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