EQUITY CONTRIBUTION AGREEMENT

 

        This Equity Contribution Agreement (this "Agreement") dated as of
October 25, 2000, is made and entered into by and among WPS Northern Nevada,
LLC, a Nevada limited liability company ("WPS Nevada"), WPS Resources
Corporation, a Wisconsin corporation ("WPSR"), WPS Power Development, Inc., a
Wisconsin corporation ("PDI") and an indirect wholly-owned subsidiary of WPSR,
and Sierra Pacific Power Company, a Nevada corporation ("Seller"). WPS Nevada,
PDI, WPSR and Seller may be referred to herein individually as a "Party," and
collectively as the "Parties".

R E C I T A L S:

        WHEREAS

, WPS Nevada has been formed by PDI to acquire certain assets and assume certain
liabilities of Seller pursuant to that certain Asset Sale Agreement for the
Tracy/Pinon Asset Bundle of even date herewith between Seller and WPS Nevada
("Asset Sale Agreement");

        WHEREAS

, PDI owns 100 percent of the membership interests in WPS Nevada as may be
reflected in a limited liability company operating agreement or other agreements
related thereto to be entered into in connection therewith (the "LLC
Documents"), and PDI shall contribute to the capital and expenses of WPS Nevada
on the terms and conditions set forth below; and

        WHEREAS

, in connection with the negotiation and execution of the Asset Sale Agreement,
Seller has requested that this Agreement be executed and delivered by WPSR and
PDI. Capitalized terms used herein but not defined shall have the meanings
assigned to such terms in the Asset Sale Agreement.

        NOW, THEREFORE

, in consideration of the execution and delivery of the Asset Sale Agreement by
the Parties thereto and of the mutual promises herein contained, the Parties
hereto agree as follows:

 

        1. Equity Contribution Agreement. Notwithstanding any other provision to
the contrary contained in the LLC Documents, as the sole member of WPS Nevada,
PDI shall contribute (and WPSR agrees that it shall cause PDI to contribute)
from time to time, in immediately available funds, such capital and other funds
as are necessary to permit WPS Nevada to fulfill when due its financial and
other obligations which are contained in the Asset Sale Agreement from and after
the date thereof to and including the Closing, including without limitation the
payment of the Purchase Price pursuant to Section 4.2 of the Asset Sale
Agreement (the "Pre-Closing Obligations") or amounts payable in connection with
any breach of the Pre-Closing Obligations ("Breach Obligations"); and provided,
further, that PDI shall contribute (and WPSR shall cause PDI to contribute),
such additional capital to WPS Nevada after the Closing as may be necessary to
permit WPS Nevada to pay any adjustments to the Purchase Price due from WPS
Nevada under the terms and conditions of Section 3.2 of the Asset Sale Agreement
(the "Post-Closing Obligations"). It is agreed and understood that the maximum
financial exposure under this Agreement of PDI (together with WPSR) is an amount
equal to (i) the Purchase Price less the TPPA Amount plus (ii) the Post-Closing
Obligations, if any, plus (iii) all transaction expenses incurred by WPS Nevada.
It is also agreed and understood that Seller is direct third-party beneficiary
of the provisions of this paragraph 1.

        2. Performance Guarantee. WPSR agrees with WPS Nevada and with Seller
that it shall unconditionally and irrevocably guarantee the performance by WPS
Nevada of all of its obligations under the Asset Sale Agreement due to be
performed by WPS Nevada at or prior to the Closing and with respect to any
Post-Closing Obligations thereafter.

        3. Termination. Except as specifically provided in paragraph 1 with
respect to the Post-Closing Obligations and the Breach Obligations above, all
obligations of PDI and WPSR under this Agreement shall terminate and have no
further force or effect upon the earlier of (i) consummation of the Closing, and
(ii) termination of the Asset Sale Agreement in accordance with the terms
thereof. It is expressly understood that this Agreement does not constitute a
continuing guarantee of the performance or financial obligations of WPS Nevada
(including, without limitation, with respect to the Assumed Liabilities, the
Ancillary Agreements, or under Article IX ("Indemnification") of the Asset Sale
Agreement) by any of PDI or WPSR or any of their Affiliates (other than WPS
Nevada) from and after the Closing Date, except as specifically provided in
paragraph 1 above.

        4. Representations and Warranties of PDI, WPSR and WPS Nevada. PDI, WPSR
and WPS Nevada each hereby represents and warrants, with respect to itself and
WPS Nevada, to Seller as follows, which representations and warranties shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby:

            4.1. Organization. Each of PDI and WPSR is a corporation duly
organized, validly existing and in active status under the laws of the State of
Wisconsin and each has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. WPS Nevada is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite limited liability company power and authority to own, lease, and
operate its properties and to carry on its business as it is now being
conducted. Each of PDI, WPSR and WPS Nevada is qualified to do business and is
in good standing or active status under the laws of each jurisdiction in which
its business as it is now being conducted requires it to be so qualified, except
where the failure to be so qualified would not have a material adverse effect on
the financial condition of such Party.

