Borrower and its Consolidated Subsidiaries plus (d) Consolidated equity of the preference stockholders of the Borrower and its Subsidiaries plus (e) Consolidated equity of the preferred stockholders of the Borrower and its Subsidiaries, calculated as of such date, in the case of clauses (b) through (e) above, in accordance with GAAP.
“Consolidated Indebtedness” means, at any date of determination, without duplication, the aggregate Indebtedness of the Borrower and its Consolidated Subsidiaries; provided, however, that Consolidated Indebtedness shall not include junior subordinated debentures issued by the Borrower in connection with the issuance of (a) preferred trust securities or trust-issued preferred securities by any Trust Preferred Vehicle and (b) other similar trust-originated preferred securities by any Subsidiary of the Borrower; provided, that (i) the issuer of such preferred securities lends substantially all of the proceeds from such issuance to the Borrower in exchange for such junior subordinated debentures and (ii) substantially all of the assets of such issuer consist solely of such junior subordinated debentures and payments made from time to time in respect thereof.
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.
“Conversion”, “Convert” or “Converted” refers to a conversion of Loans of one Type into Loans of another Type, or to the selection of a new, or the continuation of the same, Interest Period for Loans, as the case may be, pursuant to Section 3.2.
“Debt Ratings Trigger” means the date which the Borrower shall have obtained a Secured Debt Rating of (a) BBB- or higher from S&P and (b) Baa3 or higher from Moody’s, in each case with a stable or better outlook.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
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“Default” means any of the events specified in Section 9.1, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“Defaulting Lender” means, subject to Section 11.18(b), any Lender that (a) has failed to (i) fund all or any portion of the Loans or participations in respect of Letters of Credit or Swingline Loans required to be funded by it hereunder within two Business Days of the date such Loans or participations were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, an Issuing Bank, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower,the Administrative Agent, an Issuing Bank or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied, (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 11.18(b)) upon delivery of written notice of such determination to the Borrower, the Issuing Banks, the Swingline Lender and each Lender.
“Disposition” means, with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof; and the terms “Dispose” and “Disposed of” shall have correlative meanings.
“Dollars” and the sign “$” each means lawful money of the United States.
“Domestic Lending Office” means, with respect to any Lender, the office of such Lender or Affiliate of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule 11.2 hereto or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender or Affiliate of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.
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“Eligible Assignee” means any Person that meets the requirements to be an assignee under Sections 11.7(b)(iii), (v), (vi) and (vii) (subject to such consents, if any, as may be required under Section 11.7(b)(iii)).
“Environmental Laws” means any and all laws, rules, orders, regulations, statutes, ordinances, guidelines, codes, decrees, or other legally enforceable requirements (including, without limitation, common law) of any international authority, foreign government, the United States, or any state, local, municipal or other governmental authority, regulating, relating to or imposing liability or standards of conduct concerning protection of the environment or of human health, or employee health and safety, as has been, is now, or may at any time hereafter be, in effect. For the avoidance of doubt, the Nevada Renewable Energy Portfolio Standard shall not constitute an Environmental Law.
“Environmental Liability” means, with respect to any Person, any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of such Person or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Materials of Environmental Concern, (c) exposure to any Materials of Environmental Concern, (d) the release or threatened release of any Materials of Environmental Concern into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Environmental Permits” means any and all permits, licenses, approvals, registrations, notifications, exemptions and other authorizations required under any Environmental Law.
“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Board, as in effect from time to time.
“Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender or Affiliate of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule 11.2 hereto or in the Assignment and Assumption pursuant to which it became a Lender (or, if no such office or Affiliate is specified, its Domestic Lending Office), or such other office of such Lender or Affiliate of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.
“Eurodollar Reserve Percentage” means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Board of Governors of the Federal Reserve system (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City.
“Event of Default” means any of the events specified in Section 9.1, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
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“Evergreen Letter of Credit” means any Letter of Credit that, by its terms, provides that it shall be automatically renewed or extended for a stated period of time at the end of its then scheduled expiration date unless the applicable Issuing Bank notifies the beneficiary thereof prior to such expiration date that such Issuing Bank elects not to renew or extend such Letter of Credit.
“Excess Net Proceeds” has the meaning set forth in Section 8.2(d).
“Existing Letter of Credit” means each of the letters of credit set forth on Schedule 1.1(A).
“Existing NPC Credit Agreement” means that certain Credit Agreement dated as of April 28, 2010 by and among Nevada Power Company, as the borrower, Wells Fargo Bank, National Association as the administrative agent, an issuing bank and a lender and the other lenders from time to time party thereto, as amended or otherwise modified from time to time.
“Extension of Credit” means, as to any Lender at any time, (a) an amount equal to the sum of (i) the Outstanding Amount of all Revolving Loans made by such Lender plus (ii) such Lender’s Percentage of the Outstanding Amount of all LC Obligations plus (iii) such Lender’s Percentage of the Outstanding Amount of all Swingline Loans or (b) the making of any Loan by such Lender or the issuance, extension or renewal of, or participation in, a Letter of Credit by such Lender.
“Federal Funds Rate” means, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day (or, if such day is not a Business Day, for the immediately preceding Business Day), as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent.
“Fee Letters” means (a) that certain letter agreement, dated February 24, 2012, among the Borrower, SPPC, Wells Fargo Bank and WFS, as amended from time to time, (b) that certain letter agreement, dated February 24, 2012, among the Borrower, SPPC, Bank of America and MLPFS, as amended from time to time and (c) that certain letter agreement, dated as of February 24, 2012, among the Borrower, SPPC, JPMorgan and JPM Securities, as amended from time to time.
“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to an Issuing Bank, such Defaulting Lender’s Percentage of the outstanding LC Obligations other than LC Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swingline Lender, such Defaulting Lender’s Percentage of Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
“General and Refunding Mortgage Bonds” means, collectively, (a) the Borrower’s General and Refunding Mortgage Bonds, Series Z, due on the Maturity Date, issued as of the Closing Date to the
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Administrative Agent under the General and Refunding Mortgage Indenture and any supplemental indenture or Officer’s Certificate related thereto, in the aggregate principal amount of $500,000,000, and (b) any additional General and Refunding Mortgage Bonds issued by the Borrower to the Administrative Agent under the General and Refunding Mortgage Indenture and any supplemental indentures or Officer’s Certificate related thereto in connection with any increase in the Commitments pursuant to Section 2.5, in each case as collateral securing the Obligations.
“General and Refunding Mortgage Indenture” means the General and Refunding Mortgage Indenture, dated as of May 1, 2001, between the Borrower and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Mellon), as trustee, as the same may be amended, modified or supplemented from time to time.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, bureau, instrumentality, regulatory body, court, tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness.
“Hedge Agreements” means, with respect to any Person, the collective reference to any of the following: (a) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and any other agreements designed to protect such Person against fluctuations in interest rates with respect to Indebtedness incurred and not for purposes of speculation, (b) foreign exchange contracts and currency protection agreements entered into with one of more financial institutions designed to protect such Person against fluctuations in currency exchange rates with respect to Indebtedness incurred and not for purposes of speculation, (c) any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities used by such Person at the time and (d) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. The term “Hedge Agreements”, for the avoidance of doubt, shall exclude any forward energy purchase or sale contracts or similar arrangements entered into by the Borrower or its Subsidiaries.
“Hedging Obligations” means, with respect to any Person, all existing or future payment and other obligations owing by such Person under any Hedge Agreement (which such Hedge Agreement is permitted hereunder) with any Person that (i) is a current Lender or Affiliate of any current Lender or (ii) was a Lender or an Affiliate of any Lender at the time such Hedge Agreement was executed.
“Honor Date” has the meaning assigned to that term in Section 4.3(a).
“Indebtedness” means, with respect to any Person, any indebtedness of such Person, whether or not contingent (a) in respect of borrowed money, (b) evidenced by notes, bonds, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (c) in respect of banker’s acceptances, (d) representing Capital Lease Obligations, (e) representing the balance deferred and unpaid
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of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable arising in the ordinary course of business that is (i) less than $1,000,000 or (ii) not more than one hundred twenty (120) days past due or (f) representing any Net Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Net Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be (x) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount, and (y) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness.
“Indemnitee” has the meaning assigned to that term in Section 11.4(b).
“Ineligible Lender” means any Person other than (a) a Lender or an Affiliate thereof, (b) an Approved Fund or (c) any U.S. or foreign bank that accepts deposits in the ordinary course of business.
“Information” has the meaning assigned to that term in Section 11.8.
“Insolvency” means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA; and the term “Insolvent” shall have a correlative meaning (pertaining to a condition of Insolvency).
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
“Interest Period” has the meaning assigned to that term in Section 3.3.
“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), or purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Borrower or any Subsidiary of the Borrower sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Borrower such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Borrower, the Borrower will be deemed to have made an Investment on the date of any such sale or disposition. The acquisition by the Borrower or any Subsidiary of the Borrower of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Borrower or such Subsidiary in such third Person.
“ISP98” means the International Standby Practices (1998 Revision, effective January 1, 1999), International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the time of issuance of any Letter of Credit.
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“Issuing Banks” means, collectively, Wells Fargo Bank, Bank of America and JPMorgan, in their respective capacities as issuers of Letters of Credit under this Agreement (or any successors thereto) and “Issuing Bank” means any one of them. Notwithstanding the foregoing, Wells Fargo Bank shall be the Issuing Bank with respect to the Existing Letters of Credit, as more specifically set forth on Schedule 1.1(A).
“Issuing Bank Agreement” means, with respect to any Letter of Credit, the collective reference to (a) an agreement between an Issuing Bank and the Borrower, providing for the issuance of one or more Letters of Credit, in support of (i) the Borrower’s obligations owing to gas, electric power or other energy suppliers or (ii) other general corporate activities of the Borrower and (b) any other document, agreement and instrument entered into by such Issuing Bank and the Borrower (or any Subsidiary) or in favor of such Issuing Bank and relating to any such Letter of Credit. In the event of any conflict between the terms of this Agreement and the terms of any Issuing Bank Agreement, the terms of this Agreement shall control and such conflicting terms under such Issuing Bank Agreement shall be of no force or effect.
“Joint Lead Arrangers” means the collective reference to Wells Fargo Securities, MLPFS and JPM Securities in their respective capacities as joint lead arrangers and joint bookrunners.
“JPMorgan” means JPMorgan Chase Bank, N.A.
“JPM Securities” means J.P. Morgan Securities LLC.
“LC Advance” means, with respect to each Lender, such Lender’s funding of its participation in any LC Borrowing in accordance with its Percentage.
“LC Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing of Revolving Loans.
“LC Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“LC Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all LC Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP98, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Lenders” means the banks and other financial institutions listed on the signature pages hereof as lenders (including, without limitation, any Issuing Bank), each Eligible Assignee that shall become a party hereto pursuant to Section 11.7 and, as the context requires, the Swingline Lender.
“Letter of Credit” means (a) any letter of credit issued hereunder and (b) any Existing Letter of Credit. A Letter of Credit may be a commercial or direct pay letter of credit or a standby letter of credit.
“Letter of Credit Application” means an application and agreement for the issuance or amendment of a letter of credit in the form from time to time in use by the applicable Issuing Bank.
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“Letter of Credit Expiration Date” means with respect to any Letter of Credit the earlier of (a) one (1) year after the date of issuance of such Letter of Credit and (b) five (5) Business Days prior to the Maturity Date.
“Letter of Credit Fee” has the meaning assigned to that term in Section 4.8.
“Letter of Credit Sublimit” means, as of any date of determination, the lesser of (a) ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) and (b) the Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Commitments.
“LIBOR Base Rate” means:
(a) for any Interest Period with respect to a LIBOR Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a period equal to the applicable Interest Period, as published by Reuters at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate is not available, then the “LIBOR Base Rate” shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period. Each calculation by the Administrative Agent of the LIBOR Base Rate shall be conclusive and binding for all purposes, absent manifest error; and
(b) for any interest rate calculation with respect to a Base Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a term of one month commencing that day, as published by Reuters at approximately 11:00 a.m. (London time) two (2) Business Days prior to the date of determination (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate is not available, then the “LIBOR Base Rate” shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) on the date of determination for a term equal to one month. Each calculation by the Administrative Agent of the LIBOR Base Rate shall be conclusive and binding for all purposes, absent manifest error.
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“LIBOR Market Index Rate” means, for any day, the 30-day rate of interest per annum appearing on Reuters Screen LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) on such day, or if such day is not a London business day, then the immediately preceding London business day (or if not so reported, then as determined by the Administrative Agent from another recognized source or interbank quotation), or another rate as agreed to by the Administrative Agent and the Borrower.
“LIBOR Market Index Rate Loan” means any Loan bearing interest at a rate based upon the LIBOR Market Index Rate.
“LIBOR Rate” means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula:
LIBOR Rate = |
LIBOR Base Rate |
1.00 - Eurodollar Reserve Percentage |
“LIBOR Rate Loan” means any Loan bearing interest at a rate based upon the LIBOR Rate other than LIBOR Market Index Rate Loans.
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
“Loan” means an extension of credit by a Lender to the Borrower under Article III in the form of a Revolving Loan or a Swingline Loan.
“Loan Documents” means this Agreement, any Note, each Subsidiary Guarantee, if any, each Issuing Bank Agreement, the Officer’s Certificate, the General and Refunding Mortgage Bonds and each Fee Letter, and each other document, instrument, certificate and agreement executed and delivered by the Borrower or any Subsidiary thereof in connection with this Agreement, including any certificates provided pursuant to this Agreement (excluding any Hedge Agreement and any Treasury Management Agreement), all as may be amended, restated, supplemented or otherwise modified from time to time.
“Material Adverse Effect” means a material adverse effect on (a) the business, assets, property, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent, the Issuing Banks or the Lenders hereunder or thereunder.
“Materials of Environmental Concern” means any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity, and any other substances or forces of any kind, whether or not any such substance or force is defined as hazardous or toxic under any Environmental Law, that is regulated pursuant to or could give rise to liability under any Environmental Law.
“Maturity Date” means March 23, 2017.
“Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 105% of the Fronting Exposure of all Issuing
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Banks with respect to Letters of Credit issued and outstanding at such time and (b) otherwise, an amount determined by the Administrative Agent and the Issuing Banks in their sole discretion.
“MLPFS” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.
“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.
“Mortgaged Property” has the meaning assigned to that term in the General and Refunding Mortgage Indenture.
“Multiemployer Plan” means a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Negative Mark-to-Market Exposure” means the mark-to-market exposure of the Borrower or any of its Subsidiaries in connection with a Hedge Agreement with any current Lender or Affiliate of a current Lender (or any Person that was a Lender or Affiliate of a Lender at the time such Hedge Agreement was executed) that would cause a liability to the Borrower or any such Subsidiary, as calculated by the Borrower and provided in a certificate to the Administrative Agent pursuant to Section 8.1(b)(iii) or Section 6.1(i), in each case in form and substance reasonably acceptable to the Administrative Agent.
“Net Hedging Obligations” means, as of any date, any net obligations associated with the Termination Value of any such Hedge Agreement on such date.
“Net Proceeds” means the aggregate cash proceeds received by the Borrower or any Subsidiary in respect of any Disposition, net of (a) direct costs incurred in connection therewith (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and (b) taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements); it being understood that “Net Proceeds” shall include, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received by the Borrower or any Subsidiary in any Disposition.
“Note” or “Notes” means the Revolving Notes and the Swingline Note, individually or collectively, as appropriate.
“Notice of Borrowing” means a Notice of Revolving Borrowing or a Notice of Swingline Borrowing, as the case may be.
“Notice of Revolving Borrowing” has the meaning assigned to that term in Section 3.1(a).
“Notice of Swingline Borrowing” has the meaning assigned to that term in Section 3.8(b).
“OECD” means the Organization for Economic Cooperation and Development.
“Obligations” means the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities (including any Hedging Obligations and any Treasury Management Obligations) of the Borrower to (a) the Administrative Agent, (b) any Issuing Bank, (c) the Swingline Lender, (d) any Lender and (e) in the case of Hedging Obligations and Treasury Management
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Obligations, (i) any current Lender or Affiliate of any current Lender and (ii) any Person who was a Lender or an Affiliate of any Lender at the time such Hedge Agreement or Treasury Management Agreement is executed, in each case, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any Note, any Letter of Credit, any other Loan Document, any Hedge Agreement between the Borrower and (x) any current Lender or any Affiliate of a current Lender or (y) any Person who was a Lender or an Affiliate of a Lender at the time such Hedge Agreement was executed), any Treasury Management Agreement between the Borrower and (x) any current Lender or any Affiliate of a current Lender or (y) any Person who was a Lender or an Affiliate of a Lender at the time such Treasury Management Agreement was executed, or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent, any Issuing Bank or any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.
“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.
“Officer’s Certificate” means an “Officer’s Certificate” (as defined in the General and Refunding Mortgage Indenture) setting forth the terms of each series of the General and Refunding Mortgage Bonds, executed by a duly authorized officer of the Borrower and authenticated by the trustee under the General and Refunding Mortgage Indenture.
“Outstanding Amount” means (a) with respect to any Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of any Loans occurring on such date; and (b) with respect to any LC Obligations on any date, the amount of such LC Obligations on such date after giving effect to any LC Credit Extension occurring on such date and any other changes in the aggregate amount of the LC Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.
“Participant” has the meaning assigned to that term in Section 11.7(d).
“Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended or modified from time to time.
“Payment Amounts” has the meaning assigned to that term in Section 9.1(e).
“PBGC” means, the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).
“Percentage” means with respect to any Lender at any time, with respect to such Lender’s Commitment at any time, the percentage of the Commitments represented by such Lender’s Commitment at such time; provided that if the commitment of each Lender to make Revolving Loans and the obligation of the Issuing Banks to make LC Credit Extensions have been terminated pursuant to Section 9.2 or if the Commitments have expired, then the Percentage of each Lender shall be determined based on the Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Percentage of each Lender is set forth opposite the name of such Lender on Schedule 1.1(B) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“Permitted Business” has the meaning assigned to that term in Section 8.2(d)(viii)(C)(2).
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“Permitted Liens” has the meaning assigned to that term in Section 8.2(b).
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“Plan” means, at a particular time, any employee benefit plan that is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Platform” has the meaning assigned to that term in Section 8.1(g).
“Prime Rate” means, at any time, the rate of interest per annum publicly announced or otherwise identified from time to time by Wells Fargo Bank at its principal office in Charlotte, North Carolina as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by Wells Fargo Bank as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.
“Pro Forma Basis” means, with respect to compliance with Section 8.2(a) or Section 8.2(e), for purposes of calculating the financial covenant set forth in Section 8.3, the incurrence of Indebtedness or the declaring or making of a Restricted Payment shall be deemed to have occurred as of the last day of the most recent fiscal quarter period preceding the date of such incurrence of Indebtedness or declaring or making of such Restricted Payment for which financial statements were delivered pursuant to Section 8.1(a).
“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.
“PUCN” means the Public Utilities Commission of Nevada, or any successor agency.
“Public Lender” has the meaning assigned to that term in Section 8.1(g).
“Rating Agencies” means the collective reference to S&P and Moody’s.
“Register” has the meaning assigned to that term in Section 11.7(c).
“Regulation U” means Regulation U of the Board as in effect from time to time.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, partners, employees and agents of such Person and of such Person’s Affiliates.
“Reorganization” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.
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“Request for Credit Extension” means (a) with respect to a Borrowing of Revolving Loans, a Notice of Revolving Borrowing, (b) with respect to an LC Credit Extension, a Letter of Credit Application, (c) with respect to a Borrowing of Swingline Loans, a Notice of Swingline Borrowing and (d) with respect to a conversion or continuation of Loans, a Notice of Conversion.
“Required Lenders” means, at any time, Lenders holding in the aggregate more than 50% of (a) the unfunded Commitments, the outstanding Loans, LC Obligations and participations therein or (b) if the Commitments have been terminated, the outstanding Loans, LC Obligations and participations therein. The unfunded Commitments of, and the outstanding Loans, LC Obligations and participations therein and in Swingline Loans held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders. Any determination of those Lenders constituting the Required Lenders shall be made by the Administrative Agent and shall be conclusive and binding on all parties absent manifest error.
“Requirement of Law” means, as to any Person, the Certificate of Incorporation and By Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.
“Responsible Officer” means the chief executive officer, president, senior vice-president, vice-president, chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower, but in any event, with respect to financial matters, the chief financial officer, chief accounting officer or the treasurer of the Borrower.
“Restricted Payments” has the meaning assigned to such term in Section 8.2(e).
“Revolving Credit Termination Date” means the earlier to occur of (i) the Maturity Date and (ii) the date of termination or reduction in whole of the Commitments pursuant to Section 2.3 or Section 9.2.
“Revolving Loan” means a loan by a Lender to the Borrower pursuant to Section 3.1 (or deemed made pursuant to Section 4.4) and refers to a Base Rate Loan or a LIBOR Rate Loan (each of which shall be a “Type” of Loan). All Loans by a Lender of the same Type, having the same Interest Period and made or Converted on the same day shall be deemed to be a single Revolving Loan by such Lender until repaid or next Converted.
“Revolving Note” means any promissory note of the Borrower payable to the order of a Lender (and, if requested, its registered assigns), evidencing the Revolving Loans made by such Lender, substantially in the form of Exhibit A-1, and any amendments, supplements, and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof; in whole or in part and “Revolving Notes” means any or all of the foregoing.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto.
“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a person or entity resident in or determined to be resident in a country, that is subject to a country sanctions program administered and enforced by OFAC.
“Sanctioned Person” means a person named on the list of Specially Designated Nationals maintained by OFAC.
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“SEC” means the Securities and Exchange Commission (or successors thereto or an analogous Governmental Authority).
“Secured Debt Rating” means, as of any date of determination, the Borrower’s senior secured long term debt rating as determined by each of the Rating Agencies to be in effect as of such date.
“Single Employer Plan” means any Plan that is covered by Title IV of ERISA, but which is not a Multiemployer Plan.
“Solvent” means, with respect to any Person, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
“SPPC” means Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation.
“SPPC Credit Agreement” means that certain Credit Agreement, dated as of the Closing Date, by and among SPPC, as the borrower, Wells Fargo Bank, as the administrative agent, swingline lender, an issuing bank and a lender and the other lenders and issuing banks from time to time party thereto, as amended or otherwise modified.
“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
“Subordinated Debt” means any debt (including without limitation any guarantee) that is subordinated to the prior payment of the Loans and other Obligations.
“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Subsidiary Guarantee” means any Guarantee of the Loans and other Obligations to be executed by any Subsidiary of the Borrower pursuant to Section 8.2(n).
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“Subsidiary Guarantor” means any Subsidiary of the Borrower that executes a Subsidiary Guarantee, and its successors and assigns.
“Swingline Lender” means Wells Fargo Bank, in its capacity as a provider of Swingline Loans, or any successor swingline lender hereunder.
“Swingline Loan” has the meaning set forth in Section 3.8(a).
“Swingline Note” means the promissory note of the Borrower payable to the order of the Swingline Lender (and, if requested, its registered assigns), evidencing the Swingline Loans made by the Swingline Lender, substantially in the form of Exhibit A-2, and any amendments, supplements, and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof; in whole or in part.
“Swingline Sublimit” means the lesser of (a) FIFTY MILLION DOLLARS ($50,000,000) and (b) the Commitments. The Swingline Sublimit is part of, and not in addition to, the Commitments.
“Termination Value” means, in respect of any one or more Hedge Agreements after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreement, (x) for any date on or after the date such Hedge Agreement has been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (y) for any date prior to the date referenced in clause (x), the amount(s) determined as the mark-to-market value(s) for such Hedge Agreement, as determined based upon one or more readily available quotations provided by any recognized dealer in such Hedge Agreement (which may include a Lender or any Affiliate of a Lender). Notwithstanding the foregoing, any calculation of the aggregate Termination Value shall exclude any Termination Value of Hedge Agreements that are accounted for by the Borrower as regulatory assets or liabilities or risk management assets or liabilities pursuant to Financial Accounting Standards Board Statement No. 71.
“Total Revolving Outstandings” means the aggregate Outstanding Amount of all Revolving Loans, all Swingline Loans and all LC Obligations.
“Trading With the Enemy Act” has the meaning assigned to that term in Section 7.1(y).
“Treasury Management Agreement” means any agreement governing the provision of treasury or cash management services, including deposit accounts, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.
“Treasury Management Obligations” means with respect to any Person, all existing or future payment and other obligations owing by such Person under any Treasury Management Agreement with any Person that (i) is a current Lender or Affiliate of any current Lender or (ii) was a Lender or an Affiliate of any Lender at the time such Treasury Management Agreement was executed.
“Trust Preferred Vehicle” means any trust, the only assets of which are Subordinated Debt of the Borrower, and which are substantially similar (except for such changes to the terms of any such trust preferred vehicle to adopt terms that are customary in the trust preferred vehicles market at the time of formation of any such trust preferred vehicle) to trust preferred vehicles of the Borrower entered into within the five (5) years immediately preceding the Closing Date.
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“Type” has the meaning assigned to such term (i) in the definition of “Revolving Loan” when used in such context and (ii) in the definition of “Borrowing” when used in such context.
“Unreimbursed Amount” has the meaning assigned to that term in Section 4.3(a).
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.
“Wells Fargo Bank” means Wells Fargo Bank, National Association, a national banking association, and its successors.
“WFS” means Wells Fargo Securities, LLC, in its capacity as a joint lead arranger and joint bookrunner.
Section 1.2 Computation of Time Periods; Construction.
(a) Unless otherwise indicated, each reference in this Agreement to a specific time of day is a reference to Eastern Standard Time or Eastern Daylight Time, as applicable. In the computation of periods of time under this Agreement, any period of a specified number of days or months shall be computed by including the first day or month occurring during such period and excluding the last such day or month. Unless the context requires otherwise, in the case of a period of time “from” a specified date “to” or “until” a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.
(b) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes”, and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.
Section 1.3 Accounting Matters.
(a) All accounting terms not specifically defined herein shall be construed in accordance with GAAP, applied in a manner consistent with those applied in the preparation of the financial statements referred to in Section 8.1(a).
(b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required
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Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
(c) Any financial ratios required to be maintained by the 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 herein and rounding the result up or down to the nearest number (with a rounding‑up if there is no nearest number).
Section 1.4 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuing Agreement related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
Section 2.1 Commitments. Subject to the terms and conditions set forth herein, each Lender severally agrees to make Revolving Loans to the Borrower in Dollars from time to time on any Business Day during the period from the Closing Date to the Revolving Credit Termination Date in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Borrowing of Revolving Loans, (i) the Total Revolving Outstandings shall not exceed the Borrowing Limit and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Percentage of the Outstanding Amount of all LC Obligations plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1, prepay under Section 5.3, and reborrow under this Section 2.1. Revolving Loans may be Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as further provided herein, provided, however, all Borrowings made on the Closing Date shall be made as Base Rate Loans.
(a) The Borrower shall pay to the Administrative Agent, for the account of each Lender in accordance with its Percentage, a commitment fee (the “Commitment Fee”) at a rate per annum equal to the product of (i) the Applicable Margin times (ii) the actual daily amount by which the Commitments exceed the sum of (y) the Outstanding Amount of Revolving Loans and (z) the Outstanding Amount of LC Obligations. The Commitment Fee shall accrue at all times from the Closing Date until the Revolving Credit Termination Date, including at any time during which one or more of the conditions in Article VI is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December,
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commencing with the first such date to occur after the Closing Date, and on the Revolving Credit Termination Date; provided, that (A) no Commitment Fee shall accrue on the Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender and (B) any Commitment Fee accrued with respect to the Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Margin during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. For purposes of clarification, Swingline Loans shall not be considered outstanding for purposes of determining the unused portion of the Commitments.
(b) In addition to the fees provided for in subsection (a) above and Sections 4.8 and 4.9, the Borrower shall pay to the Administrative Agent, for its own account, such other fees as are provided for in the Fee Letters, in the amounts and at the times specified therein.
Section 2.3 Reduction of the Commitments.
(a) The Commitments (i) shall be automatically and permanently terminated on the Revolving Credit Termination Date and (ii) shall be automatically reduced by any and all Excess Net Proceeds in accordance with Section 8.2 (d).
(b) The Borrower may, upon at least three (3) Business Days’ prior written notice to the Administrative Agent (which shall promptly distribute copies thereof to the Lenders), terminate in whole or reduce ratably in part the unused portions of the Commitments (which termination or reduction (as the case may be), upon its effectiveness, shall be permanent and irrevocable); provided that (i) any such partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) any reduction shall reduce the Letter of Credit Sublimit, if applicable, in accordance with the terms of such definition. Subject to Section 2.2(a), all Commitment Fees accrued until the effective date of any termination of the Commitments shall be paid on the effective date of such termination.
(c) The Borrower may terminate the unused amount of the Commitment of a Defaulting Lender upon not less than three Business Days’ prior notice to such Defaulting Lender and the Administrative Agent (which will promptly notify the other Lenders thereof) and the Commitments shall be reduced by such amount; provided that (i) at the time of such termination, no Default or Event of Default has occurred and is continuing (or the Required Lenders consent to such termination), (ii) the Borrower shall pay to the Defaulting Lender all amounts then owed to it and (iii) such termination will not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, the Swingline Lender, the Issuing Banks or any Lender may have against such Defaulting Lender.
(d) Each permanent reduction pursuant to this Section shall be accompanied by a payment of principal of the Loans sufficient to reduce the aggregate Outstanding Amount of all Revolving Loans, LC Obligations and Swingline Loans, as applicable, after such reduction to the amount of the Commitments as so reduced, and if the Commitments as so reduced is less than the aggregate Outstanding Amount of all LC Obligations, the Borrower shall be required to deposit Cash Collateral in a Cash Collateral account opened by and under the control of the Administrative Agent in an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Such Cash Collateral shall be applied in accordance with Section 9.2(b). Any reduction of the Commitments to zero shall be accompanied by payment of all outstanding
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Loans (and furnishing of Cash Collateral satisfactory to the Administrative Agent for the Outstanding Amount of all LC Obligations) and shall result in the termination of the Commitments. Such Cash Collateral shall be applied in accordance with Section 9.2(b). If the reduction of the Commitments requires the repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.4 hereof.
(e) No repayment or prepayment or reduction pursuant to this Section shall affect any of the Borrower’s obligations under any Hedge Agreement or any Treasury Management Agreement.
Section 2.4 Computations of Outstandings. Whenever reference is made in this Agreement to the principal amount outstanding on any date under this Agreement, such reference shall refer to the sum of (i) the Outstanding Amount of all Revolving Loans on such date plus (ii) the Outstanding Amount of all LC Obligations on such date plus (iii) the Outstanding Amount of all Swingline Loans on such date, in each case after giving effect to all Extensions of Credit to be made on such date and the application of the proceeds thereof. At no time shall the principal amount outstanding under this Agreement exceed the Borrowing Limit then in effect. References to the unused portion of the Commitments shall refer to the excess, if any, of the Commitments over the principal amount outstanding hereunder; and references to the unused portion of any Lender’s Commitment shall refer to such Lender’s Percentage of the unused Commitments.
Section 2.5 Optional Increase of the Commitments. At any time following the Closing Date, the Borrower shall have the right, in consultation with the Administrative Agent, from time to time and upon not less than thirty (30) days prior written notice to the Administrative Agent to request an increase in the Commitments; provided, that:
(a) no Default or Event of Default shall have occurred and be continuing or would result from any such requested increase or Extension of Credit made on the date of such increase;
(b) the Borrower shall provide the Administrative Agent with a certificate of a Responsible Officer dated as of the date of such increase in form and substance substantially similar to the certificate delivered under Section 8.1(b)(i) demonstrating pro forma compliance with the covenant contained in Section 8.3 after giving effect to any Extensions of Credit made on the date of such increase;
(c) each increase in Commitments shall be in an aggregate principal amount of at least $10,000,000 or a whole multiple of $5,000,000 in excess thereof, or in each case if less, the remaining principal amount of increases to Commitments that are available under this Section 2.5 (after giving effect to all prior increases pursuant to this Section 2.5);
(d) the aggregate amount of all increases to the Commitments made pursuant to this Section 2.5 shall not exceed ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000);
(e) increases in Commitments pursuant to this Section 2.5 (i) shall not increase or otherwise affect the Swingline Sublimit and (ii) shall increase the Letter of Credit Sublimit, if applicable, in accordance with the terms of such definition;
(f) the Commitment of any Lender shall not be increased without the approval of such Lender;
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(g) in connection with each proposed increase, the Borrower may solicit commitments from (i) any Lender (provided, that no Lender shall have an obligation to commit to all or a portion of the proposed increase) or (ii) any third party financial institutions that are Eligible Assignees that are reasonably acceptable to the Administrative Agent, the Issuing Banks, the Swingline Lender and the Borrower (a “New Lender”);
(h) the Loans made or Letters of Credit issued in respect of any increase in Commitments pursuant to this Section 2.5: (i) will rank pari passu in right of payment and security with the other Loans made and Letters of Credit issued hereunder and shall constitute and be part of the “Obligations” arising under this Agreement, and (ii) shall have the same pricing and tenor as the other Loans and Letters of Credit hereunder;
(i) in the event that any existing Lender or any New Lender commits to such requested increase, (i) any New Lender will execute an accession agreement to this Agreement, in form and substance acceptable to the Administrative Agent, (ii) the Commitment of any existing Lender which has committed to provide any of the requested increase shall be increased by such amount, (iii) the Percentages of the Lenders shall be adjusted, and (iv) other changes shall be made to the Loan Documents as may be necessary to reflect the aggregate amount, if any, by which the Lenders have agreed to increase their respective Commitments or New Lenders have agreed to or make new Commitments in response to the Borrower’s request for an increase pursuant to this Section 2.5, and which other changes do not adversely affect the rights of those Lenders not participating in any such increase;
(j) with respect to each increase in the Commitments, the Borrower will issue to the Administrative Agent General and Refunding Mortgage Bonds, in form and substance similar to the General and Refunding Mortgage Bonds issued to the Administrative Agent on the Closing Date in accordance with the provisions of Section 6.1(g), in an aggregate principal amount equal to the difference between the principal amount of the Commitments (after giving effect to such increase and any prior increases or permanent reductions to the Commitments) and the outstanding principal amount of General and Refunding Mortgage Bonds previously issued to the Administrative Agent as collateral support for the Obligations; and
(k) with respect to each increase in the Commitments, the Borrower shall provide evidence, in form and substance satisfactory to the Administrative Agent, of new or supplemental regulatory approval by the PUCN and any other applicable regulatory body, in each case authorizing the issuance of long-term debt securities in an aggregate principal amount equal to such new issuance of General and Refunding Mortgage Bonds and/or the principal amount of such increase, as applicable.
(a) The Borrower may request a Borrowing of Revolving Loans (other than a Conversion) by delivering a notice (a “Notice of Revolving Borrowing”) to the Administrative Agent no later than 1:00 p.m. on the third Business Day prior to the date of the proposed Borrowing or, in the case of Base Rate Loans, on the same Business Day of the proposed Borrowing. The Administrative Agent shall give each Lender prompt notice of each Notice of Revolving Borrowing. Each Notice of Revolving Borrowing shall be in substantially the form of
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Exhibit A-3, appropriately completed and signed by a Responsible Officer of the Borrower, and shall specify the requested (i) date of such Borrowing (which shall be a Business Day, but in no event later than the Business Day immediately preceding the Maturity Date), (ii) Type of Loans to be made in connection with such Borrowing, (iii) Interest Period, if any, for such Loans and (iv) amount of such Borrowing. Each proposed Borrowing shall conform to the requirements of Sections 3.3 and 3.4.
(b) Each Lender shall, before 3:00 p.m. on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent’s Office, in same day funds, such Lender’s Percentage of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article VI, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s Office. Notwithstanding the foregoing, unless the Administrative Agent shall have received notice from a Lender prior to the time of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s Percentage of such Borrowing, the Administrative Agent may assume that such Lender has made such Percentage available to the Administrative Agent on the date of such Borrowing in accordance with the first sentence of this subsection (b), and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.
(c) If and to the extent that any Lender shall not have made available to the Administrative Agent, in accordance with subsection (b) above, such Lender’s Percentage of any Borrowing, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand corresponding amounts (not to exceed the aggregate amount that such Lender failed to make available to the Administrative Agent), together with interest thereon for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Loans made in connection with such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. Within the limits of each Lender’s Commitment and the Borrowing Limit and subject to the other terms and conditions set forth in this Agreement for the making of Loans, the Borrower may request (and the Lenders shall honor) one or more additional Borrowings of Revolving Loans from the other Lenders to fund such repayment to the Administrative Agent. If a Lender shall repay to the Administrative Agent such corresponding amount in full (with interest as above provided), (x) the Administrative Agent shall apply such corresponding amount and interest to the repayment to the Administrative Agent (or repayment of Revolving Loans made to fund such repayment to the Administrative Agent), and shall make any remainder available to the Borrower and (y) such amount so repaid shall be deemed to constitute such Lender’s Revolving Loan, made as part of such Borrowing for purposes of this Agreement as if funded concurrently with the other Revolving Loans made as part of such Borrowing. The failure of any Lender to make the Revolving Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Revolving Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Loan to be made by such other Lender on the date of any Borrowing.
(d) The Extensions of Credit made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Extensions of Credit made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of
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the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
(e) Any Lender may request that its Commitment hereunder be evidenced by a Revolving Note. In such event, the Borrower shall prepare, execute and deliver to such Lender a Revolving Note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns), substantially in the form of Exhibit A-1. Each Lender may attach schedules to its Revolving Notes and endorse thereon the date, amount and maturity of its Revolving Loans and payments with respect thereto. Upon the request of the Swingline Lender, the Borrower shall prepare, execute and deliver to the Swingline Lender a Swingline Note payable to the order of the Swingline Lender (or, if requested by the Swingline Lender, to the Swingline Lender and its registered assigns), substantially in the form of Exhibit A-2. In addition to the accounts and records referenced above in this subsection (e), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender or participations in Letters of Credit and Swingline Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
Section 3.2 Conversion of Loans. The Borrower may from time to time Convert any Loan (or portion thereof) of any Type to one or more Loans of the same or any other Type by delivering a notice of such Conversion (a “Notice of Conversion”) to the Administrative Agent no later than 1:00 p.m. on (x) the third Business Day prior to the date of any proposed Conversion into a LIBOR Rate Loan and (y) the same Business Day as to the date of any proposed Conversion into a Base Rate Loan. The Administrative Agent shall give each Lender prompt notice of each Notice of Conversion. Each Notice of Conversion shall be in substantially the form of Exhibit B and shall specify (i) the requested date of such Conversion, (ii) the Type of, and Interest Period, if any, applicable to, the Loans (or portions thereof) proposed to be Converted, (iii) the requested Type of Loans to which such Loans (or portions thereof) are proposed to be Converted, (iv) the requested initial Interest Period, if any, to be applicable to the Loans resulting from such Conversion and (v) the aggregate amount of Loans (or portions thereof) proposed to be Converted. Each proposed Conversion shall be subject to the provisions of Sections 3.3 and 3.4.
Section 3.3 Interest Periods. The period between the date each LIBOR Rate Loan is made and the date of payment in full of such Loan shall be divided into successive periods (“Interest Periods”) for purposes of computing interest applicable thereto. The initial Interest Period for each such Loan shall begin on the day such Loan is made, and each subsequent Interest Period shall begin on the last day of the immediately preceding Interest Period for such Loan. The duration of each Interest Period shall be 1, 2, 3, or 6 months as the Borrower may select in accordance with Section 3.1 or 3.2, or such shorter period as requested by the Borrower and consented to by all Lenders (other than Defaulting Lenders), as applicable; provided, however:
(a) the Borrower may not select any Interest Period that ends after the Maturity Date;
(b) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall occur on the next succeeding Business Day, provided that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and
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(c) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.
Section 3.4 Other Terms Relating to the Making and Conversion of Loans.
(a) Notwithstanding anything in Section 3.1 or 3.2 to the contrary:
(i) each Borrowing of Revolving Loans (other than a Borrowing deemed made under Section 4.3) shall be in an aggregate amount not less than (A) in the case of LIBOR Rate Loans, $5,000,000 (or such lesser amount as shall be equal to the Commitments on such date, after giving effect to all of the other Extensions of Credit to be made to the Borrower on such date) or an integral multiple of $1,000,000 in excess thereof (or such lesser amount as shall be equal to the Commitments on such date, after giving effect to all of the other Extensions of Credit to be made to the Borrower on such date), or (B) in the case of Base Rate Loans, $1,000,000 or an integral multiple of $500,000 in excess thereof, and shall consist of Loans of the same Type, having the same Interest Period and made or Converted on the same day by the Lenders ratably according to their respective Percentages;
(ii) the Borrower may request that more than one Borrowing be made on the same day;
(iii) at no time shall more than ten (10) different Borrowings comprising LIBOR Rate Loans be outstanding hereunder;
(iv) no LIBOR Rate Loan may be Converted on a date other than the last day of the Interest Period applicable to such Loan unless the corresponding amounts, if any, payable to the Lenders pursuant to Section 5.4(b) are paid within two (2) Business Days after the Administrative Agent or any Lender provides written notice to the Borrower as to amounts owing under Section 5.4(b) in connection with such Conversion;
(v) if the Borrower shall either fail to give a timely Notice of Conversion pursuant to Section 3.2 in respect of any Loans or fail, in any Notice of Conversion that has been timely given, to select the duration of any Interest Period for Loans to be Converted into LIBOR Rate Loans in accordance with Section 3.3, such Loans shall, on the last day of the then existing Interest Period therefor, automatically Convert into, or remain as, as the case may be, Base Rate Loans; and
(vi) if, on the date of any proposed Conversion, any Event of Default shall have occurred and be continuing, all Loans then outstanding shall, on such date, automatically Convert into, or remain as, as the case may be, Base Rate Loans.
(b) If any Lender shall notify the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other governmental authority asserts that it is unlawful, for such Lender or its Applicable Lending Office to perform its obligations hereunder to make, or to fund or maintain, LIBOR Rate Loans hereunder, (i) the obligation of such Lender to make, or to Convert Loans into, LIBOR Rate Loans for such Borrowing or any subsequent Borrowing from such Lender shall be forthwith suspended until the earlier to occur of the date upon which (A) such Lender
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shall cease to be a party hereto and (B) it is no longer unlawful for such Lender to make, fund or maintain LIBOR Rate Loans, and (ii) if the maintenance of LIBOR Rate Loans then outstanding through the last day of the Interest Period therefor would cause such Lender to be in violation of such law, regulation or assertion, such Lender may require the Borrower to either prepay or Convert all LIBOR Rate Loans from such Lender within five Business Days after the Borrower’s receipt of such notice, and if the Borrower shall not have so prepaid or Converted such LIBOR Rate Loans by such fifth Business Day, then such LIBOR Rate Loans shall be deemed automatically Converted to Base Rate Loans on such fifth Business Day. Promptly upon becoming aware that the circumstances that caused such Lender to deliver such notice no longer exist, such Lender shall deliver notice thereof to the Administrative Agent (but the failure to do so shall impose no liability upon such Lender). Promptly upon receipt of such notice from such Lender (or upon such Lender’s assigning all of its Commitments, Loans, participation and other rights and obligations hereunder to an Eligible Assignee), the Administrative Agent shall deliver notice thereof to the Borrower and the Lenders and such suspension shall terminate. Prior to any Lender giving notice to the Administrative Agent or the Borrower under this subsection (b), such Lender shall use reasonable efforts to change the jurisdiction of its Applicable Lending Office, if such change would avoid such unlawfulness and would not, in the sole determination of such Lender, be otherwise disadvantageous to such Lender.
(c) If the Required Lenders shall, at least one (1) Business Day before the date of any requested Borrowing, notify the Administrative Agent that the LIBOR Rate for LIBOR Rate Loans to be made in connection with such Borrowing will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective LIBOR Rate Loans for such Borrowing, the right of the Borrower to select LIBOR Rate Loans for such Borrowing and any subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist, and each Loan to be made or Converted in connection with such Borrowing shall be a Base Rate Loan.
(d) If any Lender shall have delivered a notice to the Borrower or the Administrative Agent as described in Section 3.4(b) or Section 3.6, or shall become a Defaulting Lender under Section 3.1(c) or Section 4.4, and if and so long as such Lender shall not have withdrawn such notice or corrected such non-performance in accordance with Section 3.1(c), Section 3.4(b), Section 3.6, or Section 4.4, the Borrower or the Administrative Agent may demand that such Lender assign in accordance with Section 11.7, to one or more Eligible Assignees designated by the Borrower or the Administrative Agent, all (but not less than all) of such Lender’s Commitments, Loans, participation and other rights and obligations hereunder; provided that any such demand by the Borrower during the continuance of a Default or an Event of Default shall be ineffective without the consent of the Required Lenders. If, within 30 days following any such demand by the Administrative Agent or the Borrower, any such Eligible Assignee so designated shall fail to consummate such assignment on terms reasonably satisfactory to such Lender, or the Borrower and the Administrative Agent shall have failed to designate any such Eligible Assignee, then such demand by the Borrower or the Administrative Agent shall become ineffective, it being understood for purposes of this provision that such assignment shall be conclusively deemed to be on terms reasonably satisfactory to such Lender, and such Lender shall be compelled to consummate such assignment forthwith, if such Eligible Assignee (i) shall agree to such assignment in substantially the form of the Assignment and Assumption attached hereto as Exhibit C and (ii) shall tender payment to such Lender in an amount equal to the full outstanding dollar amount accrued in favor of such Lender hereunder (as computed in accordance with the records of the Administrative Agent), including, without limitation, all accrued interest and fees and, to the extent not paid by the Borrower, any payments required pursuant to Section 5.4(b).
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(e) Each Notice of Borrowing and Notice of Conversion shall be irrevocable and binding on the Borrower. In the case of any Borrowing which the related Notice of Borrowing or Notice of Conversion specifies is to be comprised of LIBOR Rate Loans, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure by the Borrower to fulfill, on or before the date specified in such Notice of Borrowing or Notice of Conversion for such Borrowing, the applicable conditions (if any) set forth in this Article III (other than failure pursuant to the provisions of Section 3.4(c) hereof) or in Article VI, including any such loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Loan to be made by such Lender when such Loan, as a result of such failure, is not made on such date.
Section 3.5 Repayment of Loans; Interest.
(a) Principal.
(i) Revolving Loans. The Borrower shall repay the outstanding principal amount of the Revolving Loans on the Maturity Date.
(ii) Swingline Loans. The Borrower shall repay each Swingline Loan on the earlier to occur of (A) ten (10) Business Days after the Swingline Loan is made, (B) the date within one (1) Business Day of demand therefor by the Swingline Lender and (C) the Maturity Date.
(b) Interest. The Borrower shall pay interest on the unpaid principal amount of each Loan owing to each Lender from the date of such Loan until such principal amount shall be paid in full, at the Applicable Rate for such Loan, payable as follows:
(i) Base Rate Loans. If such Loan is a Base Rate Loan (including a Swingline Loan bearing interest based on the Base Rate), interest thereon shall be payable quarterly in arrears on the last day of each March, June, September and December, on the date of any Conversion of such Base Rate Loan, on the date such Base Rate Loan shall become due and payable or shall otherwise be paid in full and on the Maturity Date.
(ii) LIBOR Rate Loans. If such Loan is a LIBOR Rate Loan, interest thereon shall be payable on the last day of each Interest Period for such Loan and, if the Interest Period for such Loan has a duration of more than three months, on that day of each third month during such Interest Period that corresponds to the first day of such Interest Period (or, if any such month does not have a corresponding day, then on the last day of such month) and on the Maturity Date.
(iii) LIBOR Market Index Rate Loans. If such Loan is a LIBOR Market Index Rate Loan, interest thereon shall be payable on the third Business Day following the end of each calendar month and on the Maturity Date.
Section 3.6 Additional Interest on LIBOR Rate Loans. The Borrower shall pay to the Administrative Agent, for the account of each Lender, any costs actually incurred by such Lender with respect to LIBOR Rate Loans that are attributable to such Lender’s compliance with regulations of the Board requiring the maintenance of reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities. Such costs shall be paid to the Administrative Agent for the account of such
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Lender in the form of additional interest on the unpaid principal amount of each LIBOR Rate Loan of such Lender, from the date of such LIBOR Rate Loan until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the LIBOR Rate for the Interest Period for such LIBOR Rate Loan from (ii) the rate obtained by dividing such LIBOR Rate by a percentage equal to 100% minus the Eurodollar Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such LIBOR Rate Loan (but in no event earlier than ten (10) Business Days after the Borrower’s receipt of the certificate referred to in the last sentence of this Section 3.6). Such additional interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent. A certificate as to the amount of such additional interest and giving a reasonable explanation and calculation thereof shall be submitted to the Borrower and the Administrative Agent by such Lender and shall be conclusive and binding for all purposes, absent manifest error.
