**EQUITY CONTRIBUTION AGREEMENT**
 

        This Equity Contribution Agreement(this "Agreement") dated as of October 25, 2000, is made and enteredinto 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 SierraPacific 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 beenformed by PDI to acquire certain assets and assume certain liabilities of Sellerpursuant to that certain Asset Sale Agreement for the Tracy/Pinon Asset Bundleof even date herewith between Seller and WPS Nevada ("Asset SaleAgreement");
**        WHEREAS, PDI owns100 percent of the membership interests in WPS Nevada as may be reflectedin a limited liability company operating agreement or other agreements relatedthereto to be entered into in connection therewith (the "LLCDocuments"), and PDI shall contribute to the capital and expenses of WPSNevada on the terms and conditions set forth below; and
**        WHEREAS, in connection withthe negotiation and execution of the Asset Sale Agreement, Seller has requestedthat this Agreement be executed and delivered by WPSR and PDI. Capitalized termsused herein but not defined shall have the meanings assigned to such terms inthe Asset Sale Agreement.
**        NOW, THEREFORE, inconsideration of the execution and delivery of the Asset Sale Agreement by theParties thereto and of the mutual promises herein contained, the Parties heretoagree as follows:

 

        1. Equity ContributionAgreement. Notwithstanding any other provision to the contrary contained inthe LLC Documents, as the sole member of WPS Nevada, PDI shall contribute (andWPSR agrees that it shall cause PDI to contribute) from time to time, inimmediately available funds, such capital and other funds as are necessary topermit WPS Nevada to fulfill when due its financial and other obligations whichare contained in the Asset Sale Agreement from and after the date thereof to andincluding the Closing, including without limitation the payment of the PurchasePrice pursuant to Section 4.2 of the Asset Sale Agreement (the "Pre-ClosingObligations") or amounts payable in connection with any breach of thePre-Closing Obligations ("Breach Obligations"); and provided, further,that PDI shall contribute (and WPSR shall cause PDI to contribute), suchadditional capital to WPS Nevada after the Closing as may be necessary to permitWPS Nevada to pay any adjustments to the Purchase Price due from WPS Nevadaunder the terms and conditions of Section 3.2 of the Asset Sale Agreement (the"Post-Closing Obligations"). It is agreed and understood that themaximum financial exposure under this Agreement of PDI (together with WPSR) isan amount equal to (i) the Purchase Price less the TPPA Amount plus (ii) thePost-Closing Obligations, if any, plus (iii) all transaction expenses incurredby WPS Nevada. It is also agreed and understood that Seller is directthird-party beneficiary of the provisions of this paragraph 1.

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

        3. Termination. Except asspecifically provided in paragraph 1 with respect to the Post-ClosingObligations and the Breach Obligations above, all obligations of PDI and WPSRunder this Agreement shall terminate and have no further force or effect uponthe earlier of (i) consummation of the Closing, and (ii) termination of theAsset Sale Agreement in accordance with the terms thereof. It is expresslyunderstood that this Agreement does not constitute a continuing guarantee of theperformance or financial obligations of WPS Nevada (including, withoutlimitation, 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) fromand after the Closing Date, except as specifically provided in paragraph 1above.

        4. Representations andWarranties of PDI, WPSR and WPS Nevada. PDI, WPSR and WPS Nevada each herebyrepresents and warrants, with respect to itself and WPS Nevada, to Seller asfollows, which representations and warranties shall survive the execution anddelivery of this Agreement and the consummation of the transactions contemplatedhereby:

