Document:

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                                                                     EXHIBIT 4.8

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                                PLEDGE AGREEMENT

                                      AMONG

                            SIERRA PACIFIC RESOURCES

                                       AND

           WELLS FARGO BANK, NATIONAL ASSOCIATION, AS COLLATERAL AGENT

                                       AND

                     WELLS FARGO BANK, NATIONAL ASSOCIATION,
                           AS SECURITIES INTERMEDIARY

                                       AND

                THE BANK OF NEW YORK, AS PURCHASE CONTRACT AGENT

                         DATED AS OF ____________, 2005

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                                TABLE OF CONTENTS

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Section 1.        Definitions....................................................................................   2

Section 2.        Pledge.........................................................................................   7
         Section 2.1       Pledge................................................................................   7
         Section 2.2       Control; Financing Statement..........................................................   7
         Section 2.3       Termination...........................................................................   7

Section 3.        Distributions on Pledged Collateral............................................................   7
         Section 3.1       Income Distributions..................................................................   7
         Section 3.2       Principal Payments Following Termination Event........................................   7
         Section 3.3       Principal Payments Prior to or On Purchase Contract Settlement Date...................   8
         Section 3.4       Payments to Purchase Contract Agent...................................................   9
         Section 3.5       Assets Not Properly Released..........................................................   9

Section 4.        Control........................................................................................   9
         Section 4.1       Establishment of Collateral Account...................................................   9
         Section 4.2       Treatment as Financial Assets.........................................................  10
         Section 4.3       Sole Control by Collateral Agent......................................................  10
         Section 4.4       Securities Intermediary's Location....................................................  10
         Section 4.5       No Other Claims.......................................................................  10
         Section 4.6       Investment and Release................................................................  10
         Section 4.7       Statements and Confirmations..........................................................  10
         Section 4.8       Tax Allocations.......................................................................  10
         Section 4.9       No Other Agreements...................................................................  11
         Section 4.10      Powers Coupled With An Interest.......................................................  11

Section 5.        Initial Deposit; Creation of Treasury PIES; and Recreation of Corporate PIES; Other............  11
         Section 5.1       Initial Deposit of Senior Notes.......................................................  11
         Section 5.2       Creation of Treasury PIES by Substitution of Treasury Securities......................  11
         Section 5.3       Recreation of Corporate PIES..........................................................  12
         Section 5.4       Termination Event.....................................................................  14
         Section 5.5       Cash Settlement.......................................................................  14
         Section 5.6       Early Settlement; Merger Early Settlement.............................................  16
         Section 5.7       Optional Remarketing..................................................................  17
         Section 5.8       Application of Proceeds in Settlement; Remarketing....................................  18

Section 6.        Voting Rights..................................................................................  21

Section 7.        Rights and Remedies............................................................................  21
         Section 7.1       Rights and Remedies of the Collateral Agent...........................................  21
         Section 7.2       Substitutions.........................................................................  22
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Section 8.        Representations and Warranties; Covenants......................................................  22
         Section 8.1       Representations and Warranties........................................................  22
         Section 8.2       Covenants.............................................................................  23

Section 9.        The Collateral Agent and the Securities Intermediary...........................................  24
         Section 9.1       Appointment, Powers and Immunities....................................................  24
         Section 9.2       Instructions of the Company...........................................................  25
         Section 9.3       Reliance by Collateral Agent and Securities Intermediary..............................  25
         Section 9.4       Rights in Other Capacities............................................................  25
         Section 9.5       Non-Reliance on Collateral Agent and Securities Intermediary..........................  26
         Section 9.6       Compensation and Indemnity............................................................  26
         Section 9.7       Failure to Act........................................................................  26
         Section 9.8       Resignation of Collateral Agent and Securities Intermediary...........................  27
         Section 9.9       Right to Appoint Agent or Advisor.....................................................  29
         Section 9.10      Survival..............................................................................  29
         Section 9.11      Exculpation...........................................................................  29

Section 10.       Amendment......................................................................................  29
         Section 10.1      Amendment Without Consent of Holders..................................................  29
         Section 10.2      Amendment with Consent of Holders.....................................................  29
         Section 10.3      Execution of Amendments...............................................................  30
         Section 10.4      Effect of Amendments..................................................................  31
         Section 10.5      Reference to Amendments...............................................................  31