Section 3.7 Default Rate. Subject to Section 9.3, (i) immediately upon the occurrence and during the continuance of an Event of Default under Section 9.1(a) or (f), or (ii) at the election of the Required Lenders, upon the occurrence and during the continuance of any other Event of Default, (A) the Borrower shall no longer have the option to request LIBOR Rate Loans, LIBOR Market Index Rate Loans or Letters of Credit, (B) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the Applicable Rate with respect to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate per annum equal to two percent (2%) in excess of the Applicable Rate with respect to Base Rate Loans, (C) all outstanding Base Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the Applicable Rate with respect to Base Rate Loans and (D) all outstanding LIBOR Market Index Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the Applicable Rate with respect to LIBOR Market Index Rate Loans. Interest shall continue to accrue on the Obligations after the filing by or against the Borrower of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign.
(a) Subject to the terms and conditions set forth herein, the Swingline Lender may, in its discretion and in reliance upon the agreements of the other Lenders set forth in this Section 3.8, make loans (each such loan, a “Swingline Loan”) to the Borrower from time to time on any Business Day prior to the Revolving Credit Termination Date in an aggregate amount not to exceed at any time outstanding the amount of the Swingline Sublimit; provided, however, that after giving effect to any Swingline Loan, (i) the Total Revolving Outstandings shall not exceed the Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Percentage of the Outstanding Amount of all LC Obligations, plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment, and provided, further, that the Borrower shall not use the proceeds of any Swingline Loan to refinance any outstanding Swingline Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 3.8, prepay under Section 5.3, and reborrow under this Section 3.8. Each Swingline Loan shall be a Base Rate Loan or a LIBOR Market Index Rate Loan. Immediately upon the making of a Swingline Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swingline Lender a risk participation in such Swingline Loan in an amount equal to the product of such Lender’s Percentage times the amount of such Swingline Loan.
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(b) Borrowing Procedures. The Borrower may request a Borrowing of Swingline Loans by delivering a notice (a “Notice of Swingline Borrowing”) to the Swingline Lender and the Administrative Agent no later than 1:00 p.m. on the same Business Day of the proposed Borrowing. Each Notice of Swingline Borrowing shall be in substantially the form of Exhibit A-4, appropriately completed and signed by a Responsible Officer of the Borrower, and shall specify (i) the amount to be borrowed, which shall be a minimum principal amount of $500,000 and integral multiples of $100,000 in excess thereof, and (ii) the requested borrowing date, which shall be a Business Day. Unless the Swingline Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Borrowing of Swingline Loans (A) directing the Swingline Lender not to make such Swingline Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 3.8(a), or (B) that one or more of the applicable conditions specified in Article VI is not then satisfied, then, subject to the terms and conditions hereof, the Swingline Lender will, not later than 3:00 p.m. on the borrowing date specified in such written Notice of Swingline Borrowing, make the amount of its Swingline Loan available to the Borrower.
(c) Refinancing of Swingline Loans.
(i) The Swingline Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably requests and authorizes the Swingline Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Percentage of the amount of Swingline Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Notice of Swingline Borrowing for purposes hereof) and in accordance with the requirements of Section 3.1, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the conditions set forth in Section 6.2 and provided that, after giving effect to such Borrowing, the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate principal amount of outstanding Swingline Loans plus the aggregate outstanding LC Obligations shall not exceed the Borrowing Limit then in effect. The Swingline Lender shall furnish the Borrower with a copy of the applicable Notice of Swingline Borrowing promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Percentage of the amount specified in such Notice of Swingline Borrowing available to the Administrative Agent in immediately available funds for the account of the Swingline Lender at the Administrative Agent’s Office not later than 11:00 a.m. on the day specified in such Notice of Swingline Borrowing, whereupon, subject to Section 3.8(c)(ii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swingline Lender.
(ii) If for any reason any Swingline Loan cannot be refinanced by such a Borrowing of Revolving Loans in accordance with Section 3.8(c)(i), the request for Base Rate Loans submitted by the Swingline Lender as set forth herein shall be deemed to be a request by the Swingline Lender that each of the Lenders fund its risk participation in the relevant Swingline Loan and each Lender’s payment to the Administrative Agent for the account of the Swingline Lender pursuant to Section 3.8(c)(i) shall be deemed payment in respect of such participation.
(iii) If any Lender fails to make available to the Administrative Agent for the account of the Swingline Lender any amount required to be paid by such Lender pursuant
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to the foregoing provisions of this Section 3.8(c) by the time specified in Section 3.8(c)(i), the Swingline Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swingline Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swingline Lender in accordance with banking industry rules on interbank compensation. A certificate of the Swingline Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
(iv) Each Lender’s obligation to make Revolving Loans or to purchase and fund risk participations in Swingline Loans pursuant to this Section 3.8(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Lender may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Loans pursuant to this Section 3.8(c) is subject to the conditions set forth in Section 6.2. No such purchase or funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swingline Loans, together with interest as provided herein.
(d) Repayment of Participations.
(i) At any time after any Lender has purchased and funded a risk participation in a Swingline Loan, if the Swingline Lender receives any payment on account of such Swingline Loan, the Swingline Lender will distribute to such Lender its Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by the Swingline Lender.
(ii) If any payment received by the Swingline Lender in respect of principal or interest on any Swingline Loan is required to be returned by the Swingline Lender under any of the circumstances described in Section 11.5(c) (including pursuant to any settlement entered into by the Swingline Lender in its discretion), each Lender shall pay to the Swingline Lender its Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swingline Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Interest for Account of Swingline Lender. The Swingline Lender shall be responsible for invoicing the Borrower for interest on the Swingline Loans. Until each Lender funds its Revolving Loans that are Base Rate Loans or risk participation pursuant to this Section 3.8 to refinance such Lender’s Percentage of any Swingline Loan, interest in respect of such Percentage shall be solely for the account of the Swingline Lender.
(f) Payments Directly to Swingline Lender. The Borrower shall make all payments of principal and interest in respect of the Swingline Loans directly to the Swingline Lender.
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Section 4.1 The Letter of Credit Commitment.
(a) Subject to the terms and conditions set forth herein, (i) each Issuing Bank agrees, in reliance upon the agreements of the Lenders set forth in this Article IV, (A) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit in Dollars for the account of the Borrower or any of its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with Section 4.2, and (B) to honor drawings under the Letters of Credit; and (ii) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower or its Subsidiaries and any drawings thereunder; provided, that after giving effect to any LC Credit Extension with respect to any Letter of Credit, (w) the Total Revolving Outstandings shall not exceed the Commitments, (x) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Percentage of the Outstanding Amount of all LC Obligations plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment and (y) the Outstanding Amount of the LC Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the LC Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. Furthermore, each Lender acknowledges and confirms that it has a participation interest in the liability of Wells Fargo Bank under the Existing Letters of Credit in a percentage equal to its Percentage of the Commitments. The Borrower’s reimbursement obligations in respect of the Existing Letters of Credit, and each Lender’s obligations in connection therewith, shall be governed by the terms of this Agreement.
(b) Notwithstanding clause (a) of this Section 4.1 and any other term or provision of this Agreement, including, without limitation, the size of the Letter of Credit Sublimit, (i) Wells Fargo Bank shall not be obligated to issue Letters of Credit in an aggregate amount outstanding at any one time in excess of $50,000,000, (ii) Bank of America shall not be obligated to issue Letters of Credit in an aggregate amount outstanding at any one time in excess of $50,000,000 and (iii) JPMorgan shall not be obligated to issue Letters of Credit in an aggregate amount outstanding at any one time in excess of $50,000,000.
(c) No Issuing Bank shall issue any Letter of Credit if:
(i) the expiry date of such requested Letter of Credit would occur more than twelve (12) months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or
(ii) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all of the Lenders shall have approved such expiry date;
(d) No Issuing Bank shall be under any obligation to issue any Letter of Credit if:
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(i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing such Letter of Credit, or any Requirement of Law or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such Issuing Bank in good faith deems material to it;
(ii) the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank;
(iii) except as otherwise agreed by the Administrative Agent and the applicable Issuing Bank, such Letter of Credit is in an initial stated amount less than $100,000;
(iv) such Letter of Credit is to be denominated in a currency other than Dollars;
(v) any Lender is at that time a Defaulting Lender, unless the applicable Issuing Bank has entered into arrangements, including the delivery of Cash Collateral, satisfactory to such Issuing Bank (in its sole discretion) with the Borrower or such Lender to eliminate such Issuing Bank’s actual or potential Fronting Exposure (after giving effect to Section 11.18(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other LC Obligations as to which such Issuing Bank has actual or potential Fronting Exposure, as it may reasonably require; or
(vi) such Letter of Credit would cause such Issuing Bank to exceed the applicable amount specified for such Issuing Bank in Section 4.1(b).
(e) No Issuing Bank shall amend any Letter of Credit if such Issuing Bank would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.
(f) No Issuing Bank shall be under any obligation to amend any Letter of Credit if (i) such Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (ii) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
(g) Each Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and such Issuing Bank shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article X with respect to any acts taken or omissions suffered by such Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and the Issuing Bank Agreement pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article X included such Issuing Bank with respect to such acts or omissions, and (B) as additionally provided herein with respect to such Issuing Bank.
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Section 4.2 Procedures for Issuance and Amendment of Letters of Credit; Evergreen Letters of Credit.
(a) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the applicable Issuing Bank (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the applicable Issuing Bank and the Administrative Agent not later than 2:00 p.m. at least five (5) Business Days (or such later date and time as the applicable Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the applicable Issuing Bank: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the applicable Issuing Bank may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the applicable Issuing Bank: (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the applicable Issuing Bank may reasonably require. Additionally, the Borrower shall furnish to the applicable Issuing Bank and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuing Bank Agreement, as such Issuing Bank or the Administrative Agent may reasonably require.
(b) Promptly after receipt of any Letter of Credit Application, the applicable Issuing Bank will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such Issuing Bank will provide the Administrative Agent with a copy thereof. Unless such Issuing Bank has received written notice from any Lender, the Administrative Agent or the Borrower, at least one (1) Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article VI shall not be satisfied, then, subject to the terms and conditions hereof, such Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of the Borrower or the applicable Subsidiary or enter into the applicable amendment, as the case may be, in each case in accordance with such Issuing Bank’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable Issuing Bank a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Percentage times the amount of such Letter of Credit.
(c) If the Borrower so requests in any applicable Letter of Credit Application, an Issuing Bank may, in its sole and absolute discretion, agree to issue an Evergreen Letter of Credit; provided, that any such Evergreen Letter of Credit must permit the applicable Issuing Bank to prevent any extension at least once in each twelve‑month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non‑Extension Notice Date”) in each such twelve‑month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable Issuing
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Bank, the Borrower shall not be required to make a specific request to such Issuing Bank for any such extension. Once an Evergreen Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that no Issuing Bank shall permit any such extension if (i) such Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (c) or (d) of Section 4.1 or otherwise), or (ii) it has received notice (which may be by telephone or in writing) on or before the day that is seven (7) Business Days before the Non‑Extension Notice Date (A) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (B) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 6.2 is not then satisfied, and in each such case directing such Issuing Bank not to permit such extension.
(d) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable Issuing Bank will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
Section 4.3 Drawings and Reimbursements; Funding of Participations.
(a) Upon receipt from the beneficiary of any Letter of Credit of any notice of drawing under such Letter of Credit, the applicable Issuing Bank shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by any Issuing Bank under a Letter of Credit (each such date, an “Honor Date”), the Borrower shall reimburse such Issuing Bank through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse such Issuing Bank by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Percentage thereof. In such event, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 3.4(a) for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Commitments and the Borrowing Limit and the conditions set forth in Section 6.2 (other than the delivery of a Notice of Revolving Borrowing). Any notice given by an Issuing Bank or the Administrative Agent pursuant to this Section 4.3(a) may be given by telephone if immediately confirmed in writing; provided, that, the lack of such immediate written confirmation shall not affect the conclusiveness or binding effect of such notice.
(b) Each Lender shall upon any notice of an Unreimbursed Amount pursuant to Section 4.3(a) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the applicable Issuing Bank at the Administrative Agent’s Office in an amount equal to its Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 4.3(c), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the applicable Issuing Bank.
(c) With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base Rate Loans because the conditions set forth in Section 6.2 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the applicable
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Issuing Bank an LC Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which LC Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the applicable Issuing Bank pursuant to Section 4.3(b) shall be deemed payment in respect of its participation in such LC Borrowing and shall constitute an LC Advance from such Lender in satisfaction of its participation obligation under this Article IV.
(d) Until each Lender funds its Revolving Loan or LC Advance pursuant to this Section 4.3 to reimburse an Issuing Bank for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Percentage of such amount shall be solely for the account of the applicable Issuing Bank.
(e) Each Lender’s obligation to make Revolving Loans or LC Advances to reimburse the Issuing Banks for amounts drawn under Letters of Credit, as contemplated by this Section 4.3, shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against any Issuing Bank, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Loans pursuant to this Section 4.3 is subject to the conditions set forth in Section 6.2 (other than delivery by the Borrower of a Notice of Revolving Borrowing). No such making of an LC Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Banks for the amount of any payment made by an Issuing Bank under any Letter of Credit, together with interest as provided herein.
(f) If any Lender fails to make available to the Administrative Agent for the account of an Issuing Bank any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 4.3 by the time specified in Section 4.3(b), the applicable Issuing Bank shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the applicable Issuing Bank at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the applicable Issuing Bank in accordance with banking industry rules on interbank compensation plus any administrative, processing or similar fees customarily charged by such Issuing Bank in connection with the foregoing. A certificate of an Issuing Bank submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (f) shall be conclusive absent manifest error.
Section 4.4 Repayment of Participations.
(a) At any time after an Issuing Bank has made a payment under any Letter of Credit and has received from any Lender such Lender’s LC Advance in respect of such payment in accordance with Section 4.3, if the Administrative Agent receives for the account of such Issuing Bank any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s LC Advance was outstanding) in the same funds as those received by the Administrative Agent.
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(b) If any payment received by the Administrative Agent for the account of an Issuing Bank pursuant to Section 4.3(a) is required to be returned under any of the circumstances described in Section 11.5 (including pursuant to any settlement entered into by the applicable Issuing Bank in its discretion), each Lender shall pay to the Administrative Agent for the account of such Issuing Bank its Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
Section 4.5 Obligations Absolute. The obligation of the Borrower to reimburse the Issuing Banks for each drawing under each Letter of Credit and to repay each LC Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(a) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;
(b) the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), any Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(c) any draft, demand, certificate or other document presented under such 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; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(d) any payment by the applicable Issuing Bank under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by such Issuing Bank under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor‑in‑possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; and
(e) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Subsidiary.
The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will promptly notify the applicable Issuing Bank. The Borrower shall be conclusively deemed to have waived any such claim against such Issuing Bank and its correspondents unless such notice is given as aforesaid; provided, that, the terms and provisions of this Section 4.5 shall not limit the rights of the Borrower under Section 4.6.
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Section 4.6 Role of Issuing Banks. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, no Issuing Bank shall have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by such Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of any Issuing Bank, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any Issuing Bank shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuing Bank Agreement. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of any Issuing Bank, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any Issuing Bank shall be liable or responsible for any of the matters described in clauses (a) through (e) of Section 4.5; provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against an Issuing Bank, and an Issuing Bank may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which are determined by a court of competent jurisdiction by final and non-appealable judgment to have been caused by such Issuing Bank’s willful misconduct or gross negligence or such Issuing Bank’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit unless such Issuing Bank is prevented or prohibited from so paying as a result of any order or directive of any court or other Governmental Authority. In furtherance and not in limitation of the foregoing, each Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and each Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.
Section 4.7 Applicability of ISP and UCP. Unless otherwise expressly agreed by the applicable Issuing Bank and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP98 shall apply to each Letter of Credit and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each commercial or direct pay Letter of Credit.
Section 4.8 Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Percentage a Letter of Credit fee (the “Letter of Credit Fee”), for each Letter of Credit equal to the Applicable Margin times the daily maximum amount available to be drawn under such Letter of Credit; provided, however, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with respect to which such Defaulting Lender has not provided Cash Collateral satisfactory to the applicable Issuing Bank pursuant to this Article IV shall be payable, to the maximum extent permitted by applicable Law, to the other Lenders in accordance with the upward adjustments in their respective Percentages allocable to such Letter of Credit pursuant to Section 11.18(a)(iv), with the balance of such fee, if any, payable to the applicable Issuing Bank for its own account. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4. Letter of Credit Fees shall be (i) computed on a quarterly basis in arrears and (ii) due and payable on the first Business
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Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If there is any change in the Applicable Margin during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default under Section 9.1(a) exists, all Letter of Credit Fees shall accrue at the Default Rate.
Section 4.9 Fronting Fee and Processing Charges Payable to Issuing Banks. The Borrower shall pay to the Administrative Agent, for the account of the applicable Issuing Bank a fronting fee with respect to each Letter of Credit issued by such Issuing Bank in an amount equal to the actual daily maximum amount available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit) multiplied by the rate per annum specified in the applicable Fee Letter between the Borrower and such Issuing Bank and computed on a quarterly basis in arrears. Such fronting fee shall be due and payable on the last Business Day of each March, June, September and December, commencing with (a) with respect to the Existing Letters of Credit, the first such date to occur after the Closing Date, on the Letter of Credit Expiration Date and thereafter on demand and (b) with respect to all Letters of Credit other than Existing Letters of Credit, the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4. In addition, the Borrower shall pay directly to each Issuing Bank for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such Issuing Bank relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.
Section 4.10 Conflict with Issuing Bank Agreements. In the event of any conflict between the terms hereof and the terms of any Issuing Bank Agreement, the terms hereof shall control.
Section 4.11 Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the applicable Issuing Bank hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.
ARTICLE V.
PAYMENTS, COMPUTATIONS AND
YIELD PROTECTION
Section 5.1 Payments and Computations.
(a) The Borrower shall make each payment hereunder and under the other Loan Documents not later than 3:00 p.m. on the day when due in Dollars to the Administrative Agent’s Office in same day funds, except payments to be made directly to the Issuing Banks or the Swingline Lender as expressly provided herein; any payment received after 3:00 p.m. shall be deemed to have been received at the start of business on the next succeeding Business Day. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, fees or other amounts payable to the Lenders, to the respective
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Lenders to which the same are payable, for the account of their respective Applicable Lending Offices, in each case to be applied in accordance with the terms of this Agreement. If and to the extent that any distribution of any payment from the Borrower required to be made to any Lender pursuant to the preceding sentence shall not be made in full by the Administrative Agent on the date such payment was received by the Administrative Agent, the Administrative Agent shall pay to such Lender, upon demand, interest on the unpaid amount of such distribution, at a rate per annum equal to the Federal Funds Rate, from the date of such payment by the Borrower to the Administrative Agent to the date of payment in full by the Administrative Agent to such Lender of such unpaid amount. Upon the Administrative Agent’s acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 11.7, from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder and under any Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.
(b) The Borrower hereby authorizes the Administrative Agent, the Swingline Lender, each Lender and each Issuing Bank, if and to the extent payment owed by the Borrower to the Administrative Agent, the Swingline Lender, such Lender or such Issuing Bank, as the case may be, is not made when due hereunder (or, in the case of a Lender, under any Note held by such Lender), to charge from time to time against any or all of the Borrower’s accounts with the Administrative Agent, the Swingline Lender, such Lender or such Issuing Bank, as the case may be, any amount so due.
(c) All computations of interest for Base Rate Loans when the Base Rate is determined by the Prime Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be. All other computations of interest and fees hereunder shall be made by the Administrative Agent on the basis of a year of 360 days. In each such case, such computation shall be made for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each such determination by the Administrative Agent or a Lender shall be conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under any other Loan Document shall be stated to be due on a day other than 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 payment of interest and fees hereunder; provided, however, that if such extension would cause payment of interest on or principal of LIBOR Rate Loans to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.
(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date, and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, such Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender, together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate.
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(f) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto.
Section 5.2 Interest Rate Determination. The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 3.5(b)(i) or (ii).
Section 5.3 Prepayments. The Borrower shall have no right to prepay any principal amount of any Loans other than as provided in subsections (a) and (b) below.
(a) Voluntary Prepayments.
(i) Revolving Loans. The Borrower may, upon at least three (3) Business Days’ notice, with respect to LIBOR Rate Loans, and one (1) Business Day’s notice, with respect to Base Rate Loans, to the Administrative Agent stating the proposed date and the aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amounts of Revolving Loans made as part of the same Borrowing, in whole or ratably in part, together with (i) accrued interest to the date of such prepayment on the principal amount prepaid and (ii) in the case of LIBOR Rate Loans, and subject to Section 5.4(d), any amount payable to the Lenders pursuant to Section 5.4(b); provided, however, that each partial prepayment shall be in an aggregate principal amount of not less than (A) in the case of LIBOR Loans, $5,000,000 or an integral multiple of $1,000,000 in excess thereof or (B) in the case of Base Rate Loans, $1,000,000 or an integral multiple of $500,000 in excess thereof.
(ii) Swingline Loans. The Borrower may, upon one (1) Business Day’s notice to the Swingline Lender (with a copy to the Administrative Agent) stating the proposed date and the aggregate principal amount of the prepayment, at any time and from time to time, and if such notice is given the Borrower shall, voluntarily prepay Swingline Loans in whole or in part without premium or penalty, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, that, (A) such notice must be received by the Swingline Lender and the Administrative Agent not later than 1:00 p.m. on the date of such prepayment and (B) such prepayment shall be in a minimum principal amount of $100,000 or a whole multiple of $100,000 in excess thereof (or, if less, the entire principal thereof then outstanding).
(b) Mandatory Prepayments.
(i) Revolving Commitments. If for any reason the Total Revolving Outstandings exceeds the Commitments (including as a result of any termination or reduction of the Commitments pursuant to Sections 2.3 or 8.2(d)), the Borrower shall immediately pay or prepay so much of the principal amount outstanding hereunder as shall be necessary in order that the Total Revolving Outstandings (after giving effect to all Extensions of Credit to be made on such date and the application of the proceeds thereof) will not exceed the Commitments, together with (i) accrued interest to the date of such prepayment on the principal amount prepaid and (ii) in the case of prepayments of LIBOR Rate Loans, and subject to Section 5.4(d), any amount payable to the Lenders
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pursuant to Section 5.4(b). Any prepayments required by this subsection (b) shall be applied to outstanding Base Rate Loans up to the full amount thereof before they are applied to outstanding LIBOR Rate Loans.
(ii) Negative Mark-to-Market Exposure. If, as of the end of any calendar month, (A) there exists Aggregate Negative Mark-to-Market Exposure, as set forth in the certificate of a Responsible Officer of the Borrower required to be delivered pursuant to Section 8.1(b)(iii) and (B) at such time the Total Revolving Outstandings exceed the Borrowing Limit then in effect (after giving effect to the reduction in the Borrowing Limit caused by such Aggregate Negative Mark-to-Market Exposure), the Borrower shall, within three (3) Business Days pay or prepay so much of the principal amount outstanding hereunder as shall be necessary in order that the Total Revolving Outstandings (after giving effect to all Extensions of Credit to be made on such date and the application of the proceeds thereof) will not exceed the Borrowing Limit.
(a) Increased Costs. If, due to any Change in Law there shall be reasonably incurred any increase in (A) the cost to any Lender of agreeing to make or making, funding or maintaining LIBOR Rate Loans, or of participating in the issuance, maintenance or funding of any Letter of Credit, or (B) the cost to any Issuing Bank of issuing or maintaining any Letter of Credit, then the Borrower shall from time to time, promptly after receipt of written demand by such Lender or Issuing Bank, as the case may be (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender or Issuing Bank, as the case may be, additional amounts sufficient to compensate such Lender or Issuing Bank, as the case may be, for such increased cost. A certificate as to the amount of such increased cost and giving a reasonable explanation and calculation thereof shall be submitted to the Borrower and the Administrative Agent by such Lender or such Issuing Bank, as the case may be, shall constitute such demand and shall be conclusive and binding for all purposes, absent manifest error.
(b) Breakage. If, due to any prepayment pursuant to Section 5.3, an acceleration of maturity of the Loans pursuant to Section 9.2, or any other reason, any Lender receives payments of principal of any LIBOR Rate Loan other than on the last day of the Interest Period relating to such Loan, or if the Borrower shall Convert any LIBOR Rate Loans on any day other than the last day of the Interest Period therefor, the Borrower shall, promptly after demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for additional losses, costs, or expenses (including anticipated lost profits) that such Lender may reasonably incur as a result of such payment or Conversion, including any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such Loan. For purposes of this subsection (b) and Section 3.4(e), a certificate setting forth the amount of such additional losses, costs, or expenses and giving a reasonable explanation and calculation thereof shall be submitted to the Borrower and the Administrative Agent by such Lender, shall constitute such demand and shall be conclusive and binding for all purposes, absent manifest error.
(c) Capital. If any Lender or Issuing Bank determines that any Change in Law after the date hereof, affects or would affect the amount of capital required or expected to be maintained by such Lender or Issuing Bank, whether directly, or indirectly as a result of commitments of any corporation controlling such Lender or Issuing Bank (but without duplication), and the amount of such capital is increased by or based upon (A) the existence of
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such Lender’s or Issuing Bank’s commitment to lend or issue or participate in any Letter of Credit hereunder, or (B) the participation in or issuance or maintenance of any Letter of Credit or Loan and (C) other similar such commitments, then, promptly after demand by such Lender or Issuing Bank, the Borrower shall pay to the Administrative Agent for the account of such Lender or Issuing Bank from time to time as specified by such Lender or Issuing Bank additional amounts sufficient to compensate such Lender or Issuing Bank in the light of such circumstances, to the extent that such Lender or Issuing Bank reasonably determines such increase in capital to be allocable to the transactions contemplated hereby. A certificate as to such amounts and giving a reasonable explanation and calculation thereof (to the extent permitted by law) shall be submitted to the Borrower and the Administrative Agent by such Lender or Issuing Bank and shall be conclusive and binding for all purposes, absent manifest error.
(d) Notices, Etc. Each Lender and each Issuing Bank hereby agrees to use its best efforts to notify the Borrower of the occurrence of any event referred to in subsection (a), (b) or (c) of this Section 5.4 promptly after becoming aware of the occurrence thereof. The Borrower shall pay the Administrative Agent, for the account of such Lender or such Issuing Bank, the amount shown as due on any certificate delivered pursuant to this Section 5.4 within ten (10) Business Days after its receipt of the same. The failure of any Lender or any Issuing Bank to provide such notice or to make demand for payment under said subsection shall not constitute a waiver of such Lender’s or such Issuing Bank’s rights hereunder; provided, that, notwithstanding any provision to the contrary contained in this Section 5.4, the Borrower shall not be required to reimburse any Lender or any Issuing Bank for any amounts or costs incurred under subsection (a), (b) or (c) above, more than 90 days prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower in writing thereof, in each case unless, and to the extent that, any such amounts or costs so incurred shall relate to the retroactive application of any event notified to the Borrower which entitles such Lender to such compensation. Each Lender and Issuing Bank claiming any compensation under this Section 5.4 shall use reasonable efforts to designate a different Applicable Lending Office if such designation would not result in the incurrence by such Lender or such Issuing Bank of additional costs or expenses which it deems material or, in the sole judgment of such Lender or such Issuing Bank, be inadvisable for regulatory, competitive or internal management reasons. If any Lender or Issuing Bank shall subsequently determine that any amount demanded and collected under this Section 5.4 was done so in error, such Lender or such Issuing Bank will promptly return such amount to the Borrower. Notwithstanding any other provision of this Section 5.4, no Lender or Issuing Bank shall demand compensation for any increased cost or increased capital requirement referred to in subsection (a) or (c) above if it shall not at the time be the general policy or practice of such Lender or Issuing Bank (as the case may be) to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any.
(e) Survival of Obligations. Subject to subsection (d) above, the Borrower’s obligations under this Section 5.4 shall survive the repayment of all other amounts owing to the Lenders, the Swingline Lender, the Administrative Agent and the Issuing Banks under the Loan Documents and the termination of the Commitments.
Section 5.5 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Loans or other obligations owing to it pursuant to this Agreement (excluding any amounts applied by the Swingline Lender to outstanding Swingline Loans and excluding any amounts received by an Issuing Bank and/or the Swingline Lender to secure the obligations of a Defaulting Lender to fund risk participations hereunder and other than pursuant to Section 5.4, 5.6, 11.4 or 11.7) in excess of its ratable share of payments obtained by all the Lenders on account of the Loans of such Lenders, such Lender shall
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forthwith purchase from the other Lenders such participation in the Loans owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 5.5 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. Notwithstanding the foregoing, if any Lender shall obtain any such excess payment involuntarily, such Lender may, in lieu of purchasing participations from the other Lenders in accordance with this Section 5.5, on the date of receipt of such excess payment, return such excess payment to the Administrative Agent for distribution in accordance with Section 5.1(a).
(a) All payments by the Borrower hereunder and under the other Loan Documents shall be made in accordance with Section 5.1, free and clear of and without deduction for all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender, each Issuing Bank and the Administrative Agent, taxes imposed on its overall net or gross income, receipts, capital, net worth, privilege of transacting business or corporate franchise taxes imposed on it by the jurisdiction under the laws of which such Lender, such Issuing Bank or the Administrative Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, taxes imposed on its overall net or gross income, receipts, capital, net worth, privilege of transacting business or corporate franchise taxes imposed on it by the jurisdiction of such Lender’s Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any other Loan Document to any Lender, any Issuing Bank or the Administrative Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.6) such Lender, such Issuing Bank or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other similar taxes or charges that arise from any payment made hereunder or under any other Loan Document or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as “Other Taxes”).
(c) Tax Indemnifications.
(i) Without limiting the provisions of subsection (a) or (b) of this Section 5.6 and subject to clause (ii) below, the Borrower shall, and does hereby, indemnify the Administrative Agent, each Lender, and each Issuing Bank and shall make payment in
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respect thereof within thirty (30) days after demand therefor, for the full amount of any Taxes or Other Taxes (including Taxes or Other Taxes imposed by any jurisdiction or asserted on or attributable to amounts payable under this Section) withheld or deducted by the Borrower or the Administrative Agent or paid by the Administrative Agent, such Lender, or such Issuing Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by any Governmental Authority. The Borrower shall also, and does hereby, indemnify the Administrative Agent, and shall make payment in respect thereof within thirty (30) days after demand therefor, for any amount which a Lender for any reason fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of this subsection. A certificate as to the amount of any such payment or liability delivered to the Borrower by a Lender or Issuing Bank (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank, shall be conclusive absent manifest error. Nothing herein shall preclude the right of the Borrower to contest any such Taxes or Other Taxes so paid, and each Lender, each Issuing Bank and the Administrative Agent (as the case may be) will, following notice from, and at the expense of, the Borrower, reasonably cooperate with the Borrower to preserve the Borrower’s rights to contest such Taxes or Other Taxes.
(ii) Without limiting the provisions of subsection (a) or (b) above, each Lender shall, and does hereby, indemnify the Borrower and the Administrative Agent, and shall make payment in respect thereof within thirty (30) days after demand therefor, against any and all Taxes and any and all related losses, claims, liabilities, penalties, interest and expenses (including the fees, charges and disbursements of any counsel for the Borrower or the Administrative Agent) incurred by or asserted against the Borrower or the Administrative Agent by any Governmental Authority directly as a result of the failure by such Lender to deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any documentation required to be delivered by such Lender to the Borrower or the Administrative Agent pursuant to subsection (e) below. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this subsection (c)(ii). The agreements in this subsection (c)(ii) shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the repayment of all other amounts owing to the Lenders, the Administrative Agent and the Issuing Banks under the Loan Documents and the termination of the Commitments.
(d) Within thirty (30) days after the date of any payment of Taxes, the Borrower will furnish to the Administrative Agent, at its address referred to in Section 11.2, the original or a certified copy of a receipt evidencing payment thereof.
(e) Each Lender represents and warrants that either (i) it is organized under the laws of a jurisdiction within the United States or (ii) it has delivered to the Borrower or the Administrative Agent duly completed copies of such form or forms prescribed by the United States Internal Revenue Service indicating that such Lender is entitled to receive payments without deduction or withholding of any United States federal income taxes, as permitted by the Code or any tax treaty to which the United States is a party. Each other Lender agrees that, on or prior to the date upon which it shall become a party hereto, and upon the reasonable request from time to time of the Borrower or the Administrative Agent, such Lender will deliver to the Borrower and the Administrative Agent (to the extent that it is not prohibited by law from doing
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so) either (A) a statement that it is organized under the laws of a jurisdiction within the United States or (B) duly completed copies of such form or forms as may from time to time be prescribed by the United States Internal Revenue Service, indicating that such Lender is entitled to receive payments without deduction or withholding of any United States federal income taxes, as permitted by the Code. Each Lender that has delivered, and each other Lender that hereafter delivers, to the Borrower and the Administrative Agent the form or forms referred to in the two preceding sentences further undertakes to deliver to the Borrower and the Administrative Agent, to the extent that it is not prohibited by law from doing so, further copies of such form or forms, or successor applicable form or forms, as the case may be, as and when any previous form filed by it hereunder shall expire (upon request for recertification made by the Borrower or the Administrative Agent) or shall become incomplete or inaccurate in any respect. Each Lender represents and warrants that each such form supplied by it to the Administrative Agent and the Borrower pursuant to this subsection (e), and not superseded by another form supplied by it, is or will be, as the case may be, complete and accurate, and such Lender acknowledges and agrees that nothing contained herein shall in any way limit, waive, or otherwise reduce any claim that the Administrative Agent or the Borrower may have against such Lender in the event that any such form shall not be complete and accurate.
(f) Any Lender claiming any additional amounts payable pursuant to this Section 5.6 shall use its best efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.
(g) Any Lender claiming any additional amounts payable pursuant to this Section 5.6 (“Additional Amounts”) who determines, in its sole discretion exercised in good faith, that it has received a tax refund as a result of the Borrower’s payment of such Additional Amounts shall, to the extent it can do so without prejudice to the retention of the amount of the tax refund so realized (after taking into account any net additional taxes paid in connection with the realization thereof), notify the Borrower and pay to the Borrower (to the extent that the same shall not already have been taken into account in computing any amount previously paid by the Borrower or the amount of any reimbursement previously received by such Lender) promptly after the realization thereof an amount that is equal to the net amount thereof (or, in the event of a deduction from taxable income, the net tax benefit generated thereby, if less than such deduction) plus any additional tax savings resulting from the payment of such amount to the Borrower pursuant to this sentence; provided, that, the aggregate of all such payments shall not exceed the aggregate of all Additional Amounts paid by the Borrower with respect to such Lender; provided, further, that, the Borrower, upon request of such Lender, agrees to pay the amount paid over to the Borrower (plus penalties, interest and other charges) to such Lender in the event such Lender is required to repay or return such refund with respect to which a payment was made by such Lender to the Borrower. Nothing contained herein shall interfere with the right of such Lender to arrange its tax affairs in whatever manner it deems appropriate and, in particular, such Lender shall neither be under any obligation to claim relief from a tax liability in priority to any other credit or deduction available to it or be obligated to disclose any information relating to its tax affairs or any computations in respect thereof or be required to do anything that would prejudice its ability to benefit from any other credits, deductions or similar tax savings to which it may be entitled.
(h) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 5.6 shall
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survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the repayment of all other amounts owing to the Lenders, the Administrative Agent and the Issuing Banks under the Loan Documents and the termination of the Commitments.. If and to the extent that the obligations of the Borrower under this Section 5.6 are unenforceable for any reason, the Borrower agrees to make the maximum contribution to the payment and satisfaction thereof which is permissible under applicable law.
ARTICLE VI.
CONDITIONS PRECEDENT
Section 6.1 Conditions Precedent to Effectiveness of this Agreement. This Agreement shall become effective on the first date on which all of the following conditions precedent shall be satisfied or waived:
(a) Loan Documents. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Borrower and each Lender, (ii) the General and Refunding Mortgage Bonds in a principal amount equal to the Commitments, duly issued and delivered by a duly authorized officer of the Borrower and duly authenticated by the trustee under the General and Refunding Mortgage Indenture, (iii) the Notes (if requested by any Lender), duly executed by the Borrower and (iv) any other applicable Loan Documents, each of which shall have been duly authorized, executed and delivered to the Administrative Agent.
(b) Approvals. All governmental and third party approvals (including, without limitation, any required approvals of the PUCN and any relevant Federal regulatory bodies) necessary in connection with the transactions contemplated herein, the issuance and delivery to the Administrative Agent of the General and Refunding Mortgage Bonds and the continuing operations of the Borrower and its Subsidiaries shall have been obtained and be in full force and effect; and the Administrative Agent shall have received evidence satisfactory to it that the foregoing have been accomplished.
(c) Related Agreements. The Administrative Agent shall have received (in a form reasonably satisfactory to the Administrative Agent) true and correct copies, certified as to authenticity by a Responsible Officer of the Borrower, of such documents or instruments as may be reasonably requested by the Administrative Agent, including, without limitation, a copy of any debt instrument, security agreement or other material contract to which the Borrower may be a party.
(d) Fees. The Lenders, the Administrative Agent and Wells Fargo Securities, MLPFS and JPM Securities (each in its capacity as Joint Lead Arranger) shall have received all fees required to be paid, and all expenses for which invoices have been presented (including reasonable fees, disbursements and other charges of counsel to the Administrative Agent), on or before the Closing Date.
(e) Closing Certificates. The Administrative Agent shall have received an officer’s certificate of the Borrower, dated the Closing Date, substantially in the form of Exhibit D, and a secretary’s certificate of the Borrower, dated the Closing Date, substantially in the form of Exhibit E, in each case executed by a Responsible Officer of the Borrower, with appropriate insertions and attachments in form and substance satisfactory to the Administrative Agent.
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(f) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions:
(i) the legal opinion of Choate, Hall & Stewart LLP, special counsel to the Borrower, in form and substance satisfactory to the Administrative Agent (including, without limitation, matters governed by New York law); and
(ii) the legal opinion of Woodburn and Wedge, Nevada counsel to the Borrower, in form and substance satisfactory to the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.
(g) General and Refunding Mortgage Bond Documents. The Administrative Agent shall have received copies of (i) the General and Refunding Mortgage Indenture as in effect on the Closing Date, certified as to authenticity by a Responsible Officer of the Borrower and (ii) each of the following documents (all as defined in the General and Refunding Mortgage Indenture), each certified as to authenticity by a Responsible Officer of the Borrower: (A) an “Officer’s Certificate” pursuant to a board resolution meeting the requirements of Section 4.01(b) of the General and Refunding Mortgage Indenture and setting forth the terms of the General and Refunding Mortgage Bonds; (B) a “Company Order” requesting authentication of the General and Refunding Mortgage Bond by the trustee under the General and Refunding Mortgage Indenture; and (C) all legal opinions provided in connection with the issuance of the General and Refunding Mortgage Bonds, including that required by Section 4.01(d) of the General and Refunding Mortgage Indenture.
(h) Financial Statements and Projections. The Lenders and the Administrative Agent shall have received and be satisfied with (i) the financial statements referred to in Section 7.1(a) and (ii) projections for the Borrower through the fiscal year ending December 31, 2016.
(i) Negative Mark-to-Market Exposure. The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower, in form and substance satisfactory to the Administrative Agent, setting forth calculations of the Borrower’s Aggregate Negative Mark-to-Market Exposure as of the Closing Date, if any, in respect of all Hedge Agreements between the Borrower and any Lender or any Affiliate of a Lender.
(j) Termination of Existing NPC Credit Agreement. Receipt by the Administrative Agent of evidence that the Existing NPC Credit Agreement concurrently with the Closing Date is being terminated and all Liens securing obligations under the Existing NPC Credit Agreement concurrently with the Closing Date are being released.
(k) SPPC Facility. Receipt by the Administrative Agent of a certificate of a Responsible Officer of the Borrower, certifying that the SPPC Credit Agreement is, or contemporaneously with the effectiveness of this Agreement will be, effective on and as of Closing Date.
(l) Good Standing Certificate. The Administrative Agent shall have received a certificate of good standing (or equivalent certification) issued within five (5) days prior to the Closing Date with respect to the Borrower by the Secretary of State in the Borrower’s jurisdiction of incorporation.
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(m) Other Approvals, Etc. The Administrative Agent shall have received such other approvals, opinions and documents as any Lender, through the Administrative Agent, may reasonably request.
Section 6.2 Conditions Precedent to Each Extension of Credit. The obligation of each Lender or Issuing Bank, as the case may be, to make an Extension of Credit (including the initial Extension of Credit, but excluding Conversions (except (x) the condition precedent set forth in clause (c) of this Section 6.2 shall be satisfied for all Conversions and (y) the condition precedent set forth in clause (b) of this Section 6.2 shall be satisfied for all Conversions from Base Rate Loans to LIBOR Rate Loans)) shall be subject to the further conditions precedent that (a) each of the representations and warranties made by the Borrower in or pursuant to the Loan Documents (other than in the case of any Extension of Credit made after the occurrence of a Debt Ratings Trigger and during the period that the conditions for the Debt Ratings Trigger remain in effect, the representations and warranties set forth in Section 7.1(b) of this Agreement) is true and correct in all material respects on and as of the date of such Extension of Credit as if made on such date, (b) no Default or Event of Default has occurred and is continuing on the date of such Extension of Credit or after giving effect to the Extensions of Credit requested to be made on such date and (c) the Administrative Agent and, if applicable, the applicable Issuing Bank and/or the Swingline Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
Section 6.3 Determinations Under Section 6.1. For purposes of determining compliance with the conditions specified in Section 6.1, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by this Agreement shall have received written notice from such Lender prior to the date hereof specifying its objection thereto.
Section 6.4 Reliance on Certificates. The Lenders, the Issuing Banks and the Administrative Agent shall be entitled to rely conclusively upon the certificates delivered from time to time by officers of the Borrower as to the names, incumbency, authority and signatures of the respective individuals named therein until such time as the Administrative Agent may receive a replacement certificate, in form acceptable to the Administrative Agent, from an officer of such Person identified to the Administrative Agent as having authority to deliver such certificate, setting forth the names and true signatures of the officers and other representatives of such Person thereafter authorized to act on behalf of such Person.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of the Borrower. To induce the Administrative Agent, the Issuing Banks and the Lenders to enter into this Agreement and to make Extensions of Credit, the Borrower hereby represents and warrants to the Administrative Agent, each Issuing Bank and each Lender that:
(a) Financial Condition. The audited consolidated balance sheets of the Borrower as at December 31, 2010 and December 31, 2011 and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from Deloitte & Touche LLP, present fairly the Consolidated financial condition of the Borrower and its Subsidiaries as at such dates, and the Consolidated results of its operations and its Consolidated cash flows for the respective fiscal years then ended. All such
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financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). The Borrower and its Subsidiaries do not have any material Guarantees, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including, without limitation, any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph. During the period from December 31, 2011 to and including the date hereof there has been no Disposition by the Borrower or any of its Subsidiaries of any material part of its business or Property. The financial statements delivered pursuant to Section 8.1(a) have been prepared in accordance with GAAP and present fairly in all material respects the consolidated financial condition, results of operations and cash flows of the Borrower and its Subsidiaries, as of the date and for the periods covered thereby.
(b) No Change. Since December 31, 2011, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.
(c) Corporate Existence; Compliance with Law. Each of the Borrower and its Subsidiaries (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the business in which it is currently engaged, (iii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its business requires such qualification and (iv) is in compliance with all Requirements of Law, except to the extent that, in the case of clauses (ii), (iii) and (iv) above, the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. Set forth on Schedule 7.1(c) as of the Closing Date (and for the four (4) months immediately preceding the Closing Date), is the exact legal name of the Borrower, the state of its incorporation, the chief executive office, the principal place of business, the jurisdictions in which the Borrower is qualified to do business, the federal tax identification number and organizational identification number of the Borrower.
(d) Corporate Power; Authorization; Enforceable Obligations. The Borrower has the corporate power and authority, and the legal right, to make, deliver and perform the Loan Documents and to borrow hereunder. The Borrower has taken all necessary corporate action to authorize the execution, delivery and performance of the Loan Documents, to authorize the issuance and delivery or assignment of the General and Refunding Mortgage Bonds on the terms and conditions of this Agreement and to authorize such borrowings on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Loan Documents, except consents, authorizations, filings and notices described in Schedule 7.1(d), which consents, authorizations, filings and notices have been obtained or made and are in full force and effect. Each Loan Document has been duly executed and delivered on behalf of the Borrower. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
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(e) No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the Extensions of Credit hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of the Borrower or any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien (other than pursuant to the Loan Documents) on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation. No Requirement of Law or Contractual Obligation applicable to the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.
(f) No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its Subsidiaries or against any of their respective properties or revenues (i) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (ii) that could reasonably be expected to have a Material Adverse Effect, except as set forth on Schedule 7.1(f).
(g) No Default. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
(h) Ownership of Property; Liens. Each of the Borrower and its Subsidiaries has title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other Property, and none of such Property is subject to any Lien except for Permitted Liens, including without limitation all Mortgaged Property and all rights to control or occupy easements or rights of way that are part of the Mortgaged Property.
(i) Intellectual Property. The Borrower and each of its Subsidiaries owns, or is licensed to use, all Intellectual Property necessary for the conduct of its business as currently conducted. No material claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does the Borrower know of any valid basis for any such claim. The use of Intellectual Property by the Borrower and its Subsidiaries does not infringe on the rights of any Person in any material respect.
(j) Taxes. Each of the Borrower and each of its Subsidiaries has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its Property and all other taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Subsidiaries, as the case may be); and no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.
(k) Federal Regulations. No part of the proceeds of any Extension of Credit will be used for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the regulations of the Board. The Borrower does not own any “margin stock” within the meaning of the quoted term under Regulation U as now and from time to time hereafter in effect. If requested by any Lender or the Administrative Agent, the
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Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G‑3 or FR Form U‑1 referred to in Regulation U.
(l) Government Approval and Filings. The PUCN has duly and validly issued an order authorizing the Borrower to enter into this Agreement and the other Loan Documents and to take all actions contemplated hereby or thereby or in connection herewith or therewith and to incur the maximum amount of indebtedness provided for in this Agreement and the other Loan Documents, and such authority granted to the Borrower pursuant to such order has not been rescinded, revoked or otherwise modified and remains in full force and effect. All compliance reports required to be filed with the PUCN in connection with this Agreement and the other Loan Documents have been properly filed with and accepted by the PUCN. No other authorization, approval, order, decree, ruling or other action by, or notice to or filing with, any Governmental Authority is required for the due execution, delivery and performance by the Borrower of this Agreement or any of the other Loan Documents.
(m) Labor Matters. There are no strikes or other labor disputes against the Borrower or any of its Subsidiaries pending or, to the knowledge of the Borrower, threatened that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. All payments due from the Borrower or any of its Subsidiaries on account of employee health and welfare insurance that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a liability on the books of the Borrower or the relevant Subsidiary.
(n) ERISA. Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. No Single Employer Plan is in “at risk status” (as defined in Section 430(i)(4) of the Code, without regard to Section 430(i)(4)(B) relating to the transition rule) and the Borrower has timely made the minimum required contribution (as defined in Section 430(a) of the Code) to each Single Employer Plan. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result in a material liability under ERISA, and neither the Borrower nor any Commonly Controlled Entity would become subject to any material liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
(o) Investment Company Act; Other Regulations. The Borrower is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. The Borrower is not subject to regulation under any Requirement of Law (other than Regulation X of the Board) which limits its ability to incur Indebtedness (other than public utility laws and regulations of Nevada administered by the PUCN).
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(p) Subsidiaries.
(i) The Subsidiaries listed on Schedule 7.1(p) constitute all the Subsidiaries of the Borrower at the date hereof. Schedule 7.1(p) sets forth as of the Closing Date the name and jurisdiction of incorporation of each Subsidiary and, as to each Subsidiary, the percentage of each class of Capital Stock owned by the Borrower.
(ii) There are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments of any nature relating to any Capital Stock of the Borrower or any Subsidiary.
(q) Use of Proceeds. The proceeds of the Extensions of Credit shall be used solely for working capital and general corporate purposes of the Borrower and its Subsidiaries, including, without limitation, the refinancing of certain Indebtedness outstanding as of the Closing Date (including the Existing NPC Credit Agreement), Capital Expenditures in the ordinary course of business, acquisitions permitted hereunder, commercial paper back-stop purposes and the payment of certain fees and expenses incurred in connection with the transactions contemplated by this Agreement.
(r) Environmental Matters. Except with respect to matters existing on the Closing Date as set forth in the Borrower’s annual report on form 10-K for the fiscal year ended December 31, 2011 and other than exceptions to any of the following that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:
(i) The Borrower and its Subsidiaries: (A) are, and within the period of all applicable statutes of limitation have been, in compliance with all applicable Environmental Laws; (B) hold all Environmental Permits (each of which is in full force and effect) required for any of their current or intended operations or for any property owned, leased, or otherwise operated by any of them; (C) are, and within the period of all applicable statutes of limitation have been, in compliance with all of their Environmental Permits; and (D) reasonably believe that: each of their Environmental Permits will be timely renewed and complied with, without material expense; any additional Environmental Permits that may be required of any of them will be timely obtained and complied with, without material expense; and compliance with any Environmental Law that is or is expected to become applicable to any of them will be timely attained and maintained, without material expense.