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

            4.2. Authority.Each of PDI and WPSR has full corporate power and authority to execute anddeliver this Agreement and to consummate the transactions contemplated hereby.WPS Nevada has full limited liability company power and authority to execute anddeliver this Agreement and to consummate the transactions contemplated hereby.The execution and delivery of this Agreement by PDI and WPSR and theconsummation of the transactions contemplated hereby have been duly and validlyauthorized by all necessary corporate action required on the part of each suchParty. The execution and delivery of this Agreement by WPS Nevada and theconsummation of the transactions contemplated hereby have been duly and validlyauthorized by all necessary limited liability company action required on thepart of WPS Nevada. This Agreement has been duly and validly executed anddelivered by each of PDI, WPSR and WPS Nevada and this Agreement constitutes thelegal, valid and binding obligation of each of PDI, WPSR and WPS Nevada,enforceable against each such Party in accordance with its terms, except thatsuch enforceability may be limited by applicable bankruptcy, insolvency,reorganization, fraudulent conveyance, moratorium or other similar lawsaffecting or relating to enforcement of creditors' rights generally and generalprinciples of equity (regardless of whether enforcement is considered in aproceeding at law or in equity).

            4.3. Consentsand Approvals; No Violation. Neither the execution and delivery of thisAgreement by each of PDI, WPSR and WPS Nevada nor the consummation by each ofPDI, WPSR and WPS Nevada of the transactions contemplated hereby will (i)conflict with or result in any breach of any provision of the Certificate orArticles of Incorporation or Bylaws (or other similar governing documents) ofsuch Parties; (ii) result in a default (or give rise to any right oftermination, cancellation or acceleration) under any of the terms, conditions orprovisions of any note, bond, mortgage, indenture, material agreement or otherinstrument or obligation to which any such Party or any of their Affiliates is aparty or by which any of their respective assets may be bound, except for suchdefaults (or rights of termination, cancellation or acceleration) as to whichrequisite waivers or consents have been obtained or which would not,individually or in the aggregate, have a material adverse effect on thefinancial condition of any such Party; or (iii) constitute violations of anylaw, regulation, order, judgment or decree applicable to PDI, WPSR or WPSNevada, which violations, individually or in the aggregate, would have amaterial adverse effect on the financial condition of any such Party. No consentof any other Person or any Governmental Authority is required to authorize, oris required in connection with, the execution, delivery and performance of thisAgreement or the taking of any action by PDI, WPS Capital or WPS Nevada hereincontemplated.

            4.4. LegalProceedings. There are no actions or proceedings pending or, to theKnowledge of PDI, WPSR or WPS Nevada, threatened against PDI, WPSR or WPS Nevadabefore any court, arbitrator or Governmental Authority, which could,individually or in the aggregate, reasonably be expected to have a materialadverse effect on the financial condition of any of such Party or that questionthe validity of this Agreement, the Asset Sale Agreement or the AncillaryAgreements or of any action taken or to be taken pursuant to or in connectionwith the provisions of this Agreement, the Asset Sale Agreement or the AncillaryAgreements. None of PDI, WPSR or WPS Nevada is subject to any outstandingjudgments, rules, orders, writs, injunctions or decrees of any court, arbitratoror Governmental Authority which would, individually or in the aggregate, have amaterial adverse effect on the financial condition of any of such Parties.

            4.5. NoPledge. As of the date of this Agreement, neither PDI's ownership interestin WPS Nevada, nor WPSR's ownership interest in PDI, is subject to a pledge toany other Person.

            4.6. OwnershipInterest. As of the date of this Agreement, PDI owns 100 percent of themembership interests in WPS Nevada and no other Person owns any interest in WPSNevada.