Section 11.       Merger, Consolidation, Sale or Conveyance......................................................  31
         Section 11.1      When Company May Merge, Etc...........................................................  31
         Section 11.2      Successor Corporation Substituted.....................................................  31
         Section 11.3      Limitation............................................................................  32

Section 12.       Miscellaneous..................................................................................  32
         Section 12.1      No Waiver.............................................................................  32
         Section 12.2      Governing Law; Jurisdiction and Venue.................................................  32
         Section 12.3      Notices...............................................................................  32
         Section 12.4      Successors and Assigns................................................................  33
         Section 12.5      Counterparts..........................................................................  33
         Section 12.6      Effect of Headings and Table of Contents..............................................  33
         Section 12.7      Severability..........................................................................  33
         Section 12.8      Expenses, etc.........................................................................  34
         Section 12.9      Security Interest Absolute............................................................  34

                                                    EXHIBITS

EXHIBIT A                  Instruction from Purchase Contract Agent to Collateral Agent
                           (Creation of Treasury PIES)...........................................................  A-1
EXHIBIT B                  Instruction from Collateral Agent to Securities Intermediary
                           (Creation of Treasury PIES)...........................................................  B-1
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EXHIBIT C         Instruction from Purchase Contract Agent to Collateral Agent
                  (Recreation of Corporate PIES).......................................................  C-1
EXHIBIT D         Instruction from Collateral Agent to Securities Intermediary
                  (Recreation of Corporate PIES).......................................................  D-1
EXHIBIT E         Notice of Cash Settlement from the Securities Intermediary to the
                  Purchase Contract Agent..............................................................  E-1
EXHIBIT F         Instruction from Holder of Separated Senior Notes to Collateral Agent
                  Regarding Remarketing................................................................  F-1
EXHIBIT G         Instruction from Purchase Contract Agent to Collateral Agent.........................  G-1
EXHIBIT H         Agency and Custody Account Direction for Cash Balances...............................  H-1
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                                      -iii-

<PAGE>

      PLEDGE AGREEMENT, dated as of __________, 2005, among SIERRA PACIFIC
RESOURCES, a Nevada corporation (the "Company"), WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association, not individually but solely as
collateral agent (in such capacity, together with its successors in such
capacity, the "Collateral Agent"), WELLS FARGO BANK, NATIONAL ASSOCIATION, not
individually but solely in its capacity as "Securities Intermediary" (in such
capacity, together with its successors in such capacity, the "Securities
Intermediary") as defined in Section 8-102(a)(14) of the UCC (as hereinafter
defined) with respect to the Collateral Account (as hereinafter defined), and
THE BANK OF NEW YORK, a New York banking corporation, not individually but
solely as purchase contract agent and as attorney-in-fact of the Holders from
time to time of the PIES (in such capacity, together with its successors in such
capacity, the "Purchase Contract Agent") under the Purchase Contract Agreement
(as hereinafter defined).

                                    RECITALS

      The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement dated as of the date hereof (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Purchase Contract Agreement"), pursuant to which there may be issued up to
4,704,350 PIES (the "PIES"), all of which will initially be Corporate PIES.

      Each Corporate PIES consists of a unit comprised of (a) one stock purchase
contract (a "Purchase Contract") under which the Holder will purchase from the
Company and the Company will be required to sell to such Holder not later than
the Purchase Contract Settlement Date, for an amount equal to $50 (the "Stated
Amount"), a number of shares of Common Stock of the Company equal to the
Settlement Rate or Early Settlement Rate, as the case may be, then in effect and
(b) either beneficial ownership of (1) a 1/20th, or 5%, undivided beneficial
interest in a Senior Note with a principal amount of $1,000 or (2) following the
Remarketing of the Senior Note in accordance with the Purchase Contract
Agreement and the Remarketing Agreement, the Treasury Portfolio Interest,
subject to the termination or settlement of the Purchase Contracts.