(ii) There are no Materials of Environmental Concern present at, on, under, in, or about any real property now or formerly owned, leased or operated by the Borrower or any of its Subsidiaries, or at any other location (including, without limitation, any location to which Materials of Environmental Concern have been sent for re-use or recycling or for treatment, storage, or disposal), which could reasonably be expected, individually or in the aggregate, to (A) give rise to liability of the Borrower or any of its Subsidiaries under any applicable Environmental Law or otherwise result in costs to the Borrower or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect, or (B) interfere with the Borrower’s or any of its Subsidiaries’ continued operations, or (C) materially adversely affect the fair saleable value of any real property owned or leased by the Borrower or any of its Subsidiaries.
(iii) There is no judicial, administrative, or arbitral proceeding (including any notice of violation or alleged violation) under or relating to any Environmental Law to
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which the Borrower or any of its Subsidiaries is, or to the knowledge of the Borrower or any of its Subsidiaries will be, named as a party that is pending or, to the knowledge of the Borrower or any of its Subsidiaries, threatened.
(iv) Neither the Borrower nor any of its Subsidiaries has received any written request for information, or been notified that it is a potentially responsible party under or relating to the federal Comprehensive Environmental Response, Compensation, and Liability Act or any similar Environmental Law, or with respect to any Materials of Environmental Concern.
(v) Neither the Borrower nor any of its Subsidiaries has entered into or agreed to any consent decree, order, or settlement or other agreement, or is subject to any judgment, decree, or order or other agreement, in any judicial, administrative, arbitral, or other forum for dispute resolution, relating to compliance with or liability under any Environmental Law.
(vi) Neither the Borrower nor any of its Subsidiaries has assumed or retained, by contract or operation of law, any liabilities of any kind, fixed or contingent, known or unknown, under any Environmental Law or with respect to any Material of Environmental Concern.
(s) Accuracy of Information, etc. No statement or information contained in this Agreement, any other Loan Document or any other document, certificate or statement furnished to the Administrative Agent or the Lenders or any of them, by or on behalf of the Borrower for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading. The projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. There is no fact known to the Borrower that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents or in any other documents, certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.
(t) General and Refunding Mortgage Bonds.
(i) The General and Refunding Mortgage Indenture is effective to create in favor of The Bank of New York Mellon Trust Company, N.A., as trustee under the General and Refunding Mortgage Indenture (the “Indenture Trustee”), for the ratable benefit of all Holders of Securities (as defined in the General and Refunding Mortgage Indenture), a legal, valid, binding, subsisting and enforceable Lien on and security interest in the Mortgaged Property and the proceeds thereof, subject to applicable Debtor Relief Laws, and such Lien constitutes a fully perfected Lien on, and security interest in, all right title and interest of the grantors thereof in such Mortgaged Property and the proceeds thereof, in each case prior to and superior in right to any other Person subject only to Permitted Liens (as defined in the General and Refunding Mortgage Indenture.
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(ii) The General and Refunding Mortgage Bonds, when executed by the Borrower and authenticated by the Indenture Trustee in accordance with the General and Refunding Mortgage Indenture and delivered to the Administrative Agent in accordance with the terms hereof, will constitute valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms, except as the enforceability thereof may be limited by applicable Debtor Relief Laws. The Borrower has all requisite corporate power and authority to issue and deliver the General and Refunding Mortgage Bonds in accordance with and upon the terms and conditions set forth herein.
(iii) The General and Refunding Mortgage Bonds secure the Obligations of the Borrower hereunder, have been duly and validly issued and are entitled to the security and benefits of the General and Refunding Mortgage Indenture. The General and Refunding Mortgage Bonds are secured equally and ratably with, and only with, all other Securities (as defined in the General and Refunding Mortgage Indenture) issued and outstanding under the General and Refunding Mortgage Indenture.
(u) Solvency. The Borrower is, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith will be and will continue to be, Solvent.
(v) Compliance with OFAC Rules and Regulations.
(i) None of the Borrower or any of its Subsidiaries or their respective Affiliates is in violation of and shall not violate any of the country or list based economic and trade sanctions administered and enforced by OFAC that are described or referenced at http://www.ustreas.gov/offices/enforcement/ofac/ or as otherwise published from time to time.
(ii) None of the Borrower or any of its Subsidiaries or their respective Affiliates (i) is a Sanctioned Person or a Sanctioned Entity, (ii) has more than 10% of its assets located in Sanctioned Entities, or (iii) derives more than 10% of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any Loan will be used nor have any been used to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Entity.
(w) Insurance. The Borrower and its Subsidiaries maintain insurance with financially sound and reputable insurance companies on all its Property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business.
(x) Compliance with FCPA. Each of the Borrower and its Subsidiaries is in compliance with the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., and any foreign counterpart thereto. None of the Borrower or its Subsidiaries has made a payment, offering, or promise to pay, or authorized the payment of, money or anything of value (a) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (b) to a foreign official, foreign political party or party official or any candidate for foreign political office, and (c) with the intent to induce the recipient to misuse his or her official position to direct business
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wrongfully to the Borrower or any of its Subsidiaries or to any other Person, in violation of the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.
(y) Anti-Terrorism Laws. Neither the Borrower nor any of its Subsidiaries is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et seq.) (the “Trading with the Enemy Act”), as amended. Neither any of the Borrower nor any of its Subsidiaries is in violation of (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or (c) the Patriot Act. None of the Borrower or its Subsidiaries (i) is a blocked person described in Section 1 of the Anti-Terrorism Order or (ii) to the best of its knowledge, engages in any dealings or transactions, or is otherwise associated, with any such blocked person.
ARTICLE VIII.
COVENANTS OF THE BORROWER
Section 8.1 Affirmative Covenants. So long as any Loan or any other amount payable hereunder or under any Note shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment, the Borrower shall and shall cause each of its Subsidiaries to:
(a) Financial Statements. Furnish to the Administrative Agent and each Lender:
(i) as soon as available, but in any event within ninety (90) (or, if earlier, on the date of any required public filing thereof) days after the end of each fiscal year of the Borrower, a copy of the audited Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of such year and the related audited Consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing; provided, that, electronic delivery by the Borrower to the Administrative Agent and the Lenders of the Borrower’s annual report to the SEC on Form 10-K with respect to any fiscal year within the period specified above shall be deemed to be compliance by the Borrower with this Section 8.1(a)(i); and
(ii) as soon as available, but in any event not later than forty-five (45) (or, if earlier, on the date of any required public filing thereof) days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of such quarter and the related unaudited Consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments); provided, that, electronic delivery by the Borrower to the Administrative Agent and the Lenders of the Borrower’s quarterly report to the SEC on Form 10-Q with respect to any fiscal quarter within the period specified above shall be deemed to be compliance by the Borrower with this Section 8.1(a)(ii).
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All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods.
(b) Certificates; Other Information. Furnish to the Administrative Agent and each Lender, or, in the case of clause (iv) below, to the relevant Lender:
(i) concurrently with the delivery of any financial statements pursuant to Section 8.1(a), (A) a certificate of a Responsible Officer stating that, to the best of such Responsible Officer’s knowledge, the Borrower and each of its Subsidiaries during such period has observed or performed all of its covenants and other agreements, and satisfied every condition contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate, and (B) a schedule in form satisfactory to the Administrative Agent of the computations used by the Borrower in determining, as of the end such fiscal year or quarter (as the case may be), compliance with the covenant contained in Section 8.3;
(ii) if requested by the Administrative Agent or another Lender within five (5) days after such request, copies of all financial statements and reports that the Borrower sends to the holders of any class of its debt securities or public equity securities and, within five days after such request, copies of all financial statements and reports that the Borrower may make to, or file with, the SEC;
(iii) after the date of the first trade of interest protection, commodity hedges, foreign exchange or other hedging arrangements by the Borrower and continuing thereafter, within five (5) Business Days after the end of each calendar month, a certificate of a Responsible Officer of the Borrower substantially in the form of Exhibit F, in form and substance satisfactory to the Administrative Agent, setting forth calculations of the Borrower’s Aggregate Negative Mark-to-Market Exposure, if any;
(iv) promptly, such additional financial and other information as any Lender may from time to time reasonably request; and
(v) concurrently with the delivery of any financial statements pursuant to Section 8.1(a), a certificate of a Responsible Officer of the Borrower, in form and substance satisfactory to the Administrative Agent, setting forth any updated information as to the exact legal name of the Borrower, the state of its incorporation, the chief executive office, the principal place of business, the jurisdictions in which the Borrower is qualified to do business, the federal tax identification number and the organizational identification number of the Borrower.
(c) Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be.
(d) Conduct of Business, Maintenance of Existence, Compliance with Law, etc. (i) (A) Preserve, renew and keep in full force and effect its corporate existence and (B) take all
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reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 8.2(c) and except, in the case of clause (B) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (ii) comply with all Contractual Obligations and Requirements of Law, except (x) to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect and (y) as described on Schedule 8.1(d).
(e) Maintenance of Property; Insurance. (i) Keep all Property and systems useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and (ii) maintain with financially sound and reputable insurance companies insurance on all its Property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business.
(f) Inspection of Property; Books and Records; Discussions. (i) Keep proper books of records and accounts in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (ii) permit representatives of any Lender (at such Lender’s expense, except during the continuation of an Event of Default) to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants.
(g) Notices. Promptly give notice to the Administrative Agent and each Lender of:
(i) the occurrence of any Default or Event of Default;
(ii) any (A) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or (B) litigation, investigation or proceeding (other than any regularly scheduled rate proceeding with the PUCN) which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, that in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;
(iii) any litigation or proceeding affecting the Borrower or any of its Subsidiaries in which (A) the amount involved is $25,000,000 or more and not covered by insurance or (B) injunctive or similar relief is sought and such litigation or proceeding, could reasonably be expected to have a Material Adverse Effect;
(iv) the following events, as soon as possible and in any event within thirty (30) days after the Borrower knows or has reason to know thereof: (A) the occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (B) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan;
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(v) any development or event that has had or could reasonably be expected to have a Material Adverse Effect;
(vi) any change in the Borrower’s Secured Debt Rating; and
(vii) any amendment or modification to (A) its certificate of incorporation or (B) the General and Refunding Mortgage Indenture.
Each notice pursuant to this Section (other than clause (vi)) shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower or the relevant Subsidiary proposes to take with respect thereto.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Joint Lead Arrangers will make available to the Lenders and the Issuing Banks materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on SyndTrak or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Joint Lead Arrangers, the Issuing Banks and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 11.8); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Side Information;” and (z) the Administrative Agent and the Joint Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform that is not marked as “Public Side Information.” Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”
(h) Environmental Laws. Except where the failure to take the following actions could not reasonably be expected to have a Material Adverse Effect,
(i) comply with, and ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply with and maintain, and ensure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws; and
(ii) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.
Section 8.2 Negative Covenants. So long as any Loan or any other amount payable hereunder or under any Note shall remain unpaid, any Letter of Credit shall remain outstanding or any
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Lender shall have any Commitment, the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:
(a) Limitation on Indebtedness. Incur Indebtedness unless (i) there exists no Default or Event of Default and (ii) after giving effect to the incurrence of such Indebtedness, the Borrower will be in compliance with the financial covenant set forth in Section 8.3(a) on a Pro Forma Basis.
(b) Limitation on Liens. Create, incur, assume or suffer to exist any Lien of any kind securing Indebtedness, Attributable Debt or trade payables on any of its Property, whether now owned or hereafter acquired, except for the following (the “Permitted Liens”):
(i) Liens securing the liabilities and obligations of the Borrower under the Loan Documents and Liens securing any Hedging Obligations to the extent such Liens are granted on a pari passu basis with each other;
(ii) Liens in favor of the Borrower or any Subsidiary Guarantors;
(iii) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Borrower or any Subsidiary of the Borrower; provided, that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Borrower or such Subsidiary;
(iv) Liens on property existing at the time of acquisition of the property by the Borrower or any Subsidiary of the Borrower; provided, that such Liens were in existence prior to the contemplation of such acquisition;
(v) Liens to secure the performance of statutory or regulatory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;
(vi) Liens existing on the Closing Date listed on Schedule 8.2(b)(vi);
(vii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided, that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;
(viii) Liens securing any Indebtedness that is issued pursuant to the General and Refunding Mortgage Indenture;
(ix) Liens, including pledges, rights of offset and bankers’ liens, on deposit accounts, instruments, investment accounts and investment property (including cash, cash equivalents and marketable securities) from time to time maintained with or held by any financial and/or depository institutions, in each case solely to secure any and all obligations now or hereafter existing of the Borrower or any of its Subsidiaries in connection with any deposit account, investment account or cash management service (including ACH, Fedwire, CHIPS, concentration and zero balance accounts, and controlled disbursement, lockbox or restricted accounts) now or hereafter provided by
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any financial and/or depository institutions to or for the benefit of the Borrower or any of its Subsidiaries;
(x) Liens in favor of the United States Department of Energy in connection with the Borrower’s smart grid assets purchased with a grant from the United States Department of Energy under the American Recovery and Reinvestment Act;
(xi) Liens that constitute “Permitted Liens” as defined in the General and Refunding Mortgage Indenture as in effect on the Closing Date except for Liens permitted by clause (c) of such definition of “Permitted Liens” in the General and Refunding Mortgage Indenture as in effect on the Closing Date;
(xii) the Lien in favor of the Indenture Trustee on the Mortgaged Property;
(xiii) Liens securing Indebtedness under any accounts receivables securitization facility in an aggregate amount not to exceed, at any one time outstanding, $100,000,000; and
(xiv) Other Liens securing Indebtedness not to exceed, at any one time outstanding, $35,000,000.
(c) Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its Property or business, except that:
(i) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided, that the Borrower shall be the continuing or surviving corporation);
(ii) any Subsidiary of the Borrower may be merged or consolidated with another Subsidiary of the Borrower;
(iii) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower; and
(iv) SPPC may be merged or consolidated with or into the Borrower; provided, that (A) the Borrower shall be the continuing or surviving corporation, (B) the Borrower will be in compliance with the financial covenant set forth in Section 8.3(a) on a Pro Forma Basis, (C) each of the representations and warranties made by the Borrower in or pursuant to the Loan Documents is true and correct in all material respects, except to the extent such representation or warranty is already qualified by materiality or Material Adverse Effect, in which case it shall be true and correct in all respects, on and as of the date of such merger or consolidation as if made on such date, (D) no Default or Event of Default has occurred and is continuing on the date of such merger or consolidation or after giving effect to the merger or consolidation and (E) such merger or consolidation is permitted under the General and Refunding Mortgage Indenture and the General and Refunding Mortgage Bonds.
(d) Limitation on Disposition of Property; Issuance of Subsidiary Capital Stock. Dispose of any of its Property (including, without limitation, receivables and leasehold interests),
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whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:
(i) the Disposition of obsolete or worn out property in the ordinary course of business.
(ii) the sale of inventory in the ordinary course of business.
(iii) (A) the issuance of Equity Interests by a Subsidiary to the Borrower or another Subsidiary or (B) the sale of any Subsidiary’s Capital Stock to the Borrower.
(iv) the transfer of assets between or among the Borrower and its Subsidiaries.
(v) a Restricted Payment that is permitted by Sections 8.2(e).
(vi) the transfer of assets by the Borrower and its Subsidiaries required under statute or regulation in connection with renewable energy contracts.
(vii) sales, transfers or other Dispositions of assets, including Capital Stock of Subsidiaries, for consideration at least equal to the fair market value of the assets Disposed of, but only if the consideration received consists of Capital Stock of a Person that becomes a Subsidiary engaged in, or property or assets (other than cash, except to the extent used as a bona fide means of equalizing the value of the property or assets involved in the swap transaction) of a nature or type that are used in, a Permitted Business; provided, that, the fair market value of any assets Disposed of shall be determined by the Board of Directors of the Borrower and based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the fair market value of the assets Disposed of exceeds $25,000,000.
(viii) Dispositions not otherwise permitted by this Section 8.2(d); provided, that:
(A) the aggregate amount of Dispositions made in accordance with this clause (viii), in any fiscal year, shall not exceed 10% of the Consolidated Assets, as determined as of the last day of the fiscal year prior to the fiscal year in which the Dispositions are made;
(B) the Borrower (or the Subsidiary, as the case may be) receives consideration at the time of such Disposition at least equal to the fair market value of the assets Disposed of (the fair market value of any assets Disposed of shall be determined by (x) a Responsible Officer if the fair market value is less than $25,000,000 (provided, that, a Responsible Officer shall not be required to determine the fair market value of any assets Disposed if the value thereof is less than $1,000,000, so long as the aggregate amount of asset sales less than $1,000,000 do not exceed $10,000,000, in the aggregate, in any fiscal year) or (y) the Board of Directors of the Borrower, if the fair market value is $25,000,000 or greater and based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing);
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(C) at least seventy-five percent (75%) of the consideration received in connection with the Disposition shall be in the form of cash. Strictly for purposes of this Section 8.2(d)(viii)(C), each of the following shall be deemed to be cash:
(1) any liabilities, as shown on the most recent financial statements delivered by the Borrower pursuant to Section 8.1(a), of the Borrower or any Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee or purchaser of such assets Disposed of pursuant to a customary novation agreement that releases the Borrower or such Subsidiary from further liability; and
(2) any securities, notes or other obligations received by the Borrower or any such Subsidiary from such transferee or purchaser of the assets Disposed of that are contemporaneously, subject to ordinary settlement periods, converted by the Borrower or such Subsidiary into cash, to the extent of the cash received in that conversion; and
(D) within three hundred sixty-five (365) days of the receipt by the Borrower or any Subsidiary of any Net Proceeds from any Disposition under this Section 8.2(d)(viii), the Borrower shall apply such Net Proceeds at its option:
(1) to repay outstanding Indebtedness issued pursuant to the General and Refunding Mortgage Indenture or any Indebtedness which is indirectly secured thereby;
(2) to acquire all or substantially all of the assets of, or a majority of the voting Capital Stock of, a business that the Borrower is permitted to engage in pursuant to and in accordance with Section 8.2(l) (a “Permitted Business”);
(3) to make a capital expenditure; and/or
(4) to acquire other long-term assets that are used or useful in connection with a Permitted Business.
The amount of any Net Proceeds of a Disposition that are not applied as set forth above (“Excess Net Proceeds”) shall cause a reduction in the Commitments in the amount of such Excess Net Proceeds in accordance with Section 2.3(a).
(ix) Dispositions not otherwise permitted under this Section 8.2(d), in an amount not to exceed a fair market value of $25,000,000, in the aggregate, during any fiscal year of the Borrower.
(e) Limitation on Restricted Payments. (i) Declare or pay any dividend or make any other payment or distribution on account of the Borrower’s or any of its Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Borrower or any of its Subsidiaries) or to the direct or indirect holders
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of the Borrower’s or any of its Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests of the Borrower) or to the Borrower or a Subsidiary of the Borrower or (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Borrower) any Equity Interests of the Borrower or any direct or indirect parent of the Borrower (all such payments and other actions set forth in clauses (i) and (ii) above being collectively referred to as “Restricted Payments”), unless, (i) there exists no Default or Event of Default and (ii) after giving effect to such Restricted Payment, the Borrower will be in compliance with the financial covenant set forth in Section 8.3(a) on a Pro Forma Basis; provided, however, the preceding provisions will not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of this clause (e), (2) the payment of any dividend by a Subsidiary of the Borrower to the holders of its Equity Interests on a pro rata basis and (3) the payment of any distribution by a Trust Preferred Vehicle to holders of such trust’s preferred beneficial interests, to the extent such distribution does not exceed the amount that is contemporaneously received by such trust as a payment of interest at its Stated Maturity on the Subordinated Debt of the Borrower held by such trust.
(f) Modifications of Instruments, etc. Amend or modify in any manner adverse to the Lenders (as reasonably determined by the Administrative Agent) (i) its certificate of incorporation or (ii) the General and Refunding Mortgage Indenture. Notwithstanding the foregoing, it is understood and agreed that the Borrower shall be permitted to change its legal name subject to (A) prior written notice to the Administrative Agent and (B) delivery of such documents, certificates and opinions reasonably required by the Administrative Agent, including without limitation, any documentation, certificates and opinions in connection with the General and Refunding Mortgage Bonds.
(g) Limitation on Transactions with Affiliates. Except as set forth on Schedule 8.2(g) and the transactions contemplated and permitted pursuant to Section 8.2(c)(iv), enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than the Borrower or any Subsidiary) unless such transaction is (i) otherwise permitted under this Agreement, (ii) in the ordinary course of business or consistent with past practice of the Borrower or such Subsidiary, as the case may be, and (iii) upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.
(h) Limitation on Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day other than December 31 or change the Borrower’s method of determining fiscal quarters.
(i) Limitation on Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that (i) prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its Property or revenues, whether now owned or hereafter acquired, to secure the Obligations, other than (x) this Agreement and the other Loan Documents, (y) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) and (z) any restriction in effect on the date hereof or (ii) contains covenants more restrictive than the covenants in this Section 8.2, unless the Borrower offers to amend this Agreement, concurrently with the effectiveness of such other agreement, to provide covenants under this Agreement equivalent to
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the more restrictive covenants under such other agreement for so long as such more restrictive covenants remain in effect under such other agreement.
(j) Limitation on Assets in Subsidiaries. Permit less than 80% of the Consolidated Assets of the Borrower and its Subsidiaries to be held by Persons other than the Borrower.
(k) Limitation on Modifications to Subordinated Debt. Amend, supplement or otherwise modify any documentation governing any Subordinated Debt (other than (i) amendments to such Subordinated Debt which reduce the interest rate or extend the maturity thereof and (ii) waivers of compliance by the Borrower with any of the terms or conditions of such Subordinated Debt (except those terms or conditions which by their terms are for the benefit of the Lenders)).
(l) Limitation on Lines of Business. Engage in any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or that are reasonably related thereto.
(m) Limitation on Release from Liens. Cause the Liens of the General and Refunding Mortgage Indenture and related security documents, upon any assets, to be released, except in connection with a Disposition of such assets permitted by Section 8.2(d); provided, that within one hundred and eighty (180) days after any such release, the Borrower will either (i) Dispose of such assets or (ii) subject such assets again to the Lien of the General and Refunding Mortgage Indenture.
(n) Limitation on Subsidiary Guarantees. Permit any Subsidiary to Guarantee the payment of any Indebtedness of the Borrower unless:
(i) such Subsidiary simultaneously executes and delivers to the Administrative Agent a Subsidiary Guarantee of such Subsidiary, except that, with respect to a Guarantee of Indebtedness of the Borrower if such Indebtedness is by its express terms subordinated in right of payment to the Loans and other Obligations, any such Guarantee of such Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Subsidiary’s Subsidiary Guarantee with respect to the Loans and such other Obligations substantially to the same extent as such Indebtedness is subordinated to the Loans and such other Obligations;
(ii) such Subsidiary waives, and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Borrower or any other Subsidiary of the Borrower as a result of any payment by such Subsidiary under its Subsidiary Guarantee of the Loans and other Obligations; and
(iii) such Subsidiary shall deliver to the Administrative Agent an opinion of counsel to the effect that (A) such Subsidiary Guarantee has been duly executed and authorized and (B) such Subsidiary Guarantee constitutes a valid, binding and enforceable obligation of such Subsidiary, except insofar as enforcement thereof may be limited by applicable Debtor Relief Laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity;
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provided, that this Section shall not be applicable to any Guarantee of any Subsidiary that (A) existed at the time such Person became a Subsidiary of the Borrower and (B) was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Borrower.
Notwithstanding the foregoing and the other provisions of this Agreement, in the event a Subsidiary Guarantor is sold or Disposed of (whether by merger, consolidation, the sale of its Capital Stock or the sale of all or substantially all of its assets (other than by lease) and whether or not the Subsidiary Guarantor is the surviving corporation in such transaction) to a Person which is not the Borrower or a Subsidiary of the Borrower, such Subsidiary Guarantor will be released from its obligations under its Subsidiary Guarantee if (1) the sale or other Disposition is in compliance with Section 8.2(d) and (2) the Subsidiary Guarantor is also released or discharged from its obligations under the Guarantee which resulted in the creation of such Subsidiary Guarantee, except by or as a result of payment under such Guarantee.
(o) Use of Proceeds. Use the proceeds of any Extension of Credit, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.
(p) Payment of Subordinated Debt. Make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Subordinated Debt, except for any scheduled payment of interest or the payment of principal at the Stated Maturity thereof and except for payments made in respect of Subordinated Debt that constitutes trust preferred securities pursuant to a Trust Preferred Vehicle permitted hereunder.
Section 8.3 Financial Covenant.
(a) Maximum Leverage. The Borrower shall not permit the ratio of (a) Consolidated Indebtedness to (b) Consolidated Capital, determined as of the last day of each fiscal quarter, to exceed 0.68 to 1.00.
(b) Compliance Period. The covenant set forth in subsection (a) above shall have no further force or effect, and the Borrower shall no longer be required to comply therewith, at any time after the Maturity Date, unless at any such time any Loan or any other amount payable hereunder or under any Note shall remain unpaid or any Letter of Credit shall remain outstanding.
Section 9.1 Events of Default. If any of the following events shall occur and be continuing, the Administrative Agent and the Lenders shall be entitled to exercise the remedies set forth in Section 9.2:
(a) The Borrower shall:
(i) fail to pay any principal of any Loan or any LC Obligation when due in accordance with the terms hereof; or
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(ii) fail to pay any interest on any Loan or any LC Obligation, or any other amount payable hereunder or under any other Loan Document, within five (5) days after any such interest or other amount becomes due in accordance with the terms hereof or thereof; or
(b) Any representation or warranty made or deemed made by the Borrower herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made or furnished; or
(c) The Borrower shall default in the observance or performance of any agreement contained in clause (A) or (B) of Section 8.1(d)(i), Section 8.1(g)(i), Section 8.2 or Section 8.3; or
(d) The Borrower shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of thirty (30) days; or
(e) (i) The Borrower or any of its Subsidiaries shall (A) default in making any payment of any principal of any Indebtedness (including, without limitation, any Guarantees, but excluding the Loans) on the scheduled or original due date with respect thereto; or (B) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (C) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to become subject to a mandatory offer to purchase by the obligor thereunder or (in the case of any such Indebtedness constituting a Guarantee) to become payable; or (ii) the Borrower or any of its Subsidiaries shall, (A) default in making any payment of any amount owing to a counterparty under any Hedge Agreement beyond the period of grace, if any, provided in such Hedge Agreement; or (B) default in the observance or performance of any other agreement or condition relating to any such Hedge Agreement or contained in such Hedge Agreement or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the counterparty under such Hedge Agreement to cause, with the giving of notice if required, the Borrower or such Subsidiary to make a termination payment, payment of liquidated damages or similar payment under such Hedge Agreement (collectively, “Payment Amounts”); provided, that a default, event or condition described in clause (i) or (ii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i) and (ii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness and/or Payment Amounts the outstanding principal amount of which exceeds $35,000,000 in the aggregate ; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or
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other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, any Single Employer Plan shall be deemed to be in “at risk status” as defined in Section 430(i)(4) of the Code, or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders shall be likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could, in the sole judgment of the Required Lenders, reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments, decrees or orders shall be entered against the Borrower or any of its Subsidiaries involving for the Borrower and its Subsidiaries taken as a whole a liability (not paid or fully covered by insurance as to which the relevant insurance company (that shall be rated at least “A” by A.M. Best Company) has acknowledged coverage) that exceeds more than $35,000,000 in the aggregate (with credit for any applicable insurance coverage) and all such judgments, decrees or orders shall not have been vacated, discharged, stayed, paid or bonded pending appeal within sixty (60) days from the entry thereof; or
(i) Any of the Loan Documents or the General and Refunding Mortgage Indenture (or any security documents executed in connection therewith) shall cease for any reason to be in full force and effect, or the Borrower or any Affiliate of the Borrower shall so assert; or any Lien created by any of the Loan Documents or the General and Refunding Mortgage Indenture (or any security documents executed in connection therewith) shall cease to be enforceable and of the same effect and priority purported to be created thereby; or
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(j) Any Event of Default under (and as defined in) the General and Refunding Mortgage Indenture shall occur; or
(k) Any Change of Control shall occur; or
(l) At any time any of the Issuing Banks shall have been served with or otherwise subjected to a court order, injunction, or other process or decree issued or granted at the instance of the Borrower restraining or seeking to restrain such Issuing Bank from paying any amount under any Letter of Credit issued by it and either (i) there has been a drawing under such Letter of Credit which such Issuing Bank would otherwise be obligated to pay or (ii) the stated expiration date or any reduction of the stated amount of such Letter of Credit has occurred but the right of the beneficiary to draw thereunder has been extended to a date after the Letter of Credit Expiration Date in connection with the pendency of the related court action or proceeding; or
(m) Any Subordinated Debt shall cease (or the Borrower or an Affiliate of the Borrower shall so assert), for any reason, to be validly subordinated to the Obligations as provided in the agreements evidencing the Subordinated Debt.
Section 9.2 Remedies. Upon the occurrence of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower:
(a) Acceleration; Termination of Facilities. Terminate the Commitments and declare the principal of and interest on the Loans at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents (including, without limitation, the Outstanding Amount of all LC Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented or shall be entitled to present the documents required thereunder) and all other Obligations (other than Hedging Obligations and Treasury Management Obligations), to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the credit facility under this Agreement and any right of the Borrower to request borrowings or Letters of Credit thereunder; provided, that upon the occurrence of an Event of Default specified in Section 9.1(f), the Commitments shall be automatically terminated and all Obligations (other than Hedging Obligations and Treasury Management Obligations) shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower, anything in this Agreement or in any other Loan Document to the contrary notwithstanding.
(b) Letters of Credit. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to Section 9.2(a), the Borrower shall at such time deposit in a Cash Collateral account opened by and under the control of the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such Cash Collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the other Obligations on a pro rata basis. After all such Letters of Credit shall have expired or been fully drawn upon, the Outstanding Amount of all LC Obligations shall have been satisfied and all other Obligations shall have been paid in full, the balance, if any, in such Cash Collateral account shall be returned to the Borrower.
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(c) Rights of Collection. Exercise on behalf of the Lenders all of its other rights and remedies under this Agreement, the other Loan Documents, the General and Refunding Mortgage Bonds, the General and Refunding Mortgage Indenture and Applicable Law, in order to satisfy all of the Obligations.
Section 9.3 Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrower, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default.
Section 9.4 Crediting of Payments and Proceeds. In the event that the Borrower shall fail to pay any of the Obligations when due and the Obligations have been accelerated pursuant to Section 9.2, all payments received by the Lenders (and in the case of Hedge Agreements and Treasury Management Agreements, Affiliates of Lenders) upon the Obligations and all net proceeds from the enforcement of the Obligations shall be applied:
First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such, the Issuing Banks in their respective capacities as such and the Swingline Lender in its capacity as such (ratably among the Administrative Agent and the Issuing Banks in proportion to the respective amounts described in this clause First payable to them);
Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders, including attorney fees (ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them);
Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and LC Borrowings and any Hedging Obligations (including any accrued and unpaid interest thereon, but excluding any termination payments paid pursuant to clause Fourth) (ratably among the Lenders (and, in the case of Hedging Obligations, Affiliates of Lenders) in proportion to the respective amounts described in this clause Third payable to them);
Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and LC Borrowings, any termination payments then required to be paid in connection with Hedging Obligations, and payments due in connection with Treasury Management Obligations and to the Administrative Agent for the account of the Issuing Banks, to Cash Collateralize any LC Obligations (ratably among the Lenders and the Administrative Agent (and, in the case of Hedging Obligations and Treasury Management Obligations, Affiliates of Lenders), in proportion to the respective amounts described in this clause Fourth held by or payable to them); and
Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
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Section 9.5 Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Borrower, the Administrative Agent (irrespective of whether the principal of any Loan or LC Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Obligations and all other Obligations (except for Hedging Obligations and Treasury Management Obligations of other Lenders) that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.2, 4.8, 4.9 and 11.4) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.2, 4.8, 4.9 and 11.4.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
ARTICLE X.
THE ADMINISTRATIVE AGENT
Section 10.1 Appointment and Authority. Each of the Lenders and the Issuing Banks hereby irrevocably appoints Wells Fargo Bank to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Each of the Lenders and the Issuing Banks hereby authorizes the Administrative Agent to vote the General and Refunding Mortgage Bonds, or consent with respect thereto, at any meeting (or where the vote or consent of the bondholders is requested without a meeting) of the bondholders under the General and Refunding Mortgage Indenture. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks, and neither the Borrower nor any Subsidiary thereof shall have rights as a third party beneficiary of any of such provisions.
Section 10.2 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless
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otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 10.3 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided, that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or any Requirement of Law; and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.2 and 11.1) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until written notice describing such Default or Event of Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Banks.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
Section 10.4 Reliance by the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or
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otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Banks, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Banks unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Banks prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Section 10.5 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
Section 10.6 Resignation of Administrative Agent.
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Banks and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed, and shall not be required upon the occurrence or continuance of an Event of Default), in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Banks and without the requirement of the consent of any other Person (other than the successor Administrative Agent), appoint a successor Administrative Agent meeting the qualifications set forth above; provided, that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Banks under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Banks directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this paragraph. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor Administrative Agent shall be the
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same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 11.4 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
(b) Any resignation by Wells Fargo Bank as Administrative Agent pursuant to this Section shall also constitute its resignation as an Issuing Bank and as Swingline Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank and Swingline Lender, (ii) the retiring Issuing Bank and Swingline Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangement satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.
Section 10.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and each Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Section 10.8 No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the syndication agents, documentation agents, co-agents, bookrunners, lead manager, arranger, lead arranger or co-arranger listed on the cover page or signature pages hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an Issuing Bank hereunder.
Section 10.9 Collateral and Guaranty Matters. The Lenders and the Issuing Banks irrevocably authorize the Administrative Agent, at its option and in its discretion,
(a) to release any Lien on any collateral granted to or held by the Administrative Agent under any Loan Document or to release the General and Refunding Mortgage Bonds (i) upon termination of the Commitments and payment in full of all Obligations under the Loan Documents (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the applicable Issuing Bank in their sole discretion shall have been made) or (ii) if approved, authorized or ratified in writing in accordance with Section 11.1;
(b) to subordinate any Lien on any collateral granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such collateral that is permitted by Section 8.2(b)(vi); and
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(c) to release any Subsidiary Guarantor from its obligations under the Subsidiary Guarantee if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Subsidiary Guarantor from its obligations under any Subsidiary Guarantee pursuant to this Section.
Section 11.1 Amendments, Etc. No amendment or waiver of any provision of any Loan Document, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by each Lender affected thereby, do any of the following: (i) waive, modify or eliminate any of the conditions specified in Section 6.2, (ii) increase the Commitments of the Lenders or subject the Lenders to any additional obligations (other than as provided by this Agreement), (iii) reduce the principal of, or interest on, any Loan, any Applicable Margin or any fees or other amounts payable hereunder (other than fees payable to the Administrative Agent pursuant to Section 2.2(b)), (iv) extend the Revolving Credit Termination Date or the Letter of Credit Expiration Date or postpone any date fixed for any payment of principal of, or interest on, any Loan or any fees or other amounts payable hereunder (other than fees payable to the Administrative Agent pursuant to Section 2.2(b)), (v) change the definition of “Required Lenders” contained in Section 1.1 or change any other provision that specifies the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans or the number of Lenders which shall be required for the Lenders or any of them to take any action hereunder, (vi) amend any Loan Document in a manner intended to prefer one or more Lenders over any other Lenders, (vii) take any action that would result in the General and Refunding Mortgage Bonds no longer being secured equally and ratably with all other securities issued and outstanding under the General and Refunding Mortgage Indenture or no longer being secured by direct and valid, duly perfected Liens on and security interests in the Mortgaged Property (as defined in the General and Refunding Mortgage Indenture), subject only to Permitted Liens (as such term is defined in the General and Refunding Mortgage Indenture), (viii) release the General and Refunding Mortgage Bonds or Subsidiary Guarantees, if any, except pursuant to the terms thereof or pursuant to Section 10.9 hereof, or change any provision of the General and Refunding Mortgage Bonds providing for the release of the General and Refunding Mortgage Bonds, or (ix) amend, waive or modify this Section 11.1.
Furthermore, (A) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document, (B) no amendment, waiver or consent shall, unless in writing and signed by each Issuing Bank in addition to the Lenders required above to take such action, affect the rights or duties of the Issuing Banks under this Agreement or any other Loan Document and (C) no amendment, waiver or consent shall, unless in writing and signed by the Swingline Lender in addition to the Lenders required above to take such action, affect the rights or duties of the Swingline Lender under this Agreement or any other Loan Document.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected
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with the consent of the applicable Lenders other than the Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders will require the consent of such Defaulting Lender.
Any request from the Borrower for any amendment, waiver or consent under this Section 11.1 shall be addressed to the Administrative Agent. The Administrative Agent, as holder of the General and Refunding Mortgage Bonds, will not consent to any amendment or other modification of the General and Refunding Mortgage Indenture that requires the consent of holders of all securities issued thereunder, without the consent of each Lender.
Section 11.2 Notices, Etc. All notices and other communications provided for hereunder and under the other Loan Documents shall be in writing (including telegraphic, facsimile, telex or cable communication) and mailed, sent via electronic mail, telegraphed, telecopied, telexed, cabled or delivered, (i) if to the Borrower, at the address specified on Schedule 11.2; (ii) if to any Lender, at its Domestic Lending Office specified in the administrative questionnaire submitted to the Administrative Agent; (iii) if to any Issuing Bank, at its address specified on Schedule 11.2; (iv) if to any Lender other than a Lender listed on Schedule 11.2, at its Domestic Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender; and (v) if to Wells Fargo Bank as Administrative Agent or Swingline Lender, at its address specified on Schedule 11.2; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile or electronic mail shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).
Section 11.3 No Waiver of Remedies. No failure on the part of the Borrower, any Lender, the Issuing Banks or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right 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 11.4 Costs, Expenses and Indemnification.
(a) Costs and Expenses. The Borrower hereby agrees to pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Banks in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Banks (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Banks), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
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(b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Banks, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims (including, without limitation, any environmental claims or civil penalties or fines assessed by OFAC), damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Banks to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Materials of Environmental Concern on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any environmental claim related in any way to the Borrower or any of its Subsidiaries, (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, and regardless of whether any Indemnitee is a party thereto, or (v) any claim (including, without limitation, any environmental claims or civil penalties or fines assessed by OFAC), investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Loans, this Agreement, any other Loan Document, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including without limitation, reasonable attorneys and consultant’s fees, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee.
(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clause (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Banks or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Banks or such Related Party, as the case may be, such Lender’s Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided, that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Banks in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or Issuing Banks in connection with such capacity. The obligations of the Lenders under this clause (c) are subject to the provisions of Section 5.5.
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by any Requirement of Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by
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it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(e) Payments. All amounts due under this Section shall be payable promptly after demand therefor.
Section 11.5 Right of Set-off; Payments Set Aside.
(a) If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Banks and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by any Requirement of Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Banks or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower or now or hereafter existing under this Agreement or any other Loan Document to such Lender or the Issuing Banks, irrespective of whether or not such Lender or the Issuing Banks shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender or the Issuing Banks different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender or the Issuing Banks and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or the Issuing Banks or their respective Affiliates may have. Each Lender or the Issuing Banks agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided, that the failure to give such notice shall not affect the validity of such setoff and application.
(b) The Borrower agrees that it shall have no right of off set, deduction or counterclaim in respect of its obligations hereunder, and that the obligations of the Lenders hereunder are several and not joint. Nothing contained herein shall constitute a relinquishment or waiver of the Borrower’s rights to any independent claim that the Borrower may have against the Administrative Agent or any Lender for the Administrative Agent’s or such Lender’s, as the case may be, gross negligence or willful misconduct, but no Lender shall be liable for any such conduct on the part of the Administrative Agent or any other Lender, and the Administrative Agent shall not be liable for any such conduct on the part of any Lender.
(c) To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, any Issuing Bank or any Lender, or the Administrative Agent, any Issuing Bank or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors or otherwise, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (ii) each Lender and each Issuing Bank severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the Issuing Banks under clause
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(ii) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
Section 11.6 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Lender and each Issuing Bank that such Lender or Issuing Bank, as applicable, has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, each Lender and each Issuing Bank and their respective successors and assigns.
Section 11.7 Successors and Assigns; Participations.
(a) Successors and Assigns Generally. The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder or thereunder without the prior written consent of the Administrative Agent, the Issuing Banks and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in Letters of Credit and in Swingline Loans) at the time owing to it); provided; that any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the related Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 in the case of an assignment of a Commitment unless each of the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the Borrower otherwise consents (each such
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consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all of the assigning Lender’s Loans and Commitments, and rights and obligations with respect thereto, assigned, except that this clause (ii) shall not apply to the Swingline Lender’s rights and obligations in respect of Swingline Loans;
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed; it being understood and agreed that it shall be deemed reasonable for the Borrower to withhold consent to any assignment to an Ineligible Lender) shall be required unless (1) a Default or an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender;
(C) the consent of each Issuing Bank (each such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment; and
(D) the consent of the Swingline Lender (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment.
(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that (x) such processing and recordation fee shall not be required in the case of any assignment to a Lender, an Affiliate of a Lender or an Approved Fund and (y) the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Borrower. No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.
(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person.
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(vii) No Assignment to Defaulting Lender. No such assignment shall be made to a Defaulting Lender.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section 11.7, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 5.4, 5.6 and 11.4 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver a Note to the Eligible Assignee. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and Letters of Credit owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in Letters of Credit and/or Swingline Loans) owing to it); provided; that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the Issuing Banks shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided, that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in Section 11.1 that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 5.4, and 5.6 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 11.5 as though it were a Lender, provided such Participant agrees to be subject to Section 5.5 as though it were a Lender.
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(e) Limitation on Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 5.4 or 5.6 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.6 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 5.6 as though it were a Lender.
(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(g) Resignation as Issuing Bank or Swingline Lender after Assignment. Notwithstanding anything to the contrary contained herein, if any Lender acting as an Issuing Bank or the Swingline Lender assigns all of its Commitment pursuant to subsection (b) above, such Lender may, (i) upon thirty (30) days’ notice to the Borrower and the Lenders, resign as an Issuing Bank and/or (ii) upon thirty (30) days’ notice to the Borrower, resign as Swingline Lender. In the event of any such resignation as an Issuing Bank or Swingline Lender, the Borrower shall be entitled to appoint from among the Lenders a successor Issuing Bank or Swingline Lender hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of such Lender as an Issuing Bank or Swingline Lender, as the case may be. If a Lender resigns as an Issuing Bank, it shall retain all the rights, powers, privileges and duties of an Issuing Bank hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as an Issuing Bank and all LC Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations pursuant to Article IV). If Wells Fargo Bank resigns as Swingline Lender, it shall retain all the rights of the Swingline Lender provided for hereunder with respect to Swingline Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swingline Loans pursuant to Section 3.8(c). Upon the appointment of a successor Issuing Bank and/or Swingline Lender, (1) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank or Swingline Lender, as the case may be, and (2) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the resigning Issuing Bank to effectively assume the obligations of the resigning Issuing Bank with respect to such Letters of Credit.
Section 11.8 Confidentiality. Each of the Administrative Agent, the Lenders, the Swingline Lender and the Issuing Banks agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, credit insurance providers, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder, under any other Loan
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Document or Hedge Agreement or Treasury Management Agreement entered into with a Lender or an Affiliate of a Lender or any action or proceeding relating to this Agreement, any other Loan Document or Hedge Agreement or Treasury Management Agreement entered into with a Lender or an Affiliate of a Lender or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement, (g)(i) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (ii) an investor or prospective investor in securities issued by an Approved Fund that also agrees that Information shall be used solely for the purpose of evaluating an investment in such securities issued by the Approved Fund, (iii) a trustee, collateral manager, servicer, backup servicer, noteholder or secured party in connection with the administration, servicing and reporting on the assets serving as collateral for securities issued by an Approved Fund, or (iv) a nationally recognized rating agency that requires access to information regarding the Borrower and its Subsidiaries, the Loans and Loan Documents in connection with ratings issued in respect of securities issued by an Approved Fund (in each case, it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential), (h) with the consent of the Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the Swingline Lender, any Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.
For purposes of this Section, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender, the Swingline Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by any the Borrower or any of its Subsidiaries; provided, that, in the case of information received from the Borrower or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Section 11.9 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT 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) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 11.10 Governing Law; Submission to Jurisdiction. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to the conflicts of laws principles thereof). The Borrower, the Lenders, the Issuing Banks and the Administrative Agent each (a) irrevocably submits to the jurisdiction of any New York State court or Federal court sitting in New York, New York in any action arising out of any Loan Document, (b) agrees that all claims in such action may be decided in such court, (c) waives, to the fullest extent it may
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effectively do so, the defense of an inconvenient forum and (d) consents to the service of process by mail. A final judgment in any such action shall be conclusive and may be enforced in other jurisdictions. Nothing herein shall affect the right of any party to serve legal process in any manner permitted by law or affect its right to bring any action in any other court.
Section 11.11 Relation of the Parties; No Beneficiary. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a)(i) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lenders and the Joint Lead Arrangers, are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Lenders and the Joint Lead Arrangers, on the other hand, (ii) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (b)(i) the Administrative Agent, each Lender and each Joint Lead Arranger is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary, for the Borrower or any of Affiliates or any other Person and (ii) neither the Administrative Agent nor any Lender nor Joint Lead Arranger has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (c) the Administrative Agent, each Lender and each Joint Lead Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any Lender nor any Joint Lead Arranger has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases, any claims that it may have against the Administrative Agent, any Lender or any Joint Lead Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 11.12 Execution in Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 11.13 Survival of Agreement. All covenants, agreements, representations and warranties made herein and in the certificates pursuant hereto shall be considered to have been relied upon by the Administrative Agent, the Issuing Banks and the Lenders and shall survive the making by the Lenders of the Extensions of Credit and the execution and delivery to the Lenders of any Notes evidencing the Extensions of Credit and shall continue in full force and effect so long as any Note or any amount due hereunder or under any other Loan Document is outstanding and unpaid, any Letter of Credit is outstanding, or any Commitment of any Lender has not been terminated.
Section 11.14 Survival of Indemnities. Notwithstanding any termination of this Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article XI and any other provision of this Agreement and the other Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before.
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Section 11.15 Patriot Act Notice. Each Lender and the Administrative Agent (for itself and not on behalf of any other party) hereby notifies the Borrower that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.
Section 11.16 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 11.17 Electronic Execution of Assignments and Certain Other Documents. The words “execution,” “signed,” “signature” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
Section 11.18 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i) Waivers and Amendments. That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 11.1 and in the definition of “Required Lenders”.
(ii) Reallocation of Payments. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article IX or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 11.5), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to the Issuing Banks or Swingline Lender hereunder; third, to Cash Collateralize the Fronting Exposure of the Issuing Banks and the Swingline Lender with respect to such Defaulting Lender in accordance with Section 11.19; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released pro rata in order to (A) satisfy such Defaulting Lender’s potential future funding
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obligations with respect to Loans and funded participations under this Agreement and (B) Cash Collateralize the Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit and Swingline Loans issued under this Agreement, in accordance with Section 11.19; sixth, to the payment of any amounts owing to the Lenders, the Issuing Banks or the Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, any Issuing Bank or the Swingline Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided, that if (x) such payment is a payment of the principal amount of any Loans or LC Borrowings in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans or LC Borrowings were made at a time when the conditions set forth in Section 6.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Borrowings owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Borrowings owed to, that Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 11.18(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees. Such Defaulting Lender (A) shall not be entitled to receive any Commitment Fee pursuant to Section 2.2(a) for any period during which such Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to such Defaulting Lender) and (B) shall be limited in its right to receive Letter of Credit Fees as provided in Section 4.8).
(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit or Swingline Loans, the “Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Commitment of that Defaulting Lender; provided, that, (i) each such reallocation shall be given effect only if, the conditions set forth in Section 6.2 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (ii) the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swingline Loans shall not exceed the positive difference, if any, of (A) the Commitment of that non-Defaulting Lender minus (B) the aggregate Outstanding Amount of the Revolving Loans of that Lender. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.
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(v) Cash Collateral, Repayment of Swingline Loans. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x) first, repay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize the Issuing Banks’ Fronting Exposure in accordance with the procedures set forth in Section 11.19.
(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, the Swingline Lender and the Issuing Banks agree in writing in their sole discretion that a Defaulting Lender no longer falls under the definition of “Defaulting Lender”, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Revolving Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held on a pro rata basis by the Lenders in accordance with their Percentages (without giving effect to Section 11.18(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.