        5. Covenants
            5.1. Obligations.The obligations of each of PDI and WPSR to perform its respective obligationspursuant to paragraphs 1 and 2 hereof shall not be affected by the failure ofany member in WPS Nevada to make the equity contributions or any failure tofulfill its respective obligations hereunder. The obligations of each of PDI andWPSR pursuant to paragraphs 1 and 2 hereof are absolute and unconditionalsubject to the specific terms and conditions hereof irrespective of thevalidity, regularity or enforceability of, or any change in or amendment to, theAsset Sale Agreement or any other agreement, the institution or absence of anyaction to enforce the same, any waiver or consent by Seller, the obtaining ofany judgment against any Party or any action to enforce the same, the inabilityto recover from WPS Nevada because of any statute of limitations, laches orotherwise or any other circumstance which might otherwise constitute a legal orequitable discharge of or a defense to its obligation hereunder and shall not beaffected by (i) any default by WPS Nevada or any member of WPS Nevada or anyother Person in the performance or observance of any of its agreements orcovenants hereunder or under the Asset Sale Agreement and the transactionscontemplated thereby, (ii) the bankruptcy or insolvency of WPS Nevada, anymember of WPS Nevada or any other Person or (iii) the execution, delivery orperformance by WPS Nevada or any member of WPS Nevada of, or the exercise of anyremedies of Seller under, the Asset Sale Agreement and the Ancillary Agreementsor any other agreement. Subject to the specific terms and conditions of thisAgreement, the obligations of each of PDI and WPSR under paragraphs 1 and 2hereof shall not be subject to any abatement, reduction, limitation, impairment,termination, setoff, defense, counterclaim or recoupment whatsoever or any rightto any thereof, and shall not be released, discharged or in any way affected byany reorganization, arrangement, compromise, settlement, release, modification,amendment (whether material or otherwise), waiver or termination of any or allof the obligations, conditions, covenants or agreements of any Person in respectof the Asset Sale Agreement or by the occurrence of any breach or default or theomission of any action, under or referred to in any of the Asset Sale Agreementor the Ancillary Agreements, or any modification of, or lack of priority orperfection of, or exercise of remedies with respect to any security for theobligation, or by any lack of validity or enforceability of any of suchagreements, whether or not PDI or WPSR shall have notice or knowledge of any ofthe foregoing, or to the fullest extent permitted by applicable law, or by anyother circumstance whatsoever which might otherwise constitute a legal orequitable discharge or defense of a surety or guarantor.

            5.2. Maintenanceof Ownership Interest. Prior to the fulfillment of all obligationshereunder, each of PDI and WPSR agrees that it shall not assign, sell ortransfer, 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. NoPledge of Ownership Interests. Prior to the fulfillment of all obligationshereunder, each of PDI and WPSR agrees that it shall not, without the priorwritten 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 itsownership 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 inWPS Nevada on or after the Closing Date in connection with obtaining third-partyfinancing for the acquisition of the Purchased Assets by WPS Nevada.

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

            5.5. FurtherAssurances. The Parties hereto hereby agree to execute and deliver all suchinstruments and take all such action as may be necessary to effectuate fully thepurposes of this Agreement.

        6. Miscellaneous.

            6.1. Amendmentand Modification. This Agreement may not be amended, modified orsupplemented and no provision may be waived except by written agreement ofSeller, WPS Nevada, PDI and WPSR.

            6.2. GoverningLaw. This Agreement shall be governed by and construed in accordance withthe law of the State of Nevada (without giving effect to conflict of lawprinciples) 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 thepurpose of reference, are not part of the agreement of the Parties and shall notin any way affect the meaning or interpretation of this Agreement.

            6.4. EnforcementAction. Each of PDI and WPSR hereby agrees that, pursuant to the exercise ofremedies, Seller or its designee or transferee has the rights, powers,privileges, interests and remedies of WPS Nevada with respect to the obligationsof PDI and WPSR hereunder, whether such rights, powers, privileges interests andremedies arise under this Agreement or by statute or in law or in equity orotherwise and Seller shall have the right to enforce directly the provisionshereof against each of the Parties hereto. In addition to, and not in derogationof, the foregoing, Seller may, in addition to proceeding in their respectivenames, or otherwise, proceed to protect and enforce the rights of WPS Nevadaunder this Agreement by suit in equity, action at law or other appropriateproceedings, whether for the specific performance of any covenant or agreementcontained in this Agreement or otherwise, and whether or not PDI, WPSR or WPSNevada shall have complied with any of the provisions hereof or proceeded totake any action authorized or permitted under applicable law. Each and everyright and remedy of Seller shall, to the extent permitted by law, be cumulativeand shall be in addition to any other remedy given hereunder or under the AssetSale Agreement or any other agreement now or hereafter existing at law or inequity or by statute.

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

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

 

 
**[Signature page follows]**
 
**        IN WITNESS WHEREOF, theParties have caused this Agreement to be signed by their respective dulyauthorized 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**********