            4.2. Authority. Each of PDI and WPSR has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. WPS Nevada has full limited liability company
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by PDI and WPSR and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action required
on the part of each such Party. The execution and delivery of this Agreement by
WPS Nevada and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary limited liability company
action required on the part of WPS Nevada. This Agreement has been duly and
validly executed and delivered by each of PDI, WPSR and WPS Nevada and this
Agreement constitutes the legal, valid and binding obligation of each of PDI,
WPSR and WPS Nevada, enforceable against each such Party in accordance with its
terms, except that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity).

            4.3. Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by each of PDI, WPSR and WPS Nevada nor the
consummation by each of PDI, WPSR and WPS Nevada of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the Certificate or Articles of Incorporation or Bylaws (or other
similar governing documents) of such Parties; (ii) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, material
agreement or other instrument or obligation to which any such Party or any of
their Affiliates is a party or by which any of their respective assets may be
bound, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, have a material adverse
effect on the financial condition of any such Party; or (iii) constitute
violations of any law, regulation, order, judgment or decree applicable to PDI,
WPSR or WPS Nevada, which violations, individually or in the aggregate, would
have a material adverse effect on the financial condition of any such Party. No
consent of any other Person or any Governmental Authority is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement or the taking of any action by PDI, WPS Capital or
WPS Nevada herein contemplated.

            4.4. Legal Proceedings. There are no actions or proceedings pending
or, to the Knowledge of PDI, WPSR or WPS Nevada, threatened against PDI, WPSR or
WPS Nevada before any court, arbitrator or Governmental Authority, which could,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the financial condition of any of such Party or that question
the validity of this Agreement, the Asset Sale Agreement or the Ancillary
Agreements or of any action taken or to be taken pursuant to or in connection
with the provisions of this Agreement, the Asset Sale Agreement or the Ancillary
Agreements. None of PDI, WPSR or WPS Nevada is subject to any outstanding
judgments, rules, orders, writs, injunctions or decrees of any court, arbitrator
or Governmental Authority which would, individually or in the aggregate, have a
material adverse effect on the financial condition of any of such Parties.

            4.5. No Pledge. As of the date of this Agreement, neither PDI's
ownership interest in WPS Nevada, nor WPSR's ownership interest in PDI, is
subject to a pledge to any other Person.

            4.6. Ownership Interest. As of the date of this Agreement, PDI owns
100 percent of the membership interests in WPS Nevada and no other Person owns
any interest in WPS Nevada.

        5. Covenants

            5.1. Obligations. The obligations of each of PDI and WPSR to perform
its respective obligations pursuant to paragraphs 1 and 2 hereof shall not be
affected by the failure of any member in WPS Nevada to make the equity
contributions or any failure to fulfill its respective obligations hereunder.
The obligations of each of PDI and WPSR pursuant to paragraphs 1 and 2 hereof
are absolute and unconditional subject to the specific terms and conditions
hereof irrespective of the validity, regularity or enforceability of, or any
change in or amendment to, the Asset Sale Agreement or any other agreement, the
institution or absence of any action to enforce the same, any waiver or consent
by Seller, the obtaining of any judgment against any Party or any action to
enforce the same, the inability to recover from WPS Nevada because of any
statute of limitations, laches or otherwise or any other circumstance which
might otherwise constitute a legal or equitable discharge of or a defense to its
obligation hereunder and shall not be affected by (i) any default by WPS Nevada
or any member of WPS Nevada or any other Person in the performance or observance
of any of its agreements or covenants hereunder or under the Asset Sale
Agreement and the transactions contemplated thereby, (ii) the bankruptcy or
insolvency of WPS Nevada, any member of WPS Nevada or any other Person or (iii)
the execution, delivery or performance by WPS Nevada or any member of WPS Nevada
of, or the exercise of any remedies of Seller under, the Asset Sale Agreement
and the Ancillary Agreements or any other agreement. Subject to the specific
terms and conditions of this Agreement, the obligations of each of PDI and WPSR
under paragraphs 1 and 2 hereof shall not be subject to any abatement,
reduction, limitation, impairment, termination, setoff, defense, counterclaim or
recoupment whatsoever or any right to any thereof, and shall not be released,
discharged or in any way affected by any reorganization, arrangement,
compromise, settlement, release, modification, amendment (whether material or
otherwise), waiver or termination of any or all of the obligations, conditions,
covenants or agreements of any Person in respect of the Asset Sale Agreement or
by the occurrence of any breach or default or the omission of any action, under
or referred to in any of the Asset Sale Agreement or the Ancillary Agreements,
or any modification of, or lack of priority or perfection of, or exercise of
remedies with respect to any security for the obligation, or by any lack of
validity or enforceability of any of such agreements, whether or not PDI or WPSR
shall have notice or knowledge of any of the foregoing, or to the fullest extent
permitted by applicable law, or by any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor.