(c) New Swingline Loans/Letters of Credit. So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) no Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
Section 11.19 Cash Collateral.
(a) Certain Credit Support Events. At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent, an Issuing Bank or the Swingline Lender (with a copy to the Administrative Agent), the Borrower shall Cash Collateralize the Fronting Exposure of such Issuing Bank and/or the Swingline Lender, as applicable, with respect to such Defaulting Lender (determined after giving effect to Section 11.18(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.
(b) Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the Issuing Banks and the Lenders (including the Swingline Lender), and agrees to maintain, a first priority security interest in all such Cash Collateral, all as security for the Defaulting Lender’s obligations to fund participations in respect of LC Obligations and Swingline Loans, to be applied pursuant to subsection (c) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender
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will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.
(c) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 11.19 or Sections 2.3, 3.8, 5.5, 9.2 or Article IV in respect of Letters of Credit or Swingline Loans shall be held and applied to the satisfaction of the specific LC Obligations, Swingline Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.
(d) Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender) or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, however, (x) that Cash Collateral furnished by or on behalf of the Borrower shall not be released during the continuance of an Event of Default (and following application as provided in this Section 11.19 may be otherwise applied in accordance with Section 9.4), and (y) the Person providing Cash Collateral and the applicable Issuing Bank or Swingline Lender, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.
Section 11.20 Press Releases and Related Matters. The Borrower and its Affiliates agree that they will not in the future issue any press releases or other public disclosure using the name of the Administrative Agent or any Lender or their respective Affiliates or referring to this Agreement or any of the Loan Documents without the prior written consent of such Person, unless (and only to the extent that) the Borrower or such Affiliate is required to do so under law and then, in any event, the Borrower or such Affiliate will consult with such Person before issuing such press release or other public disclosure; provided, however, the Borrower and its Affiliates shall not be required to obtain the prior written consent of any Person or consult with any Person prior to any public disclosure required (a) pursuant to any federal securities laws applicable to the Borrower or any of its Subsidiaries, (b) pursuant to the rules and regulations governing the New York Stock Exchange or any other stock exchange or quotation service from time to time applicable to the Borrower or any of its Subsidiaries or (c) by any other Governmental Authority. The Borrower and its Subsidiaries consent to the publication by the Administrative Agent or any Lender of customary advertising material relating to the transactions contemplated by this Agreement and the Loan Documents using the name, product photographs, logo or trademark of the Borrower and its Subsidiaries.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
NEVADA POWER COMPANY d/b/a NV ENERGY
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By: |
/s/ Dilek L. Samil |
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Name: |
Dilek L. Samil |
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Title: |
Senior Vice President, Finance, |
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Chief Financial Officer and |
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Treasurer |
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WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent, a Lender, Swingline Lender
and an Issuing Bank
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By: |
/s/ Yann Blindert |
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Name: |
Yann Blindert |
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Title: |
Director |
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BANK OF AMERICA, N.A.,
as a Lender and an Issuing Bank
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By: |
/s/ Kevin Bertelsen |
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Name: |
KEVIN BERTELSEN |
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Title: |
MANAGING DIRECTOR |
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[signature pages continue]
JPMORGAN CHASE BANK, N.A.,
as a Lender and an Issuing Bank
|
By: |
/s/ Nancy R. Barwig |
|
|
Name: |
Nancy R. Barwig |
|
|
Title: |
Credit Executive |
|
[signature pages continue]
THE BANK OF NOVIA SCOTIA,
as a Lender
|
By: |
/s/ Brenda Insull |
|
|
Name: |
Brenda Insull |
|
|
Title: |
Authorized Signatory |
|
[signature pages continue]
UNION BANK, N.A.,
as a Lender
|
By: |
/s/ Jeffrey Fesenmaier |
|
|
Name: |
Jeffrey Fesenmaier |
|
|
Title: |
Vice President |
|
[signature pages continue]
BARCLAYS BANK PLC
as a Lender
|
By: |
/s/ Diane Rolfe |
|
|
Name: |
Diane Rolfe |
|
|
Title: |
Director |
|
[signature pages continue]
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as a Lender
|
By: |
/s/ Marcus M. Tarkington |
|
|
Name: |
Marcus M. Tarkington |
|
|
Title: |
Director |
|
|
By: |
/s/ Marguerite Sutton |
|
|
Name: |
Marguerite Sutton |
|
|
Title: |
Director |
|
[signature pages continue]
GOLDMAN SACHS BANK USA,
as a Lender
|
By: |
/s/ Anna Ostrovsky |
|
|
Name: |
Anna Ostrovsky |
|
|
Title: |
Authorized Signatory |
|
[signature pages continue]
The Royal Bank of Scotland plc,
as a Lender
|
By: |
/s/ Andrew N. Taylor |
|
|
Name: |
Andrew N. Taylor |
|
|
Title: |
Vice President |
|
[signature pages continue]
UBS LOAN FINANCE LLC,
as a Lender
|
By: |
/s/ Irja R. Otsa |
|
|
Name: |
Irja R. Otsa |
|
|
Title: |
Associate Director |
|
|
By: |
/s/ Mary E. Evans |
|
|
Name: |
Mary E. Evans |
|
|
Title: |
Associate Director |
|
[signature pages continue]
SUNTRUST BANK,
as a Lender
|
By: |
/s/ Andrew Johnson |
|
|
Name: |
Andrew Johnson |
|
|
Title: |
Director |
|
[signature pages continue]
THE BANK OF NEW YORK MELLON,
as a Lender
|
By: |
/s/ Mark W. Rogers |
|
|
Name: |
Mark W. Rogers |
|
|
Title: |
Vice President |
|
[signature pages continue]
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
|
By: |
/s/ Holland H. Williams |
|
|
Name: |
Holland H. Williams |
|
|
Title: |
AVP & Portfolio Manager |
|
[signature pages continue]
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
|
By: |
/s/ Dale Stein |
|
|
Name: |
Dale Stein |
|
|
Title: |
Senior Vice President |
|
[signature pages continue]
THE NORTHERN TRUST COMPANY,
as a Lender
|
By: |
/s/ Steven W. Ryan |
|
|
Name: |
Steven W. Ryan |
|
|
Title: |
Senior Vice President |
|
[signature pages continue]
ASSOCIATED BANK, N.A.,
as a Lender
|
By: |
/s/ Kristin A. Isleib |
|
|
Name: |
Kristin A. Isleib |
|
|
Title: |
Senior Vice President |
|
[signature pages continue]
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, as a Lender
|
By: |
/s/ Jonathan Kim |
|
|
Name: |
Jonathan Kim |
|
|
Title: |
Executive Director |
|
|
By: |
/s/ Eoin Roche |
|
|
Name: |
Eoin Roche |
|
|
Title: |
Executive Director |
|
[signature pages continue]
NEVADA POWER COMPANY
Schedules to Credit Agreement, dated as of March 23, 2012, by and among Nevada Power Company, as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank and the Lenders and Issuing Banks party thereto.
SCHEDULE 1.1(A) |
|
Existing Letters of Credit |
SCHEDULE 1.1(B) |
|
Commitments and Percentages |
SCHEDULE 7.1(c) |
|
Legal Name, Etc. |
SCHEDULE 7.1(d) |
|
Consents, Authorizations, Filings and Notices |
SCHEDULE 7.1(f) |
|
Material Litigation |
SCHEDULE 7.1(p) |
|
Subsidiaries |
SCHEDULE 8.1(d) |
|
Contractual Obligations, Compliance with Law |
SCHEDULE 8.2(b)(vi) |
|
Existing Liens |
SCHEDULE 8.2(g) |
|
Affiliate Transactions |
SCHEDULE 11.2 |
|
Certain Addresses for Notices; Applicable Lending Offices |
1
Schedule 1.1(A)
Existing Letters of Credit
|
Issuing |
Beneficiary |
No. |
Date of |
Date of |
Face |
Reason |
Note |
|
Bank |
|
|
Issue |
Expiry |
Amount |
|
|
1 |
Wells Fargo |
Salt River |
SM237316W |
6/9/2010 |
4/2/2012 |
$300,000.00 |
Transmission Deposit |
Financial |
|
|
Project |
|
|
|
|
|
|
2 |
Wells Fargo |
KernRiver |
SM237310W |
6/9/2010 |
10/15/2012 |
$2,397,531.00 |
Big Horn Facilities Agreement |
Performance |
|
|
Gas Transmission |
|
|
|
|
|
|
3 |
Wells Fargo |
KernRiver |
SM237321W |
7/1/2011 |
4/29/2013 |
$6,415,870.63 |
Transportation Service Agreement |
Financial |
|
|
Gas Transmission |
|
|
|
|
|
|
4 |
Wells Fargo |
KernRiver |
SM237503W |
7/1/2011 |
12/31/2012 |
$1,085,400.00 |
Transportation Service Agreement |
Financial |
|
|
Gas Transmission |
|
|
|
|
|
|
5 |
Wells Fargo |
KernRiver |
IS0002706 |
9/2/2011 |
4/29/2013 |
$10,408,580.00 |
Transportation Service Agreement |
Financial |
|
|
Gas Transmission |
|
|
|
|
|
|
2
Schedule 1.1(B)
Commitments and Percentages
Lender
|
Commitment |
Percentage of Commitments |
Wells Fargo Bank, National Association |
$37,333,333.32 |
7.466666664% |
Bank of America, N.A. |
$37,333,333.33 |
7.466666666% |
JPMorgan Chase Bank, N.A. |
$37,333,333.33 |
7.466666666% |
The Bank of Nova Scotia |
$37,333,333.33 |
7.466666666% |
Union Bank, N.A. |
$37,333,333.33 |
7.466666666% |
Barclays Bank PLC |
$30,666,666.67 |
6.133333334% |
Deutsche Bank Trust Company Americas |
$30,666,666.67 |
6.133333334% |
Goldman Sachs Bank USA |
$30,666,666.67 |
6.133333334% |
The Royal Bank of Scotland plc |
$30,666,666.67 |
6.133333334% |
UBS Loan Finance LLC |
$30,666,666.67 |
6.133333334% |
SunTrust Bank |
$26,666,666.67 |
5.333333334% |
The Bank of New York Mellon |
$26,666,666.67 |
5.333333334% |
U.S. Bank National Association |
$26,666,666.67 |
5.333333334% |
PNC Bank, National Association |
$23,333,333.33 |
4.666666666% |
The Northern Trust Company |
$23,333,333.33 |
4.666666666% |
Associated Bank, N.A. |
$16,666,666.67 |
3.333333334% |
Canadian Imperial Bank of Commerce |
$16,666,666.67 |
3.333333334% |
TOTAL |
$500,000,000.00 |
100.000000000% |
3
Schedule 7.1(c)
Legal Name, Etc.
Legal Name of Borrower: Nevada Power Company
State of Incorporation: Nevada
Chief Executive Office and the Principal Place of Business: 6226 West Sahara Avenue,
Las Vegas, Nevada 89146
Jurisdictions in which Borrower is qualified to do business: Arizona and Utah
Federal Tax Identification Number: 88-0420104
Organizational Identification Number: C9862-1998
4
Schedule 7.1(d)
Consents, Authorizations, Filings and Notices
Order of the Public Utilities Commission of Nevada, Docket No. 10-06040, dated October 14, 2010.
5
Schedule 7.1(f)
Material Litigation
The litigation that is described in “Legal Proceedings” and Note 13 to the financial statements, in each case as included in the Borrower’s and NV Energy, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011.
6
Schedule 7.1(p)
Subsidiaries
Company |
State of Incorporation |
Commonsite, Inc. |
Nevada |
Nevada Electric Investment Company |
Nevada |
Each of the Subsidiaries listed above are wholly-owned subsidiaries of the Borrower.
Company |
State of Incorporation |
Northwind Aladdin LLC |
Nevada |
The Subsidiary listed above is a wholly-owned subsidiary of Nevada Electric Investment Company.
7
Schedule 8.1(d)
Contractual Obligations, Compliance with Law
None.
8
Schedule 8.2(b)(vi)
Existing Liens
None.
9
Schedule 8.2(g)
Affiliate Transactions
1. Portfolio Energy Credit (PEC) Pooling Arrangement between the Borrower and Sierra Pacific Power Company (“SPPC”) (approved by Public Utilities Commission of Nevada in its Docket No. 08-04002 on October 7, 2008)
2. Master Services Agreement between the Borrower, SPPC and NV Energy, Inc. (December 23, 2009) as updated from time to time
3. Any prospective coal sale agreements between the Borrower and SPPC.
4. Any existing and prospective Power Related Agreements between the Borrower and SPPC, executed to facilitate compliance with the Renewable Energy Portfolio Standard, including the following:
Buyer |
|
Seller |
|
Project |
Nevada Power Company |
|
Sierra Pacific Power Company |
|
Nevada Solar One |
|
|
|
|
NPC-SPPC Portfolio Energy |
Nevada Power Company |
|
Sierra Pacific Power Company |
|
Credit Agreement |
Sierra Pacific Power Company |
|
Nevada Power Company |
|
Faulkner | Blue Mountain |
Sierra Pacific Power Company |
|
Nevada Power Company |
|
Desert Peak 2 |
Sierra Pacific Power Company |
|
Nevada Power Company |
|
Galena 2 |
Sierra Pacific Power Company |
|
Nevada Power Company |
|
Salt Wells |
Sierra Pacific Power Company |
|
Nevada Power Company |
|
Stillwater (New) |
Sierra Pacific Power Company |
|
Nevada Power Company |
|
Jersey Valley |
Sierra Pacific Power Company |
|
Nevada Power Company |
|
Tuscarora |
5. Any prospective pooling arrangements to share spare generating station parts among the Borrower, SPPC and third party vendors. These arrangements shall be on fair and reasonable terms no less favorable to the Borrower than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.
10
Schedule 11.2
Certain Addresses for Notices; Applicable Lending Offices
A. CERTAIN ADDRESSES FOR NOTICES
1. Address for Borrower:
Nevada Power Company
d/b/a NV Energy
6226 West Sahara Avenue
Las Vegas, Nevada 89146
Attention: Dilek L. Samil, Senior Vice President, Finance, Chief Financial Officer and Treasurer, or any duly appointed successor(s)
Copy to: E. Kevin Bethel, Vice President, Chief Accounting Officer and Controller
Telephone: (702) 402-5620 (Samil) or (702) 402-5622 (Bethel)
Facsimile: (702) 402-2250 (Samil) or (702) 402-2250 (Bethel)
Electronic mail: dsamil@nvenergy.com; kbethel@nvenergy.com;
U.S. Taxpayer Identification Number: 88-0420104
with a copy (which shall not constitute notice) to:
Choate, Stewart & Hall LLP
Two International Place
Boston, Massachusetts 02110
Attention: Andrew J. Hickey, Esq.
Telephone: (617) 218-5267
Facsimile: (617) 248-4000
2. Address for Administrative Agent and Swingline Lender:
Wells Fargo Bank, National Association
1525 W WT Harris Boulevard
Mail Code : D1109-019
Charlotte, NC 28262
Attention: Syndication Agency Services
Telephone: (704) 590-2706
Facsimile: (704) 590-2790
Electronic Mail : Agencyservices.requests@wellsfargo.com
Wiring Instructions
Bank Name : Wells Fargo Bank, National Association
Account Number : 01104331628807
Routing / ABA : 121000248
Attention : Financial Cash Controls
Reference : Nevada Power Company
3. Addresses for Issuing Banks:
11
a. Wells Fargo Bank, National Association
1525 W WT Harris Boulevard
Charlotte, NC 28262
Mail Code: NC0680
Telephone: (704) 590-2706
Facsimile: (704) 590-2790
b.
Bank of America, N.A.
1000 W. Temple Street
c. 7th Floor
Mail Code: CA9-705-07-05
Los Angeles, CA 90012
Attention: Mane Badalyan
Telephone: (213) 417-9466
Facsimile: (213) 457-8841
Electronic Mail: mane.v.badalyan@baml.com
Remittance Instructions:
Bank of America, N.A.
ABA #: 026-009-593
Account #: 45358-83980
Attn: LA Standby LC Dept.
Reference: LC#____________
d. JPMorgan Chase Bank, N.A.
Attn: Standby Letter of Credit Unit
10 South Dearborn, 5th Floor
Mail Code: IL1-0236
Chicago, IL 60603-5506
Telephone: 800-634-1969 – option 1
Email: Standbylc.chi.mc@jpmchase.com
With a copy to: nancy.r.barwig@jpmorgan.com
Reference: Nevada Power Company
12
EXHIBIT A-1
FORM OF REVOLVING NOTE
FOR VALUE RECEIVED, the undersigned, NEVADA POWER COMPANY d/b/a NV ENERGY, a Nevada corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of _________________ or its registered assigns (the “Lender”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Loan from time to time made by the Lender to the Borrower under the Credit Agreement. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each Revolving Loan from the date of such Revolving Loan until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the date thereof until the date of actual payment (and before as well as after judgment) computed at the rate per annum set forth in the Credit Agreement.
This Revolving Note is one of the Revolving Notes referred to in, and is entitled to the benefits of, that certain Credit Agreement, dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. The Credit Agreement, among other things, (a) provides for the making of Revolving Loans by the Lender to the Borrower from time to time, the indebtedness of the Borrower resulting from each such Revolving Loan being evidenced by this Revolving Note and (b) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.
The Lender may attach schedules to this Revolving Note and endorse thereon the date, amount and maturity of its Revolving Loans and payments with respect thereto.
The Indebtedness evidenced by this Revolving Note is senior in right of payment to all Subordinated Debt.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Revolving Note shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to the conflicts of laws principles thereof).
NEVADA POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
EXHIBIT A-2
FORM OF SWINGLINE NOTE
FOR VALUE RECEIVED, the undersigned, NEVADA POWER COMPANY d/b/a NV ENERGY, a Nevada corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION or its registered assigns (the “Swingline Lender”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Swingline Loan from time to time made by the Swingline Lender to the Borrower under the Credit Agreement. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each Swingline Loan from the date of such Swingline Loan until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. All payments of principal and interest shall be made directly to the Swingline Lender in Dollars in immediately available funds. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the rate per annum set forth in the Credit Agreement.
This Swingline Note is the Swingline Note referred to in, and is entitled to the benefits of, that certain Credit Agreement, dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. The Credit Agreement, among other things, (a) provides for the making of Swingline Loans by the Swingline Lender to the Borrower from time to time, the indebtedness of the Borrower resulting from each such Swingline Loan being evidenced by this Swingline Note and (b) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.
The Swingline Lender may attach schedules to this Swingline Note and endorse thereon the date, amount and maturity of its Swingline Loans and payments with respect thereto.
The Indebtedness evidenced by this Swingline Note is senior in right of payment to all Subordinated Debt.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Swingline Note shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to the conflicts of laws principles thereof).
NEVADA POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
EXHIBIT A-3
FORM OF NOTICE OF REVOLVING BORROWING
Date: __________, 201_
To: Wells Fargo Bank, National Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Nevada Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), refers to that certain Credit Agreement, dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank, and hereby gives you notice, irrevocably, pursuant to Section 3.1 of the Credit Agreement that the undersigned hereby requests a Borrowing of Revolving Loans under the Credit Agreement, and in connection with such Borrowing sets forth below the information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 3.1(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ____________, 201_.
(ii) The Type of Loans comprising the Proposed Borrowing is [Base Rate Loans] [LIBOR Rate Loans].
(iii) The aggregate principal amount of the Proposed Borrowing is $________.
(iv) For Proposed Borrowing consisting of LIBOR Rate Loans: with an Interest Period of ___ months.
Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
The Borrower hereby represents and warrants that (a) after giving effect to the Proposed Borrowing, (i) the Total Revolving Outstandings shall not exceed the Borrowing Limit and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender plus such Lender’s Percentage of all LC Obligations plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment, (b) each of the conditions set forth in Section 6.2 of the Credit Agreement has been satisfied on and as of the date of such Proposed Borrowing and (c) the Proposed Borrowing is made in compliance with Sections 3.1, 3.3 and 3.4 of the Credit Agreement.
Very truly yours,
NEVADA POWER COMPANY d/b/a NV ENERGY, a Nevada corporation
EXHIBIT A-4
FORM OF NOTICE OF SWINGLINE BORROWING
Date: ____________, 201_
To: Wells Fargo Bank, National Association, as Swingline Lender
cc: Wells Fargo Bank, National Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Nevada Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), refers to that certain Credit Agreement, dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank, and hereby gives you notice, irrevocably, pursuant to Section 3.8 of the Credit Agreement that the undersigned hereby requests a Borrowing of Swingline Loans under the Credit Agreement (the “Proposed Swingline Borrowing”), and in connection with such Proposed Swingline Borrowing sets forth below the information relating to such Proposed Swingline Borrowing as required by Section 3.8(b) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ____________, 201_.
(ii) The aggregate principal amount of the Proposed Borrowing is $________.
(iii) The Type of Loans comprising the Proposed Borrowing is [Base Rate Loans] [LIBOR Market Index Rate Loans].
Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
The Borrower hereby represents and warrants that (a) after giving effect to the Proposed Swingline Borrowing, (i) the Total Revolving Outstandings shall not exceed the Borrowing Limit and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender plus such Lender’s Percentage of all LC Obligations plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment, (b) each of the conditions set forth in Section 6.2 of the Credit Agreement has been satisfied on and as of the date of such Proposed Swingline Borrowing and (c) the Proposed Swingline Borrowing is made in compliance with Sections 3.4 and 3.8 of the Credit Agreement.
NEVADA POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
EXHIBIT B
FORM OF NOTICE OF CONVERSION
Date: _______, 201_
To: Wells Fargo Bank, National Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Nevada Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), refers to that certain Credit Agreement dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank, and hereby gives you notice, irrevocably, pursuant to Section 3.2 of the Credit Agreement that the undersigned hereby requests a Conversion under the Credit Agreement, and in connection with such Conversion sets forth below the information relating to such Conversion (the “Proposed Conversion”) as required by Section 3.2 of the Credit Agreement:
(i) The Business Day of the Proposed Conversion is ________________, 201_.
(ii) The Type of Loans comprising the Proposed Conversion is [Base Rate Loans] [LIBOR Rate Loans].
(iii) The Interest Period for each Loan to be Converted is _______months.1
(iv) The aggregate amount of the Proposed Conversion is $____________.
(v) The Type of Loans to which such Loans are proposed to be Converted is [Base Rate Loans] [LIBOR Rate Loans].
(vi) The Interest Period for each Converted Loan made as part of the Proposed Conversion is ___ month(s).2
Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
___________________
1 |
To be included for a Proposed Conversion to LIBOR Rate Loans only. |
2 |
To be included for a Proposed Conversion to LIBOR Rate Loans only. |
The Borrower hereby certifies that its request for the Proposed Conversion is made in compliance with Sections 3.2, 3.3 and 3.4 of the Credit Agreement. [The undersigned hereby acknowledges that the delivery of this Notice of Conversion shall constitute a representation and warranty by the Borrower that, on the date of the Proposed Conversion, no Default or Event of Default has occurred and is continuing or would result from the Proposed Conversion.3
NEVADA POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
___________________
3 |
Include this bracketed sentence for Proposed Conversions to LIBOR Rate Loans, and delete if Proposed Conversion into Base Rate Loans. |
EXHIBIT C
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, Letters of Credit, Guarantees and Swingline Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________
[and is an Affiliate/Approved Fund of [identify Lender]]
3. Borrower: Nevada Power Company d/b/a NV Energy, a Nevada corporation
4. Agent: Wells Fargo Bank, National Association, as the administrative agent under the Credit Agreement
5. Credit Agreement: Credit Agreement dated as of March 23, 2012 among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank
Aggregate Amount of Commitment/Loans for all Lenders |
Amount of Commitment/Loans Assigned1 |
Percentage Assigned of Commitment/Loans2 |
|
|
|
7. Trade Date: __________, 201_
8. Effective Date: __________, 201_
The terms set forth in this Assignment and Assumption are hereby agreed to:
By:______________________________
By:______________________________
___________________
1 |
Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. |
2 |
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
[Consented to and]3 Accepted:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By_________________________________
Name:
Title:
Consented to:
NEVADA POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
By________________________________
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as an Issuing Bank and as Swingline Lender
By:______________________________
Name:
Title:
BANK OF AMERICA, N.A.,
as an Issuing Bank
By________________________________
Name:
Title:
JPMORGAN CHASE BANK, N.A.,
as an Issuing Bank
By________________________________
Name:
Title:
3 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.
Annex 1 to Assignment and Assumption
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets the requirements to be an assignee under Section 11.7(b)(iii), (v), (vi), and (vii) of the Credit Agreement (subject to such consents as may be required under Section 11.7(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 8.1(a) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and
Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York (without regard to the conflicts of laws principles thereof).
EXHIBIT D
NEVADA POWER COMPANY
d/b/a NV ENERGY
FORM OF OFFICER'S CERTIFICATE
March 23, 2012
This Officer’s Certificate is delivered pursuant to Section 6.1(e) of the Credit Agreement, dated as of March 23, 2012 (the “Credit Agreement”) among Nevada Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. The undersigned, _________, the _________ of the Borrower hereby certifies to the Administrative Agent and the Lenders as follows:
1. The representations and warranties of the Borrower contained in Article VII of the Credit Agreement or in any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date hereof, except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties were true and correct as of such earlier date.
2. No Default exists as of the date hereof, or would result from the Extensions of Credit to be made on the date hereof or from the application of the proceeds thereof.
3. The conditions precedent set forth in Sections 6.1 and 6.2 of the Credit Agreement are satisfied as of the date hereof.
4. There are no liquidation or dissolution proceedings pending or to my knowledge threatened against the Borrower, nor has any other event occurred adversely affecting or threatening the continued corporate existence of the Borrower.
5. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of Nevada.
6. The SPPC Credit Agreement is, or contemporaneously with the effectiveness of the Credit Agreement will be, effective on and as of the date hereof.
7. Attached hereto as Exhibit A is a true and complete copy of the General and Refunding Mortgage Indenture as in effect on the date hereof, the General and Refunding Mortgage Bonds and all other documents required to be delivered pursuant to Section 6.1(g) of the Credit Agreement.
8. Attached hereto as Exhibit B is the certificate required to be delivered by the Borrower pursuant to Section 6.1(i) of the Credit Agreement, demonstrating that, as of the Closing Date, the Borrower does not have any Negative Mark-to-Market Exposure.
Woodburn and Wedge and Choate, Hall & Stewart LLP are entitled to rely on this certificate in connection with the opinions that such firms are rendering pursuant to clauses (i) and (ii) of Section 6.1(f) of the Credit Agreement. The undersigned acknowledges that (a) in entering into the Credit Agreement, the Administrative Agent, the Lenders and the Issuing Banks are entitled to rely and have, in fact, relied
upon the statements contained herein and (b) any successor or assign of the Administrative Agent, the Lenders and the Issuing Banks is entitled to rely upon the statements contained herein, such statements being made only as of the date hereof.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned Responsible Officer of the Borrower has executed this Officer’s Certificate as of the date first written above.
NEVADA POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
By: _____________________________________
Name: ___________________________________
Title: ___________________________________
EXHIBIT E
NEVADA POWER COMPANY
d/b/a NV ENERGY
FORM OF SECRETARY’S CERTIFICATE
March 23, 2012
This Secretary’s Certificate is delivered pursuant to Section 6.1(e) of the Credit Agreement dated as of March 23, 2012 (as amended, modified, supplemented or extended from time to time, the “Credit Agreement”) among Nevada Power Company d/b/a NV Energy, a Nevada corporation (the “Company”), the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. Capitalized terms used but not otherwise defined herein have the meanings provided in the Credit Agreement. I, _____________, do hereby certify that (a) I am the duly appointed, qualified and acting Secretary of the Company, (b) I am authorized to execute this certificate on behalf of the Company, and (c) as follows:
1. Attached hereto as Exhibit A is a true and complete copy of the Restated Articles of Incorporation of the Company and all amendments thereto as in effect on the date hereof. Such articles have not otherwise been amended, modified, rescinded or changed in any respect since their date of adoption and are in full force and effect on and as of the date hereof.
2. Attached hereto as Exhibit B is a true and complete copy of the Bylaws of the Company, together with all amendments thereto, as in effect on the date hereof. Such Bylaws have not been otherwise amended, modified, rescinded or changed in any respect since their date of adoption and are in full force and effect as of the date hereof.
3. Attached hereto as Exhibit C is a true, complete and correct copy of the resolutions of the Board of Directors of the Company, duly adopted by said Board of Directors at a meeting held on October 28, 2011, at which a quorum was present and acting throughout; such resolutions were duly adopted and constitute all resolutions of the Board of Directors of the Company with respect to the authorization of the execution, delivery and performance of the Credit Agreement, the General and Refunding Mortgage Bonds and the agreements and transactions contemplated thereby and in connection therewith, and such resolutions have not been amended, modified, annulled or revoked, and are in full force and effect on the date hereof; and the instruments referred to in said resolutions of said Board of Directors were executed pursuant thereto and in compliance therewith.
4. Attached hereto as Exhibit D is a true, complete and correct copy of a certificate of the Company setting forth the true and genuine signatures of the persons, each being a duly elected and qualified officer of the Company, authorized to execute and deliver on behalf of the Company each of the Loan Documents and any certificate or other document to be delivered by the Company pursuant to the Loan Documents.
5. Attached hereto as Exhibit E is a true, complete and correct copy of the order of the Public Utilities Commission of Nevada, Docket No. 10-06040 dated October 15, 2010, authorizing the execution and delivery by the Company of the Credit Agreement and the agreements and transactions contemplated thereby and in connection therewith (including without limitation the issuance of the General and Refunding Mortgage Bonds), which order has not been rescinded and remains in full force and effect on the date hereof.
Woodburn and Wedge and Choate, Hall & Stewart LLP are entitled to rely on this certificate in connection with the opinions that such firms are rendering pursuant to clauses (i) and (ii) of Section 6.1(f) of the Credit Agreement. The undersigned acknowledges that (a) in entering into the Credit Agreement, the Administrative Agent, the Lenders and the Issuing Banks are entitled to rely and have, in fact, relied upon the statements contained herein and (b) any successor or assign of the Administrative Agent, the Lenders and the Issuing Banks is entitled to rely upon the statements contained herein, such statements being made only as of the date hereof.
IN WITNESS WHEREOF, I hereunder subscribe my name effective as of the 23rd day of March, 2012.
Secretary of Nevada Power Company d/b/a NV Energy,
a Nevada corporation
EXHIBIT F
NEVADA POWER COMPANY
d/b/a NV ENERGY
FORM OF MARK-TO-MARKET EXPOSURE CERTIFICATE
______, 201_
Reference is made to that certain Credit Agreement dated as of March 23, 2012 (as amended, modified, supplemented or extended from time to time, the “Credit Agreement”) among Nevada Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. Capitalized terms used but not otherwise defined herein have the meanings provided in the Credit Agreement. This Mark-to-Market Exposure Certificate is delivered pursuant to [Section 6.1(i)] [Section 8.1(b)(iii)] of the Credit Agreement. The undersigned Responsible Officer of the Borrower hereby certified as follows:
No Aggregate Negative Mark-to Market Exposure exists as of the Closing Date.
Schedule 1 hereto sets forth calculations of the Borrower’s Aggregate Negative Mark-to-Market Exposure or calculations demonstrating the absence of Aggregate Negative Mark-to-Market Exposure, as the case may be, as of the most recently ended calendar month.
IN WITNESS WHEREOF, the undersigned Responsible Officer of the Borrower has executed this Mark-to-Market Exposure Certificate as of the date first written above.
NEVADA POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
By: _____________________________________
Name: ___________________________________
Title: ___________________________________
SCHEDULE 1
Monthly Period End Date: [_____], 201_
$ amounts actual
|
Lender or Lender Affiliate ISDA1 |
|
|
|
Counterparty |
Interest Rate Mark-to-Market |
Commodities Mark-to-Market |
Netting2 |
Negative Mark-to-Market |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
Aggregate Negative Mark-to-Market Exposure3 |
$[ ] |
$[ ] |
|
$[ ] |
________________
1 |
Indicate Negative Mark-to-Market by placing the dollar amount in parentheticals. |
2 |
Netting of exposure calculated in accordance with the terms of the Credit Agreement, which permits netting between two or more Hedge Agreements each by and between the Borrower and any Subsidiary, on the one hand, and the same legal entity (or any Affiliate thereof), on the other hand, that is contractually available to the Borrower or such Subsidiary. For the avoidance of doubt, the Borrower and the Administrative Agent agree that netting between and among transactions within a Hedge Agreement is permitted (to the extent permitted by the terms of such Hedge Agreement). Capitalized terms used but not defined in this footnote 1 shall have the meanings ascribed thereto in the Credit Agreement. |
3 |
Excludes netting across counterparties. |
EXHIBIT 10.2
$250,000,000
CREDIT AGREEMENT
Dated as of March 23, 2012
among
SIERRA PACIFIC POWER COMPANY d/b/a
NV
ENERGY,
as Borrower
and
THE LENDERS PARTY HERETO
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent, Swingline Lender and an Issuing Bank
WELLS FARGO SECURITIES, LLC,
J.P. MORGAN SECURITIES LLC
and
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
as Joint Lead Arrangers and Joint Bookrunners
BANK OF AMERICA, N.A.
and
JPMORGAN
CHASE BANK, N.A.
each as a Syndication Agent
and
THE BANK OF NOVA SCOTIA
and
UNION
BANK, N.A.
each as a Documentation Agent
Table of Contents
|
Page |
||
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS |
1 |
||
|
Section 1.1 |
Certain Defined Terms |
1 |
|
Section 1.2 |
Computation of Time Periods; Construction |
20 |
|
Section 1.3 |
Accounting Matters |
21 |
|
Section 1.4 |
Letter of Credit Amounts |
21 |
ARTICLE II. COMMITMENTS |
21 |
||
|
Section 2.1 |
Commitments |
21 |
|
Section 2.2 |
Fees |
22 |
|
Section 2.3 |
Reduction of the Commitments |
22 |
|
Section 2.4 |
Computations of Outstandings |
23 |
|
Section 2.5 |
Optional Increase of the Commitments |
23 |
ARTICLE III. LOANS |
25 |
||
|
Section 3.1 |
Revolving Loans |
25 |
|
Section 3.2 |
Conversion of Loans |
26 |
|
Section 3.3 |
Interest Periods |
26 |
|
Section 3.4 |
Other Terms Relating to the Making and Conversion of Loans |
27 |
|
Section 3.5 |
Repayment of Loans; Interest |
29 |
|
Section 3.6 |
Additional Interest on LIBOR Rate Loans |
30 |
|
Section 3.7 |
Default Rate |
30 |
|
Section 3.8 |
Swingline Loans |
30 |
ARTICLE IV. LETTERS OF CREDIT |
33 |
||
|
Section 4.1 |
The Letter of Credit Commitment |
33 |
|
Section 4.2 |
Procedures for Issuance and Amendment of Letters of Credit; |
|
|
|
Evergreen Letters of Credit |
35 |
|
Section 4.3 |
Drawings and Reimbursements; Funding of Participants |
36 |
|
Section 4.4 |
Repayment of Participations |
38 |
|
Section 4.5 |
Obligations Absolute |
38 |
|
Section 4.6 |
Role of Issuing Banks |
39 |
|
Section 4.7 |
Applicability of ISP and UCP |
39 |
|
Section 4.8 |
Letter of Credit Fees |
40 |
|
Section 4.9 |
Fronting Fee and Processing Charges Payable to Issuing Banks |
40 |
|
Section 4.10 |
Conflict with Issuing Bank Agreements |
40 |
|
Section 4.11 |
Letters of Credit Issued for Subsidiaries |
40 |
ARTICLE V. PAYMENTS, COMPUTATIONS AND YIELD PROTECTION |
41 |
||
|
Section 5.1 |
Payments and Computations |
41 |
|
Section 5.2 |
Interest Rate Determination |
42 |
|
Section 5.3 |
Prepayments |
42 |
|
Section 5.4 |
Yield Protection |
43 |
|
Section 5.5 |
Sharing of Payments, Etc. |
45 |
|
Section 5.6 |
Taxes |
45 |
ARTICLE VI. CONDITIONS PRECEDENT |
48 |
||
|
Section 6.1 |
Conditions Precedent to Effectiveness of this Agreement |
48 |
|
Section 6.2 |
Conditions Precedent to Each Extension of Credit |
50 |
|
Section 6.4 |
Reliance on Certificates |
50 |
ARTICLE VII. REPRESENTATIONS AND WARRANTIES |
51 |
||
|
Section 7.1 |
Representations and Warranties of the Borrower |
51 |
ARTICLE VIII. COVENANTS OF THE BORROWER |
57 |
||
|
Section 8.1 |
Affirmative Covenants |
57 |
|
Section 8.2 |
Negative Covenants |
61 |
|
Section 8.3 |
Financial Covenant |
67 |
ARTICLE IX. DEFAULTS |
68 |
i
|
Page |
||
|
Section 9.1 |
Events of Default |
68 |
|
Section 9.2 |
Remedies |
70 |
|
Section 9.3 |
Rights and Remedies Cumulative; Non-Waiver; etc. |
71 |
|
Section 9.4 |
Crediting of Payments and Proceeds |
71 |
|
Section 9.5 |
Administrative Agent May File Proofs of Claim |
72 |
ARTICLE X. THE ADMINISTRATIVE AGENT |
73 |
||
|
Section 10.1 |
Appointment and Authority |
73 |
|
Section 10.2 |
Rights as a Lender |
73 |
|
Section 10.3 |
Exculpatory Provisions |
73 |
|
Section 10.4 |
Reliance by the Administrative Agent |
74 |
|
Section 10.5 |
Delegation of Duties |
74 |
|
Section 10.6 |
Resignation of Administrative Agent |
74 |
|
Section 10.7 |
Non-Reliance on Administrative Agent and Other Lenders |
75 |
|
Section 10.8 |
No Other Duties, etc. |
76 |
|
Section 10.9 |
Collateral and Guaranty Matters |
76 |
ARTICLE XI. MISCELLANEOUS |
76 |
||
|
Section 11.1 |
Amendments, Etc. |
76 |
|
Section 11.2 |
Notices, Etc. |
77 |
|
Section 11.3 |
No Waiver of Remedies |
77 |
|
Section 11.4 |
Costs, Expenses and Indemnification |
78 |
|
Section 11.5 |
Right of Set-Off; Payments Set Aside |
79 |
|
Section 11.6 |
Binding Effect |
80 |
|
Section 11.7 |
Successors and Assigns; Participations |
80 |
|
Section 11.8 |
Confidentiality |
84 |
|
Section 11.9 |
Waiver of Jury Trial |
85 |
|
Section 11.10 |
Governing Law; Submission to Jurisdiction |
85 |
|
Section 11.11 |
Relation of the Parties; No Beneficiary |
85 |
|
Section 11.12 |
Execution in Counterparts |
86 |
|
Section 11.13 |
Survival of Agreement |
86 |
|
Section 11.14 |
Survival of Indemnities |
86 |
|
Section 11.15 |
Patriot Act Notice |
86 |
|
Section 11.16 |
Severability |
86 |
|
Section 11.17 |
Electronic Execution of Assignments and Certain Other Documents |
86 |
|
Section 11.18 |
Defaulting Lenders |
87 |
|
Section 11.19 |
Cash Collateral |
89 |
|
Section 11.20 |
Press Releases and Related Matters |
89 |
ii
Exhibits |
|
||
|
|
||
|
EXHIBIT A-1 |
Form of Revolving Note |
|
|
EXHIBIT A-2 |
Form of Swingline Note |
|
|
EXHIBIT A-3 |
Form of Notice of Revolving Borrowing |
|
|
EXHIBIT A-4 |
Form of Notice of Swingline Borrowing |
|
|
EXHIBIT B |
Form of Notice of Conversion |
|
|
EXHIBIT C |
Form of Assignment and Assumption |
|
|
EXHIBIT D |
Form of Officer’s Certificate |
|
|
EXHIBIT E |
Form of Secretary’s Certificate |
|
|
EXHIBIT F |
Form of Mark-to-Market Exposure Certificate |
|
|
|
|
|
|
|
|
|
Schedules |
|
||
|
|
||
|
SCHEDULE 1.1(A) |
Existing Letters of Credit |
|
|
SCHEDULE 1.1(B) |
Commitments and Percentages |
|
|
SCHEDULE 7.1(c) |
Legal Name, Etc. |
|
|
SCHEDULE 7.1(d) |
Consents, Authorizations, Filings and Notices |
|
|
SCHEDULE 7.1(f) |
Material Litigation |
|
|
SCHEDULE 7.1(p) |
Subsidiaries |
|
|
SCHEDULE 8.1(d) |
Contractual Obligations; Compliance with Law |
|
|
SCHEDULE 8.2(b)(vi) |
Existing Liens |
|
|
SCHEDULE 8.2(g) |
Affiliate Transactions |
|
|
SCHEDULE 11.2 |
Certain Addresses for Notices; Applicable Lending Offices |
|
iii
THIS CREDIT AGREEMENT, dated as of March 23, 2012 is made by and among:
(i) Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”),
(ii) the banks and other financial institutions listed on the signature pages of this Agreement and the other Lenders (as hereinafter defined) and Issuing Banks (as hereinafter defined) from time to time party hereto, and
(iii) Wells Fargo Bank, National Association, as administrative agent (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”) for the Lenders hereunder, as Swingline Lender and as an Issuing Bank.
PRELIMINARY STATEMENTS
The Borrower has requested that the Lenders provide credit facilities for the purposes set forth herein, and the Lenders are willing to do so on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS
AND ACCOUNTING TERMS
Section 1.1 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
“Acquired Debt” means, with respect to any specified Person, (a) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person and (b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.
“Administrative Agent” has the meaning assigned to that term in the preamble hereto.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account, as set forth on Schedule 11.2 or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
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“Aggregate Negative Mark-to-Market Exposure” means, as of any date of determination, an amount equal to the sum of the Negative Mark-to-Market Exposure existing on such date of determination under each Hedge Agreement without giving effect to any netting other than netting as between two or more Hedge Agreements each by and between the Borrower or any Subsidiary, on the one hand, and the same legal entity (or any Affiliate thereof), on the other hand, that is contractually available to the Borrower or such Subsidiary.
“Agreement” means this Credit Agreement, as amended, modified, restated, supplemented or replaced from time to time in accordance with the terms hereof.
“Applicable Lending Office” means, with respect to each Lender, (a) such Lender’s Domestic Lending Office, in the case of a Base Rate Loan, and (b) such Lender’s Eurodollar Lending Office, in the case of a LIBOR Rate Loan.
“Applicable Margin” means, with respect to Loans, Letters of Credit and the Commitment Fee, the corresponding percentages per annum as set forth below based on the applicable Secured Debt Ratings:
Level |
Secured Debt Rating |
Applicable LIBOR Rate and LIBOR Market Index Rate Margin |
Applicable Base Rate Margin |
Commitment Fee |
Letter of Credit Fee |
I |
A- or higher from S&P/A3 or higher from Moody’s |
1.125% |
0.125% |
0.125% |
1.125% |
II |
BBB+ from S&P/Baa1 from Moody’s |
1.25% |
0.25% |
0.175% |
1.25% |
III |
BBB from S&P/Baa2 from Moody’s |
1.50% |
0.50% |
0.225% |
1.50% |
IV |
BBB- from S&P/Baa3 from Moody’s |
1.75% |
0.75% |
0.275% |
1.75% |
V |
BB+ or lower from S&P/Ba1 or lower from Moody’s/unrated by S&P and Moody’s |
2.00% |
1.00% |
0.325% |
2.00% |
In all cases in determining the Applicable Margin, the Commitment Fee and the Letter of Credit Fee, if the Secured Debt Ratings established by the Rating Agencies shall fall within different levels, the applicable Secured Debt Rating shall be based on the higher of the two applicable Secured Debt Ratings unless one of the two applicable Secured Debt Ratings is two or more levels lower than the other, in which case the applicable Secured Debt Rating shall be determined by reference to the level one lower than the higher of the two applicable Secured Debt Ratings. The Applicable Margins, Commitment Fee and Letter of Credit Fee shall be increased or decreased in accordance with this definition upon any change in the applicable Secured Debt Rating, and such increased or decreased Applicable Margins, Commitment Fee and Letter of Credit Fee shall be effective from the date of announcement of any such new Secured Debt Rating until the next such change. The Borrower agrees to notify the Administrative Agent promptly after each change in any Secured Debt Rating. If the rating system of any Rating Agency shall change, or if any such Rating Agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect
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such changed rating system or the non-availability of Secured Debt Ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable Margin, the Commitment Fee and the Letter of Credit Fee shall be determined by reference to the Secured Debt Rating most recently in effect prior to such change or cessation.
“Applicable Rate” means:
(a) in the case of each Base Rate Loan, a rate per annum equal at all times to the sum of the Base Rate in effect from time to time plus the Applicable Margin in effect from time to time;
(b) in the case of each LIBOR Rate Loan comprising part of the same Borrowing, a rate per annum during each Interest Period equal at all times to the sum of the LIBOR Rate for such Interest Period plus the Applicable Margin in effect from time to time during such Interest Period; and
(c) in the case of each LIBOR Market Index Rate Loan, a rate per annum equal at all times to the sum of the LIBOR Market Index Rate in effect from time to time plus the Applicable Margin in effect from time to time.
“Approved Fund” means any Person (other than a natural Person), including, without limitation, any special purpose entity, that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business; provided, that such Approved Fund must be administered, managed or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.7), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.
“Bank of America” means Bank of America, N.A., a national banking association.
“Base Rate” means, at any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 1/2 of 1% and (c) the LIBOR Base Rate plus 1.0%. Any change in the Base Rate due to a change in any of the foregoing will become effective on the effective date of such change in the Federal Funds Rate, the Prime Rate or the LIBOR Base Rate.
“Base Rate Loan” means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 3.5(b)(i).
“Board” means the Board of Governors of the Federal Reserve System of the United States of America (or any successor).
“Board of Directors” means (a) with respect to a corporation, the board of directors of the corporation, (b) with respect to a partnership, the Board of Directors of the general partner of the partnership and (c) with respect to any other Person, the board or committee of such Person serving a similar function.
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“Borrower” has the meaning assigned to that term in the preamble hereto, subject to Section 8.2(c)(iv).
“Borrower Materials” has the meaning assigned to that term in Section 8.1(g).
“Borrowing” means a borrowing consisting of Loans of the same Type and in the case of LIBOR Rate Loans, having the same Interest Period, and made or Converted on the same day by the Lenders, ratably in accordance with their respective Percentages. Any Borrowing consisting of Loans of a particular Type may be referred to as being a Borrowing of such “Type”. All Loans of the same Type and, in the case of LIBOR Rate Loans, having the same Interest Period and made or Converted on the same day shall be deemed a single Borrowing hereunder until repaid or next Converted.
“Borrowing Limit” means, as of any date of determination, the lesser of (a) the Commitments and (b) an amount equal to (i) the Commitments minus (ii) Aggregate Negative Mark-to-Market Exposure as of the last day of the calendar month most recently ended as set forth in the certificate of a Responsible Officer of the Borrower delivered pursuant to Section 8.1(b)(iii); provided, that, (i) in no event shall the amount calculated in clause (b) above be less than 50% of the Commitments then in effect and (ii) with respect to the determination of the Borrowing Limit on the Closing Date, Aggregate Negative Mark-to-Market Exposure, if any, shall be as set forth in the certificate of a Responsible Officer of the Borrower delivered pursuant to Section 6.1(i). For the avoidance of doubt, the Borrowing Limit shall be re-calculated as of each calendar month.
“Business Day” means (a) for all purposes other than as covered by clause (b) below, a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York, Charlotte, North Carolina or Dallas, Texas are authorized or required by law to close and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, LIBOR Rate Loans, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.
“Capital Lease Obligations” means, with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP; for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.
“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.
“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, an Issuing Bank, the Swingline Lender (as applicable) and the Lenders, as collateral for LC Obligations, Obligations in respect of Swingline Loans or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if an Issuing Bank or Swingline Lender benefitting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and (b) an Issuing Bank or the Swingline Lender (as applicable). “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
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“Cash Equivalents” means (a) United States dollars, (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition, (c) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any commercial bank having capital and surplus in excess of $500,000,000 and a Thomson Bank Watch Rating of “B” or better, (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above, (e) commercial paper having the highest rating obtainable from Moody’s or S&P and in each case maturing within 270 days after the date of acquisition and (f) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (e) of this definition.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” means the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 20% of the outstanding common stock of NV Energy, Inc.; or (b) NV Energy, Inc. shall cease to own and control, of record and beneficially, directly, 100% of each class of outstanding Capital Stock of the Borrower (other than non-voting preferred Capital Stock of the Borrower in an amount not to exceed 10% of all Capital Stock of the Borrower; provided that such preferred Capital Stock may become voting upon an event of default with respect to such preferred stock) free and clear of all Liens.
“Closing Date” means the date of this Agreement.