      In accordance with the terms of the Purchase Contract Agreement, a Holder
of Corporate PIES may separate the Senior Notes from the related Purchase
Contracts by substituting Treasury Securities for such Senior Notes that will
pay on maturity in the aggregate an amount equal to the aggregate Stated Amount
of such Corporate PIES except during an Active Remarketing Period. Upon such
substitution, the Corporate PIES will become Treasury PIES in accordance with
the terms of the Purchase Contract Agreement. Each Treasury PIES will be
comprised of (a) a Purchase Contract under which the holder will purchase from
the Company not later than the Purchase Contract Settlement Date, for the Stated
Amount, a number of shares of Common Stock of the Company equal to the
Settlement Rate or Early Settlement Rate, as the case may be, then in effect,
and (b) a 1/20th undivided beneficial interest in a Treasury Security having a
principal amount at maturity equal to $1,000 and maturing on or prior to the
Business Day preceding the Purchase Contract Settlement Date, subject to the
termination or settlement of the Purchase Contracts.

      Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders, from time to time, of the PIES have irrevocably
authorized the Purchase Contract Agent, as attorney-in-fact of such Holders,
among other things, to execute and deliver this

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                                                                               2

Agreement on behalf of such Holders and to grant the pledge provided herein of
the Collateral Account to secure the Obligations.

      Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the PIES, agree as follows:

Section 1. Definitions.

            For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

            (a) the terms defined in this Section have the meanings assigned to
them in this Section and include the plural as well as the singular;

            (b) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section, Exhibit or other section;

            (c) the following terms which are defined in the UCC shall have the
meanings set forth therein: "certificated security," "control," "financial
asset," "entitlement order," "securities account" and "security entitlement";

            (d) capitalized terms used and not defined in this Agreement shall
have the meanings set forth in the Purchase Contract Agreement; and

            (e) the following terms have the meanings given to them in this
Section 1(e):

      "Account Direction" means the Agency and Custody Account Direction for
Cash Balances in the form of Exhibit H attached hereto, as executed and
delivered to the Collateral Agent by the Company from time to time.

      "Active Remarketing Period" means the period commencing on and including
the Business Day preceding any Three-Day Remarketing Period and ending on and
including, in the case of a Successful Remarketing during that Three-Day
Remarketing Period, the Remarketing Settlement Date, or, if none of the
Remarketings during that Three-Day Remarketing Period is successful, the
Business Day following the last remarketing date during that Three-Day
Remarketing Period.

      "Agreement" means this Pledge Agreement, as the same may be amended,
modified or supplemented from time to time in accordance with the terms thereof.

      "Business Day" means any day other than Saturday or Sunday or a day on
which banking institutions in New York City are authorized or required by law or
executive order to remain closed.

      "Cash" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.

      "Collateral" means the collective reference to:

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                                                                               3

            (1) the Collateral Account;

            (2) all investment property and other financial assets and other
      property and credit balances from time to time credited to the Collateral
      Account, including, without limitation, (A) any Senior Notes or any
      Treasury Portfolio Interest which are then a component of the Corporate
      PIES and, in each case, security entitlements relating thereto, (B) any
      Treasury Securities and security entitlements relating thereto delivered
      from time to time upon establishment of Treasury PIES in accordance with
      Section 5.2 hereof and (C) payments made by Holders pursuant to Section
      5.5 hereof;

            (3) all Proceeds of any of the foregoing (whether such Proceeds
      arise before or after the commencement of any proceeding under any
      applicable bankruptcy, insolvency or other similar law, by or against the
      pledgor or with respect to the pledgor); and

            (4) all powers and rights now owned or hereafter acquired under or
      with respect to the Collateral Account.

      "Collateral Account" means the Securities Account No. ________ entitled
"Wells Fargo Bank, National Association, as Collateral Agent, Securities Account
(Sierra Pacific Resources)" maintained by the Securities Intermediary for the
Purchase Contract Agent on behalf of and as attorney-in-fact for the Holders.

      "Collateral Agent" means the Person named as the "Collateral Agent" in the
first paragraph of this instrument until a successor shall have become such in
accordance with the terms of this Agreement, and thereafter "Collateral Agent"
shall mean such successor.

      "Collateral Substitution" means the substitution of Treasury Securities
for a Holder's Senior Notes, pursuant to Section 3.13 of the Purchase Contract
Agreement and Section 5.2 of this Agreement, and the substitution of a Holder's
Senior Notes for Treasury Securities, pursuant to Section 3.14 of the Purchase
Contract Agreement and Section 5.3 of this Agreement.

      "Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor shall have become such in accordance with
the terms of this Agreement, and thereafter "Company" shall mean such successor.

      "Custodian" has the meaning set forth in Section 5.2(c).