            5.2. Maintenance of Ownership Interest. Prior to the fulfillment of
all obligations hereunder, each of PDI and WPSR agrees that it shall not assign,
sell or transfer, or permit the assignment, sale or transfer of, directly or
indirectly, any of its ownership interest in WPS Nevada (or PDI, in the case of
WPSR), except as permitted in paragraph 5.3 below.

            5.3. No Pledge of Ownership Interests. Prior to the fulfillment of
all obligations hereunder, each of PDI and WPSR agrees that it shall not,
without the prior written consent of Seller, which consent shall not be
unreasonably withheld, sell, assign, dispose of in any way, pledge, or caused to
be pledged, any of its ownership interests in WPS Nevada (or PDI, in the case of
WPSR) to any Person, or agree to any of the foregoing, except that PDI may
pledge its interests in WPS Nevada on or after the Closing Date in connection
with obtaining third-party financing for the acquisition of the Purchased Assets
by WPS Nevada.

            5.4. Changes in WPSR Credit Rating. WPSR will notify Seller as soon
as practicable of (i) any decrease in its credit rating by any "nationally
recognized statistical rating organization" (as defined for the purposes of Rule
436(g) under the Securities Act of 1933, as amended) or (ii) any notice given of
any intended or potential decrease in any such rating or of a possible change in
any such rating that does not indicate the direction of the possible change.

            5.5. Further Assurances. The Parties hereto hereby agree to execute
and deliver all such instruments and take all such action as may be necessary to
effectuate fully the purposes of this Agreement.

        6. Miscellaneous.

            6.1. Amendment and Modification. This Agreement may not be amended,
modified or supplemented and no provision may be waived except by written
agreement of Seller, WPS Nevada, PDI and WPSR.

            6.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Nevada (without giving
effect to conflict of law principles) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.

            6.3. Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the Parties and shall not in any way affect the meaning or
interpretation of this Agreement.

            6.4. Enforcement Action. Each of PDI and WPSR hereby agrees that,
pursuant to the exercise of remedies, Seller or its designee or transferee has
the rights, powers, privileges, interests and remedies of WPS Nevada with
respect to the obligations of PDI and WPSR hereunder, whether such rights,
powers, privileges interests and remedies arise under this Agreement or by
statute or in law or in equity or otherwise and Seller shall have the right to
enforce directly the provisions hereof against each of the Parties hereto. In
addition to, and not in derogation of, the foregoing, Seller may, in addition to
proceeding in their respective names, or otherwise, proceed to protect and
enforce the rights of WPS Nevada under this Agreement by suit in equity, action
at law or other appropriate proceedings, whether for the specific performance of
any covenant or agreement contained in this Agreement or otherwise, and whether
or not PDI, WPSR or WPS Nevada shall have complied with any of the provisions
hereof or proceeded to take any action authorized or permitted under applicable
law. Each and every right and remedy of Seller shall, to the extent permitted by
law, be cumulative and shall be in addition to any other remedy given hereunder
or under the Asset Sale Agreement or any other agreement now or hereafter
existing at law or in equity or by statute.

            6.5. Entire Agreement. This Agreement, including the schedules
hereto, embodies the entire agreement and understanding of the Parties hereto in
respect of the matters set forth herein, and there have been and are no
agreements, representations or warranties between or among the Parties other
than those set forth or provided for herein.

            6.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed original.

 

 

[Signature page follows]

 

        IN WITNESS WHEREOF

, the Parties have caused this Agreement to be signed by their respective duly
authorized officers as of the date first written above.

> > > > WPS NORTHERN NEVADA, LLC
> > > > 
> > > > By: WPS POWER DEVELOPMENT, INC.
> > > > (Its Sole Member)
> > > > 
> > > > By: _________________________
> > > > Name:  Gerald L. Mroczkowski
> > > > Title:  Vice President
> > > > 
> > > >  
> > > > 
> > > > WPS RESOURCES CORPORATION
> > > > 
> > > >  
> > > > 
> > > > By: _________________________
> > > > Name:  Ralph G. Baeten
> > > > Title:  Treasurer
> > > > 
> > > >  
> > > > 
> > > > WPS POWER DEVELOPMENT, INC.
> > > > 
> > > >  
> > > > 
> > > > By: _________________________
> > > > Name:   Gerald L. Mroczkowski
> > > > Title:  Vice President
> > > 
> > >          
> > > 
> > > > SIERRA PACIFIC POWER COMPANY
> > > > 
> > > >  
> > > > 
> > > > By: _________________________
> > > > Name:  William E. Peterson
> > > > Title:  Senior Vice President, General Counsel & Corporate Secretary