“Code” means the Internal Revenue Code of 1986, and the rules and regulations thereunder, each as amended or modified from time to time.
“Commitment” means, as to each Lender, its obligation to (a) make Revolving Loans to the Borrower pursuant to Section 2.1, (b) purchase participations in LC Obligations and (c) purchase participations in Swingline Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1.1(B) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
“Commitment Fee” has the meaning assigned to that term in Section 2.2(a).
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“Commitments” mean the Commitments of all the Lenders. The aggregate principal amount of all the Commitments in effect on the Closing Date is TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000).
“Commonly Controlled Entity” means an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.
“Consolidated” means, when used with reference to financial statements or financial statement items of any Person, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP.
“Consolidated Assets” means, at any date of determination, the total amount of consolidated assets of the Borrower and its Subsidiaries, as determined in accordance with GAAP.
“Consolidated Capital” means, at any date of determination, the sum of (a) Consolidated Indebtedness plus (b) Consolidated equity of the common stockholders of the Borrower and its Subsidiaries plus (c) trust-originated or partnership-originated preferred securities of the Borrower and its Consolidated Subsidiaries plus (d) Consolidated equity of the preference stockholders of the Borrower and its Subsidiaries plus (e) Consolidated equity of the preferred stockholders of the Borrower and its Subsidiaries, calculated as of such date, in the case of clauses (b) through (e) above, in accordance with GAAP.
“Consolidated Indebtedness” means, at any date of determination, without duplication, the aggregate Indebtedness of the Borrower and its Consolidated Subsidiaries; provided, however, that Consolidated Indebtedness shall not include junior subordinated debentures issued by the Borrower in connection with the issuance of (a) preferred trust securities or trust-issued preferred securities by any Trust Preferred Vehicle and (b) other similar trust-originated preferred securities by any Subsidiary of the Borrower; provided, that (i) the issuer of such preferred securities lends substantially all of the proceeds from such issuance to the Borrower in exchange for such junior subordinated debentures and (ii) substantially all of the assets of such issuer consist solely of such junior subordinated debentures and payments made from time to time in respect thereof.
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.
“Conversion”, “Convert” or “Converted” refers to a conversion of Loans of one Type into Loans of another Type, or to the selection of a new, or the continuation of the same, Interest Period for Loans, as the case may be, pursuant to Section 3.2.
“Debt Ratings Trigger” means the date which the Borrower shall have obtained a Secured Debt Rating of (a) BBB- or higher from S&P and (b) Baa3 or higher from Moody’s, in each case with a stable or better outlook.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
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“Default” means any of the events specified in Section 9.1, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“Defaulting Lender” means, subject to Section 11.18(b), any Lender that (a) has failed to (i) fund all or any portion of the Loans or participations in respect of Letters of Credit or Swingline Loans required to be funded by it hereunder within two Business Days of the date such Loans or participations were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, an Issuing Bank, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower,the Administrative Agent, an Issuing Bank or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied, (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 11.18(b)) upon delivery of written notice of such determination to the Borrower, the Issuing Banks, the Swingline Lender and each Lender.
“Disposition” means, with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof; and the terms “Dispose” and “Disposed of” shall have correlative meanings.
“Dollars” and the sign “$” each means lawful money of the United States.
“Domestic Lending Office” means, with respect to any Lender, the office of such Lender or Affiliate of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule 11.2 hereto or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender or Affiliate of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Sections 11.7(b)(iii), (v), (vi) and (vii) (subject to such consents, if any, as may be required under Section 11.7(b)(iii)).
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“Environmental Laws” means any and all laws, rules, orders, regulations, statutes, ordinances, guidelines, codes, decrees, or other legally enforceable requirements (including, without limitation, common law) of any international authority, foreign government, the United States, or any state, local, municipal or other governmental authority, regulating, relating to or imposing liability or standards of conduct concerning protection of the environment or of human health, or employee health and safety, as has been, is now, or may at any time hereafter be, in effect. For the avoidance of doubt, the Nevada Renewable Energy Portfolio Standard shall not constitute an Environmental Law.
“Environmental Liability” means, with respect to any Person, any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of such Person or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Materials of Environmental Concern, (c) exposure to any Materials of Environmental Concern, (d) the release or threatened release of any Materials of Environmental Concern into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Environmental Permits” means any and all permits, licenses, approvals, registrations, notifications, exemptions and other authorizations required under any Environmental Law.
“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Board, as in effect from time to time.
“Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender or Affiliate of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule 11.2 hereto or in the Assignment and Assumption pursuant to which it became a Lender (or, if no such office or Affiliate is specified, its Domestic Lending Office), or such other office of such Lender or Affiliate of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.
“Eurodollar Reserve Percentage” means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Board of Governors of the Federal Reserve system (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City.
“Event of Default” means any of the events specified in Section 9.1, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“Evergreen Letter of Credit” means any Letter of Credit that, by its terms, provides that it shall be automatically renewed or extended for a stated period of time at the end of its then scheduled expiration date unless the applicable Issuing Bank notifies the beneficiary thereof prior to such expiration date that such Issuing Bank elects not to renew or extend such Letter of Credit.
“Excess Net Proceeds” has the meaning set forth in Section 8.2(d).
“Existing Letters of Credit” means each of the letters of credit set forth on Schedule 1.1(A).
“Existing SPPC Credit Agreement” means that certain Credit Agreement dated as of April 28, 2010 by and among Sierra Pacific Power Company, as the borrower, Bank of America, N.A. as the
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administrative agent, an issuing bank and a lender and the other lenders from time to time party thereto, as amended or otherwise modified from time to time.
“Extension of Credit” means, as to any Lender at any time, (a) an amount equal to the sum of (i) the Outstanding Amount of all Revolving Loans made by such Lender plus (ii) such Lender’s Percentage of the Outstanding Amount of all LC Obligations plus (iii) such Lender’s Percentage of the Outstanding Amount of all Swingline Loans or (b) the making of any Loan by such Lender or the issuance, extension or renewal of, or participation in, a Letter of Credit by such Lender.
“Federal Funds Rate” means, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day (or, if such day is not a Business Day, for the immediately preceding Business Day), as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent.
“Fee Letters” means (a) that certain letter agreement, dated February 24, 2012, among the Borrower, NPC, Wells Fargo Bank and WFS, as amended from time to time, (b) that certain letter agreement, dated February 24, 2012, among the Borrower, NPC, Bank of America and MLPFS, as amended from time to time and (c) that certain letter agreement, dated as of February 24, 2012, among the Borrower, NPC, JPMorgan and JPM Securities, as amended from time to time.
“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to an Issuing Bank, such Defaulting Lender’s Percentage of the outstanding LC Obligations other than LC Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swingline Lender, such Defaulting Lender’s Percentage of Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
“General and Refunding Mortgage Bonds” means, collectively, (a) the Borrower’s General and Refunding Mortgage Bonds, Series R, due on the Maturity Date, issued as of the Closing Date to the Administrative Agent under the General and Refunding Mortgage Indenture and any supplemental indenture or Officer’s Certificate related thereto, in the aggregate principal amount of $250,000,000, and (b) any additional General and Refunding Mortgage Bonds issued by the Borrower to the Administrative Agent under the General and Refunding Mortgage Indenture and any supplemental indentures or Officer’s Certificate related thereto in connection with any increase in the Commitments pursuant to Section 2.5, in each case as collateral securing the Obligations.
“General and Refunding Mortgage Indenture” means the General and Refunding Mortgage Indenture, dated as of May 1, 2001, between the Borrower and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Mellon), as trustee, as the same may be amended, modified or supplemented from time to time.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, bureau, instrumentality, regulatory body, court, tribunal, central bank or other entity exercising executive,
9
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness.
“Hedge Agreements” means, with respect to any Person, the collective reference to any of the following: (a) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and any other agreements designed to protect such Person against fluctuations in interest rates with respect to Indebtedness incurred and not for purposes of speculation, (b) foreign exchange contracts and currency protection agreements entered into with one of more financial institutions designed to protect such Person against fluctuations in currency exchange rates with respect to Indebtedness incurred and not for purposes of speculation, (c) any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities used by such Person at the time and (d) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. The term “Hedge Agreements”, for the avoidance of doubt, shall exclude any forward energy purchase or sale contracts or similar arrangements entered into by the Borrower or its Subsidiaries.
“Hedging Obligations” means, with respect to any Person, all existing or future payment and other obligations owing by such Person under any Hedge Agreement (which such Hedge Agreement is permitted hereunder) with any Person that (i) is a current Lender or Affiliate of any current Lender or (ii) was a Lender or an Affiliate of any Lender at the time such Hedge Agreement was executed.
“Honor Date” has the meaning assigned to that term in Section 4.3(a).
“Indebtedness” means, with respect to any Person, any indebtedness of such Person, whether or not contingent (a) in respect of borrowed money, (b) evidenced by notes, bonds, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (c) in respect of banker’s acceptances, (d) representing Capital Lease Obligations, (e) representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable arising in the ordinary course of business that is (i) less than $1,000,000 or (ii) not more than one hundred twenty (120) days past due or (f) representing any Net Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Net Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be (x) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount, and (y) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness.
“Indemnitee” has the meaning assigned to that term in Section 11.4(b).
“Ineligible Lender” means any Person other than (a) a Lender or an Affiliate thereof, (b) an Approved Fund or (c) any U.S. or foreign bank that accepts deposits in the ordinary course of business.
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“Information” has the meaning assigned to that term in Section 11.8.
“Insolvency” means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA; and the term “Insolvent” shall have a correlative meaning (pertaining to a condition of Insolvency).
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
“Interest Period” has the meaning assigned to that term in Section 3.3.
“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), or purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Borrower or any Subsidiary of the Borrower sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Borrower such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Borrower, the Borrower will be deemed to have made an Investment on the date of any such sale or disposition. The acquisition by the Borrower or any Subsidiary of the Borrower of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Borrower or such Subsidiary in such third Person.
“ISP98” means the International Standby Practices (1998 Revision, effective January 1, 1999), International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the time of issuance of any Letter of Credit.
“Issuing Banks” means, collectively, Wells Fargo Bank, Bank of America and JPMorgan, in their respective capacities as issuers of Letters of Credit under this Agreement (or any successors thereto) and “Issuing Bank” means any one of them. Notwithstanding the foregoing, Bank of America shall be the Issuing Bank with respect to the Existing Letters of Credit, as more specifically set forth on Schedule 1.1(A).
“Issuing Bank Agreement” means, with respect to any Letter of Credit, the collective reference to (a) an agreement between an Issuing Bank and the Borrower, providing for the issuance of one or more Letters of Credit, in support of (i) the Borrower’s obligations owing to gas, electric power or other energy suppliers or (ii) other general corporate activities of the Borrower and (b) any other document, agreement and instrument entered into by such Issuing Bank and the Borrower (or any Subsidiary) or in favor of such Issuing Bank and relating to any such Letter of Credit. In the event of any conflict between the terms of this Agreement and the terms of any Issuing Bank Agreement, the terms of this Agreement shall control and such conflicting terms under such Issuing Bank Agreement shall be of no force or effect.
“Joint Lead Arrangers” means the collective reference to Wells Fargo Securities, JPM Securities and MLPFS in their respective capacities as joint lead arrangers and joint bookrunners.
“JPMorgan” means JPMorgan Chase Bank, N.A.
“JPM Securities” means J.P. Morgan Securities LLC.
“LC Advance” means, with respect to each Lender, such Lender’s funding of its participation in any LC Borrowing in accordance with its Percentage.
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“LC Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing of Revolving Loans.
“LC Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“LC Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all LC Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP98, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Lenders” means the banks and other financial institutions listed on the signature pages hereof as lenders (including, without limitation, any Issuing Bank), each Eligible Assignee that shall become a party hereto pursuant to Section 11.7 and, as the context requires, the Swingline Lender.
“Letter of Credit” means (a) any letter of credit issued hereunder and (b) any Existing Letter of Credit. A Letter of Credit may be a commercial or direct pay letter of credit or a standby letter of credit.
“Letter of Credit Application” means an application and agreement for the issuance or amendment of a letter of credit in the form from time to time in use by the applicable Issuing Bank.
“Letter of Credit Expiration Date” means with respect to any Letter of Credit the earlier of (a) one (1) year after the date of issuance of such Letter of Credit and (b) five (5) Business Days prior to the Maturity Date.
“Letter of Credit Fee” has the meaning assigned to that term in Section 4.8.
“Letter of Credit Sublimit” means, as of any date of determination, the lesser of (a) ONE HUNDRED MILLION DOLLARS ($100,000,000) and (b) the Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Commitments.
“LIBOR Base Rate” means:
(a) for any Interest Period with respect to a LIBOR Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a period equal to the applicable Interest Period, as published by Reuters at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate is not available, then the “LIBOR Base Rate” shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period. Each calculation by the Administrative Agent of the LIBOR Base Rate shall be conclusive and binding for all purposes, absent manifest error; and
(b) for any interest rate calculation with respect to a Base Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a term of one month commencing that day, as published by Reuters at approximately 11:00 a.m. (London time) two (2) Business Days prior to the date of determination (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate is not available, then the “LIBOR Base Rate” shall be determined by the
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Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) on the date of determination for a term equal to one month. Each calculation by the Administrative Agent of the LIBOR Base Rate shall be conclusive and binding for all purposes, absent manifest error.
“LIBOR Market Index Rate” means, for any day, the 30-day rate of interest per annum appearing on Reuters Screen LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) on such day, or if such day is not a London business day, then the immediately preceding London business day (or if not so reported, then as determined by the Administrative Agent from another recognized source or interbank quotation), or another rate as agreed to by the Administrative Agent and the Borrower.
“LIBOR Market Index Rate Loan” means any Loan bearing interest at a rate based upon the LIBOR Market Index Rate.
“LIBOR Rate” means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula:
LIBOR Rate = |
LIBOR Base Rate |
1.00 - Eurodollar Reserve Percentage |
“LIBOR Rate Loan” means any Loan bearing interest at a rate based upon the LIBOR Rate other than LIBOR Market Index Rate Loans.
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
“Loan” means an extension of credit by a Lender to the Borrower under Article III in the form of a Revolving Loan or a Swingline Loan.
“Loan Documents” means this Agreement, any Note, each Subsidiary Guarantee, if any, each Issuing Bank Agreement, the Officer’s Certificate, the General and Refunding Mortgage Bonds and each Fee Letter, and each other document, instrument, certificate and agreement executed and delivered by the Borrower or any Subsidiary thereof in connection with this Agreement, including any certificates provided pursuant to this Agreement (excluding any Hedge Agreement and any Treasury Management Agreement), all as may be amended, restated, supplemented or otherwise modified from time to time.
“Material Adverse Effect” means a material adverse effect on (a) the business, assets, property, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent, the Issuing Banks or the Lenders hereunder or thereunder.
“Materials of Environmental Concern” means any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity, and any other substances or forces of any kind, whether
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or not any such substance or force is defined as hazardous or toxic under any Environmental Law, that is regulated pursuant to or could give rise to liability under any Environmental Law.
“Maturity Date” means March 23, 2017.
“Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 105% of the Fronting Exposure of all Issuing Banks with respect to Letters of Credit issued and outstanding at such time and (b) otherwise, an amount determined by the Administrative Agent and the Issuing Banks in their sole discretion.
“MLPFS” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.
“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.
“Mortgaged Property” has the meaning assigned to that term in the General and Refunding Mortgage Indenture.
“Multiemployer Plan” means a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Negative Mark-to-Market Exposure” means the mark-to-market exposure of the Borrower or any of its Subsidiaries in connection with a Hedge Agreement with any current Lender or Affiliate of a current Lender (or any Person that was a Lender or Affiliate of a Lender at the time such Hedge Agreement was executed) that would cause a liability to the Borrower or any such Subsidiary, as calculated by the Borrower and provided in a certificate to the Administrative Agent pursuant to Section 8.1(b)(iii) or Section 6.1(i), in each case in form and substance reasonably acceptable to the Administrative Agent.
“Net Hedging Obligations” means, as of any date, any net obligations associated with the Termination Value of any such Hedge Agreement on such date.
“Net Proceeds” means the aggregate cash proceeds received by the Borrower or any Subsidiary in respect of any Disposition, net of (a) direct costs incurred in connection therewith (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and (b) taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements); it being understood that “Net Proceeds” shall include, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received by the Borrower or any Subsidiary in any Disposition.
“Note” or “Notes” means the Revolving Notes and the Swingline Note, individually or collectively, as appropriate.
“Notice of Borrowing” means a Notice of Revolving Borrowing or a Notice of Swingline Borrowing, as the case may be.
“Notice of Revolving Borrowing” has the meaning assigned to that term in Section 3.1(a).
“Notice of Swingline Borrowing” has the meaning assigned to that term in Section 3.8(b).
“NPC” means Nevada Power Company d/b/a NV Energy, a Nevada corporation.
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“NPC Credit Agreement” means that certain Credit Agreement, dated as of the Closing Date, by and among NPC, as the borrower, Wells Fargo Bank, as the administrative agent, swingline lender, an issuing bank and a lender and the other lenders and issuing banks from time to time party thereto, as amended or otherwise modified.
“OECD” means the Organization for Economic Cooperation and Development.
“Obligations” means the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities (including any Hedging Obligations and any Treasury Management Obligations) of the Borrower to (a) the Administrative Agent, (b) any Issuing Bank, (c) the Swingline Lender, (d) any Lender and (e) in the case of Hedging Obligations and Treasury Management Obligations, (i) any current Lender or Affiliate of any current Lender and (ii) any Person who was a Lender or an Affiliate of any Lender at the time such Hedge Agreement or Treasury Management Agreement is executed, in each case, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any Note, any Letter of Credit, any other Loan Document, any Hedge Agreement between the Borrower and (x) any current Lender or any Affiliate of a current Lender or (y) any Person who was a Lender or Affiliate of a Lender at the time such Hedge Agreement was executed, any Treasury Management Agreement between the Borrower and (x) any current Lender or any Affiliate of a current Lender or (y) any Person who was a Lender or Affiliate of a Lender at the time such Treasury Management Agreement was executed, or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent, any Issuing Bank or any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.
“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.
“Officer’s Certificate” means an “Officer’s Certificate” (as defined in the General and Refunding Mortgage Indenture) setting forth the terms of each series of the General and Refunding Mortgage Bonds, executed by a duly authorized officer of the Borrower and authenticated by the trustee under the General and Refunding Mortgage Indenture.
“Outstanding Amount” means (a) with respect to any Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of any Loans occurring on such date; and (b) with respect to any LC Obligations on any date, the amount of such LC Obligations on such date after giving effect to any LC Credit Extension occurring on such date and any other changes in the aggregate amount of the LC Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.
“Participant” has the meaning assigned to that term in Section 11.7(d).
“Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended or modified from time to time.
“Payment Amounts” has the meaning assigned to that term in Section 9.1(e).
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“PBGC” means, the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).
“Percentage” means with respect to any Lender at any time, with respect to such Lender’s Commitment at any time, the percentage of the Commitments represented by such Lender’s Commitment at such time; provided that if the commitment of each Lender to make Revolving Loans and the obligation of the Issuing Banks to make LC Credit Extensions have been terminated pursuant to Section 9.2 or if the Commitments have expired, then the Percentage of each Lender shall be determined based on the Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Percentage of each Lender is set forth opposite the name of such Lender on Schedule 1.1(B) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“Permitted Business” has the meaning assigned to that term in Section 8.2(d)(viii)(C)(2).
“Permitted Liens” has the meaning assigned to that term in Section 8.2(b).
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“Plan” means, at a particular time, any employee benefit plan that is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Platform” has the meaning assigned to that term in Section 8.1(g).
“Prime Rate” means, at any time, the rate of interest per annum publicly announced or otherwise identified from time to time by Wells Fargo Bank at its principal office in Charlotte, North Carolina as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by Wells Fargo Bank as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.
“Pro Forma Basis” means, with respect to compliance with Section 8.2(a) or Section 8.2(e), for purposes of calculating the financial covenant set forth in Section 8.3, the incurrence of Indebtedness or the declaring or making of a Restricted Payment shall be deemed to have occurred as of the last day of the most recent fiscal quarter period preceding the date of such incurrence of Indebtedness or declaring or making of such Restricted Payment for which financial statements were delivered pursuant to Section 8.1(a).
“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.
“PUCN” means the Public Utilities Commission of Nevada, or any successor agency.
“Public Lender” has the meaning assigned to that term in Section 8.1(g).
“Rating Agencies” means the collective reference to S&P and Moody’s.
“Register” has the meaning assigned to that term in Section 11.7(c).
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“Regulation U” means Regulation U of the Board as in effect from time to time.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, partners, employees and agents of such Person and of such Person’s Affiliates.
“Reorganization” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.
“Request for Credit Extension” means (a) with respect to a Borrowing of Revolving Loans, a Notice of Revolving Borrowing, (b) with respect to an LC Credit Extension, a Letter of Credit Application, (c) with respect to a Borrowing of Swingline Loans, a Notice of Swingline Borrowing and (d) with respect to a conversion or continuation of Loans, a Notice of Conversion
.
“Required Lenders” means, at any time, Lenders holding in the aggregate more than 50% of (a) the unfunded Commitments, the outstanding Loans, LC Obligations and participations therein or (b) if the Commitments have been terminated, the outstanding Loans, LC Obligations and participations therein. The unfunded Commitments of, and the outstanding Loans, LC Obligations and participations therein and in Swingline Loans held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders. Any determination of those Lenders constituting the Required Lenders shall be made by the Administrative Agent and shall be conclusive and binding on all parties absent manifest error.
“Requirement of Law” means, as to any Person, the Certificate of Incorporation and By Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.
“Responsible Officer” means the chief executive officer, president, senior vice-president, vice-president, chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower, but in any event, with respect to financial matters, the chief financial officer, chief accounting officer or the treasurer of the Borrower.
“Restricted Payments” has the meaning assigned to such term in Section 8.2(e).
“Revolving Credit Termination Date” means the earlier to occur of (i) the Maturity Date and (ii) the date of termination or reduction in whole of the Commitments pursuant to Section 2.3 or Section 9.2.
“Revolving Loan” means a loan by a Lender to the Borrower pursuant to Section 3.1 (or deemed made pursuant to Section 4.4) and refers to a Base Rate Loan or a LIBOR Rate Loan (each of which shall be a “Type” of Loan). All Loans by a Lender of the same Type, having the same Interest Period and made or Converted on the same day shall be deemed to be a single Revolving Loan by such Lender until repaid or next Converted.
“Revolving Note” means any promissory note of the Borrower payable to the order of a Lender (and, if requested, its registered assigns), evidencing the Revolving Loans made by such Lender, substantially in the form of Exhibit A-1, and any amendments, supplements, and modifications thereto,
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any substitutes therefor, and any replacements, restatements, renewals or extension thereof; in whole or in part and “Revolving Notes” means any or all of the foregoing.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto.
“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a person or entity resident in or determined to be resident in a country, that is subject to a country sanctions program administered and enforced by OFAC.
“Sanctioned Person” means a person named on the list of Specially Designated Nationals maintained by OFAC.
“SEC” means the Securities and Exchange Commission (or successors thereto or an analogous Governmental Authority).
“Secured Debt Rating” means, as of any date of determination, the Borrower’s senior secured long term debt rating as determined by each of the Rating Agencies to be in effect as of such date.
“Single Employer Plan” means any Plan that is covered by Title IV of ERISA, but which is not a Multiemployer Plan.
“Solvent” means, with respect to any Person, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
“Subordinated Debt” means any debt (including without limitation any guarantee) that is subordinated to the prior payment of the Loans and other Obligations.
“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such corporation,
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partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Subsidiary Guarantee” means any Guarantee of the Loans and other Obligations to be executed by any Subsidiary of the Borrower pursuant to Section 8.2(n).
“Subsidiary Guarantor” means any Subsidiary of the Borrower that executes a Subsidiary Guarantee, and its successors and assigns.
“Swingline Lender” means Wells Fargo Bank, in its capacity as a provider of Swingline Loans, or any successor swingline lender hereunder.
“Swingline Loan” has the meaning set forth in Section 3.8(a).
“Swingline Note” means the promissory note of the Borrower payable to the order of the Swingline Lender (and, if requested, its registered assigns), evidencing the Swingline Loans made by the Swingline Lender, substantially in the form of Exhibit A-2, and any amendments, supplements, and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof; in whole or in part.
“Swingline Sublimit” means the lesser of (a) TWENTY MILLION DOLLARS ($20,000,000) and (b) the Commitments. The Swingline Sublimit is part of, and not in addition to, the Commitments.
“Termination Value” means, in respect of any one or more Hedge Agreements after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreement, (x) for any date on or after the date such Hedge Agreement has been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (y) for any date prior to the date referenced in clause (x), the amount(s) determined as the mark-to-market value(s) for such Hedge Agreement, as determined based upon one or more readily available quotations provided by any recognized dealer in such Hedge Agreement (which may include a Lender or any Affiliate of a Lender). Notwithstanding the foregoing, any calculation of the aggregate Termination Value shall exclude any Termination Value of Hedge Agreements that are accounted for by the Borrower as regulatory assets or liabilities or risk management assets or liabilities pursuant to Financial Accounting Standards Board Statement No. 71.
“Total Revolving Outstandings” means the aggregate Outstanding Amount of all Revolving Loans, all Swingline Loans and all LC Obligations.
“Trading With the Enemy Act” has the meaning assigned to that term in Section 7.1(y).
“Treasury Management Agreement” means any agreement governing the provision of treasury or cash management services, including deposit accounts, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.
“Treasury Management Obligations” means with respect to any Person, all existing or future payment and other obligations owing by such Person under any Treasury Management Agreement with
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any Person that (i) is a current Lender or Affiliate of any current Lender or (ii) was a Lender or an Affiliate of any Lender at the time such Treasury Management Agreement was executed.
“Trust Preferred Vehicle” means any trust, the only assets of which are Subordinated Debt of the Borrower, and which are substantially similar (except for such changes to the terms of any such trust preferred vehicle to adopt terms that are customary in the trust preferred vehicles market at the time of formation of any such trust preferred vehicle) to trust preferred vehicles of the Borrower entered into within the five (5) years immediately preceding the Closing Date.
“Type” has the meaning assigned to such term (i) in the definition of “Revolving Loan” when used in such context and (ii) in the definition of “Borrowing” when used in such context.
“Unreimbursed Amount” has the meaning assigned to that term in Section 4.3(a).
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.
“Wells Fargo Bank” means Wells Fargo Bank, National Association, a national banking association, and its successors.
“WFS” means Wells Fargo Securities, LLC, in its capacity as a joint lead arranger and joint bookrunner.
Section 1.2 Computation of Time Periods; Construction.
(a) Unless otherwise indicated, each reference in this Agreement to a specific time of day is a reference to Eastern Standard Time or Eastern Daylight Time, as applicable. In the computation of periods of time under this Agreement, any period of a specified number of days or months shall be computed by including the first day or month occurring during such period and excluding the last such day or month. Unless the context requires otherwise, in the case of a period of time “from” a specified date “to” or “until” a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.
(b) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes”, and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.
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Section 1.3 Accounting Matters.
(a) All accounting terms not specifically defined herein shall be construed in accordance with GAAP, applied in a manner consistent with those applied in the preparation of the financial statements referred to in Section 8.1(a).
(b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
(c) Any financial ratios required to be maintained by the 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 herein and rounding the result up or down to the nearest number (with a rounding‑up if there is no nearest number).
Section 1.4 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuing Agreement related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
Section 2.1 Commitments. Subject to the terms and conditions set forth herein, each Lender severally agrees to make Revolving Loans to the Borrower in Dollars from time to time on any Business Day during the period from the Closing Date to the Revolving Credit Termination Date in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Borrowing of Revolving Loans, (i) the Total Revolving Outstandings shall not exceed the Borrowing Limit and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Percentage of the Outstanding Amount of all LC Obligations plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1, prepay under Section 5.3, and reborrow under this Section 2.1. Revolving Loans may be Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as further provided herein, provided, however, all Borrowings made on the Closing Date shall be made as Base Rate Loans.
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(a) The Borrower shall pay to the Administrative Agent, for the account of each Lender in accordance with its Percentage, a commitment fee (the “Commitment Fee”) at a rate per annum equal to the product of (i) the Applicable Margin times (ii) the actual daily amount by which the Commitments exceed the sum of (y) the Outstanding Amount of Revolving Loans and (z) the Outstanding Amount of LC Obligations. The Commitment Fee shall accrue at all times from the Closing Date until the Revolving Credit Termination Date, including at any time during which one or more of the conditions in Article VI is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Revolving Credit Termination Date; provided, that (A) no Commitment Fee shall accrue on the Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender and (B) any Commitment Fee accrued with respect to the Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Margin during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. For purposes of clarification, Swingline Loans shall not be considered outstanding for purposes of determining the unused portion of the Commitments.
(b) In addition to the fees provided for in subsection (a) above and Sections 4.8 and 4.9, the Borrower shall pay to the Administrative Agent, for its own account, such other fees as are provided for in the Fee Letters, in the amounts and at the times specified therein.
Section 2.3 Reduction of the Commitments.
(a) The Commitments (i) shall be automatically and permanently terminated on the Revolving Credit Termination Date and (ii) shall be automatically reduced by any and all Excess Net Proceeds in accordance with Section 8.2 (d).
(b) The Borrower may, upon at least three (3) Business Days’ prior written notice to the Administrative Agent (which shall promptly distribute copies thereof to the Lenders), terminate in whole or reduce ratably in part the unused portions of the Commitments (which termination or reduction (as the case may be), upon its effectiveness, shall be permanent and irrevocable); provided that (i) any such partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) any reduction shall reduce the Letter of Credit Sublimit, if applicable, in accordance with the terms of such definition. Subject to Section 2.2(a), all Commitment Fees accrued until the effective date of any termination of the Commitments shall be paid on the effective date of such termination.
(c) The Borrower may terminate the unused amount of the Commitment of a Defaulting Lender upon not less than three Business Days’ prior notice to such Defaulting Lender and the Administrative Agent (which will promptly notify the other Lenders thereof) and the Commitments shall be reduced by such amount; provided that (i) at the time of such termination, no Default or Event of Default has occurred and is continuing (or the Required Lenders consent to such termination), (ii) the Borrower shall pay to the Defaulting Lender all amounts then owed to it and (iii) such termination will not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, the Swingline Lender, the Issuing Banks or any Lender may have against such Defaulting Lender.
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(d) Each permanent reduction pursuant to this Section shall be accompanied by a payment of principal of the Loans sufficient to reduce the aggregate Outstanding Amount of all Revolving Loans, LC Obligations and Swingline Loans, as applicable, after such reduction to the amount of the Commitments as so reduced, and if the Commitments as so reduced is less than the aggregate Outstanding Amount of all LC Obligations, the Borrower shall be required to deposit Cash Collateral in a Cash Collateral account opened by and under the control of the Administrative Agent in an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Such Cash Collateral shall be applied in accordance with Section 9.2(b). Any reduction of the Commitments to zero shall be accompanied by payment of all outstanding Loans (and furnishing of Cash Collateral satisfactory to the Administrative Agent for the Outstanding Amount of all LC Obligations) and shall result in the termination of the Commitments. Such Cash Collateral shall be applied in accordance with Section 9.2(b). If the reduction of the Commitments requires the repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.4 hereof.
(e) No repayment or prepayment or reduction pursuant to this Section shall affect any of the Borrower’s obligations under any Hedge Agreement or any Treasury Management Agreement.
Section 2.4 Computations of Outstandings. Whenever reference is made in this Agreement to the principal amount outstanding on any date under this Agreement, such reference shall refer to the sum of (i) the Outstanding Amount of all Revolving Loans on such date plus (ii) the Outstanding Amount of all LC Obligations on such date plus (iii) the Outstanding Amount of all Swingline Loans on such date, in each case after giving effect to all Extensions of Credit to be made on such date and the application of the proceeds thereof. At no time shall the principal amount outstanding under this Agreement exceed the Borrowing Limit then in effect. References to the unused portion of the Commitments shall refer to the excess, if any, of the Commitments over the principal amount outstanding hereunder; and references to the unused portion of any Lender’s Commitment shall refer to such Lender’s Percentage of the unused Commitments.
Section 2.5 Optional Increase of the Commitments. At any time following the Closing Date, the Borrower shall have the right, in consultation with the Administrative Agent, from time to time and upon not less than thirty (30) days prior written notice to the Administrative Agent to request an increase in the Commitments; provided, that:
(a) no Default or Event of Default shall have occurred and be continuing or would result from any such requested increase or Extension of Credit made on the date of such increase;
(b) the Borrower shall provide the Administrative Agent with a certificate of a Responsible Officer dated as of the date of such increase in form and substance substantially similar to the certificate delivered under Section 8.1(b)(i) demonstrating pro forma compliance with the covenant contained in Section 8.3 after giving effect to any Extensions of Credit made on the date of such increase;
(c) each increase in Commitments shall be in an aggregate principal amount of at least $10,000,000 or a whole multiple of $5,000,000 in excess thereof, or in each case if less, the remaining principal amount of increases to Commitments that are available under this Section 2.5 (after giving effect to all prior increases pursuant to this Section 2.5);
(d) the aggregate amount of all increases to the Commitments made pursuant to this Section 2.5 shall not exceed ONE HUNDRED MILLION DOLLARS ($100,000,000);
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(e) increases in Commitments pursuant to this Section 2.5 (i) shall not increase or otherwise affect the Swingline Sublimit and (ii) shall increase the Letter of Credit Sublimit, if applicable, in accordance with the terms of such definition;
(f) the Commitment of any Lender shall not be increased without the approval of such Lender;
(g) in connection with each proposed increase, the Borrower may solicit commitments from (i) any Lender (provided, that no Lender shall have an obligation to commit to all or a portion of the proposed increase) or (ii) any third party financial institutions that are Eligible Assignees that are reasonably acceptable to the Administrative Agent, the Issuing Banks, the Swingline Lender and the Borrower (a “New Lender”);
(h) the Loans made or Letters of Credit issued in respect of any increase in Commitments pursuant to this Section 2.5: (i) will rank pari passu in right of payment and security with the other Loans made and Letters of Credit issued hereunder and shall constitute and be part of the “Obligations” arising under this Agreement, and (ii) shall have the same pricing and tenor as the other Loans and Letters of Credit hereunder;
(i) in the event that any existing Lender or any New Lender commits to such requested increase, (i) any New Lender will execute an accession agreement to this Agreement, in form and substance acceptable to the Administrative Agent, (ii) the Commitment of any existing Lender which has committed to provide any of the requested increase shall be increased by such amount, (iii) the Percentages of the Lenders shall be adjusted, and (iv) other changes shall be made to the Loan Documents as may be necessary to reflect the aggregate amount, if any, by which the Lenders have agreed to increase their respective Commitments or New Lenders have agreed to or make new Commitments in response to the Borrower’s request for an increase pursuant to this Section 2.5, and which other changes do not adversely affect the rights of those Lenders not participating in any such increase;
(j) with respect to each increase in the Commitments, the Borrower will issue to the Administrative Agent General and Refunding Mortgage Bonds, in form and substance similar to the General and Refunding Mortgage Bonds issued to the Administrative Agent on the Closing Date in accordance with the provisions of Section 6.1(g), in an aggregate principal amount equal to the difference between the principal amount of the Commitments (after giving effect to such increase and any prior increases or permanent reductions to the Commitments) and the outstanding principal amount of General and Refunding Mortgage Bonds previously issued to the Administrative Agent as collateral support for the Obligations; and
(k) with respect to each increase in the Commitments, the Borrower shall provide evidence, in form and substance satisfactory to the Administrative Agent, of new or supplemental regulatory approval by the PUCN (if applicable) and any other applicable regulatory body, in each case authorizing the issuance of long-term debt securities in an aggregate principal amount equal to such new issuance of General and Refunding Mortgage Bonds and/or the principal amount of such increase, as applicable.
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(a) The Borrower may request a Borrowing of Revolving Loans (other than a Conversion) by delivering a notice (a “Notice of Revolving Borrowing”) to the Administrative Agent no later than 1:00 p.m. on the third Business Day prior to the date of the proposed Borrowing or, in the case of Base Rate Loans, on the same Business Day of the proposed Borrowing. The Administrative Agent shall give each Lender prompt notice of each Notice of Revolving Borrowing. Each Notice of Revolving Borrowing shall be in substantially the form of Exhibit A-3, appropriately completed and signed by a Responsible Officer of the Borrower, and shall specify the requested (i) date of such Borrowing (which shall be a Business Day, but in no event later than the Business Day immediately preceding the Maturity Date), (ii) Type of Loans to be made in connection with such Borrowing, (iii) Interest Period, if any, for such Loans and (iv) amount of such Borrowing. Each proposed Borrowing shall conform to the requirements of Sections 3.3 and 3.4.
(b) Each Lender shall, before 3:00 p.m. on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent’s Office, in same day funds, such Lender’s Percentage of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article VI, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s Office. Notwithstanding the foregoing, unless the Administrative Agent shall have received notice from a Lender prior to the time of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s Percentage of such Borrowing, the Administrative Agent may assume that such Lender has made such Percentage available to the Administrative Agent on the date of such Borrowing in accordance with the first sentence of this subsection (b), and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.
(c) If and to the extent that any Lender shall not have made available to the Administrative Agent, in accordance with subsection (b) above, such Lender’s Percentage of any Borrowing, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand corresponding amounts (not to exceed the aggregate amount that such Lender failed to make available to the Administrative Agent), together with interest thereon for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Loans made in connection with such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. Within the limits of each Lender’s Commitment and the Borrowing Limit and subject to the other terms and conditions set forth in this Agreement for the making of Loans, the Borrower may request (and the Lenders shall honor) one or more additional Borrowings of Revolving Loans from the other Lenders to fund such repayment to the Administrative Agent. If a Lender shall repay to the Administrative Agent such corresponding amount in full (with interest as above provided), (x) the Administrative Agent shall apply such corresponding amount and interest to the repayment to the Administrative Agent (or repayment of Revolving Loans made to fund such repayment to the Administrative Agent), and shall make any remainder available to the Borrower and (y) such amount so repaid shall be deemed to constitute such Lender’s Revolving Loan, made as part of such Borrowing for purposes of this Agreement
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as if funded concurrently with the other Revolving Loans made as part of such Borrowing. The failure of any Lender to make the Revolving Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Revolving Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Loan to be made by such other Lender on the date of any Borrowing.
(d) The Extensions of Credit made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Extensions of Credit made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
(e) Any Lender may request that its Commitment hereunder be evidenced by a Revolving Note. In such event, the Borrower shall prepare, execute and deliver to such Lender a Revolving Note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns), substantially in the form of Exhibit A-1. Each Lender may attach schedules to its Revolving Notes and endorse thereon the date, amount and maturity of its Revolving Loans and payments with respect thereto. Upon the request of the Swingline Lender, the Borrower shall prepare, execute and deliver to the Swingline Lender a Swingline Note payable to the order of the Swingline Lender (or, if requested by the Swingline Lender, to the Swingline Lender and its registered assigns), substantially in the form of Exhibit A-2. In addition to the accounts and records referenced above in this subsection (e), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender or participations in Letters of Credit and Swingline Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
Section 3.2 Conversion of Loans. The Borrower may from time to time Convert any Loan (or portion thereof) of any Type to one or more Loans of the same or any other Type by delivering a notice of such Conversion (a “Notice of Conversion”) to the Administrative Agent no later than 1:00 p.m. on (x) the third Business Day prior to the date of any proposed Conversion into a LIBOR Rate Loan and (y) the same Business Day as to the date of any proposed Conversion into a Base Rate Loan. The Administrative Agent shall give each Lender prompt notice of each Notice of Conversion. Each Notice of Conversion shall be in substantially the form of Exhibit B and shall specify (i) the requested date of such Conversion, (ii) the Type of, and Interest Period, if any, applicable to, the Loans (or portions thereof) proposed to be Converted, (iii) the requested Type of Loans to which such Loans (or portions thereof) are proposed to be Converted, (iv) the requested initial Interest Period, if any, to be applicable to the Loans resulting from such Conversion and (v) the aggregate amount of Loans (or portions thereof) proposed to be Converted. Each proposed Conversion shall be subject to the provisions of Sections 3.3 and 3.4.
Section 3.3 Interest Periods. The period between the date each LIBOR Rate Loan is made and the date of payment in full of such Loan shall be divided into successive periods (“Interest Periods”) for purposes of computing interest applicable thereto. The initial Interest Period for each such Loan shall begin on the day such Loan is made, and each subsequent Interest Period shall begin on the last day of the
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immediately preceding Interest Period for such Loan. The duration of each Interest Period shall be 1, 2, 3, or 6 months as the Borrower may select in accordance with Section 3.1 or 3.2, or such shorter period as requested by the Borrower and consented to by all Lenders (other than Defaulting Lenders), as applicable; provided, however:
(a) the Borrower may not select any Interest Period that ends after the Maturity Date;
(b) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall occur on the next succeeding Business Day, provided that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and
(c) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.
Section 3.4 Other Terms Relating to the Making and Conversion of Loans.
(a) Notwithstanding anything in Section 3.1 or 3.2 to the contrary:
(i) each Borrowing of Revolving Loans (other than a Borrowing deemed made under Section 4.3) shall be in an aggregate amount not less than (A) in the case of LIBOR Rate Loans, $5,000,000 (or such lesser amount as shall be equal to the Commitments on such date, after giving effect to all of the other Extensions of Credit to be made to the Borrower on such date) or an integral multiple of $1,000,000 in excess thereof (or such lesser amount as shall be equal to the Commitments on such date, after giving effect to all of the other Extensions of Credit to be made to the Borrower on such date), or (B) in the case of Base Rate Loans, $1,000,000 or an integral multiple of $500,000 in excess thereof, and shall consist of Loans of the same Type, having the same Interest Period and made or Converted on the same day by the Lenders ratably according to their respective Percentages;
(ii) the Borrower may request that more than one Borrowing be made on the same day;
(iii) at no time shall more than ten (10) different Borrowings comprising LIBOR Rate Loans be outstanding hereunder;
(iv) no LIBOR Rate Loan may be Converted on a date other than the last day of the Interest Period applicable to such Loan unless the corresponding amounts, if any, payable to the Lenders pursuant to Section 5.4(b) are paid within two (2) Business Days after the Administrative Agent or any Lender provides written notice to the Borrower as to amounts owing under Section 5.4(b) in connection with such Conversion;
(v) if the Borrower shall either fail to give a timely Notice of Conversion pursuant to Section 3.2 in respect of any Loans or fail, in any Notice of Conversion that has been timely given, to select the duration of any Interest Period for Loans to be Converted into LIBOR Rate Loans in accordance with Section 3.3, such Loans shall, on
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the last day of the then existing Interest Period therefor, automatically Convert into, or remain as, as the case may be, Base Rate Loans; and
(vi) if, on the date of any proposed Conversion, any Event of Default shall have occurred and be continuing, all Loans then outstanding shall, on such date, automatically Convert into, or remain as, as the case may be, Base Rate Loans.
(b) If any Lender shall notify the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other governmental authority asserts that it is unlawful, for such Lender or its Applicable Lending Office to perform its obligations hereunder to make, or to fund or maintain, LIBOR Rate Loans hereunder, (i) the obligation of such Lender to make, or to Convert Loans into, LIBOR Rate Loans for such Borrowing or any subsequent Borrowing from such Lender shall be forthwith suspended until the earlier to occur of the date upon which (A) such Lender shall cease to be a party hereto and (B) it is no longer unlawful for such Lender to make, fund or maintain LIBOR Rate Loans, and (ii) if the maintenance of LIBOR Rate Loans then outstanding through the last day of the Interest Period therefor would cause such Lender to be in violation of such law, regulation or assertion, such Lender may require the Borrower to either prepay or Convert all LIBOR Rate Loans from such Lender within five Business Days after the Borrower’s receipt of such notice, and if the Borrower shall not have so prepaid or Converted such LIBOR Rate Loans by such fifth Business Day, then such LIBOR Rate Loans shall be deemed automatically Converted to Base Rate Loans on such fifth Business Day. Promptly upon becoming aware that the circumstances that caused such Lender to deliver such notice no longer exist, such Lender shall deliver notice thereof to the Administrative Agent (but the failure to do so shall impose no liability upon such Lender). Promptly upon receipt of such notice from such Lender (or upon such Lender’s assigning all of its Commitments, Loans, participation and other rights and obligations hereunder to an Eligible Assignee), the Administrative Agent shall deliver notice thereof to the Borrower and the Lenders and such suspension shall terminate. Prior to any Lender giving notice to the Administrative Agent or the Borrower under this subsection (b), such Lender shall use reasonable efforts to change the jurisdiction of its Applicable Lending Office, if such change would avoid such unlawfulness and would not, in the sole determination of such Lender, be otherwise disadvantageous to such Lender.
(c) If the Required Lenders shall, at least one (1) Business Day before the date of any requested Borrowing, notify the Administrative Agent that the LIBOR Rate for LIBOR Rate Loans to be made in connection with such Borrowing will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective LIBOR Rate Loans for such Borrowing, the right of the Borrower to select LIBOR Rate Loans for such Borrowing and any subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist, and each Loan to be made or Converted in connection with such Borrowing shall be a Base Rate Loan.
(d) If any Lender shall have delivered a notice to the Borrower or the Administrative Agent as described in Section 3.4(b) or Section 3.6, or shall become a Defaulting Lender under Section 3.1(c) or Section 4.4, and if and so long as such Lender shall not have withdrawn such notice or corrected such non-performance in accordance with Section 3.1(c), Section 3.4(b), Section 3.6, or Section 4.4, the Borrower or the Administrative Agent may demand that such Lender assign in accordance with Section 11.7, to one or more Eligible Assignees designated by the Borrower or the Administrative Agent, all (but not less than all) of such Lender’s Commitments, Loans, participation and other rights and obligations hereunder; provided that any
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such demand by the Borrower during the continuance of a Default or an Event of Default shall be ineffective without the consent of the Required Lenders. If, within 30 days following any such demand by the Administrative Agent or the Borrower, any such Eligible Assignee so designated shall fail to consummate such assignment on terms reasonably satisfactory to such Lender, or the Borrower and the Administrative Agent shall have failed to designate any such Eligible Assignee, then such demand by the Borrower or the Administrative Agent shall become ineffective, it being understood for purposes of this provision that such assignment shall be conclusively deemed to be on terms reasonably satisfactory to such Lender, and such Lender shall be compelled to consummate such assignment forthwith, if such Eligible Assignee (i) shall agree to such assignment in substantially the form of the Assignment and Assumption attached hereto as Exhibit C and (ii) shall tender payment to such Lender in an amount equal to the full outstanding dollar amount accrued in favor of such Lender hereunder (as computed in accordance with the records of the Administrative Agent), including, without limitation, all accrued interest and fees and, to the extent not paid by the Borrower, any payments required pursuant to Section 5.4(b).
(e) Each Notice of Borrowing and Notice of Conversion shall be irrevocable and binding on the Borrower. In the case of any Borrowing which the related Notice of Borrowing or Notice of Conversion specifies is to be comprised of LIBOR Rate Loans, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure by the Borrower to fulfill, on or before the date specified in such Notice of Borrowing or Notice of Conversion for such Borrowing, the applicable conditions (if any) set forth in this Article III (other than failure pursuant to the provisions of Section 3.4(c) hereof) or in Article VI, including any such loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Loan to be made by such Lender when such Loan, as a result of such failure, is not made on such date.
Section 3.5 Repayment of Loans; Interest.
(a) Principal.
(i) Revolving Loans. The Borrower shall repay the outstanding principal amount of the Revolving Loans on the Maturity Date.
(ii) Swingline Loans. The Borrower shall repay each Swingline Loan on the earlier to occur of (A) ten (10) Business Days after the Swingline Loan is made, (B) the date within one (1) Business Day of demand therefor by the Swingline Lender and (C) the Maturity Date.
(b) Interest. The Borrower shall pay interest on the unpaid principal amount of each Loan owing to each Lender from the date of such Loan until such principal amount shall be paid in full, at the Applicable Rate for such Loan, payable as follows:
(i) Base Rate Loans. If such Loan is a Base Rate Loan (including a Swingline Loan bearing interest based on the Base Rate), interest thereon shall be payable quarterly in arrears on the last day of each March, June, September and December, on the date of any Conversion of such Base Rate Loan, on the date such Base Rate Loan shall become due and payable or shall otherwise be paid in full and on the Maturity Date.
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(ii) LIBOR Rate Loans. If such Loan is a LIBOR Rate Loan, interest thereon shall be payable on the last day of each Interest Period for such Loan and, if the Interest Period for such Loan has a duration of more than three months, on that day of each third month during such Interest Period that corresponds to the first day of such Interest Period (or, if any such month does not have a corresponding day, then on the last day of such month) and on the Maturity Date.
(iii) LIBOR Market Index Rate Loans. If such Loan is a LIBOR Market Index Rate Loan, interest thereon shall be payable on the third Business Day following the end of each calendar month and on the Maturity Date.