      "Early Remarketing" means a Remarketing in one or more three-day
remarketing periods that consist of three sequential possible remarketing dates
selected by the Company during the Period for Early Remarketing.

      "Failed Remarketing" has the meaning set forth in the Remarketing
Agreement.

      "Final Remarketing" means a Remarketing during Final Remarketing Period.

      "Final Remarketing Period" means the period beginning on the fifth
Business Day and ending on and including the third Business Day preceding the
Purchase Contract Settlement Date.

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                                                                               4

      "Final Remarketing Date" means last day of the Final Remarketing Period.

      "Indenture Officers' Certificate" has the meaning set forth in Section 1.1
of the Purchase Contract Agreement.

      "Obligations" means, with respect to each Holder, the collective reference
to all obligations and liabilities of such Holder under such Holder's Purchase
Contract and this Agreement or any other document made, delivered or given in
connection herewith or therewith, in each case whether on account of principal,
interest (including, without limitation, interest accruing before and after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to such Holder, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Company or the Collateral Agent or
the Securities Intermediary that are required to be paid by the Holder pursuant
to the terms of any of the foregoing agreements).

      "Period for Early Remarketing" means the period beginning the day
following the consummation of the exchange offer and ending on the ninth
Business Day prior to the Purchase Contract Settlement Date.

      "Permitted Investments" means any one of the following which shall mature
not later than the Purchase Contract Settlement Date:

            (1) any evidence of indebtedness with an original maturity of 365
      days or less issued, or directly and fully guaranteed or insured, by the
      United States of America or any agency or instrumentality thereof
      (provided that the full faith and credit of the United States of America
      is pledged in support of the timely payment thereof or such indebtedness
      constitutes a general obligation of it);

            (2) deposits, certificates of deposit or acceptances with an
      original maturity of 365 days or less of any institution which is a member
      of the Federal Reserve System having combined capital and surplus and
      undivided profits of not less than $200,000,000 at the time of deposit,
      which may include the Collateral Agent or any of its affiliates;

            (3) investments with an original maturity of 365 days or less of any
      Person that are fully and unconditionally guaranteed by a bank referred to
      in clause (2);

            (4) repurchase agreements and reverse repurchase agreements relating
      to marketable direct obligations issued or unconditionally guaranteed by
      the United States Government or issued by any agency thereof and backed as
      to timely payment by the full faith and credit of the United States
      Government;

            (5) investments in commercial paper, other than commercial paper
      issued by the Company or its affiliates, of any corporation incorporated
      under the laws of the United States or any State thereof, which commercial
      paper has a rating at the time of purchase at least equal to "A-1" by
      Standard & Poor's Ratings Services, Inc. ("S&P") or at least equal to
      "P-1" by Moody's Investors Service, Inc. ("Moody's"); and

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                                                                               5

            (6) investments in money market funds registered under the
      Investment Company Act of 1940, as amended, rated in the highest
      applicable rating category by S&P or Moody's, which may include such money
      market funds offered, administered or serviced by the Collateral Agent or
      any of its affiliates.

      "PIES" has the meaning specified in the paragraph preceding the recitals
of this Agreement.

      "Pledge" means the lien and security interest created by this Agreement.

      "Pledged Senior Notes" means the Senior Notes, which shall be in
certificated form, and security entitlements with respect thereto from time to
time credited to the Collateral Account and not then released from the Pledge.

      "Pledged Treasury Portfolio Interest" means the Treasury Portfolio
Interest and security entitlements with respect thereto from time to time
credited to the Collateral Account and not then released from the Pledge.

      "Pledged Treasury Securities" means Treasury Securities and security
entitlements with respect thereto from time to time credited to the Collateral
Account and not then released from the Pledge.

      "Proceeds" has the meaning ascribed thereto in the UCC and includes,
without limitation, all interest, dividends, Cash, instruments, securities,
financial assets (as defined in Section 8-102(a)(9) of the UCC) and other
property received, receivable or otherwise distributed upon the sale, exchange,
collection or disposition of any financial assets from time to time held in the
Collateral Account.

      "Purchase Contract Agent" means the Person named as the "Purchase Contract
Agent" in the first paragraph of this instrument until a successor shall have
become such in accordance with the terms of the Purchase Contract Agreement, and
thereafter "Purchase Contract Agent" shall mean such successor.