Section 3.6 Additional Interest on LIBOR Rate Loans. The Borrower shall pay to the Administrative Agent, for the account of each Lender, any costs actually incurred by such Lender with respect to LIBOR Rate Loans that are attributable to such Lender’s compliance with regulations of the Board requiring the maintenance of reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities. Such costs shall be paid to the Administrative Agent for the account of such Lender in the form of additional interest on the unpaid principal amount of each LIBOR Rate Loan of such Lender, from the date of such LIBOR Rate Loan until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the LIBOR Rate for the Interest Period for such LIBOR Rate Loan from (ii) the rate obtained by dividing such LIBOR Rate by a percentage equal to 100% minus the Eurodollar Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such LIBOR Rate Loan (but in no event earlier than ten (10) Business Days after the Borrower’s receipt of the certificate referred to in the last sentence of this Section 3.6). Such additional interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent. A certificate as to the amount of such additional interest and giving a reasonable explanation and calculation thereof shall be submitted to the Borrower and the Administrative Agent by such Lender and shall be conclusive and binding for all purposes, absent manifest error.
Section 3.7 Default Rate. Subject to Section 9.3, (i) immediately upon the occurrence and during the continuance of an Event of Default under Section 9.1(a) or (f), or (ii) at the election of the Required Lenders, upon the occurrence and during the continuance of any other Event of Default, (A) the Borrower shall no longer have the option to request LIBOR Rate Loans, LIBOR Market Index Rate Loans or Letters of Credit, (B) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the Applicable Rate with respect to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate per annum equal to two percent (2%) in excess of the Applicable Rate with respect to Base Rate Loans, (C) all outstanding Base Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the Applicable Rate with respect to Base Rate Loans and (D) all outstanding LIBOR Market Index Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the Applicable Rate with respect to LIBOR Market Index Rate Loans. Interest shall continue to accrue on the Obligations after the filing by or against the Borrower of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign.
(a) Subject to the terms and conditions set forth herein, the Swingline Lender may, in its discretion and in reliance upon the agreements of the other Lenders set forth in this Section 3.8, make loans (each such loan, a “Swingline Loan”) to the Borrower from time to time on any Business Day prior to the Revolving Credit Termination Date in an aggregate amount not to
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exceed at any time outstanding the amount of the Swingline Sublimit; provided, however, that after giving effect to any Swingline Loan, (i) the Total Revolving Outstandings shall not exceed the Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Percentage of the Outstanding Amount of all LC Obligations, plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment, and provided, further, that the Borrower shall not use the proceeds of any Swingline Loan to refinance any outstanding Swingline Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 3.8, prepay under Section 5.3, and reborrow under this Section 3.8. Each Swingline Loan shall be a Base Rate Loan or a LIBOR Market Index Rate Loan. Immediately upon the making of a Swingline Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swingline Lender a risk participation in such Swingline Loan in an amount equal to the product of such Lender’s Percentage times the amount of such Swingline Loan.
(b) Borrowing Procedures. The Borrower may request a Borrowing of Swingline Loans by delivering a notice (a “Notice of Swingline Borrowing”) to the Swingline Lender and the Administrative Agent no later than 1:00 p.m. on the same Business Day of the proposed Borrowing. Each Notice of Swingline Borrowing shall be in substantially the form of Exhibit A-4, appropriately completed and signed by a Responsible Officer of the Borrower, and shall specify (i) the amount to be borrowed, which shall be a minimum principal amount of $500,000 and integral multiples of $100,000 in excess thereof, and (ii) the requested borrowing date, which shall be a Business Day. Unless the Swingline Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Borrowing of Swingline Loans (A) directing the Swingline Lender not to make such Swingline Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 3.8(a), or (B) that one or more of the applicable conditions specified in Article VI is not then satisfied, then, subject to the terms and conditions hereof, the Swingline Lender will, not later than 3:00 p.m. on the borrowing date specified in such written Notice of Swingline Borrowing, make the amount of its Swingline Loan available to the Borrower.
(c) Refinancing of Swingline Loans.
(i) The Swingline Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably requests and authorizes the Swingline Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Percentage of the amount of Swingline Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Notice of Swingline Borrowing for purposes hereof) and in accordance with the requirements of Section 3.1, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the conditions set forth in Section 6.2 and provided that, after giving effect to such Borrowing, the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate principal amount of outstanding Swingline Loans plus the aggregate outstanding LC Obligations shall not exceed the Borrowing Limit then in effect. The Swingline Lender shall furnish the Borrower with a copy of the applicable Notice of Swingline Borrowing promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Percentage of the amount specified in such Notice of Swingline Borrowing available to the Administrative Agent in immediately available funds for the account of the Swingline Lender at the Administrative Agent’s Office not later than 11:00 a.m. on the day specified in such
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Notice of Swingline Borrowing, whereupon, subject to Section 3.8(c)(ii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swingline Lender.
(ii) If for any reason any Swingline Loan cannot be refinanced by such a Borrowing of Revolving Loans in accordance with Section 3.8(c)(i), the request for Base Rate Loans submitted by the Swingline Lender as set forth herein shall be deemed to be a request by the Swingline Lender that each of the Lenders fund its risk participation in the relevant Swingline Loan and each Lender’s payment to the Administrative Agent for the account of the Swingline Lender pursuant to Section 3.8(c)(i) shall be deemed payment in respect of such participation.
(iii) If any Lender fails to make available to the Administrative Agent for the account of the Swingline Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 3.8(c) by the time specified in Section 3.8(c)(i), the Swingline Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swingline Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swingline Lender in accordance with banking industry rules on interbank compensation. A certificate of the Swingline Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
(iv) Each Lender’s obligation to make Revolving Loans or to purchase and fund risk participations in Swingline Loans pursuant to this Section 3.8(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Lender may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Revolving Loans pursuant to this Section 3.8(c) is subject to the conditions set forth in Section 6.2. No such purchase or funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swingline Loans, together with interest as provided herein.
(d) Repayment of Participations.
(i) At any time after any Lender has purchased and funded a risk participation in a Swingline Loan, if the Swingline Lender receives any payment on account of such Swingline Loan, the Swingline Lender will distribute to such Lender its Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by the Swingline Lender.
(ii) If any payment received by the Swingline Lender in respect of principal or interest on any Swingline Loan is required to be returned by the Swingline Lender under any of the circumstances described in Section 11.5(c) (including pursuant to any settlement entered into by the Swingline Lender in its discretion), each Lender shall pay to the Swingline Lender its Percentage thereof on demand of the Administrative Agent,
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plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swingline Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Interest for Account of Swingline Lender. The Swingline Lender shall be responsible for invoicing the Borrower for interest on the Swingline Loans. Until each Lender funds its Revolving Loans that are Base Rate Loans or risk participation pursuant to this Section 3.8 to refinance such Lender’s Percentage of any Swingline Loan, interest in respect of such Percentage shall be solely for the account of the Swingline Lender.
(f) Payments Directly to Swingline Lender. The Borrower shall make all payments of principal and interest in respect of the Swingline Loans directly to the Swingline Lender.
Section 4.1 The Letter of Credit Commitment.
(a) Subject to the terms and conditions set forth herein, (i) each Issuing Bank agrees, in reliance upon the agreements of the Lenders set forth in this Article IV, (A) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit in Dollars for the account of the Borrower or any of its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with Section 4.2, and (B) to honor drawings under the Letters of Credit; and (ii) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower or its Subsidiaries and any drawings thereunder; provided, that after giving effect to any LC Credit Extension with respect to any Letter of Credit, (w) the Total Revolving Outstandings shall not exceed the Commitments, (x) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Percentage of the Outstanding Amount of all LC Obligations plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment and (y) the Outstanding Amount of the LC Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the LC Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. Furthermore, each Lender acknowledges and confirms that it has a participation interest in the liability of Bank of America under the Existing Letters of Credit in a percentage equal to its Percentage of the Commitments. The Borrower’s reimbursement obligations in respect of the Existing Letters of Credit, and each Lender’s obligations in connection therewith, shall be governed by the terms of this Agreement.
(b) Notwithstanding clause (a) of this Section 4.1 and any other term or provision of this Agreement, including, without limitation, the size of the Letter of Credit Sublimit, (i) Wells Fargo Bank shall not be obligated to issue Letters of Credit in an aggregate amount outstanding at any one time in excess of $33,333,334, (ii) Bank of America shall not be obligated to issue Letters of Credit in an aggregate amount outstanding at any one time in excess of $33,333,333
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and (iii) JPMorgan shall not be obligated to issue Letters of Credit in an aggregate amount outstanding at any one time in excess of $33,333,333.
(c) No Issuing Bank shall issue any Letter of Credit if:
(i) the expiry date of such requested Letter of Credit would occur more than twelve (12) months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or
(ii) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all of the Lenders shall have approved such expiry date;
(d) No Issuing Bank shall be under any obligation to issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing such Letter of Credit, or any Requirement of Law or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such Issuing Bank in good faith deems material to it;
(ii) the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank;
(iii) except as otherwise agreed by the Administrative Agent and the applicable Issuing Bank, such Letter of Credit is in an initial stated amount less than $100,000;
(iv) such Letter of Credit is to be denominated in a currency other than Dollars;
(v) any Lender is at that time a Defaulting Lender, unless the applicable Issuing Bank has entered into arrangements, including the delivery of Cash Collateral, satisfactory to such Issuing Bank (in its sole discretion) with the Borrower or such Lender to eliminate such Issuing Bank’s actual or potential Fronting Exposure (after giving effect to Section 11.18(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other LC Obligations as to which such Issuing Bank has actual or potential Fronting Exposure, as it may reasonably require; or
(vi) such Letter of Credit would cause such Issuing Bank to exceed the applicable amount specified for such Issuing Bank in Section 4.1(b).
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(e) No Issuing Bank shall amend any Letter of Credit if such Issuing Bank would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.
(f) No Issuing Bank shall be under any obligation to amend any Letter of Credit if (i) such Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (ii) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
(g) Each Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and such Issuing Bank shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article X with respect to any acts taken or omissions suffered by such Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and the Issuing Bank Agreement pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article X included such Issuing Bank with respect to such acts or omissions, and (B) as additionally provided herein with respect to such Issuing Bank.
Section 4.2 Procedures for Issuance and Amendment of Letters of Credit; Evergreen Letters of Credit.
(a) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the applicable Issuing Bank (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the applicable Issuing Bank and the Administrative Agent not later than 2:00 p.m. at least five (5) Business Days (or such later date and time as the applicable Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the applicable Issuing Bank: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the applicable Issuing Bank may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the applicable Issuing Bank: (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the applicable Issuing Bank may reasonably require. Additionally, the Borrower shall furnish to the applicable Issuing Bank and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuing Bank Agreement, as such Issuing Bank or the Administrative Agent may reasonably require.
(b) Promptly after receipt of any Letter of Credit Application, the applicable Issuing Bank will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such Issuing Bank will provide the Administrative Agent with a copy thereof. Unless such Issuing Bank has received written notice from any Lender, the Administrative Agent or the
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Borrower, at least one (1) Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article VI shall not be satisfied, then, subject to the terms and conditions hereof, such Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of the Borrower or the applicable Subsidiary or enter into the applicable amendment, as the case may be, in each case in accordance with such Issuing Bank’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable Issuing Bank a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Percentage times the amount of such Letter of Credit.
(c) If the Borrower so requests in any applicable Letter of Credit Application, an Issuing Bank may, in its sole and absolute discretion, agree to issue an Evergreen Letter of Credit; provided, that any such Evergreen Letter of Credit must permit the applicable Issuing Bank to prevent any extension at least once in each twelve‑month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non‑Extension Notice Date”) in each such twelve‑month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable Issuing Bank, the Borrower shall not be required to make a specific request to such Issuing Bank for any such extension. Once an Evergreen Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that no Issuing Bank shall permit any such extension if (i) such Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (c) or (d) of Section 4.1 or otherwise), or (ii) it has received notice (which may be by telephone or in writing) on or before the day that is seven (7) Business Days before the Non‑Extension Notice Date (A) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (B) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 6.2 is not then satisfied, and in each such case directing such Issuing Bank not to permit such extension.
(d) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable Issuing Bank will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
Section 4.3 Drawings and Reimbursements; Funding of Participations.
(a) Upon receipt from the beneficiary of any Letter of Credit of any notice of drawing under such Letter of Credit, the applicable Issuing Bank shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by any Issuing Bank under a Letter of Credit (each such date, an “Honor Date”), the Borrower shall reimburse such Issuing Bank through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse such Issuing Bank by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Percentage thereof. In such event, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 3.4(a) for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the
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Commitments and the Borrowing Limit and the conditions set forth in Section 6.2 (other than the delivery of a Notice of Revolving Borrowing). Any notice given by an Issuing Bank or the Administrative Agent pursuant to this Section 4.3(a) may be given by telephone if immediately confirmed in writing; provided, that, the lack of such immediate written confirmation shall not affect the conclusiveness or binding effect of such notice.
(b) Each Lender shall upon any notice of an Unreimbursed Amount pursuant to Section 4.3(a) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the applicable Issuing Bank at the Administrative Agent’s Office in an amount equal to its Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 4.3(c), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the applicable Issuing Bank.
(c) With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base Rate Loans because the conditions set forth in Section 6.2 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the applicable Issuing Bank an LC Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which LC Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the applicable Issuing Bank pursuant to Section 4.3(b) shall be deemed payment in respect of its participation in such LC Borrowing and shall constitute an LC Advance from such Lender in satisfaction of its participation obligation under this Article IV.
(d) Until each Lender funds its Revolving Loan or LC Advance pursuant to this Section 4.3 to reimburse an Issuing Bank for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Percentage of such amount shall be solely for the account of the applicable Issuing Bank.
(e) Each Lender’s obligation to make Revolving Loans or LC Advances to reimburse the Issuing Banks for amounts drawn under Letters of Credit, as contemplated by this Section 4.3, shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against any Issuing Bank, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Loans pursuant to this Section 4.3 is subject to the conditions set forth in Section 6.2 (other than delivery by the Borrower of a Notice of Revolving Borrowing). No such making of an LC Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Banks for the amount of any payment made by an Issuing Bank under any Letter of Credit, together with interest as provided herein.
(f) If any Lender fails to make available to the Administrative Agent for the account of an Issuing Bank any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 4.3 by the time specified in Section 4.3(b), the applicable Issuing Bank shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the applicable Issuing Bank at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the
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applicable Issuing Bank in accordance with banking industry rules on interbank compensation plus any administrative, processing or similar fees customarily charged by such Issuing Bank in connection with the foregoing. A certificate of an Issuing Bank submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (f) shall be conclusive absent manifest error.
Section 4.4 Repayment of Participations.
(a) At any time after an Issuing Bank has made a payment under any Letter of Credit and has received from any Lender such Lender’s LC Advance in respect of such payment in accordance with Section 4.3, if the Administrative Agent receives for the account of such Issuing Bank any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s LC Advance was outstanding) in the same funds as those received by the Administrative Agent.
(b) If any payment received by the Administrative Agent for the account of an Issuing Bank pursuant to Section 4.3(a) is required to be returned under any of the circumstances described in Section 11.5 (including pursuant to any settlement entered into by the applicable Issuing Bank in its discretion), each Lender shall pay to the Administrative Agent for the account of such Issuing Bank its Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
Section 4.5 Obligations Absolute. The obligation of the Borrower to reimburse the Issuing Banks for each drawing under each Letter of Credit and to repay each LC Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(a) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;
(b) the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), any Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(c) any draft, demand, certificate or other document presented under such 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; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(d) any payment by the applicable Issuing Bank under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by such Issuing Bank under such Letter of Credit to any Person
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purporting to be a trustee in bankruptcy, debtor‑in‑possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; and
(e) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Subsidiary.
The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will promptly notify the applicable Issuing Bank. The Borrower shall be conclusively deemed to have waived any such claim against such Issuing Bank and its correspondents unless such notice is given as aforesaid; provided, that, the terms and provisions of this Section 4.5 shall not limit the rights of the Borrower under Section 4.6.
Section 4.6 Role of Issuing Banks. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, no Issuing Bank shall have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by such Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of any Issuing Bank, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any Issuing Bank shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuing Bank Agreement. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of any Issuing Bank, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any Issuing Bank shall be liable or responsible for any of the matters described in clauses (a) through (e) of Section 4.5; provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against an Issuing Bank, and an Issuing Bank may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which are determined by a court of competent jurisdiction by final and non-appealable judgment to have been caused by such Issuing Bank’s willful misconduct or gross negligence or such Issuing Bank’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit unless such Issuing Bank is prevented or prohibited from so paying as a result of any order or directive of any court or other Governmental Authority. In furtherance and not in limitation of the foregoing, each Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and each Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.
Section 4.7 Applicability of ISP and UCP. Unless otherwise expressly agreed by the applicable Issuing Bank and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP98 shall apply to each Letter
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of Credit and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each commercial or direct pay Letter of Credit.
Section 4.8 Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Percentage a Letter of Credit fee (the “Letter of Credit Fee”), for each Letter of Credit equal to the Applicable Margin times the daily maximum amount available to be drawn under such Letter of Credit; provided, however, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with respect to which such Defaulting Lender has not provided Cash Collateral satisfactory to the applicable Issuing Bank pursuant to this Article IV shall be payable, to the maximum extent permitted by applicable Law, to the other Lenders in accordance with the upward adjustments in their respective Percentages allocable to such Letter of Credit pursuant to Section 11.18(a)(iv), with the balance of such fee, if any, payable to the applicable Issuing Bank for its own account. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4. Letter of Credit Fees shall be (i) computed on a quarterly basis in arrears and (ii) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If there is any change in the Applicable Margin during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default under Section 9.1(a) exists, all Letter of Credit Fees shall accrue at the Default Rate.
Section 4.9 Fronting Fee and Processing Charges Payable to Issuing Banks. The Borrower shall pay to the Administrative Agent, for the account of the applicable Issuing Bank a fronting fee with respect to each Letter of Credit issued by such Issuing Bank in an amount equal to the actual daily maximum amount available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit) multiplied by the rate per annum specified in the applicable Fee Letter between the Borrower and such Issuing Bank and computed on a quarterly basis in arrears. Such fronting fee shall be due and payable on the last Business Day of each March, June, September and December, commencing with (a) with respect to the Existing Letters of Credit, the first such date to occur after the Closing Date, on the Letter of Credit Expiration Date and thereafter on demand and (b) with respect to all Letters of Credit other than Existing Letters of Credit, the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4. In addition, the Borrower shall pay directly to each Issuing Bank for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such Issuing Bank relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.
Section 4.10 Conflict with Issuing Bank Agreements. In the event of any conflict between the terms hereof and the terms of any Issuing Bank Agreement, the terms hereof shall control.
Section 4.11 Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the applicable Issuing Bank hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of
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Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.
ARTICLE V.
PAYMENTS,
COMPUTATIONS AND
YIELD PROTECTION
Section 5.1 Payments and Computations.
(a) The Borrower shall make each payment hereunder and under the other Loan Documents not later than 3:00 p.m. on the day when due in Dollars to the Administrative Agent’s Office in same day funds, except payments to be made directly to the Issuing Banks or the Swingline Lender as expressly provided herein; any payment received after 3:00 p.m. shall be deemed to have been received at the start of business on the next succeeding Business Day. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, fees or other amounts payable to the Lenders, to the respective Lenders to which the same are payable, for the account of their respective Applicable Lending Offices, in each case to be applied in accordance with the terms of this Agreement. If and to the extent that any distribution of any payment from the Borrower required to be made to any Lender pursuant to the preceding sentence shall not be made in full by the Administrative Agent on the date such payment was received by the Administrative Agent, the Administrative Agent shall pay to such Lender, upon demand, interest on the unpaid amount of such distribution, at a rate per annum equal to the Federal Funds Rate, from the date of such payment by the Borrower to the Administrative Agent to the date of payment in full by the Administrative Agent to such Lender of such unpaid amount. Upon the Administrative Agent’s acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 11.7, from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder and under any Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.
(b) The Borrower hereby authorizes the Administrative Agent, the Swingline Lender, each Lender and each Issuing Bank, if and to the extent payment owed by the Borrower to the Administrative Agent, the Swingline Lender, such Lender or such Issuing Bank, as the case may be, is not made when due hereunder (or, in the case of a Lender, under any Note held by such Lender), to charge from time to time against any or all of the Borrower’s accounts with the Administrative Agent, the Swingline Lender, such Lender or such Issuing Bank, as the case may be, any amount so due.
(c) All computations of interest for Base Rate Loans when the Base Rate is determined by the Prime Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be. All other computations of interest and fees hereunder shall be made by the Administrative Agent on the basis of a year of 360 days. In each such case, such computation shall be made for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each such determination by the Administrative Agent or a Lender shall be conclusive and binding for all purposes, absent manifest error.
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(d) Whenever any payment hereunder or under any other Loan Document shall be stated to be due on a day other than 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 payment of interest and fees hereunder; provided, however, that if such extension would cause payment of interest on or principal of LIBOR Rate Loans to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.
(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date, and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, such Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender, together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate.
(f) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto.
Section 5.2 Interest Rate Determination. The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 3.5(b)(i) or (ii).
Section 5.3 Prepayments. The Borrower shall have no right to prepay any principal amount of any Loans other than as provided in subsections (a) and (b) below.
(a) Voluntary Prepayments.
(i) Revolving Loans. The Borrower may, upon at least three (3) Business Days’ notice, with respect to LIBOR Rate Loans, and one (1) Business Day’s notice, with respect to Base Rate Loans, to the Administrative Agent stating the proposed date and the aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amounts of Revolving Loans made as part of the same Borrowing, in whole or ratably in part, together with (i) accrued interest to the date of such prepayment on the principal amount prepaid and (ii) in the case of LIBOR Rate Loans, and subject to Section 5.4(d), any amount payable to the Lenders pursuant to Section 5.4(b); provided, however, that each partial prepayment shall be in an aggregate principal amount of not less than (A) in the case of LIBOR Loans, $5,000,000 or an integral multiple of $1,000,000 in excess thereof or (B) in the case of Base Rate Loans, $1,000,000 or an integral multiple of $500,000 in excess thereof.
(ii) Swingline Loans. The Borrower may, upon one (1) Business Day’s notice to the Swingline Lender (with a copy to the Administrative Agent) stating the proposed date and the aggregate principal amount of the prepayment, at any time and from time to time, and if such notice is given the Borrower shall, voluntarily prepay
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Swingline Loans in whole or in part without premium or penalty, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, that, (A) such notice must be received by the Swingline Lender and the Administrative Agent not later than 1:00 p.m. on the date of such prepayment and (B) such prepayment shall be in a minimum principal amount of $100,000 or a whole multiple of $100,000 in excess thereof (or, if less, the entire principal thereof then outstanding).
(b) Mandatory Prepayments.
(i) Revolving Commitments. If for any reason the Total Revolving Outstandings exceeds the Commitments (including as a result of any termination or reduction of the Commitments pursuant to Sections 2.3 or 8.2(d)), the Borrower shall immediately pay or prepay so much of the principal amount outstanding hereunder as shall be necessary in order that the Total Revolving Outstandings (after giving effect to all Extensions of Credit to be made on such date and the application of the proceeds thereof) will not exceed the Commitments, together with (i) accrued interest to the date of such prepayment on the principal amount prepaid and (ii) in the case of prepayments of LIBOR Rate Loans, and subject to Section 5.4(d), any amount payable to the Lenders pursuant to Section 5.4(b). Any prepayments required by this subsection (b) shall be applied to outstanding Base Rate Loans up to the full amount thereof before they are applied to outstanding LIBOR Rate Loans.
(ii) Negative Mark-to-Market Exposure. If, as of the end of any calendar month, (A) there exists Aggregate Negative Mark-to-Market Exposure, as set forth in the certificate of a Responsible Officer of the Borrower required to be delivered pursuant to Section 8.1(b)(iii) and (B) at such time the Total Revolving Outstandings exceed the Borrowing Limit then in effect (after giving effect to the reduction in the Borrowing Limit caused by such Aggregate Negative Mark-to-Market Exposure), the Borrower shall, within three (3) Business Days pay or prepay so much of the principal amount outstanding hereunder as shall be necessary in order that the Total Revolving Outstandings (after giving effect to all Extensions of Credit to be made on such date and the application of the proceeds thereof) will not exceed the Borrowing Limit.
(a) Increased Costs. If, due to any Change in Law there shall be reasonably incurred any increase in (A) the cost to any Lender of agreeing to make or making, funding or maintaining LIBOR Rate Loans, or of participating in the issuance, maintenance or funding of any Letter of Credit, or (B) the cost to any Issuing Bank of issuing or maintaining any Letter of Credit, then the Borrower shall from time to time, promptly after receipt of written demand by such Lender or Issuing Bank, as the case may be (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender or Issuing Bank, as the case may be, additional amounts sufficient to compensate such Lender or Issuing Bank, as the case may be, for such increased cost. A certificate as to the amount of such increased cost and giving a reasonable explanation and calculation thereof shall be submitted to the Borrower and the Administrative Agent by such Lender or such Issuing Bank, as the case may be, shall constitute such demand and shall be conclusive and binding for all purposes, absent manifest error.
(b) Breakage. If, due to any prepayment pursuant to Section 5.3, an acceleration of maturity of the Loans pursuant to Section 9.2, or any other reason, any Lender receives payments of principal of any LIBOR Rate Loan other than on the last day of the Interest Period relating to
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such Loan, or if the Borrower shall Convert any LIBOR Rate Loans on any day other than the last day of the Interest Period therefor, the Borrower shall, promptly after demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for additional losses, costs, or expenses (including anticipated lost profits) that such Lender may reasonably incur as a result of such payment or Conversion, including any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such Loan. For purposes of this subsection (b) and Section 3.4(e), a certificate setting forth the amount of such additional losses, costs, or expenses and giving a reasonable explanation and calculation thereof shall be submitted to the Borrower and the Administrative Agent by such Lender, shall constitute such demand and shall be conclusive and binding for all purposes, absent manifest error.
(c) Capital. If any Lender or Issuing Bank determines that any Change in Law after the date hereof, affects or would affect the amount of capital required or expected to be maintained by such Lender or Issuing Bank, whether directly, or indirectly as a result of commitments of any corporation controlling such Lender or Issuing Bank (but without duplication), and the amount of such capital is increased by or based upon (A) the existence of such Lender’s or Issuing Bank’s commitment to lend or issue or participate in any Letter of Credit hereunder, or (B) the participation in or issuance or maintenance of any Letter of Credit or Loan and (C) other similar such commitments, then, promptly after demand by such Lender or Issuing Bank, the Borrower shall pay to the Administrative Agent for the account of such Lender or Issuing Bank from time to time as specified by such Lender or Issuing Bank additional amounts sufficient to compensate such Lender or Issuing Bank in the light of such circumstances, to the extent that such Lender or Issuing Bank reasonably determines such increase in capital to be allocable to the transactions contemplated hereby. A certificate as to such amounts and giving a reasonable explanation and calculation thereof (to the extent permitted by law) shall be submitted to the Borrower and the Administrative Agent by such Lender or Issuing Bank and shall be conclusive and binding for all purposes, absent manifest error.
(d) Notices, Etc. Each Lender and each Issuing Bank hereby agrees to use its best efforts to notify the Borrower of the occurrence of any event referred to in subsection (a), (b) or (c) of this Section 5.4 promptly after becoming aware of the occurrence thereof. The Borrower shall pay the Administrative Agent, for the account of such Lender or such Issuing Bank, the amount shown as due on any certificate delivered pursuant to this Section 5.4 within ten (10) Business Days after its receipt of the same. The failure of any Lender or any Issuing Bank to provide such notice or to make demand for payment under said subsection shall not constitute a waiver of such Lender’s or such Issuing Bank’s rights hereunder; provided, that, notwithstanding any provision to the contrary contained in this Section 5.4, the Borrower shall not be required to reimburse any Lender or any Issuing Bank for any amounts or costs incurred under subsection (a), (b) or (c) above, more than 90 days prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower in writing thereof, in each case unless, and to the extent that, any such amounts or costs so incurred shall relate to the retroactive application of any event notified to the Borrower which entitles such Lender to such compensation. Each Lender and Issuing Bank claiming any compensation under this Section 5.4 shall use reasonable efforts to designate a different Applicable Lending Office if such designation would not result in the incurrence by such Lender or such Issuing Bank of additional costs or expenses which it deems material or, in the sole judgment of such Lender or such Issuing Bank, be inadvisable for regulatory, competitive or internal management reasons. If any Lender or Issuing Bank shall subsequently determine that any amount demanded and collected under this Section 5.4 was done so in error, such Lender or such Issuing Bank will promptly return such amount to the Borrower.
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Notwithstanding any other provision of this Section 5.4, no Lender or Issuing Bank shall demand compensation for any increased cost or increased capital requirement referred to in subsection (a) or (c) above if it shall not at the time be the general policy or practice of such Lender or Issuing Bank (as the case may be) to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any.
(e) Survival of Obligations. Subject to subsection (d) above, the Borrower’s obligations under this Section 5.4 shall survive the repayment of all other amounts owing to the Lenders, the Swingline Lender, the Administrative Agent and the Issuing Banks under the Loan Documents and the termination of the Commitments.
Section 5.5 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Loans or other obligations owing to it pursuant to this Agreement (excluding any amounts applied by the Swingline Lender to outstanding Swingline Loans and excluding any amounts received by an Issuing Bank and/or the Swingline Lender to secure the obligations of a Defaulting Lender to fund risk participations hereunder and other than pursuant to Section 5.4, 5.6, 11.4 or 11.7) in excess of its ratable share of payments obtained by all the Lenders on account of the Loans of such Lenders, such Lender shall forthwith purchase from the other Lenders such participation in the Loans owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 5.5 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. Notwithstanding the foregoing, if any Lender shall obtain any such excess payment involuntarily, such Lender may, in lieu of purchasing participations from the other Lenders in accordance with this Section 5.5, on the date of receipt of such excess payment, return such excess payment to the Administrative Agent for distribution in accordance with Section 5.1(a).
(a) All payments by the Borrower hereunder and under the other Loan Documents shall be made in accordance with Section 5.1, free and clear of and without deduction for all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender, each Issuing Bank and the Administrative Agent, taxes imposed on its overall net or gross income, receipts, capital, net worth, privilege of transacting business or corporate franchise taxes imposed on it by the jurisdiction under the laws of which such Lender, such Issuing Bank or the Administrative Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, taxes imposed on its overall net or gross income, receipts, capital, net worth, privilege of transacting business or corporate franchise taxes imposed on it by the jurisdiction of such Lender’s Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any other Loan Document to any Lender, any Issuing Bank or the Administrative Agent, (i) the sum payable shall be increased as may be necessary so
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that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.6) such Lender, such Issuing Bank or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other similar taxes or charges that arise from any payment made hereunder or under any other Loan Document or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as “Other Taxes”).
(c) Tax Indemnifications.
(i) Without limiting the provisions of subsection (a) or (b) of this Section 5.6 and subject to clause (ii) below, the Borrower shall, and does hereby, indemnify the Administrative Agent, each Lender, and each Issuing Bank and shall make payment in respect thereof within thirty (30) days after demand therefor, for the full amount of any Taxes or Other Taxes (including Taxes or Other Taxes imposed by any jurisdiction or asserted on or attributable to amounts payable under this Section) withheld or deducted by the Borrower or the Administrative Agent or paid by the Administrative Agent, such Lender, or such Issuing Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by any Governmental Authority. The Borrower shall also, and does hereby, indemnify the Administrative Agent, and shall make payment in respect thereof within thirty (30) days after demand therefor, for any amount which a Lender for any reason fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of this subsection. A certificate as to the amount of any such payment or liability delivered to the Borrower by a Lender or Issuing Bank (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank, shall be conclusive absent manifest error. Nothing herein shall preclude the right of the Borrower to contest any such Taxes or Other Taxes so paid, and each Lender, each Issuing Bank and the Administrative Agent (as the case may be) will, following notice from, and at the expense of, the Borrower, reasonably cooperate with the Borrower to preserve the Borrower’s rights to contest such Taxes or Other Taxes.
(ii) Without limiting the provisions of subsection (a) or (b) above, each Lender shall, and does hereby, indemnify the Borrower and the Administrative Agent, and shall make payment in respect thereof within thirty (30) days after demand therefor, against any and all Taxes and any and all related losses, claims, liabilities, penalties, interest and expenses (including the fees, charges and disbursements of any counsel for the Borrower or the Administrative Agent) incurred by or asserted against the Borrower or the Administrative Agent by any Governmental Authority directly as a result of the failure by such Lender to deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any documentation required to be delivered by such Lender to the Borrower or the Administrative Agent pursuant to subsection (e) below. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this subsection (c)(ii). The
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agreements in this subsection (c)(ii) shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the repayment of all other amounts owing to the Lenders, the Administrative Agent and the Issuing Banks under the Loan Documents and the termination of the Commitments.
(d) Within thirty (30) days after the date of any payment of Taxes, the Borrower will furnish to the Administrative Agent, at its address referred to in Section 11.2, the original or a certified copy of a receipt evidencing payment thereof.
(e) Each Lender represents and warrants that either (i) it is organized under the laws of a jurisdiction within the United States or (ii) it has delivered to the Borrower or the Administrative Agent duly completed copies of such form or forms prescribed by the United States Internal Revenue Service indicating that such Lender is entitled to receive payments without deduction or withholding of any United States federal income taxes, as permitted by the Code or any tax treaty to which the United States is a party. Each other Lender agrees that, on or prior to the date upon which it shall become a party hereto, and upon the reasonable request from time to time of the Borrower or the Administrative Agent, such Lender will deliver to the Borrower and the Administrative Agent (to the extent that it is not prohibited by law from doing so) either (A) a statement that it is organized under the laws of a jurisdiction within the United States or (B) duly completed copies of such form or forms as may from time to time be prescribed by the United States Internal Revenue Service, indicating that such Lender is entitled to receive payments without deduction or withholding of any United States federal income taxes, as permitted by the Code. Each Lender that has delivered, and each other Lender that hereafter delivers, to the Borrower and the Administrative Agent the form or forms referred to in the two preceding sentences further undertakes to deliver to the Borrower and the Administrative Agent, to the extent that it is not prohibited by law from doing so, further copies of such form or forms, or successor applicable form or forms, as the case may be, as and when any previous form filed by it hereunder shall expire (upon request for recertification made by the Borrower or the Administrative Agent) or shall become incomplete or inaccurate in any respect. Each Lender represents and warrants that each such form supplied by it to the Administrative Agent and the Borrower pursuant to this subsection (e), and not superseded by another form supplied by it, is or will be, as the case may be, complete and accurate, and such Lender acknowledges and agrees that nothing contained herein shall in any way limit, waive, or otherwise reduce any claim that the Administrative Agent or the Borrower may have against such Lender in the event that any such form shall not be complete and accurate.
(f) Any Lender claiming any additional amounts payable pursuant to this Section 5.6 shall use its best efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.
(g) Any Lender claiming any additional amounts payable pursuant to this Section 5.6 (“Additional Amounts”) who determines, in its sole discretion exercised in good faith, that it has received a tax refund as a result of the Borrower’s payment of such Additional Amounts shall, to the extent it can do so without prejudice to the retention of the amount of the tax refund so realized (after taking into account any net additional taxes paid in connection with the realization thereof), notify the Borrower and pay to the Borrower (to the extent that the same shall not already have been taken into account in computing any amount previously paid by the Borrower or the amount of any reimbursement
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previously received by such Lender) promptly after the realization thereof an amount that is equal to the net amount thereof (or, in the event of a deduction from taxable income, the net tax benefit generated thereby, if less than such deduction) plus any additional tax savings resulting from the payment of such amount to the Borrower pursuant to this sentence; provided, that, the aggregate of all such payments shall not exceed the aggregate of all Additional Amounts paid by the Borrower with respect to such Lender; provided, further, that, the Borrower, upon request of such Lender, agrees to pay the amount paid over to the Borrower (plus penalties, interest and other charges) to such Lender in the event such Lender is required to repay or return such refund with respect to which a payment was made by such Lender to the Borrower. Nothing contained herein shall interfere with the right of such Lender to arrange its tax affairs in whatever manner it deems appropriate and, in particular, such Lender shall neither be under any obligation to claim relief from a tax liability in priority to any other credit or deduction available to it or be obligated to disclose any information relating to its tax affairs or any computations in respect thereof or be required to do anything that would prejudice its ability to benefit from any other credits, deductions or similar tax savings to which it may be entitled.
(h) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 5.6 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the repayment of all other amounts owing to the Lenders, the Administrative Agent and the Issuing Banks under the Loan Documents and the termination of the Commitments. If and to the extent that the obligations of the Borrower under this Section 5.6 are unenforceable for any reason, the Borrower agrees to make the maximum contribution to the payment and satisfaction thereof which is permissible under applicable law.
ARTICLE VI.
CONDITIONS
PRECEDENT
Section 6.1 Conditions Precedent to Effectiveness of this Agreement. This Agreement shall become effective on the first date on which all of the following conditions precedent shall be satisfied or waived:
(a) Loan Documents. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Borrower and each Lender, (ii) the General and Refunding Mortgage Bonds in a principal amount equal to the Commitments, duly issued and delivered by a duly authorized officer of the Borrower and duly authenticated by the trustee under the General and Refunding Mortgage Indenture, (iii) the Notes (if requested by any Lender), duly executed by the Borrower and (iv) any other applicable Loan Documents, each of which shall have been duly authorized, executed and delivered to the Administrative Agent.
(b) Approvals. All governmental and third party approvals (including, without limitation, any required approvals of the PUCN and any relevant Federal regulatory bodies) necessary in connection with the transactions contemplated herein, the issuance and delivery to the Administrative Agent of the General and Refunding Mortgage Bonds and the continuing operations of the Borrower and its Subsidiaries shall have been obtained and be in full force and effect; and the Administrative Agent shall have received evidence satisfactory to it that the foregoing have been accomplished.
(c) Related Agreements. The Administrative Agent shall have received (in a form reasonably satisfactory to the Administrative Agent) true and correct copies, certified as to
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authenticity by a Responsible Officer of the Borrower, of such documents or instruments as may be reasonably requested by the Administrative Agent, including, without limitation, a copy of any debt instrument, security agreement or other material contract to which the Borrower may be a party.
(d) Fees. The Lenders, the Administrative Agent and Wells Fargo Securities, JPM Securities and MLPFS (each in its capacity as Joint Lead Arranger) shall have received all fees required to be paid, and all expenses for which invoices have been presented (including reasonable fees, disbursements and other charges of counsel to the Administrative Agent), on or before the Closing Date.
(e) Closing Certificates. The Administrative Agent shall have received an officer’s certificate of the Borrower, dated the Closing Date, substantially in the form of Exhibit D, and a secretary’s certificate of the Borrower, dated the Closing Date, substantially in the form of Exhibit E, in each case executed by a Responsible Officer of the Borrower, with appropriate insertions and attachments in form and substance satisfactory to the Administrative Agent.
(f) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions:
(i) the legal opinion of Choate, Hall & Stewart LLP, special counsel to the Borrower, in form and substance satisfactory to the Administrative Agent (including, without limitation, matters governed by New York law); and
(ii) the legal opinion of Woodburn and Wedge, Nevada counsel to the Borrower, in form and substance satisfactory to the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.
(g) General and Refunding Mortgage Bond Documents. The Administrative Agent shall have received copies of (i) the General and Refunding Mortgage Indenture as in effect on the Closing Date, certified as to authenticity by a Responsible Officer of the Borrower and (ii) each of the following documents (all as defined in the General and Refunding Mortgage Indenture), each certified as to authenticity by a Responsible Officer of the Borrower: (A) an “Officer’s Certificate” pursuant to a board resolution meeting the requirements of Section 4.01(b) of the General and Refunding Mortgage Indenture and setting forth the terms of the General and Refunding Mortgage Bonds; (B) a “Company Order” requesting authentication of the General and Refunding Mortgage Bond by the trustee under the General and Refunding Mortgage Indenture; and (C) all legal opinions provided in connection with the issuance of the General and Refunding Mortgage Bonds, including that required by Section 4.01(d) of the General and Refunding Mortgage Indenture.
(h) Financial Statements and Projections. The Lenders and the Administrative Agent shall have received and be satisfied with (i) the financial statements referred to in Section 7.1(a) and (ii) projections for the Borrower through the fiscal year ending December 31, 2016.
(i) Negative Mark-to-Market Exposure. The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower, in form and substance satisfactory to the Administrative Agent, setting forth calculations of the Borrower’s Aggregate Negative
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Mark-to-Market Exposure as of the Closing Date, if any, in respect of all Hedge Agreements between the Borrower and any Lender or any Affiliate of a Lender.
(j) Termination of Existing SPPC Credit Agreement. Receipt by the Administrative Agent of evidence that the Existing SPPC Credit Agreement concurrently with the Closing Date is being terminated and all Liens securing obligations under the Existing SPPC Credit Agreement concurrently with the Closing Date are being released.
(k) NPC Facility. Receipt by the Administrative Agent of a certificate of a Responsible Officer of the Borrower, certifying that the NPC Credit Agreement is, or contemporaneously with the effectiveness of this Agreement will be, effective on and as of Closing Date.
(l) Good Standing Certificate. The Administrative Agent shall have received a certificate of good standing (or equivalent certification) issued within five (5) days prior to the Closing Date with respect to the Borrower by the Secretary of State in the Borrower’s jurisdiction of incorporation.
(m) Other Approvals, Etc. The Administrative Agent shall have received such other approvals, opinions and documents as any Lender, through the Administrative Agent, may reasonably request.
Section 6.2 Conditions Precedent to Each Extension of Credit. The obligation of each Lender or Issuing Bank, as the case may be, to make an Extension of Credit (including the initial Extension of Credit, but excluding Conversions (except (x) the condition precedent set forth in clause (c) of this Section 6.2 shall be satisfied for all Conversions and (y) the condition precedent set forth in clause (b) of this Section 6.2 shall be satisfied for all Conversions from Base Rate Loans to LIBOR Rate Loans)) shall be subject to the further conditions precedent that (a) each of the representations and warranties made by the Borrower in or pursuant to the Loan Documents (other than in the case of any Extension of Credit made after the occurrence of a Debt Ratings Trigger and during the period that the conditions for the Debt Ratings Trigger remain in effect, the representations and warranties set forth in Section 7.1(b) of this Agreement) is true and correct in all material respects on and as of the date of such Extension of Credit as if made on such date, (b) no Default or Event of Default has occurred and is continuing on the date of such Extension of Credit or after giving effect to the Extensions of Credit requested to be made on such date and (c) the Administrative Agent and, if applicable, the applicable Issuing Bank and/or the Swingline Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
Section 6.3 Determinations Under Section 6.1. For purposes of determining compliance with the conditions specified in Section 6.1, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by this Agreement shall have received written notice from such Lender prior to the date hereof specifying its objection thereto.
Section 6.4 Reliance on Certificates. The Lenders, the Issuing Banks and the Administrative Agent shall be entitled to rely conclusively upon the certificates delivered from time to time by officers of the Borrower as to the names, incumbency, authority and signatures of the respective individuals named therein until such time as the Administrative Agent may receive a replacement certificate, in form acceptable to the Administrative Agent, from an officer of such Person identified to the Administrative Agent as having authority to deliver such certificate, setting forth the names and true
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signatures of the officers and other representatives of such Person thereafter authorized to act on behalf of such Person.
ARTICLE VII.
REPRESENTATIONS
AND WARRANTIES
Section 7.1 Representations and Warranties of the Borrower. To induce the Administrative Agent, the Issuing Banks and the Lenders to enter into this Agreement and to make Extensions of Credit, the Borrower hereby represents and warrants to the Administrative Agent, each Issuing Bank and each Lender that:
(a) Financial Condition. The audited consolidated balance sheets of the Borrower as at December 31, 2010 and December 31, 2011 and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from Deloitte & Touche LLP, present fairly the Consolidated financial condition of the Borrower and its Subsidiaries as at such dates, and the Consolidated results of its operations and its Consolidated cash flows for the respective fiscal years then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). The Borrower and its Subsidiaries do not have any material Guarantees, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including, without limitation, any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph. During the period from December 31, 2011 to and including the date hereof there has been no Disposition by the Borrower or any of its Subsidiaries of any material part of its business or Property. The financial statements delivered pursuant to Section 8.1(a) have been prepared in accordance with GAAP and present fairly in all material respects the consolidated financial condition, results of operations and cash flows of the Borrower and its Subsidiaries, as of the date and for the periods covered thereby.
(b) No Change. Since December 31, 2011, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.
(c) Corporate Existence; Compliance with Law. Each of the Borrower and its Subsidiaries (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the business in which it is currently engaged, (iii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its business requires such qualification and (iv) is in compliance with all Requirements of Law, except to the extent that, in the case of clauses (ii), (iii) and (iv) above, the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. Set forth on Schedule 7.1(c) as of the Closing Date (and for the four (4) months immediately preceding the Closing Date), is the exact legal name of the Borrower, the state of its incorporation, the chief executive office, the principal place of business, the jurisdictions in which the Borrower is qualified to do business, the federal tax identification number and organizational identification number of the Borrower.
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(d) Corporate Power; Authorization; Enforceable Obligations. The Borrower has the corporate power and authority, and the legal right, to make, deliver and perform the Loan Documents and to borrow hereunder. The Borrower has taken all necessary corporate action to authorize the execution, delivery and performance of the Loan Documents, to authorize the issuance and delivery or assignment of the General and Refunding Mortgage Bonds on the terms and conditions of this Agreement and to authorize such borrowings on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Loan Documents, except consents, authorizations, filings and notices described in Schedule 7.1(d), which consents, authorizations, filings and notices have been obtained or made and are in full force and effect. Each Loan Document has been duly executed and delivered on behalf of the Borrower. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
(e) No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the Extensions of Credit hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of the Borrower or any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien (other than pursuant to the Loan Documents) on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation. No Requirement of Law or Contractual Obligation applicable to the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.
(f) No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its Subsidiaries or against any of their respective properties or revenues (i) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (ii) that could reasonably be expected to have a Material Adverse Effect, except as set forth on Schedule 7.1(f).
(g) No Default. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
(h) Ownership of Property; Liens. Each of the Borrower and its Subsidiaries has title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other Property, and none of such Property is subject to any Lien except for Permitted Liens, including without limitation all Mortgaged Property and all rights to control or occupy easements or rights of way that are part of the Mortgaged Property.
(i) Intellectual Property. The Borrower and each of its Subsidiaries owns, or is licensed to use, all Intellectual Property necessary for the conduct of its business as currently conducted. No material claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does the Borrower know of any valid basis for any such claim. The use of
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Intellectual Property by the Borrower and its Subsidiaries does not infringe on the rights of any Person in any material respect.
(j) Taxes. Each of the Borrower and each of its Subsidiaries has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its Property and all other taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Subsidiaries, as the case may be); and no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.
(k) Federal Regulations. No part of the proceeds of any Extension of Credit will be used for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the regulations of the Board. The Borrower does not own any “margin stock” within the meaning of the quoted term under Regulation U as now and from time to time hereafter in effect. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.
(l) Government Approval and Filings. The PUCN has duly and validly issued an order authorizing the Borrower to enter into this Agreement and the other Loan Documents and to take all actions contemplated hereby or thereby or in connection herewith or therewith and to incur the maximum amount of indebtedness provided for in this Agreement and the other Loan Documents, and such authority granted to the Borrower pursuant to such order has not been rescinded, revoked or otherwise modified and remains in full force and effect. All compliance reports required to be filed with the PUCN in connection with this Agreement and the other Loan Documents have been properly filed with and accepted by the PUCN. No other authorization, approval, order, decree, ruling or other action by, or notice to or filing with, any Governmental Authority is required for the due execution, delivery and performance by the Borrower of this Agreement or any of the other Loan Documents.
(m) Labor Matters. There are no strikes or other labor disputes against the Borrower or any of its Subsidiaries pending or, to the knowledge of the Borrower, threatened that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. All payments due from the Borrower or any of its Subsidiaries on account of employee health and welfare insurance that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a liability on the books of the Borrower or the relevant Subsidiary.
(n) ERISA. Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code. No termination of a Single Employer Plan has occurred, and
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no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. No Single Employer Plan is in “at risk status” (as defined in Section 430(i)(4) of the Code, without regard to Section 430(i)(4)(B) relating to the transition rule) and the Borrower has timely made the minimum required contribution (as defined in Section 430(a) of the Code) to each Single Employer Plan. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result in a material liability under ERISA, and neither the Borrower nor any Commonly Controlled Entity would become subject to any material liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
(o) Investment Company Act; Other Regulations. The Borrower is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. The Borrower is not subject to regulation under any Requirement of Law (other than Regulation X of the Board) which limits its ability to incur Indebtedness (other than public utility laws and regulations of Nevada administered by the PUCN).
(p) Subsidiaries.
(i) The Subsidiaries listed on Schedule 7.1(p) constitute all the Subsidiaries of the Borrower at the date hereof. Schedule 7.1(p) sets forth as of the Closing Date the name and jurisdiction of incorporation of each Subsidiary and, as to each Subsidiary, the percentage of each class of Capital Stock owned by the Borrower.
(ii) There are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments of any nature relating to any Capital Stock of the Borrower or any Subsidiary.
(q) Use of Proceeds. The proceeds of the Extensions of Credit shall be used solely for working capital and general corporate purposes of the Borrower and its Subsidiaries, including, without limitation, the refinancing of certain Indebtedness outstanding as of the Closing Date (including the Existing SPPC Credit Agreement), Capital Expenditures in the ordinary course of business, acquisitions permitted hereunder, commercial paper back-stop purposes and the payment of certain fees and expenses incurred in connection with the transactions contemplated by this Agreement.
(r) Environmental Matters. Except with respect to matters existing on the Closing Date as set forth in the Borrower’s annual report on form 10-K for the fiscal year ended December 31, 2011 and other than exceptions to any of the following that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:
(i) The Borrower and its Subsidiaries: (A) are, and within the period of all applicable statutes of limitation have been, in compliance with all applicable Environmental Laws; (B) hold all Environmental Permits (each of which is in full force and effect) required for any of their current or intended operations or for any property owned, leased, or otherwise operated by any of them; (C) are, and within the period of all applicable statutes of limitation have been, in compliance with all of their Environmental Permits; and (D) reasonably believe that: each of their Environmental Permits will be
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timely renewed and complied with, without material expense; any additional Environmental Permits that may be required of any of them will be timely obtained and complied with, without material expense; and compliance with any Environmental Law that is or is expected to become applicable to any of them will be timely attained and maintained, without material expense.
(ii) There are no Materials of Environmental Concern present at, on, under, in, or about any real property now or formerly owned, leased or operated by the Borrower or any of its Subsidiaries, or at any other location (including, without limitation, any location to which Materials of Environmental Concern have been sent for re-use or recycling or for treatment, storage, or disposal), which could reasonably be expected, individually or in the aggregate, to (A) give rise to liability of the Borrower or any of its Subsidiaries under any applicable Environmental Law or otherwise result in costs to the Borrower or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect, or (B) interfere with the Borrower’s or any of its Subsidiaries’ continued operations, or (C) materially adversely affect the fair saleable value of any real property owned or leased by the Borrower or any of its Subsidiaries.
(iii) There is no judicial, administrative, or arbitral proceeding (including any notice of violation or alleged violation) under or relating to any Environmental Law to which the Borrower or any of its Subsidiaries is, or to the knowledge of the Borrower or any of its Subsidiaries will be, named as a party that is pending or, to the knowledge of the Borrower or any of its Subsidiaries, threatened.
(iv) Neither the Borrower nor any of its Subsidiaries has received any written request for information, or been notified that it is a potentially responsible party under or relating to the federal Comprehensive Environmental Response, Compensation, and Liability Act or any similar Environmental Law, or with respect to any Materials of Environmental Concern.
(v) Neither the Borrower nor any of its Subsidiaries has entered into or agreed to any consent decree, order, or settlement or other agreement, or is subject to any judgment, decree, or order or other agreement, in any judicial, administrative, arbitral, or other forum for dispute resolution, relating to compliance with or liability under any Environmental Law.
(vi) Neither the Borrower nor any of its Subsidiaries has assumed or retained, by contract or operation of law, any liabilities of any kind, fixed or contingent, known or unknown, under any Environmental Law or with respect to any Material of Environmental Concern.
(s) Accuracy of Information, etc. No statement or information contained in this Agreement, any other Loan Document or any other document, certificate or statement furnished to the Administrative Agent or the Lenders or any of them, by or on behalf of the Borrower for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading. The projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to
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future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. There is no fact known to the Borrower that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents or in any other documents, certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.
(t) General and Refunding Mortgage Bonds.
(i) The General and Refunding Mortgage Indenture is effective to create in favor of The Bank of New York Mellon Trust Company, N.A., as trustee under the General and Refunding Mortgage Indenture (the “Indenture Trustee”), for the ratable benefit of all Holders of Securities (as defined in the General and Refunding Mortgage Indenture), a legal, valid, binding, subsisting and enforceable Lien on and security interest in the Mortgaged Property and the proceeds thereof, subject to applicable Debtor Relief Laws, and such Lien constitutes a fully perfected Lien on, and security interest in, all right title and interest of the grantors thereof in such Mortgaged Property and the proceeds thereof, in each case prior to and superior in right to any other Person subject only to Permitted Liens (as defined in the General and Refunding Mortgage Indenture.
(ii) The General and Refunding Mortgage Bonds, when executed by the Borrower and authenticated by the Indenture Trustee in accordance with the General and Refunding Mortgage Indenture and delivered to the Administrative Agent in accordance with the terms hereof, will constitute valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms, except as the enforceability thereof may be limited by applicable Debtor Relief Laws. The Borrower has all requisite corporate power and authority to issue and deliver the General and Refunding Mortgage Bonds in accordance with and upon the terms and conditions set forth herein.
(iii) The General and Refunding Mortgage Bonds secure the Obligations of the Borrower hereunder, have been duly and validly issued and are entitled to the security and benefits of the General and Refunding Mortgage Indenture. The General and Refunding Mortgage Bonds are secured equally and ratably with, and only with, all other Securities (as defined in the General and Refunding Mortgage Indenture) issued and outstanding under the General and Refunding Mortgage Indenture.
(u) Solvency. The Borrower is, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith will be and will continue to be, Solvent.
(v) Compliance with OFAC Rules and Regulations.
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(i) None of the Borrower or any of its Subsidiaries or their respective Affiliates is in violation of and shall not violate any of the country or list based economic and trade sanctions administered and enforced by OFAC that are described or referenced at http://www.ustreas.gov/offices/enforcement/ofac/ or as otherwise published from time to time.
(ii) None of the Borrower or any of its Subsidiaries or their respective Affiliates (i) is a Sanctioned Person or a Sanctioned Entity, (ii) has more than 10% of its assets located in Sanctioned Entities, or (iii) derives more than 10% of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any Loan will be used nor have any been used to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Entity.
(w) Insurance. The Borrower and its Subsidiaries maintain insurance with financially sound and reputable insurance companies on all its Property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business.
(x) Compliance with FCPA. Each of the Borrower and its Subsidiaries is in compliance with the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., and any foreign counterpart thereto. None of the Borrower or its Subsidiaries has made a payment, offering, or promise to pay, or authorized the payment of, money or anything of value (a) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (b) to a foreign official, foreign political party or party official or any candidate for foreign political office, and (c) with the intent to induce the recipient to misuse his or her official position to direct business wrongfully to the Borrower or any of its Subsidiaries or to any other Person, in violation of the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.
(y) Anti-Terrorism Laws. Neither the Borrower nor any of its Subsidiaries is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et seq.) (the “Trading with the Enemy Act”), as amended. Neither any of the Borrower nor any of its Subsidiaries is in violation of (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or (c) the Patriot Act. None of the Borrower or its Subsidiaries (i) is a blocked person described in Section 1 of the Anti-Terrorism Order or (ii) to the best of its knowledge, engages in any dealings or transactions, or is otherwise associated, with any such blocked person.
ARTICLE VIII.
COVENANTS
OF THE BORROWER
Section 8.1 Affirmative Covenants. So long as any Loan or any other amount payable hereunder or under any Note shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment, the Borrower shall and shall cause each of its Subsidiaries to:
(a) Financial Statements. Furnish to the Administrative Agent and each Lender:
(i) as soon as available, but in any event within ninety (90) (or, if earlier, on the date of any required public filing thereof) days after the end of each fiscal year of the Borrower, a copy of the audited Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of such year and the related audited Consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a “going
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concern” or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing; provided, that, electronic delivery by the Borrower to the Administrative Agent and the Lenders of the Borrower’s annual report to the SEC on Form 10-K with respect to any fiscal year within the period specified above shall be deemed to be compliance by the Borrower with this Section 8.1(a)(i); and
(ii) as soon as available, but in any event not later than forty-five (45) (or, if earlier, on the date of any required public filing thereof) days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of such quarter and the related unaudited Consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments); provided, that, electronic delivery by the Borrower to the Administrative Agent and the Lenders of the Borrower’s quarterly report to the SEC on Form 10-Q with respect to any fiscal quarter within the period specified above shall be deemed to be compliance by the Borrower with this Section 8.1(a)(ii).
All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods.
(b) Certificates; Other Information. Furnish to the Administrative Agent and each Lender, or, in the case of clause (iv) below, to the relevant Lender:
(i) concurrently with the delivery of any financial statements pursuant to Section 8.1(a), (A) a certificate of a Responsible Officer stating that, to the best of such Responsible Officer’s knowledge, the Borrower and each of its Subsidiaries during such period has observed or performed all of its covenants and other agreements, and satisfied every condition contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate, and (B) a schedule in form satisfactory to the Administrative Agent of the computations used by the Borrower in determining, as of the end such fiscal year or quarter (as the case may be), compliance with the covenant contained in Section 8.3;
(ii) if requested by the Administrative Agent or another Lender within five (5) days after such request, copies of all financial statements and reports that the Borrower sends to the holders of any class of its debt securities or public equity securities and, within five days after such request, copies of all financial statements and reports that the Borrower may make to, or file with, the SEC;
(iii) after the date of the first trade of interest protection, commodity hedges, foreign exchange or other hedging arrangements by the Borrower and continuing thereafter, within five (5) Business Days after the end of each calendar month, a certificate of a Responsible Officer of the Borrower substantially in the form of Exhibit F, in form and substance satisfactory to the Administrative Agent, setting forth calculations of the Borrower’s Aggregate Negative Mark-to-Market Exposure, if any;
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(iv) promptly, such additional financial and other information as any Lender may from time to time reasonably request; and
(v) concurrently with the delivery of any financial statements pursuant to Section 8.1(a), a certificate of a Responsible Officer of the Borrower, in form and substance satisfactory to the Administrative Agent, setting forth any updated information as to the exact legal name of the Borrower, the state of its incorporation, the chief executive office, the principal place of business, the jurisdictions in which the Borrower is qualified to do business, the federal tax identification number and the organizational identification number of the Borrower.
(c) Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be.
(d) Conduct of Business, Maintenance of Existence, Compliance with Law, etc. (i) (A) Preserve, renew and keep in full force and effect its corporate existence and (B) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 8.2(c) and except, in the case of clause (B) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (ii) comply with all Contractual Obligations and Requirements of Law, except (x) to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect and (y) as described on Schedule 8.1(d).
(e) Maintenance of Property; Insurance. (i) Keep all Property and systems useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and (ii) maintain with financially sound and reputable insurance companies insurance on all its Property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business.
(f) Inspection of Property; Books and Records; Discussions. (i) Keep proper books of records and accounts in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (ii) permit representatives of any Lender (at such Lender’s expense, except during the continuation of an Event of Default) to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants.
(g) Notices. Promptly give notice to the Administrative Agent and each Lender of:
(i) the occurrence of any Default or Event of Default;
(ii) any (A) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or (B) litigation, investigation or proceeding (other than any regularly scheduled rate proceeding with the PUCN) which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental
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Authority, that in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;
(iii) any litigation or proceeding affecting the Borrower or any of its Subsidiaries in which (A) the amount involved is $25,000,000 or more and not covered by insurance or (B) injunctive or similar relief is sought and such litigation or proceeding, could reasonably be expected to have a Material Adverse Effect;
(iv) the following events, as soon as possible and in any event within thirty (30) days after the Borrower knows or has reason to know thereof: (A) the occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (B) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan;
(v) any development or event that has had or could reasonably be expected to have a Material Adverse Effect;
(vi) any change in the Borrower’s Secured Debt Rating; and
(vii) any amendment or modification to (A) its certificate of incorporation or (B) the General and Refunding Mortgage Indenture.
Each notice pursuant to this Section (other than clause (vi)) shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower or the relevant Subsidiary proposes to take with respect thereto.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Joint Lead Arrangers will make available to the Lenders and the Issuing Banks materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on SyndTrak or another similar electronic system (the "Platform") and (b) certain of the Lenders (each a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons' securities. The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Joint Lead Arrangers, the Issuing Banks and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 11.8); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Side Information;” and (z) the Administrative Agent and the Joint Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform that is not marked as "Public Side Information." Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”
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(h) Environmental Laws. Except where the failure to take the following actions could not reasonably be expected to have a Material Adverse Effect,
(i) comply with, and ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply with and maintain, and ensure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws; and
(ii) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.
Section 8.2 Negative Covenants. So long as any Loan or any other amount payable hereunder or under any Note shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment, the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:
(a) Limitation on Indebtedness. Incur Indebtedness unless (i) there exists no Default or Event of Default and (ii) after giving effect to the incurrence of such Indebtedness, the Borrower will be in compliance with the financial covenant set forth in Section 8.3(a) on a Pro Forma Basis.
(b) Limitation on Liens. Create, incur, assume or suffer to exist any Lien of any kind securing Indebtedness, Attributable Debt or trade payables on any of its Property, whether now owned or hereafter acquired, except for the following (the “Permitted Liens”):
(i) Liens securing the liabilities and obligations of the Borrower under the Loan Documents and Liens securing any Hedging Obligations to the extent such Liens are granted on a pari passu basis with each other;
(ii) Liens in favor of the Borrower or any Subsidiary Guarantors;
(iii) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Borrower or any Subsidiary of the Borrower; provided, that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Borrower or such Subsidiary;
(iv) Liens on property existing at the time of acquisition of the property by the Borrower or any Subsidiary of the Borrower; provided, that such Liens were in existence prior to the contemplation of such acquisition;
(v) Liens to secure the performance of statutory or regulatory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;
(vi) Liens existing on the Closing Date listed on Schedule 8.2(b)(vi);
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(vii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided, that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;
(viii) Liens securing any Indebtedness that is issued pursuant to the General and Refunding Mortgage Indenture;
(ix) Liens, including pledges, rights of offset and bankers’ liens, on deposit accounts, instruments, investment accounts and investment property (including cash, cash equivalents and marketable securities) from time to time maintained with or held by any financial and/or depository institutions, in each case solely to secure any and all obligations now or hereafter existing of the Borrower or any of its Subsidiaries in connection with any deposit account, investment account or cash management service (including ACH, Fedwire, CHIPS, concentration and zero balance accounts, and controlled disbursement, lockbox or restricted accounts) now or hereafter provided by any financial and/or depository institutions to or for the benefit of the Borrower or any of its Subsidiaries;
(x) Liens in favor of the United States Department of Energy in connection with the Borrower’s smart grid assets purchased with a grant from the United States Department of Energy under the American Recovery and Reinvestment Act;
(xi) Liens that constitute “Permitted Liens” as defined in the General and Refunding Mortgage Indenture as in effect on the Closing Date except for Liens permitted by clause (c) of such definition of “Permitted Liens” in the General and Refunding Mortgage Indenture as in effect on the Closing Date;
(xii) the Lien in favor of the Indenture Trustee on the Mortgaged Property;
(xiii) Liens securing Indebtedness under any accounts receivables securitization facility in an aggregate amount not to exceed, at any one time outstanding, $100,000,000; and
(xiv) Other Liens securing Indebtedness not to exceed, at any one time outstanding, $35,000,000.
(c) Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its Property or business, except that:
(i) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided, that the Borrower shall be the continuing or surviving corporation);
(ii) any Subsidiary of the Borrower may be merged or consolidated with another Subsidiary of the Borrower;
(iii) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower; and
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(iv) the Borrower may be merged or consolidated with or into NPC (and Sierra Pacific Power Company shall cease to exist as a result of such merger); provided, that (A) NPC shall assume all of the obligations of the Borrower under this Agreement pursuant to documentation acceptable to the Administrative Agent (including such certificates and legal opinions as are deemed necessary by the Administrative Agent), (B) the surviving entity, as Borrower, will be in compliance with the financial covenant set forth in Section 8.3(a) on a Pro Forma Basis, (C) each of the representations and warranties made by the Borrower in or pursuant to the Loan Documents is true and correct in all material respects, except to the extent such representation or warranty is already qualified by materiality or Material Adverse Effect, in which case it shall be true and correct in all respects, on and as of the date of such merger or consolidation as if made on such date, (D) no Default or Event of Default has occurred and is continuing on the date of such merger or consolidation or after giving effect to the merger or consolidation and (E) such merger or consolidation is permitted under the General and Refunding Mortgage Indenture and the General and Refunding Mortgage Bonds and the General and Refunding Mortgage Bonds remain in full force and effect.
(d) Limitation on Disposition of Property; Issuance of Subsidiary Capital Stock. Dispose of any of its Property (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:
(i) the Disposition of obsolete or worn out property in the ordinary course of business.
(ii) the sale of inventory in the ordinary course of business.
(iii) (A) the issuance of Equity Interests by a Subsidiary to the Borrower or another Subsidiary or (B) the sale of any Subsidiary’s Capital Stock to the Borrower.
(iv) the transfer of assets between or among the Borrower and its Subsidiaries.
(v) a Restricted Payment that is permitted by Sections 8.2(e).
(vi) the transfer of assets by the Borrower and its Subsidiaries required under statute or regulation in connection with renewable energy contracts.
(vii) sales, transfers or other Dispositions of assets, including Capital Stock of Subsidiaries, for consideration at least equal to the fair market value of the assets Disposed of, but only if the consideration received consists of Capital Stock of a Person that becomes a Subsidiary engaged in, or property or assets (other than cash, except to the extent used as a bona fide means of equalizing the value of the property or assets involved in the swap transaction) of a nature or type that are used in, a Permitted Business; provided, that, the fair market value of any assets Disposed of shall be determined by the Board of Directors of the Borrower and based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the fair market value of the assets Disposed of exceeds $25,000,000.
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(viii) Dispositions not otherwise permitted by this Section 8.2(d); provided, that:
(A) the aggregate amount of Dispositions made in accordance with this clause (viii), in any fiscal year, shall not exceed 10% of the Consolidated Assets, as determined as of the last day of the fiscal year prior to the fiscal year in which the Dispositions are made;
(B) the Borrower (or the Subsidiary, as the case may be) receives consideration at the time of such Disposition at least equal to the fair market value of the assets Disposed of (the fair market value of any assets Disposed of shall be determined by (x) a Responsible Officer if the fair market value is less than $25,000,000 (provided, that, a Responsible Officer shall not be required to determine the fair market value of any assets Disposed if the value thereof is less than $1,000,000, so long as the aggregate amount of asset sales less than $1,000,000 do not exceed $10,000,000, in the aggregate, in any fiscal year) or (y) the Board of Directors of the Borrower, if the fair market value is $25,000,000 or greater and based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing);
(C) at least seventy-five percent (75%) of the consideration received in connection with the Disposition shall be in the form of cash. Strictly for purposes of this Section 8.2(d)(viii)(C), each of the following shall be deemed to be cash:
(1) any liabilities, as shown on the most recent financial statements delivered by the Borrower pursuant to Section 8.1(a), of the Borrower or any Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee or purchaser of such assets Disposed of pursuant to a customary novation agreement that releases the Borrower or such Subsidiary from further liability; and
(2) any securities, notes or other obligations received by the Borrower or any such Subsidiary from such transferee or purchaser of the assets Disposed of that are contemporaneously, subject to ordinary settlement periods, converted by the Borrower or such Subsidiary into cash, to the extent of the cash received in that conversion; and
(D) within three hundred sixty-five (365) days of the receipt by the Borrower or any Subsidiary of any Net Proceeds from any Disposition under this Section 8.2(d)(viii), the Borrower shall apply such Net Proceeds at its option:
(1) to repay outstanding Indebtedness issued pursuant to the General and Refunding Mortgage Indenture or any Indebtedness which is indirectly secured thereby;
(2) to acquire all or substantially all of the assets of, or a majority of the voting Capital Stock of, a business that the Borrower is permitted to engage in pursuant to and in accordance with Section 8.2(l) (a “Permitted Business”);
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(3) to make a capital expenditure; and/or
(4) to acquire other long-term assets that are used or useful in connection with a Permitted Business.
The amount of any Net Proceeds of a Disposition that are not applied as set forth above (“Excess Net Proceeds”) shall cause a reduction in the Commitments in the amount of such Excess Net Proceeds in accordance with Section 2.3(a).
(ix) Dispositions not otherwise permitted under this Section 8.2(d), in an amount not to exceed a fair market value of $25,000,000, in the aggregate, during any fiscal year of the Borrower.
(e) Limitation on Restricted Payments. (i) Declare or pay any dividend or make any other payment or distribution on account of the Borrower’s or any of its Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Borrower or any of its Subsidiaries) or to the direct or indirect holders of the Borrower’s or any of its Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests of the Borrower) or to the Borrower or a Subsidiary of the Borrower or (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Borrower) any Equity Interests of the Borrower or any direct or indirect parent of the Borrower (all such payments and other actions set forth in clauses (i) and (ii) above being collectively referred to as “Restricted Payments”), unless, (i) there exists no Default or Event of Default and (ii) after giving effect to such Restricted Payment, the Borrower will be in compliance with the financial covenant set forth in Section 8.3(a) on a Pro Forma Basis; provided, however, the preceding provisions will not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of this clause (e), (2) the payment of any dividend by a Subsidiary of the Borrower to the holders of its Equity Interests on a pro rata basis and (3) the payment of any distribution by a Trust Preferred Vehicle to holders of such trust’s preferred beneficial interests, to the extent such distribution does not exceed the amount that is contemporaneously received by such trust as a payment of interest at its Stated Maturity on the Subordinated Debt of the Borrower held by such trust.
(f) Modifications of Instruments, etc. Amend or modify in any manner adverse to the Lenders (as reasonably determined by the Administrative Agent) (i) its certificate of incorporation (except in connection with any merger or consolidation permitted under Section 8.2(c)(iv) hereof) or (ii) the General and Refunding Mortgage Indenture. Notwithstanding the foregoing, it is understood and agreed that subsequent to any merger or consolidation by the Borrower into NPC, NPC shall be permitted to change its legal name subject to (A) prior written notice to the Administrative Agent and (B) delivery of such documents, certificates and opinions reasonably required by the Administrative Agent, including without limitation, any documentation, certificates and opinions in connection with the General and Refunding Mortgage Bonds.
(g) Limitation on Transactions with Affiliates. Except as set forth on Schedule 8.2(g) and the transactions contemplated and permitted pursuant to Section 8.2(c)(iv), enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than the Borrower or any Subsidiary) unless such transaction is (i) otherwise
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permitted under this Agreement, (ii) in the ordinary course of business or consistent with past practice of the Borrower or such Subsidiary, as the case may be, and (iii) upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.
(h) Limitation on Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day other than December 31 or change the Borrower’s method of determining fiscal quarters.
(i) Limitation on Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that (i) prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its Property or revenues, whether now owned or hereafter acquired, to secure the Obligations, other than (x) this Agreement and the other Loan Documents, (y) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) and (z) any restriction in effect on the date hereof or (ii) contains covenants more restrictive than the covenants in this Section 8.2, unless the Borrower offers to amend this Agreement, concurrently with the effectiveness of such other agreement, to provide covenants under this Agreement equivalent to the more restrictive covenants under such other agreement for so long as such more restrictive covenants remain in effect under such other agreement.
(j) Limitation on Assets in Subsidiaries. Permit less than 80% of the Consolidated Assets of the Borrower and its Subsidiaries to be held by Persons other than the Borrower.
(k) Limitation on Modifications to Subordinated Debt. Amend, supplement or otherwise modify any documentation governing any Subordinated Debt (other than (i) amendments to such Subordinated Debt which reduce the interest rate or extend the maturity thereof and (ii) waivers of compliance by the Borrower with any of the terms or conditions of such Subordinated Debt (except those terms or conditions which by their terms are for the benefit of the Lenders)).
(l) Limitation on Lines of Business. Engage in any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or that are reasonably related thereto.
(m) Limitation on Release from Liens. Cause the Liens of the General and Refunding Mortgage Indenture and related security documents, upon any assets, to be released, except in connection with a Disposition of such assets permitted by Section 8.2(d); provided, that within one hundred and eighty (180) days after any such release, the Borrower will either (i) Dispose of such assets or (ii) subject such assets again to the Lien of the General and Refunding Mortgage Indenture.
(n) Limitation on Subsidiary Guarantees. Permit any Subsidiary to Guarantee the payment of any Indebtedness of the Borrower unless:
(i) such Subsidiary simultaneously executes and delivers to the Administrative Agent a Subsidiary Guarantee of such Subsidiary, except that, with respect to a Guarantee of Indebtedness of the Borrower if such Indebtedness is by its express terms subordinated in right of payment to the Loans and other Obligations, any such Guarantee of such Subsidiary with respect to such Indebtedness shall be
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subordinated in right of payment to such Subsidiary’s Subsidiary Guarantee with respect to the Loans and such other Obligations substantially to the same extent as such Indebtedness is subordinated to the Loans and such other Obligations;
(ii) such Subsidiary waives, and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Borrower or any other Subsidiary of the Borrower as a result of any payment by such Subsidiary under its Subsidiary Guarantee of the Loans and other Obligations; and
(iii) such Subsidiary shall deliver to the Administrative Agent an opinion of counsel to the effect that (A) such Subsidiary Guarantee has been duly executed and authorized and (B) such Subsidiary Guarantee constitutes a valid, binding and enforceable obligation of such Subsidiary, except insofar as enforcement thereof may be limited by applicable Debtor Relief Laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity;
provided, that this Section shall not be applicable to any Guarantee of any Subsidiary that (A) existed at the time such Person became a Subsidiary of the Borrower and (B) was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Borrower.
Notwithstanding the foregoing and the other provisions of this Agreement, in the event a Subsidiary Guarantor is sold or Disposed of (whether by merger, consolidation, the sale of its Capital Stock or the sale of all or substantially all of its assets (other than by lease) and whether or not the Subsidiary Guarantor is the surviving corporation in such transaction) to a Person which is not the Borrower or a Subsidiary of the Borrower, such Subsidiary Guarantor will be released from its obligations under its Subsidiary Guarantee if (1) the sale or other Disposition is in compliance with Section 8.2(d) and (2) the Subsidiary Guarantor is also released or discharged from its obligations under the Guarantee which resulted in the creation of such Subsidiary Guarantee, except by or as a result of payment under such Guarantee.
(o) Use of Proceeds. Use the proceeds of any Extension of Credit, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.
(p) Payment of Subordinated Debt. Make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Subordinated Debt, except for any scheduled payment of interest or the payment of principal at the Stated Maturity thereof and except for payments made in respect of Subordinated Debt that constitutes trust preferred securities pursuant to a Trust Preferred Vehicle permitted hereunder.
Section 8.3 Financial Covenant.
(a) Maximum Leverage. The Borrower shall not permit the ratio of (a) Consolidated Indebtedness to (b) Consolidated Capital, determined as of the last day of each fiscal quarter, to exceed 0.68 to 1.00.
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(b) Compliance Period. The covenant set forth in subsection (a) above shall have no further force or effect, and the Borrower shall no longer be required to comply therewith, at any time after the Maturity Date, unless at any such time any Loan or any other amount payable hereunder or under any Note shall remain unpaid or any Letter of Credit shall remain outstanding.
Section 9.1 Events of Default. If any of the following events shall occur and be continuing, the Administrative Agent and the Lenders shall be entitled to exercise the remedies set forth in Section 9.2:
(a) The Borrower shall:
(i) fail to pay any principal of any Loan or any LC Obligation when due in accordance with the terms hereof; or
(ii) fail to pay any interest on any Loan or any LC Obligation, or any other amount payable hereunder or under any other Loan Document, within five (5) days after any such interest or other amount becomes due in accordance with the terms hereof or thereof; or
(b) Any representation or warranty made or deemed made by the Borrower herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made or furnished; or
(c) The Borrower shall default in the observance or performance of any agreement contained in clause (A) or (B) of Section 8.1(d)(i), Section 8.1(g)(i), Section 8.2 or Section 8.3; or
(d) The Borrower shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of thirty (30) days; or
(e) (i) The Borrower or any of its Subsidiaries shall (A) default in making any payment of any principal of any Indebtedness (including, without limitation, any Guarantees, but excluding the Loans) on the scheduled or original due date with respect thereto; or (B) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (C) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to become subject to a mandatory offer to purchase by the obligor thereunder or (in the case of any such Indebtedness constituting a Guarantee) to become payable; or (ii) the Borrower or any of its Subsidiaries shall, (A) default in making any payment of any amount owing to a counterparty under any Hedge Agreement beyond
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the period of grace, if any, provided in such Hedge Agreement; or (B) default in the observance or performance of any other agreement or condition relating to any such Hedge Agreement or contained in such Hedge Agreement or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the counterparty under such Hedge Agreement to cause, with the giving of notice if required, the Borrower or such Subsidiary to make a termination payment, payment of liquidated damages or similar payment under such Hedge Agreement (collectively, “Payment Amounts”); provided, that a default, event or condition described in clause (i) or (ii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i) and (ii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness and/or Payment Amounts the outstanding principal amount of which exceeds $35,000,000 in the aggregate ; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, any Single Employer Plan shall be deemed to be in “at risk status” as defined in Section 430(i)(4) of the Code, or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders shall be likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event
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or condition, together with all other such events or conditions, if any, could, in the sole judgment of the Required Lenders, reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments, decrees or orders shall be entered against the Borrower or any of its Subsidiaries involving for the Borrower and its Subsidiaries taken as a whole a liability (not paid or fully covered by insurance as to which the relevant insurance company (that shall be rated at least “A” by A.M. Best Company) has acknowledged coverage) that exceeds more than $35,000,000 in the aggregate (with credit for any applicable insurance coverage) and all such judgments, decrees or orders shall not have been vacated, discharged, stayed, paid or bonded pending appeal within sixty (60) days from the entry thereof; or
(i) Any of the Loan Documents or the General and Refunding Mortgage Indenture (or any security documents executed in connection therewith) shall cease for any reason to be in full force and effect, or the Borrower or any Affiliate of the Borrower shall so assert; or any Lien created by any of the Loan Documents or the General and Refunding Mortgage Indenture (or any security documents executed in connection therewith) shall cease to be enforceable and of the same effect and priority purported to be created thereby; or
(j) Any Event of Default under (and as defined in) the General and Refunding Mortgage Indenture shall occur; or
(k) Any Change of Control shall occur; or
(l) At any time any of the Issuing Banks shall have been served with or otherwise subjected to a court order, injunction, or other process or decree issued or granted at the instance of the Borrower restraining or seeking to restrain such Issuing Bank from paying any amount under any Letter of Credit issued by it and either (i) there has been a drawing under such Letter of Credit which such Issuing Bank would otherwise be obligated to pay or (ii) the stated expiration date or any reduction of the stated amount of such Letter of Credit has occurred but the right of the beneficiary to draw thereunder has been extended to a date after the Letter of Credit Expiration Date in connection with the pendency of the related court action or proceeding; or
(m) Any Subordinated Debt shall cease (or the Borrower or an Affiliate of the Borrower shall so assert), for any reason, to be validly subordinated to the Obligations as provided in the agreements evidencing the Subordinated Debt.
Section 9.2 Remedies. Upon the occurrence of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower:
(a) Acceleration; Termination of Facilities. Terminate the Commitments and declare the principal of and interest on the Loans at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents (including, without limitation, the Outstanding Amount of all LC Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented or shall be entitled to present the documents required thereunder) and all other Obligations (other than Hedging Obligations and Treasury Management Obligations), to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the credit facility under this Agreement and any right of the Borrower to request
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borrowings or Letters of Credit thereunder; provided, that upon the occurrence of an Event of Default specified in Section 9.1(f), the Commitments shall be automatically terminated and all Obligations (other than Hedging Obligations and Treasury Management Obligations) shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower, anything in this Agreement or in any other Loan Document to the contrary notwithstanding.
(b) Letters of Credit. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to Section 9.2(a), the Borrower shall at such time deposit in a Cash Collateral account opened by and under the control of the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such Cash Collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the other Obligations on a pro rata basis. After all such Letters of Credit shall have expired or been fully drawn upon, the Outstanding Amount of all LC Obligations shall have been satisfied and all other Obligations shall have been paid in full, the balance, if any, in such Cash Collateral account shall be returned to the Borrower.
(c) Rights of Collection. Exercise on behalf of the Lenders all of its other rights and remedies under this Agreement, the other Loan Documents, the General and Refunding Mortgage Bonds, the General and Refunding Mortgage Indenture and Applicable Law, in order to satisfy all of the Obligations.
Section 9.3 Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrower, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default.
Section 9.4 Crediting of Payments and Proceeds. In the event that the Borrower shall fail to pay any of the Obligations when due and the Obligations have been accelerated pursuant to Section 9.2, all payments received by the Lenders (and in the case of Hedge Agreements and Treasury Management Agreements, Affiliates of Lenders) upon the Obligations and all net proceeds from the enforcement of the Obligations shall be applied:
First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such, the Issuing Banks in their respective capacities as such and the Swingline Lender in its capacity as such (ratably among the Administrative Agent and the Issuing Banks in proportion to the respective amounts described in this clause First payable to them);
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Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders, including attorney fees (ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them);
Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and LC Borrowings and any Hedging Obligations (including any accrued and unpaid interest thereon, but excluding any termination payments paid pursuant to clause Fourth) (ratably among the Lenders (and, in the case of Hedging Obligations, Affiliates of Lenders) in proportion to the respective amounts described in this clause Third payable to them);
Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and LC Borrowings, any termination payments then required to be paid in connection with Hedging Obligations, and payments due in connection with Treasury Management Obligations and to the Administrative Agent for the account of the Issuing Banks, to Cash Collateralize any LC Obligations (ratably among the Lenders and the Administrative Agent (and, in the case of Hedging Obligations and Treasury Management Obligations, Affiliates of Lenders), in proportion to the respective amounts described in this clause Fourth held by or payable to them); and
Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
Section 9.5 Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Borrower, the Administrative Agent (irrespective of whether the principal of any Loan or LC Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Obligations and all other Obligations (except for Hedging Obligations and Treasury Management Obligations of other Lenders) that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.2, 4.8, 4.9 and 11.4) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.2, 4.8, 4.9 and 11.4.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment
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or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
ARTICLE X.
THE
ADMINISTRATIVE AGENT
Section 10.1 Appointment and Authority. Each of the Lenders and the Issuing Banks hereby irrevocably appoints Wells Fargo Bank to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Each of the Lenders and the Issuing Banks hereby authorizes the Administrative Agent to vote the General and Refunding Mortgage Bonds, or consent with respect thereto, at any meeting (or where the vote or consent of the bondholders is requested without a meeting) of the bondholders under the General and Refunding Mortgage Indenture. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks, and neither the Borrower nor any Subsidiary thereof shall have rights as a third party beneficiary of any of such provisions.
Section 10.2 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 10.3 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided, that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or any Requirement of Law; and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
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The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.2 and 11.1) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until written notice describing such Default or Event of Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Banks.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
Section 10.4 Reliance by the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Banks, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Banks unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Banks prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Section 10.5 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
Section 10.6 Resignation of Administrative Agent.
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Banks and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed, and shall not be required upon the occurrence or continuance of an Event of Default), in consultation with the Borrower, to appoint a successor,
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which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Banks and without the requirement of the consent of any other Person (other than the successor Administrative Agent), appoint a successor Administrative Agent meeting the qualifications set forth above; provided, that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Banks under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Banks directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this paragraph. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 11.4 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
(b) Any resignation by Wells Fargo Bank as Administrative Agent pursuant to this Section shall also constitute its resignation as an Issuing Bank and as Swingline Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank and Swingline Lender, (ii) the retiring Issuing Bank and Swingline Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangement satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.
Section 10.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and each Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
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Section 10.8 No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the syndication agents, documentation agents, co-agents, bookrunners, lead manager, arranger, lead arranger or co-arranger listed on the cover page or signature pages hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an Issuing Bank hereunder.
Section 10.9 Collateral and Guaranty Matters. The Lenders and the Issuing Banks irrevocably authorize the Administrative Agent, at its option and in its discretion,
(a) to release any Lien on any collateral granted to or held by the Administrative Agent under any Loan Document or to release the General and Refunding Mortgage Bonds (i) upon termination of the Commitments and payment in full of all Obligations under the Loan Documents (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the applicable Issuing Bank in their sole discretion shall have been made) or (ii) if approved, authorized or ratified in writing in accordance with Section 11.1;
(b) to subordinate any Lien on any collateral granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such collateral that is permitted by Section 8.2(b)(vi); and
(c) to release any Subsidiary Guarantor from its obligations under the Subsidiary Guarantee if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Subsidiary Guarantor from its obligations under any Subsidiary Guarantee pursuant to this Section.
Section 11.1 Amendments, Etc. No amendment or waiver of any provision of any Loan Document, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by each Lender affected thereby, do any of the following: (i) waive, modify or eliminate any of the conditions specified in Section 6.2, (ii) increase the Commitments of the Lenders or subject the Lenders to any additional obligations (other than as provided by this Agreement), (iii) reduce the principal of, or interest on, any Loan, any Applicable Margin or any fees or other amounts payable hereunder (other than fees payable to the Administrative Agent pursuant to Section 2.2(b)), (iv) extend the Revolving Credit Termination Date or the Letter of Credit Expiration Date or postpone any date fixed for any payment of principal of, or interest on, any Loan or any fees or other amounts payable hereunder (other than fees payable to the Administrative Agent pursuant to Section 2.2(b)), (v) change the definition of “Required Lenders” contained in Section 1.1 or change any other provision that specifies the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans or the number of Lenders which shall be required for the Lenders or any of them to take any action hereunder, (vi) amend any Loan Document in a manner intended to prefer one or more Lenders over any other Lenders, (vii) take any action that would result in the General and
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Refunding Mortgage Bonds no longer being secured equally and ratably with all other securities issued and outstanding under the General and Refunding Mortgage Indenture or no longer being secured by direct and valid, duly perfected Liens on and security interests in the Mortgaged Property (as defined in the General and Refunding Mortgage Indenture), subject only to Permitted Liens (as such term is defined in the General and Refunding Mortgage Indenture), (viii) release the General and Refunding Mortgage Bonds or Subsidiary Guarantees, if any, except pursuant to the terms thereof or pursuant to Section 10.9 hereof, or change any provision of the General and Refunding Mortgage Bonds providing for the release of the General and Refunding Mortgage Bonds, or (ix) amend, waive or modify this Section 11.1.
Furthermore, (A) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document, (B) no amendment, waiver or consent shall, unless in writing and signed by each Issuing Bank in addition to the Lenders required above to take such action, affect the rights or duties of the Issuing Banks under this Agreement or any other Loan Document and (C) no amendment, waiver or consent shall, unless in writing and signed by the Swingline Lender in addition to the Lenders required above to take such action, affect the rights or duties of the Swingline Lender under this Agreement or any other Loan Document.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than the Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders will require the consent of such Defaulting Lender.
Any request from the Borrower for any amendment, waiver or consent under this Section 11.1 shall be addressed to the Administrative Agent. The Administrative Agent, as holder of the General and Refunding Mortgage Bonds, will not consent to any amendment or other modification of the General and Refunding Mortgage Indenture that requires the consent of holders of all securities issued thereunder, without the consent of each Lender.
Section 11.2 Notices, Etc. All notices and other communications provided for hereunder and under the other Loan Documents shall be in writing (including telegraphic, facsimile, telex or cable communication) and mailed, sent via electronic mail, telegraphed, telecopied, telexed, cabled or delivered, (i) if to the Borrower, at the address specified on Schedule 11.2; (ii) if to any Lender, at its Domestic Lending Office specified in the administrative questionnaire submitted to the Administrative Agent; (iii) if to any Issuing Bank, at its address specified on Schedule 11.2; (iv) if to any Lender other than a Lender listed on Schedule 11.2, at its Domestic Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender; and (v) if to Wells Fargo Bank as Administrative Agent or Swingline Lender, at its address specified on Schedule 11.2; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile or electronic mail shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).
Section 11.3 No Waiver of Remedies. No failure on the part of the Borrower, any Lender, the Issuing Banks or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial
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exercise of any such right 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 11.4 Costs, Expenses and Indemnification.
(a) Costs and Expenses. The Borrower hereby agrees to pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Banks in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Banks (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Banks), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Banks, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims (including, without limitation, any environmental claims or civil penalties or fines assessed by OFAC), damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Banks to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Materials of Environmental Concern on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any environmental claim related in any way to the Borrower or any of its Subsidiaries, (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, and regardless of whether any Indemnitee is a party thereto, or (v) any claim (including, without limitation, any environmental claims or civil penalties or fines assessed by OFAC), investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Loans, this Agreement, any other Loan Document, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including without limitation, reasonable attorneys and consultant’s fees, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee.
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(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clause (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Banks or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Banks or such Related Party, as the case may be, such Lender’s Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided, that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Banks in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or Issuing Banks in connection with such capacity. The obligations of the Lenders under this clause (c) are subject to the provisions of Section 5.5.
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by any Requirement of Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(e) Payments. All amounts due under this Section shall be payable promptly after demand therefore.
Section 11.5 Right of Set-off; Payments Set Aside.
(a) If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Banks and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by any Requirement of Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Banks or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower or now or hereafter existing under this Agreement or any other Loan Document to such Lender or the Issuing Banks, irrespective of whether or not such Lender or the Issuing Banks shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender or the Issuing Banks different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender or the Issuing Banks and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or the Issuing Banks or their respective Affiliates may have. Each Lender or the Issuing Banks agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided, that the failure to give such notice shall not affect the validity of such setoff and application.
(b) The Borrower agrees that it shall have no right of off set, deduction or counterclaim in respect of its obligations hereunder, and that the obligations of the Lenders hereunder are several and not joint. Nothing contained herein shall constitute a relinquishment or
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waiver of the Borrower’s rights to any independent claim that the Borrower may have against the Administrative Agent or any Lender for the Administrative Agent’s or such Lender’s, as the case may be, gross negligence or willful misconduct, but no Lender shall be liable for any such conduct on the part of the Administrative Agent or any other Lender, and the Administrative Agent shall not be liable for any such conduct on the part of any Lender.
(c) To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, any Issuing Bank or any Lender, or the Administrative Agent, any Issuing Bank or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors or otherwise, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (ii) each Lender and each Issuing Bank severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the Issuing Banks under clause (ii) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
Section 11.6 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Lender and each Issuing Bank that such Lender or Issuing Bank, as applicable, has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, each Lender and each Issuing Bank and their respective successors and assigns.
Section 11.7 Successors and Assigns; Participations.
(a) Successors and Assigns Generally. The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder or thereunder without the prior written consent of the Administrative Agent, the Issuing Banks and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement and the other
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Loan Documents (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in Letters of Credit and in Swingline Loans) at the time owing to it); provided; that any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the related Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 in the case of an assignment of a Commitment unless each of the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all of the assigning Lender's Loans and Commitments, and rights and obligations with respect thereto, assigned, except that this clause (ii) shall not apply to the Swingline Lender's rights and obligations in respect of Swingline Loans;
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed; it being understood and agreed that it shall be deemed reasonable for the Borrower to withhold consent to any assignment to an Ineligible Lender) shall be required unless (1) a Default or an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender;
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(C) the consent of each Issuing Bank (each such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment; and
(D) the consent of the Swingline Lender (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment.
(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that (x) such processing and recordation fee shall not be required in the case of any assignment to a Lender, an Affiliate of a Lender or an Approved Fund and (y) the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Borrower. No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.
(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person.
(vii) No Assignment to Defaulting Lender. No such assignment shall be made to a Defaulting Lender.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section 11.7, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 5.4, 5.6 and 11.4 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver a Note to the Eligible Assignee. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and Letters of Credit owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
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contrary. The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in Letters of Credit and/or Swingline Loans) owing to it); provided; that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the Issuing Banks shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided, that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in Section 11.1 that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 5.4, and 5.6 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 11.5 as though it were a Lender, provided such Participant agrees to be subject to Section 5.5 as though it were a Lender.
(e) Limitation on Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 5.4 or 5.6 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.6 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 5.6 as though it were a Lender.
(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(g) Resignation as Issuing Bank or Swingline Lender after Assignment. Notwithstanding anything to the contrary contained herein, if any Lender acting as an Issuing Bank or the Swingline Lender assigns all of its Commitment pursuant to subsection (b) above, such Lender may, (i) upon thirty (30) days' notice to the Borrower and the Lenders, resign as an Issuing Bank and/or (ii) upon thirty (30) days' notice to the Borrower, resign as Swingline Lender. In the event of any such resignation as an Issuing Bank or Swingline Lender, the Borrower shall be entitled to appoint from among the Lenders a successor Issuing Bank or Swingline Lender hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of such Lender as an Issuing Bank or Swingline Lender, as the case may be. If a Lender resigns as an Issuing Bank, it shall retain all the rights,
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powers, privileges and duties of an Issuing Bank hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as an Issuing Bank and all LC Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations pursuant to Article IV). If Wells Fargo Bank resigns as Swingline Lender, it shall retain all the rights of the Swingline Lender provided for hereunder with respect to Swingline Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swingline Loans pursuant to Section 3.8(c). Upon the appointment of a successor Issuing Bank and/or Swingline Lender, (1) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank or Swingline Lender, as the case may be, and (2) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the resigning Issuing Bank to effectively assume the obligations of the resigning Issuing Bank with respect to such Letters of Credit.
Section 11.8 Confidentiality. Each of the Administrative Agent, the Lenders, the Swingline Lender and the Issuing Banks agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, credit insurance providers, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder, under any other Loan Document or Hedge Agreement or Treasury Management Agreement entered into with a Lender or an Affiliate of a Lender or any action or proceeding relating to this Agreement, any other Loan Document or Hedge Agreement or Treasury Management Agreement entered into with a Lender or an Affiliate of a Lender or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement, (g)(i) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (ii) an investor or prospective investor in securities issued by an Approved Fund that also agrees that Information shall be used solely for the purpose of evaluating an investment in such securities issued by the Approved Fund, (iii) a trustee, collateral manager, servicer, backup servicer, noteholder or secured party in connection with the administration, servicing and reporting on the assets serving as collateral for securities issued by an Approved Fund, or (iv) a nationally recognized rating agency that requires access to information regarding the Borrower and its Subsidiaries, the Loans and Loan Documents in connection with ratings issued in respect of securities issued by an Approved Fund (in each case, it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential), (h) with the consent of the Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the Swingline Lender, any Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.
For purposes of this Section, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender, the Swingline Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by any the Borrower or any of its Subsidiaries; provided, that, in the case of information received from the Borrower or any of
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its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Section 11.9 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT 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) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 11.10 Governing Law; Submission to Jurisdiction. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to the conflicts of laws principles thereof). The Borrower, the Lenders, the Issuing Banks and the Administrative Agent each (a) irrevocably submits to the jurisdiction of any New York State court or Federal court sitting in New York, New York in any action arising out of any Loan Document, (b) agrees that all claims in such action may be decided in such court, (c) waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum and (d) consents to the service of process by mail. A final judgment in any such action shall be conclusive and may be enforced in other jurisdictions. Nothing herein shall affect the right of any party to serve legal process in any manner permitted by law or affect its right to bring any action in any other court.
Section 11.11 Relation of the Parties; No Beneficiary. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a)(i) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lenders and the Joint Lead Arrangers, are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Lenders and the Joint Lead Arrangers, on the other hand, (ii) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (b)(i) the Administrative Agent, each Lender and each Joint Lead Arranger is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary, for the Borrower or any of Affiliates or any other Person and (ii) neither the Administrative Agent nor any Lender nor Joint Lead Arranger has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (c) the Administrative Agent, each Lender and each Joint Lead Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any Lender nor any Joint Lead Arranger has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases, any claims that it may have against the Administrative Agent, any
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Lender or any Joint Lead Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 11.12 Execution in Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 11.13 Survival of Agreement. All covenants, agreements, representations and warranties made herein and in the certificates pursuant hereto shall be considered to have been relied upon by the Administrative Agent, the Issuing Banks and the Lenders and shall survive the making by the Lenders of the Extensions of Credit and the execution and delivery to the Lenders of any Notes evidencing the Extensions of Credit and shall continue in full force and effect so long as any Note or any amount due hereunder or under any other Loan Document is outstanding and unpaid, any Letter of Credit is outstanding, or any Commitment of any Lender has not been terminated.
Section 11.14 Survival of Indemnities. Notwithstanding any termination of this Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article XI and any other provision of this Agreement and the other Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before.
Section 11.15 Patriot Act Notice. Each Lender and the Administrative Agent (for itself and not on behalf of any other party) hereby notifies the Borrower that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.
Section 11.16 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 11.17 Electronic Execution of Assignments and Certain Other Documents. The words “execution,” “signed,” “signature” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
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Section 11.18 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i) Waivers and Amendments. That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 11.1 and in the definition of “Required Lenders”.
(ii) Reallocation of Payments. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article IX or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 11.5), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to the Issuing Banks or Swingline Lender hereunder; third, to Cash Collateralize the Fronting Exposure of the Issuing Banks and the Swingline Lender with respect to such Defaulting Lender in accordance with Section 11.19; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released pro rata in order to (A) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans and funded participations under this Agreement and (B) Cash Collateralize the Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit and Swingline Loans issued under this Agreement, in accordance with Section 11.19; sixth, to the payment of any amounts owing to the Lenders, the Issuing Banks or the Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, any Issuing Bank or the Swingline Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided, that if (x) such payment is a payment of the principal amount of any Loans or LC Borrowings in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans or LC Borrowings were made at a time when the conditions set forth in Section 6.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Borrowings owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Borrowings owed to, that Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 11.18(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
87
(iii) Certain Fees. Such Defaulting Lender (A) shall not be entitled to receive any Commitment Fee pursuant to Section 2.2(a) for any period during which such Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to such Defaulting Lender) and (B) shall be limited in its right to receive Letter of Credit Fees as provided in Section 4.8).
(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit or Swingline Loans, the “Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Commitment of that Defaulting Lender; provided, that, (i) each such reallocation shall be given effect only if, the conditions set forth in Section 6.2 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (ii) the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swingline Loans shall not exceed the positive difference, if any, of (A) the Commitment of that non-Defaulting Lender minus (B) the aggregate Outstanding Amount of the Revolving Loans of that Lender. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.
(v) Cash Collateral, Repayment of Swingline Loans. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x) first, repay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize the Issuing Banks’ Fronting Exposure in accordance with the procedures set forth in Section 11.19.
(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, the Swingline Lender and the Issuing Banks agree in writing in their sole discretion that a Defaulting Lender no longer falls under the definition of “Defaulting Lender”, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Revolving Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held on a pro rata basis by the Lenders in accordance with their Percentages (without giving effect to Section 11.18(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.
(c) New Swingline Loans/Letters of Credit. So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans unless it is
88
satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) no Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
Section 11.19 Cash Collateral.
(a) Certain Credit Support Events. At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent, an Issuing Bank or the Swingline Lender (with a copy to the Administrative Agent), the Borrower shall Cash Collateralize the Fronting Exposure of such Issuing Bank and/or the Swingline Lender, as applicable, with respect to such Defaulting Lender (determined after giving effect to Section 11.18(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.
(b) Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the Issuing Banks and the Lenders (including the Swingline Lender), and agrees to maintain, a first priority security interest in all such Cash Collateral, all as security for the Defaulting Lender’s obligations to fund participations in respect of LC Obligations and Swingline Loans, to be applied pursuant to subsection (c) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.
(c) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 11.19 or Sections 2.3, 3.8, 5.5, 9.2 or Article IV in respect of Letters of Credit or Swingline Loans shall be held and applied to the satisfaction of the specific LC Obligations, Swingline Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.
(d) Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender) or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, however, (x) that Cash Collateral furnished by or on behalf of the Borrower shall not be released during the continuance of an Event of Default (and following application as provided in this Section 11.19 may be otherwise applied in accordance with Section 9.4), and (y) the Person providing Cash Collateral and the applicable Issuing Bank or Swingline Lender, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.
Section 11.20 Press Releases and Related Matters. The Borrower and its Affiliates agree that they will not in the future issue any press releases or other public disclosure using the name of the Administrative Agent or any Lender or their respective Affiliates or referring to this Agreement or any of the Loan Documents without the prior written consent of such Person, unless (and only to the extent that)
89
the Borrower or such Affiliate is required to do so under law and then, in any event, the Borrower or such Affiliate will consult with such Person before issuing such press release or other public disclosure; provided, however, the Borrower and its Affiliates shall not be required to obtain the prior written consent of any Person or consult with any Person prior to any public disclosure required (a) pursuant to any federal securities laws applicable to the Borrower or any of its Subsidiaries, (b) pursuant to the rules and regulations governing the New York Stock Exchange or any other stock exchange or quotation service from time to time applicable to the Borrower or any of its Subsidiaries or (c) by any other Governmental Authority. The Borrower and its Subsidiaries consent to the publication by the Administrative Agent or any Lender of customary advertising material relating to the transactions contemplated by this Agreement and the Loan Documents using the name, product photographs, logo or trademark of the Borrower and its Subsidiaries.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
SIERRA PACIFIC POWER COMPANY
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By: |
/s/ Dilek L. Samil |
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Name: |
Dilek L. Samil |
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Title: |
Senior Vice President, Finance, |
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Chief Financial Officer and |
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Treasurer |
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[signature pages continue]
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
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By: |
/s/ Yann Blindert |
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Name: |
Yann Blindert |
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Title: |
Director |
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[signature pages continue]
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as a Lender, Swingline Lender and an Issuing Bank
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By: |
/s/ Yann Blindert |
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Name: |
Yann Blindert |
|
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Title: |
Director |
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[signature pages continue]
BANK OF AMERICA, N.A.,
as a Lender and an Issuing Bank
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By: |
/s/ Kevin Bertelsen |
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Name: |
KEVIN BERTELSEN |
|
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Title: |
MANAGING DIRECTOR |
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[signature pages continue]
JPMORGAN CHASE BANK, N.A.,
as a Lender and an Issuing Bank
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By: |
/s/ Nancy R. Barwig |
|
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Name: |
Nancy R. Barwig |
|
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Title: |
Credit Executive |
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[signature pages continue]
THE BANK OF NOVIA SCOTIA,
as a Lender
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By: |
/s/ Brenda Insull |
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Name: |
Brenda Insull |
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Title: |
Authorized Signatory |
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[signature pages continue]
UNION BANK, N.A.,
as a Lender
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By: |
/s/ Jeffrey Fesenmaier |
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Name: |
Jeffrey Fesenmaier |
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Title: |
Vice President |
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[signature pages continue]
BARCLAYS BANK PLC
as a Lender
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By: |
/s/ Diane Rolfe |
|
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Name: |
Diane Rolfe |
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Title: |
Director |
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[signature pages continue]
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as a Lender
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By: |
/s/ Marcus M. Tarkington |
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Name: |
Marcus M. Tarkington |
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Title: |
Director |
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By: |
/s/ Marguerite Sutton |
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Name: |
Marguerite Sutton |
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Title: |
Director |
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[signature pages continue]
GOLDMAN SACHS BANK USA,
as a Lender
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By: |
/s/ Anna Ostrovsky |
|
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Name: |
Anna Ostrovsky |
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Title: |
Authorized Signatory |
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[signature pages continue]
The Royal Bank of Scotland plc,
as a Lender
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By: |
/s/ Andrew N. Taylor |
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Name: |
Andrew N. Taylor |
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Title: |
Vice President |
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[signature pages continue]
UBS LOAN FINANCE LLC,
as a Lender
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By: |
/s/ Irja R. Otsa |
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Name: |
Irja R. Otsa |
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Title: |
Associate Director |
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By: |
/s/ Mary E. Evans |
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Name: |
Mary E. Evans |
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Title: |
Associate Director |
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[signature pages continue]
SUNTRUST BANK,
as a Lender
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By: |
/s/ Andrew Johnson |
|
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Name: |
Andrew Johnson |
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Title: |
Director |
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[signature pages continue]
THE BANK OF NEW YORK MELLON,
as a Lender
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By: |
/s/ Mark W. Rogers |
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Name: |
Mark W. Rogers |
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Title: |
Vice President |
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[signature pages continue]
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
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By: |
/s/ Holland H. Williams |
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Name: |
Holland H. Williams |
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Title: |
AVP & Portfolio Manager |
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[signature pages continue]
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
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By: |
/s/ Dale Stein |
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Name: |
Dale Stein |
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Title: |
Senior Vice President |
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[signature pages continue]
THE NORTHERN TRUST COMPANY,
as a Lender
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By: |
/s/ Steven W. Ryan |
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Name: |
Steven W. Ryan |
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Title: |
Senior Vice President |
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[signature pages continue]
ASSOCIATED BANK, N.A.,
as a Lender
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By: |
/s/ Kristin A. Isleib |
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Name: |
Kristin A. Isleib |
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Title: |
Senior Vice President |
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[signature pages continue]
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, as a Lender
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By: |
/s/ Jonathan Kim |
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Name: |
Jonathan Kim |
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Title: |
Executive Director |
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By: |
/s/ Eoin Roche |
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Name: |
Eoin Roche |
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Title: |
Executive Director |
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[signature pages continue]
SIERRA PACIFIC POWER COMPANY
Schedules to Credit Agreement, dated as of March 23, 2012, by and among Sierra Pacific Power Company, as Borrower, Wells Fargo Bank, N.A., as Administrative Agent, Swingline Lender and an Issuing Bank and the Lenders and Issuing Banks party thereto.
SCHEDULE 1.1(A) |
|
Existing Letters of Credit |
SCHEDULE 1.1(B) |
|
Commitments and Percentages |
SCHEDULE 7.1(c) |
|
Legal Name, Etc. |
SCHEDULE 7.1(d) |
|
Consents, Authorizations, Filings and Notices |
SCHEDULE 7.1(f) |
|
Material Litigation |
SCHEDULE 7.1(p) |
|
Subsidiaries |
SCHEDULE 8.1(d) |
|
Contractual Obligations, Compliance with Law |
SCHEDULE 8.2(b)(vi) |
|
Existing Liens |
SCHEDULE 8.2(d) |
|
Disposition of Property |
SCHEDULE 8.2(g) |
|
Affiliate Transactions |
SCHEDULE 11.2 |
|
Certain Addresses for Notices; Applicable Lending Offices |
2
Schedule 1.1(A)
Existing Letters of Credit
Issuing |
Beneficiary |
No. |
Date of |
Date of |
Face |
Reason |
Note |
Bank |
|
|
Issue |
Expiry |
Amount |
|
|
Bank of America |
Gas Transmission |
3112935 |
7/23/2010 |
4/28/2012 |
$4,200,000.00 |
Transportation Service Agreement |
Financial |
|
NW Corp. |
|
|
|
|
|
|
Bank of America |
Tuscarora Gas |
3112931 |
7/23/2010 |
2/15/2013 |
$6,000,000.00 |
Precedent Agreement |
Financial |
|
Transmission Company |
|
|
|
|
|
|
Bank of America |
Idaho Power Company |
3112934 |
7/23/2010 |
12/20/2012 |
$350,000.00 |
Transportation Service Agreement |
Performance |
3
Schedule 1.1(B)
Commitments and Percentages
Lender
|
Commitment |
Percentage of Commitments |
Wells Fargo Bank, National Association |
$18,666,666.68 |
7.466666672% |
Bank of America, N.A. |
$18,666,666.67 |
7.466666668% |
JPMorgan Chase Bank, N.A. |
$18,666,666.67 |
7.466666668% |
The Bank of Nova Scotia |
$18,666,666.67 |
7.466666668% |
Union Bank, N.A. |
$18,666,666.67 |
7.466666668% |
Barclays Bank PLC |
$15,333,333.33 |
6.133333332% |
Deutsche Bank Trust Company Americas |
$15,333,333.33 |
6.133333332% |
Goldman Sachs Bank USA |
$15,333,333.33 |
6.133333332% |
The Royal Bank of Scotland plc |
$15,333,333.33 |
6.133333332% |
UBS Loan Finance LLC |
$15,333,333.33 |
6.133333332% |
SunTrust Bank |
$13,333,333.33 |
5.333333332% |
The Bank of New York Mellon |
$13,333,333.33 |
5.333333332% |
U.S. Bank National Association |
$13,333,333.33 |
5.333333332% |
PNC Bank, National Association |
$11,666,666.67 |
4.666666668% |
The Northern Trust Company |
$11,666,666.67 |
4.666666668% |
Associated Bank, N.A. |
$8,333,333.33 |
3.333333332% |
Canadian Imperial Bank of Commerce |
$8,333,333.33 |
3.333333332% |
TOTAL |
$250,000,000.00 |
100.000000000% |
4
Schedule 7.1(c)
Legal Name, Etc.
Legal Name of Borrower: Sierra Pacific Power Company
State of Incorporation: Nevada
Chief Executive Office and Principal Place of Business: 6100 Neil Road, Reno, Nevada 89511
Jurisdictions in which Borrower is qualified to do business: California
Federal Tax Identification Number: 88-0044418
Organizational Identification Number: C63-1965
5
Schedule 7.1(d)
Consents, Authorizations, Filings and Notices
Order of the Public Utilities Commission of Nevada, Docket No. 09-07024, dated November 2, 2009.
6
Schedule 7.1(f)
Material Litigation
The litigation that is described in “Legal Proceedings” and Note 13 to the financial statements, in each case as included in the Borrower’s and NV Energy, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011.
7
Schedule 7.1(p)
Subsidiaries
Company |
State of Formation |
|
|
Piñon Pine Company, LLC |
Nevada |
|
|
The Subsidiary listed above is a wholly-owned subsidiary of the Borrower.
Company |
State of Incorporation/Formation |
Piñon Pine Investment Company |
Nevada |
GPSF-B
Piñon Pine Corporation |
Delaware
Nevada |
|
|
Each of the Subsidiaries listed above are wholly-owned subsidiaries of Piñon Pine Company LLC.
8
Schedule 8.1(d)
Contractual Obligations, Compliance with Law
None.
9
Schedule 8.2(b)(vi)
Existing Liens
None.
10
Schedule 8.2(g)
Affiliate Transactions
1. Portfolio Energy Credit (PEC) Pooling Arrangement between Nevada Power Company (“NPC”) and the Borrower (approved by Public Utilities Commission of Nevada in its Docket No. 08-04002 on October 7, 2008)
2. Master Services Agreement between NPC, the Borrower and NV Energy, Inc. (December 23, 2009) as updated from time to time
3. Any prospective coal sale agreements between Borrower and NPC.
4. Any existing and prospective Power Related Agreements between the Borrower and NPC, executed to facilitate compliance with the Renewable Energy Portfolio Standard, including the following:
Buyer |
Seller |
Project |
Nevada Power Company |
Sierra Pacific Power Company |
Nevada Solar One |
|
|
NPC-SPPC Portfolio Energy |
Nevada Power Company |
Sierra Pacific Power Company |
Credit Agreement |
Sierra Pacific Power Company |
Nevada Power Company |
Faulkner | Blue Mountain |
Sierra Pacific Power Company |
Nevada Power Company |
Desert Peak 2 |
Sierra Pacific Power Company |
Nevada Power Company |
Galena 2 |
Sierra Pacific Power Company |
Nevada Power Company |
Salt Wells |
Sierra Pacific Power Company |
Nevada Power Company |
Stillwater (New) |
Sierra Pacific Power Company |
Nevada Power Company |
Jersey Valley |
Sierra Pacific Power Company |
Nevada Power Company |
Tuscarora |
5. Any prospective pooling arrangements to share spare generating station parts among the Borrower, NPC and third party vendors. These arrangements shall be on fair and reasonable terms no less favorable to the Borrower than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.
11
Schedule 11.2
Certain Addresses for Notices; Applicable Lending Offices
A. CERTAIN ADDRESSES FOR NOTICES
1. Address for Borrower:
Sierra Pacific Power Company
c/o Nevada Power Company
d/b/a NV Energy
6226 West Sahara Avenue
Las Vegas, Nevada 89146
Attention: Dilek L. Samil, Senior Vice President, Finance, Chief Financial Officer and Treasurer, or any duly appointed successor(s)
Copy to: E. Kevin Bethel, Vice President, Chief Accounting Officer and Controller
Telephone: (702) 402-5620 (Samil) or (702) 402-5622 (Bethel)
Facsimile: (702) 402-2250 (Samil) or (702) 402-2250 (Bethel)
Electronic mail: dsamil@nvenergy.com; kbethel@nvenergy.com;
U.S. Taxpayer Identification Number: 88-0044418
with a copy (which shall not constitute notice) to:
Choate, Stewart & Hall LLP
Two International Place
Boston, Massachusetts 02110
Attention: Andrew J. Hickey, Esq.
Telephone: (617) 218-5267
Facsimile: (617) 248-4000
2. Addresses for Administrative Agent and Swingline Lender:
Wells Fargo Bank, National Association
1525 W WT Harris Boulevard
Mail Code : D1109-019
Charlotte, NC 28262
Attention: Syndication Agency Services
Telephone: (704) 590-2706
Facsimile: (704) 590-2790
Electronic Mail : Agencyservices.requests@wellsfargo.com
Wiring Instructions
Bank Name : Wells Fargo Bank, National Association
Account Number : 01104331628807
Routing / ABA : 121000248
Attention : Financial Cash Controls
Reference : Sierra Pacific Power Company
12
3. Addresses for Issuing Banks:
a. Wells Fargo Bank, National Association
1525 W WT Harris Boulevard
Charlotte, NC 28262
Mail Code: NC0680
Telephone: (704) 590-2706
Facsimile: (704) 590-2790
b.
Bank of America, N.A.
1000 W. Temple Street
7th Floor
Mail Code: CA9-705-07-05
Los Angeles, CA 90012
Attention: Mane Badalyan
Telephone: (213) 417-9466
Facsimile: (213) 457-8841
Electronic Mail: mane.v.badalyan@baml.com
Remittance Instructions:
Bank of America, N.A.
ABA #: 026-009-593
Account #: 45358-83980
Attn: LA Standby LC Dept.
Reference: LC#____________
c. JPMorgan Chase Bank, N.A.
Attn: Standby Letter of Credit Unit
10 South Dearborn, 5th Floor
Mail Code: IL1-0236
Chicago, IL 60603-5506
Telephone: 800-634-1969 – option 1
Email: Standbylc.chi.mc@jpmchase.com
With a copy to: nancy.r.barwig@jpmorgan.com
Reference: Sierra Pacific Power Company
13
EXHIBIT A-1
FORM OF REVOLVING NOTE
FOR VALUE RECEIVED, the undersigned, SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY, a Nevada corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of _________________ or its registered assigns (the “Lender”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Loan from time to time made by the Lender to the Borrower under the Credit Agreement. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each Revolving Loan from the date of such Revolving Loan until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the date thereof until the date of actual payment (and before as well as after judgment) computed at the rate per annum set forth in the Credit Agreement.
This Revolving Note is one of the Revolving Notes referred to in, and is entitled to the benefits of, that certain Credit Agreement, dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. The Credit Agreement, among other things, (a) provides for the making of Revolving Loans by the Lender to the Borrower from time to time, the indebtedness of the Borrower resulting from each such Revolving Loan being evidenced by this Revolving Note and (b) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.
The Lender may attach schedules to this Revolving Note and endorse thereon the date, amount and maturity of its Revolving Loans and payments with respect thereto.
The Indebtedness evidenced by this Revolving Note is senior in right of payment to all Subordinated Debt.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Revolving Note shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to the conflicts of laws principles thereof).
SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
EXHIBIT A-2
FORM OF SWINGLINE NOTE
FOR VALUE RECEIVED, the undersigned, SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY, a Nevada corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION or its registered assigns (the “Swingline Lender”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Swingline Loan from time to time made by the Swingline Lender to the Borrower under the Credit Agreement. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each Swingline Loan from the date of such Swingline Loan until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. All payments of principal and interest shall be made directly to the Swingline Lender in Dollars in immediately available funds. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the rate per annum set forth in the Credit Agreement.
This Swingline Note is the Swingline Note referred to in, and is entitled to the benefits of, that certain Credit Agreement, dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. The Credit Agreement, among other things, (a) provides for the making of Swingline Loans by the Swingline Lender to the Borrower from time to time, the indebtedness of the Borrower resulting from each such Swingline Loan being evidenced by this Swingline Note and (b) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.
The Swingline Lender may attach schedules to this Swingline Note and endorse thereon the date, amount and maturity of its Swingline Loans and payments with respect thereto.
The Indebtedness evidenced by this Swingline Note is senior in right of payment to all Subordinated Debt.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Swingline Note shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to the conflicts of laws principles thereof).
SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
EXHIBIT A-3
FORM OF NOTICE OF REVOLVING BORROWING
Date: __________, 201_
To: Wells Fargo Bank, National Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), refers to that certain Credit Agreement, dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank, and hereby gives you notice, irrevocably, pursuant to Section 3.1 of the Credit Agreement that the undersigned hereby requests a Borrowing of Revolving Loans under the Credit Agreement, and in connection with such Borrowing sets forth below the information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 3.1(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ____________, 201_.
(ii) The Type of Loans comprising the Proposed Borrowing is [Base Rate Loans] [LIBOR Rate Loans].
(iii) The aggregate principal amount of the Proposed Borrowing is $________.
(iv) For Proposed Borrowing consisting of LIBOR Rate Loans: with an Interest Period of ___ months.
Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
The Borrower hereby represents and warrants that (a) after giving effect to the Proposed Borrowing, (i) the Total Revolving Outstandings shall not exceed the Borrowing Limit and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender plus such Lender’s Percentage of all LC Obligations plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment, (b) each of the conditions set forth in Section 6.2 of the Credit Agreement has been satisfied on and as of the date of such Proposed Borrowing and (c) the Proposed Borrowing is made in compliance with Sections 3.1, 3.3 and 3.4 of the Credit Agreement.
Very truly yours,
SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY, a Nevada corporation
EXHIBIT A-4
FORM OF NOTICE OF SWINGLINE BORROWING
Date: ____________, 201_
To: Wells Fargo Bank, National Association, as Swingline Lender
cc: Wells Fargo Bank, National Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), refers to that certain Credit Agreement, dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank, and hereby gives you notice, irrevocably, pursuant to Section 3.8 of the Credit Agreement that the undersigned hereby requests a Borrowing of Swingline Loans under the Credit Agreement (the “Proposed Swingline Borrowing”), and in connection with such Proposed Swingline Borrowing sets forth below the information relating to such Proposed Swingline Borrowing as required by Section 3.8(b) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ____________, 201_.
(ii) The aggregate principal amount of the Proposed Borrowing is $________.
(iii) The Type of Loans comprising the Proposed Borrowing is [Base Rate Loans] [LIBOR Market Index Rate Loans].
Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
The Borrower hereby represents and warrants that (a) after giving effect to the Proposed Swingline Borrowing, (i) the Total Revolving Outstandings shall not exceed the Borrowing Limit and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender plus such Lender’s Percentage of all LC Obligations plus such Lender’s Percentage of the Outstanding Amount of all Swingline Loans shall not exceed such Lender’s Commitment, (b) each of the conditions set forth in Section 6.2 of the Credit Agreement has been satisfied on and as of the date of such Proposed Swingline Borrowing and (c) the Proposed Swingline Borrowing is made in compliance with Sections 3.4 and 3.8 of the Credit Agreement.
SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
EXHIBIT B
FORM OF NOTICE OF CONVERSION
Date: _______, 201_
To: Wells Fargo Bank, National Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned, Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), refers to that certain Credit Agreement dated as of March 23, 2012 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank, and hereby gives you notice, irrevocably, pursuant to Section 3.2 of the Credit Agreement that the undersigned hereby requests a Conversion under the Credit Agreement, and in connection with such Conversion sets forth below the information relating to such Conversion (the “Proposed Conversion”) as required by Section 3.2 of the Credit Agreement:
(i) The Business Day of the Proposed Conversion is ________________, 201_.
(ii) The Type of Loans comprising the Proposed Conversion is [Base Rate Loans] [LIBOR Rate Loans].
(iii) The Interest Period for each Loan to be Converted is _______months.1
(iv) The aggregate amount of the Proposed Conversion is $____________.
(v) The Type of Loans to which such Loans are proposed to be Converted is [Base Rate Loans] [LIBOR Rate Loans].
(vi) The Interest Period for each Converted Loan made as part of the Proposed Conversion is ___ month(s).2
Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
___________________
1 |
To be included for a Proposed Conversion to LIBOR Rate Loans only. |
2 |
To be included for a Proposed Conversion to LIBOR Rate Loans only. |
The Borrower hereby certifies that its request for the Proposed Conversion is made in compliance with Sections 3.2, 3.3 and 3.4 of the Credit Agreement. The undersigned hereby acknowledges that the delivery of this Notice of Conversion shall constitute a representation and warranty by the Borrower that, on the date of the Proposed Conversion, no Default or Event of Default has occurred and is continuing or would result from the Proposed Conversion.3
SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
___________________
3 |
Include this bracketed sentence for Proposed Conversions to LIBOR Rate Loans, and delete if Proposed Conversion into Base Rate Loans. |
EXHIBIT C
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, Letters of Credit, Guarantees and Swingline Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________
[and is an Affiliate/Approved Fund of [identify Lender]]
3. Borrower: Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation
4. Agent: Wells Fargo Bank, National Association, as the administrative agent under the Credit Agreement
5. Credit Agreement: Credit Agreement dated as of March 23, 2012 among the Borrower, the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank
Aggregate Amount of Commitment/Loans for all Lenders |
Amount of Commitment/Loans Assigned1 |
Percentage Assigned of Commitment/Loans2 |
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7. Trade Date: __________, 201_
8. Effective Date: __________, 201_
The terms set forth in this Assignment and Assumption are hereby agreed to:
By:______________________________
By:______________________________
_________________________
1 |
Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. |
2 |
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
[Consented to and]3 Accepted:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By_________________________________
Name:
Title:
Consented to:
SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
By________________________________
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as an Issuing Bank and as Swingline Lender
By:______________________________
Name:
Title:
BANK OF AMERICA, N.A.,
as an Issuing Bank
By________________________________
Name:
Title:
JPMORGAN CHASE BANK, N.A.,
as an Issuing Bank
By________________________________
Name:
Title:
_________________________
3 |
To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. |
Annex 1 to Assignment and Assumption
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets the requirements to be an assignee under Section 11.7(b)(iii), (v), (vi), and (vii) of the Credit Agreement (subject to such consents as may be required under Section 11.7(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 8.1(a) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and
Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York (without regard to the conflicts of laws principles thereof).
EXHIBIT D
SIERRA PACIFIC POWER COMPANY
d/b/a NV ENERGY
FORM OF OFFICER'S CERTIFICATE
March 23, 2012
This Officer’s Certificate is delivered pursuant to Section 6.1(e) of the Credit Agreement, dated as of March 23, 2012 (the “Credit Agreement”) among Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. The undersigned, _________, the _________ of the Borrower hereby certifies to the Administrative Agent and the Lenders as follows:
1. The representations and warranties of the Borrower contained in Article VII of the Credit Agreement or in any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date hereof, except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties were true and correct as of such earlier date.
2. No Default exists as of the date hereof, or would result from the Extensions of Credit to be made on the date hereof or from the application of the proceeds thereof.
3. The conditions precedent set forth in Sections 6.1 and 6.2 of the Credit Agreement are satisfied as of the date hereof.
4. There are no liquidation or dissolution proceedings pending or to my knowledge threatened against the Borrower, nor has any other event occurred adversely affecting or threatening the continued corporate existence of the Borrower.
5. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of Nevada.
6. The NPC Credit Agreement is, or contemporaneously with the effectiveness of the Credit Agreement will be, effective on and as of the date hereof.
7. Attached hereto as Exhibit A is a true and complete copy of the General and Refunding Mortgage Indenture as in effect on the date hereof, the General and Refunding Mortgage Bonds and all other documents required to be delivered pursuant to Section 6.1(g) of the Credit Agreement.
8. Attached hereto as Exhibit B is the certificate required to be delivered by the Borrower pursuant to Section 6.1(i) of the Credit Agreement, demonstrating that, as of the Closing Date, the Borrower does not have any Negative Mark-to-Market Exposure.
Woodburn and Wedge and Choate, Hall & Stewart LLP are entitled to rely on this certificate in connection with the opinions that such firms are rendering pursuant to clauses (i) and (ii) of Section 6.1(f) of the Credit Agreement. The undersigned acknowledges that (a) in entering into the Credit Agreement, the Administrative Agent, the Lenders and the Issuing Banks are entitled to rely and have, in fact, relied
upon the statements contained herein and (b) any successor or assign of the Administrative Agent, the Lenders and the Issuing Banks is entitled to rely upon the statements contained herein, such statements being made only as of the date hereof.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned Responsible Officer of the Borrower has executed this Officer’s Certificate as of the date first written above.
SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
By: _____________________________________
Name: ___________________________________
Title: ___________________________________
EXHIBIT E
SIERRA PACIFIC POWER COMPANY
d/b/a NV ENERGY
FORM OF SECRETARY’S CERTIFICATE
March 23, 2012
This Secretary’s Certificate is delivered pursuant to Section 6.1(e) of the Credit Agreement dated as of March 23, 2012 (as amended, modified, supplemented or extended from time to time, the “Credit Agreement”) among Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation (the “Company”), the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. Capitalized terms used but not otherwise defined herein have the meanings provided in the Credit Agreement. I, _____________, do hereby certify that (a) I am the duly appointed, qualified and acting Secretary of the Company, (b) I am authorized to execute this certificate on behalf of the Company, and (c) as follows:
1. Attached hereto as Exhibit A is a true and complete copy of the Restated Articles of Incorporation of the Company and all amendments thereto as in effect on the date hereof. Such articles have not otherwise been amended, modified, rescinded or changed in any respect since their date of adoption and are in full force and effect on and as of the date hereof.
2. Attached hereto as Exhibit B is a true and complete copy of the Bylaws of the Company, together with all amendments thereto, as in effect on the date hereof. Such Bylaws have not been otherwise amended, modified, rescinded or changed in any respect since their date of adoption and are in full force and effect as of the date hereof.
3. Attached hereto as Exhibit C is a true, complete and correct copy of the resolutions of the Board of Directors of the Company, duly adopted by said Board of Directors at a meeting held on October 28, 2011, at which a quorum was present and acting throughout; such resolutions were duly adopted and constitute all resolutions of the Board of Directors of the Company with respect to the authorization of the execution, delivery and performance of the Credit Agreement, the General and Refunding Mortgage Bonds and the agreements and transactions contemplated thereby and in connection therewith, and such resolutions have not been amended, modified, annulled or revoked, and are in full force and effect on the date hereof; and the instruments referred to in said resolutions of said Board of Directors were executed pursuant thereto and in compliance therewith.
4. Attached hereto as Exhibit D is a true, complete and correct copy of a certificate of the Company setting forth the true and genuine signatures of the persons, each being a duly elected and qualified officer of the Company, authorized to execute and deliver on behalf of the Company each of the Loan Documents and any certificate or other document to be delivered by the Company pursuant to the Loan Documents.
5. Attached hereto as Exhibit E is a true, complete and correct copy of the order of the Public Utilities Commission of Nevada, Docket No. 09-07024 dated November 2, 2009, authorizing the execution and delivery by the Company of the Credit Agreement and the agreements and transactions contemplated thereby and in connection therewith (including without limitation the issuance of the General and Refunding Mortgage Bonds), which order has not been rescinded and remains in full force and effect on the date hereof.
Woodburn and Wedge and Choate, Hall & Stewart LLP are entitled to rely on this certificate in connection with the opinions that such firms are rendering pursuant to clauses (i) and (ii) of Section 6.1(f) of the Credit Agreement. The undersigned acknowledges that (a) in entering into the Credit Agreement, the Administrative Agent, the Lenders and the Issuing Banks are entitled to rely and have, in fact, relied upon the statements contained herein and (b) any successor or assign of the Administrative Agent, the Lenders and the Issuing Banks is entitled to rely upon the statements contained herein, such statements being made only as of the date hereof.
IN WITNESS WHEREOF, I hereunder subscribe my name effective as of the 23rd day of March, 2012.
Secretary of Sierra Pacific Power Company d/b/a NV Energy,
a Nevada corporation
EXHIBIT F
SIERRA PACIFIC POWER COMPANY
d/b/a NV ENERGY
FORM OF MARK-TO-MARKET EXPOSURE CERTIFICATE
______, 201_
Reference is made to that certain Credit Agreement dated as of March 23, 2012 (as amended, modified, supplemented or extended from time to time, the “Credit Agreement”) among Sierra Pacific Power Company d/b/a NV Energy, a Nevada corporation (the “Borrower”), the Lenders and Issuing Banks from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank. Capitalized terms used but not otherwise defined herein have the meanings provided in the Credit Agreement. This Mark-to-Market Exposure Certificate is delivered pursuant to [Section 6.1(i)] [Section 8.1(b)(iii)] of the Credit Agreement. The undersigned Responsible Officer of the Borrower hereby certified as follows:
[No Aggregate Negative Mark-to Market Exposure exists as of the Closing Date.]
[Schedule 1 hereto sets forth calculations of the Borrower’s Aggregate Negative Mark-to-Market Exposure or calculations demonstrating the absence of Aggregate Negative Mark-to-Market Exposure, as the case may be, as of the most recently ended calendar month.]
IN WITNESS WHEREOF, the undersigned Responsible Officer of the Borrower has executed this Mark-to-Market Exposure Certificate as of the date first written above.
SIERRA PACIFIC POWER COMPANY d/b/a NV ENERGY,
a Nevada corporation
By: _____________________________________
Name: ___________________________________
Title: ___________________________________
SCHEDULE 1
Monthly Period End Date: [_____], 201_
$ amounts actual
|
Lender or Lender Affiliate ISDA1 |
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Counterparty |
Interest Rate Mark-to-Market |
Commodities Mark-to-Market |
Netting2 |
Negative Mark-to-Market |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
|
$[ ] |
$[ ] |
[Y/N] |
$[ ] |
Aggregate Negative Mark-to-Market Exposure3 |
$[ ] |
$[ ] |
|
$[ ] |
1 |
Indicate Negative Mark-to-Market by placing the dollar amount in parentheticals. |
2 |
Netting of exposure calculated in accordance with the terms of the Credit Agreement, which permits netting between two or more Hedge Agreements each by and between the Borrower and any Subsidiary, on the one hand, and the same legal entity (or any Affiliate thereof), on the other hand, that is contractually available to the Borrower or such Subsidiary. For the avoidance of doubt, the Borrower and the Administrative Agent agree that netting between and among transactions within a Hedge Agreement is permitted (to the extent permitted by the terms of such Hedge Agreement). Capitalized terms used but not defined in this footnote 1 shall have the meanings ascribed thereto in the Credit Agreement. |
3 |
Excludes netting across counterparties. |
EXHIBIT 12.1 |
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|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
March 31, |
|
Year Ended December 31, |
|||||||||||||||||
|
|
|
|
2012 |
|
2011 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS AS DEFINED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
12,173 |
|
$ |
2,330 |
|
$ |
163,432 |
|
$ |
226,984 |
|
$ |
182,936 |
|
$ |
208,887 |
|
$ |
197,295 |
||
|
Income tax expense (benefit) |
|
7,228 |
|
|
(725) |
|
|
86,915 |
|
|
113,764 |
|
|
75,451 |
|
|
95,354 |
|
|
87,555 |
||
|
Fixed Charges |
|
81,172 |
|
|
85,372 |
|
|
343,719 |
|
|
363,773 |
|
|
360,896 |
|
|
335,868 |
|
|
310,876 |
||
|
Capitalized Interest (allowance for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
borrowed funds used during construction) |
|
(1,595) |
|
|
(6,210) |
|
|
(8,718) |
|
|
(23,355) |
|
|
(20,229) |
|
|
(29,527) |
|
|
(25,967) |
||
|
|
Total |
$ |
98,978 |
|
$ |
80,767 |
|
$ |
585,348 |
|
$ |
681,166 |
|
$ |
599,054 |
|
$ |
610,582 |
|
$ |
569,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIXED CHARGES AS DEFINED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Interest Expensed and Capitalized (1) |
$ |
81,172 |
|
$ |
85,372 |
|
$ |
343,719 |
|
$ |
363,773 |
|
$ |
360,896 |
|
$ |
335,868 |
|
$ |
310,876 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
81,172 |
|
$ |
85,372 |
|
$ |
343,719 |
|
$ |
363,773 |
|
$ |
360,896 |
|
$ |
335,868 |
|
$ |
310,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RATIO OF EARNINGS TO FIXED |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
CHARGES |
|
1.22 |
|
|
- |
|
|
1.70 |
|
|
1.87 |
|
|
1.66 |
|
|
1.82 |
|
|
1.83 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficiency |
$ |
- |
|
$ |
4,605 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
(1) |
Includes amortization of premiums, discounts, and capitalized debt expense and interest component of rent expense. |
For the purpose of calculating the ratios of earnings to fixed charges, “Earnings” represents net income adjusted for income taxes and fixed charges excluding capitalized interest. “Fixed Charges” represent the aggregate of interest charges on long-term debt (whether expensed or capitalized) and the portion of rental expense deemed to be attributable to interest.
EXHIBIT 12.2 |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEVADA POWER COMPANY |
||||||||||||||||||||||
RATIOS OF EARNINGS TO FIXED CHARGES |
||||||||||||||||||||||
(Dollars in Thousands) |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
March 31, |
|
Year Ended December 31, |
|||||||||||||||||
|
|
|
2012 |
|
2011 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS AS DEFINED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) |
$ |
(1,316) |
|
$ |
(9,020) |
|
$ |
132,586 |
|
$ |
185,943 |
|
$ |
134,284 |
|
$ |
151,431 |
|
$ |
165,694 |
|
|
Income tax expense (benefit) |
|
(645) |
|
|
(4,933) |
|
|
70,737 |
|
|
91,757 |
|
|
61,652 |
|
|
71,382 |
|
|
78,352 |
|
|
Fixed Charges |
|
56,707 |
|
|
59,126 |
|
|
233,788 |
|
|
240,830 |
|
|
247,290 |
|
|
210,067 |
|
|
190,836 |
|
|
Capitalized Interest (allowance for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
borrowed funds used during construction) |
|
(1,179) |
|
|
(5,790) |
|
|
(6,770) |
|
|
(21,443) |
|
|
(17,184) |
|
|
(20,063) |
|
|
(13,196) |
|
|
|
Total |
$ |
53,567 |
|
$ |
39,383 |
|
$ |
430,341 |
|
$ |
497,087 |
|
$ |
426,042 |
|
$ |
412,817 |
|
$ |
421,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIXED CHARGES AS DEFINED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Interest Expensed and Capitalized (1) |
$ |
56,707 |
|
$ |
59,126 |
|
$ |
233,788 |
|
$ |
240,830 |
|
$ |
247,290 |
|
$ |
210,067 |
|
$ |
190,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
56,707 |
|
$ |
59,126 |
|
$ |
233,788 |
|
$ |
240,830 |
|
$ |
247,290 |
|
$ |
210,067 |
|
$ |
190,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RATIO OF EARNINGS TO FIXED |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
CHARGES |
|
- |
|
|
- |
|
|
1.84 |
|
|
2.06 |
|
|
1.72 |
|
|
1.97 |
|
|
2.21 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficiency |
$ |
3,140 |
|
$ |
19,743 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
(1) |
Includes amortization of premiums, discounts, and capitalized debt expense and interest component of rent expense. |
For the purpose of calculating the ratios of earnings to fixed charges, “Earnings” represents net income (loss) adjusted for income taxes and fixed charges excluding capitalized interest. “Fixed Charges” represent the aggregate of interest charges on long-term debt (whether expensed or capitalized) and the portion of rental expense deemed attributable to interest.
EXHIBIT 12.3 |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SIERRA PACIFIC POWER COMPANY |
||||||||||||||||||||||
RATIOS OF EARNINGS TO FIXED CHARGES |
||||||||||||||||||||||
(Dollars in Thousands) |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
March 31, |
|
Year Ended December 31, |
|||||||||||||||||
|
|
|
2012 |
|
2011 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS AS DEFINED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
18,644 |
|
$ |
16,576 |
|
$ |
59,886 |
|
$ |
72,375 |
|
$ |
73,085 |
|
$ |
90,582 |
|
$ |
65,667 |
|
|
Income tax expense |
|
10,243 |
|
|
8,318 |
|
|
31,197 |
|
|
40,404 |
|
|
31,225 |
|
|
37,603 |
|
|
26,009 |
|
|
Fixed Charges |
|
17,864 |
|
|
17,834 |
|
|
70,418 |
|
|
72,815 |
|
|
74,955 |
|
|
84,478 |
|
|
75,655 |
|
|
Capitalized Interest (allowance for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
borrowed funds used during construction) |
|
(416) |
|
|
(420) |
|
|
(1,948) |
|
|
(1,912) |
|
|
(3,044) |
|
|
(9,464) |
|
|
(12,771) |
|
|
|
Total |
$ |
46,335 |
|
$ |
42,308 |
|
$ |
159,553 |
|
$ |
183,682 |
|
$ |
176,221 |
|
$ |
203,199 |
|
$ |
154,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIXED CHARGES AS DEFINED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Interest Expensed and Capitalized (1) |
$ |
17,864 |
|
$ |
17,834 |
|
$ |
70,418 |
|
$ |
72,815 |
|
$ |
74,955 |
|
$ |
84,478 |
|
$ |
75,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
17,864 |
|
$ |
17,834 |
|
$ |
70,418 |
|
$ |
72,815 |
|
$ |
74,955 |
|
$ |
84,478 |
|
$ |
75,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RATIO OF EARNINGS TO FIXED |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
CHARGES |
|
2.59 |
|
|
2.37 |
|
|
2.27 |
|
|
2.52 |
|
|
2.35 |
|
|
2.41 |
|
|
2.04 |
(1) |
Includes amortization of premiums, discounts, and capitalized debt expense and interest component of rent expense. |
For the purpose of calculating the ratios of earnings to fixed charges, “Earnings” represent net adjusted for income taxes and fixed charges excluding capitalized interest. “Fixed Charges” represent the aggregate of interest charges on long-term debt (whether expensed or capitalized) and the portion of rental expense deemed attributable to interest.
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER REQUIRED BY
SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002
NV ENERGY, INC.
(“Registrant”)
I, Michael W. Yackira, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2012 of NV Energy, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 8, 2012
/s/ Michael W. Yackira
Michael W. Yackira
President and Chief Executive Officer
NV Energy, Inc.
(Principal Executive Officer)
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER REQUIRED BY
SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002
NEVADA POWER COMPANY (dba NV ENERGY)
(“Registrant”)
I, Michael W. Yackira, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2012 of Nevada Power Company (dba NV Energy);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 8, 2012
/s/ Michael W. Yackira
Michael W. Yackira
President and Chief Executive Officer
Nevada Power Company (dba NV Energy)
(Principal Executive Officer)
EXHIBIT 31.3
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER REQUIRED BY
SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002
SIERRA PACIFIC POWER COMPANY (dba NV ENERGY)
(“Registrant”)
I, Michael W. Yackira, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2012 of Sierra Pacific Power Company (dba NV Energy);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 8, 2012
/s/ Michael W. Yackira
Michael W. Yackira
Chief Executive Officer
Sierra Pacific Power Company (dba NV Energy)
(Principal Executive Officer)
EXHIBIT 31.4
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER REQUIRED BY
SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002
NV ENERGY, INC.
(“Registrant”)
I, Dilek L. Samil, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2012 of NV Energy, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 8, 2012
/s/ Dilek L. Samil
Dilek L. Samil
Chief Financial Officer
NV Energy, Inc.
(Principal Financial Officer)
EXHIBIT 31.5
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER REQUIRED BY
SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002
NEVADA POWER COMPANY (dba NV ENERGY)
(“Registrant”)
I, Dilek L. Samil, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2012 of Nevada Power Company (dba NV Energy);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 8, 2012
/s/ Dilek L. Samil
Dilek L. Samil
Chief Financial Officer
Nevada Power Company (dba NV Energy)
(Principal Financial Officer)
EXHIBIT 31.6
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER REQUIRED BY
SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002
SIERRA PACIFIC POWER COMPANY (dba NV ENERGY)
(“Registrant”)
I, Dilek L. Samil, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2012 of Sierra Pacific Power Company (dba NV Energy);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 8, 2012
/s/ Dilek L. Samil
Dilek L. Samil
Chief Financial Officer
Sierra Pacific Power Company (dba NV Energy)
(Principal Financial Officer)
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
NV ENERGY, INC.
(“Registrant”)
In connection with this report of NV Energy, Inc. on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Michael W. Yackira, President and Chief Executive Officer of registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1. This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
/s/ Michael W. Yackira
Michael W. Yackira
President and Chief Executive Officer
NV Energy, Inc.
(Principal Executive Officer)
May 8, 2012
This Certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the registrant specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
NEVADA POWER COMPANY (dba NV ENERGY)
(“Registrant”)
In connection with this report of Nevada Power Company (dba NV Energy) on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Michael W. Yackira, President and Chief Executive Officer of registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1. This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
/s/ Michael W. Yackira
Michael W. Yackira
President and Chief Executive Officer
Nevada Power Company (dba NV Energy)
(Principal Executive Officer)
May 8, 2012
This Certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the registrant specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.3
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
SIERRA PACIFIC POWER COMPANY (dba NV ENERGY)
(“Registrant”)
In connection with this report of Sierra Pacific Power Company (dba NV Energy) on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Michael W. Yackira, Chief Executive Officer of registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1. This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
/s/ Michael W. Yackira
Michael W. Yackira
Chief Executive Officer
Sierra Pacific Power Company (dba NV Energy)
(Principal Executive Officer)
May 8, 2012
This Certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the registrant specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.4
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
NV ENERGY, INC.
(“Registrant”)
In connection with this report of NV Energy, Inc. on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Dilek L. Samil, Chief Financial Officer of registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1. This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
/s/ Dilek L. Samil
Dilek L. Samil
Chief Financial Officer
NV Energy, Inc.
(Principal Financial Officer)
May 8, 2012
This Certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the registrant specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.5
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
NEVADA POWER COMPANY (dba NV ENERGY)
(“Registrant”)
In connection with this report of Nevada Power Company (dba NV Energy) on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Dilek L. Samil, Chief Financial Officer of registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1. This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
/s/ Dilek L. Samil
Dilek L. Samil
Chief Financial Officer
Nevada Power Company (dba NV Energy)
(Principal Financial Officer)
May 8, 2012
This Certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the registrant specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.6
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
SIERRA PACIFIC POWER COMPANY (dba NV ENERGY)
(“Registrant”)
In connection with this report of Sierra Pacific Power Company (dba NV Energy) on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Dilek L. Samil, Chief Financial Officer of registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1. This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
/s/ Dilek L. Samil
Dilek L. Samil
Chief Financial Officer
Sierra Pacific Power Company (dba NV Energy)
(Principal Financial Officer)
May 8, 2012
This Certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the registrant specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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3 Months Ended |
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Mar. 31, 2012
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Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies for both utility and non-utility operations are as follows:
Basis of Presentation
The consolidated financial statements include the accounts of NV Energy, Inc. and its wholly-owned subsidiaries, NPC, SPPC, Sierra Pacific Communications, Lands of Sierra, Inc., NVE Insurance Company, Inc. and Sierra Gas Holding Company. All intercompany balances and transactions have been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities. These estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of certain revenues and expenses during the reporting period. Actual results could differ from these estimates.
In the opinion of the management of NVE, NPC and SPPC, the accompanying unaudited interim consolidated financial statements contain normal and recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows for the periods shown. These consolidated financial statements do not contain the complete detail concerning accounting policies and other matters, which are included in full year financial statements; therefore, they should be read in conjunction with the audited financial statements included in the 2011 Form 10-K.
The results of operations and cash flows of NVE, NPC and SPPC for the three months ended March 31, 2012, are not necessarily indicative of the results to be expected for the full year.
Reclassifications
Certain financial statement line items for prior periods have been reclassified to conform with current year presentation. The reclassifications have not affected previously reported reports of operations, statements of financial position or shareholders' equity.
Accounting Policies
Consolidations of VIEs
To identify potential variable interests, management reviewed contracts under leases, long-term purchase power contracts, tolling contracts and jointly owned facilities. The Utilities identified certain long-term purchase power contracts that could be defined as variable interests. However, the Utilities are not the primary beneficiary as they primarily lacked the power to direct the activities of the entity, including the ability to operate the generating facilities and make management decisions. The Utilities' maximum exposure to loss is limited to the cost of replacing these purchase power contracts if the providers are unable to deliver power. However, the Utilities believe their exposure is mitigated as they would likely recover these costs through their deferred energy accounting mechanism. As of March 31, 2012, the carrying amount of assets and liabilities in the Utilities' balance sheets that relate to their involvement with VIEs are predominately related to working capital accounts and generally represent the amounts owed by the Utilities for the deliveries associated with the current billing cycle under the contracts.
Derivatives and Hedging Activities
NVE, NPC and SPPC apply the accounting guidance as required by the Derivatives and Hedging Topic of the FASC. The accounting guidance for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities, requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position, measure those instruments at fair value, and recognize changes in the fair value of the derivative instruments in earnings in the period of change, unless the derivative meets certain defined conditions and qualifies as an effective hedge. The accounting guidance for derivative instruments also provides a scope exception for commodity contracts that meet the normal purchases and normal sales criteria specified in the standard. The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that are designated as normal purchases and normal sales are accounted for under deferred energy accounting and not recorded on the consolidated balance sheets of NVE and the Utilities at fair value. As a result of the suspension of the Utilities' hedging program, derivative transactions were immaterial for the period ended March 31, 2012.
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