      "Purchase Contract Agreement" has the meaning specified in the paragraph
preceding the recitals of this Agreement.

      "Purchase Contract Settlement Date" means November 15, 2005.

      "Remarketing" means the remarketing of the Remarketing Senior Notes
pursuant to the Remarketing Procedures.

      "Remarketing Fee" has the meaning set forth in Section 5.8(a).

      "Remarketing Procedures" means, collectively, the procedures and
requirements relating to the Remarketing and the determination of the Reset Rate
as set forth in the Indenture, the Purchase Contract Agreement, this Agreement
and the Remarketing Agreement.

      "Remarketing Senior Notes" has the meaning set forth in Section 5.8(a).

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                                                                               6

      "Remarketing Settlement Date" means the date of the settlement of any
Successful Remarketing, which will be three Business Days after such
Remarketing.

      "Reset Rate" has the meaning set forth in the Indenture Officers'
Certificate.

      "Securities Intermediary" means the Person named as the "Securities
Intermediary" in the first paragraph of this instrument until a successor shall
have become such in accordance with the terms of this Agreement, and thereafter
"Securities Intermediary" shall mean such successor.

      "Separated Senior Notes" means any Senior Notes that are not Pledged
Senior Notes.

      "Stated Amount" has the meaning specified in the second paragraph of the
recitals of this Agreement.

      "Successful Remarketing" has the meaning specified in the Remarketing
Agreement.

      "Three-Day Remarketing Period" means one or more three-day remarketing
periods that consist of three sequential possible remarketing dates selected by
the Company.

      "TRADES" means the Treasury/Reserve Automated Debt Entry System maintained
by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.

      "TRADES Regulations" means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, an amended from time to time.
Unless otherwise defined herein, all terms defined in the TRADES Regulations are
used herein as therein defined.

      "Transfer" means:

            (1) in the case of certificated securities in registered form,
      delivery as provided in Section 8-301(a) of the UCC, endorsed to the
      transferee or in blank by an effective endorsement;

            (2) in the case of Treasury Securities, registration of the
      transferee as the owner of such Treasury Securities on TRADES; and

            (3) in the case of security entitlements, including, without
      limitation, security entitlements with respect to Treasury Securities, a
      securities intermediary indicating by book entry that such security
      entitlement has been credited to the transferee's securities account.

      "Treasury Security" means a zero-coupon U.S. Treasury Security that has a
principal amount at maturity of $1,000 and matures on or prior to the Business
Day prior to the Purchase Contract Settlement Date.

      "UCC" means the Uniform Commercial Code as in effect in the State of New
York from time to time.

      "Value" means, with respect to any item of Collateral on any date, as to
(i) Cash, the face amount thereof, (ii) Senior Notes, the aggregate principal
amount thereof due at maturity and (iii)

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                                                                               7

Treasury Securities, the aggregate principal amount thereof due at maturity and
(iv) Treasury Portfolio Interest, the aggregate principal amount thereof due at
maturity.

Section 2. Pledge.

      Section 2.1 Pledge.

      Each Holder from time to time, acting through the Purchase Contract Agent
as such Holder's attorney-in-fact, hereby pledges and grants to the Collateral
Agent, as agent of and for the benefit of the Company, a continuing first
priority security interest in and to, and a lien upon and right of set off
against, all of such Holder's right, title and interest in and to the Collateral
to secure the prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of the Obligations. The
Collateral Agent shall have all of the rights, remedies and recourses with
respect to the Collateral afforded a secured party by the UCC, in addition to,
and not in limitation of, the other rights, remedies and recourses afforded to
the Collateral Agent by this Agreement.

      Section 2.2 Control; Financing Statement.

            (a) The Collateral Agent shall have control of the Collateral
Account pursuant to the provisions of Section 4.3 of this Agreement.

            (b) On the date of initial issuance of the PIES, the Company shall
file in the Office of the Secretary of State of the State of New York, a
financing statement identifying the Purchase Contract Agent, as attorney-in-fact
for the Holders, as debtors, and the Collateral Agent, as the secured party, and
describing the Collateral.

      Section 2.3 Termination.

      As to each Holder, this Agreement and the Pledge created hereby shall
terminate upon the satisfaction in full, discharge or termination of such
Holder's Obligations. Upon satisfaction in full, discharge or termination of
such Holder's Obligations and written notice thereof from the Company, the
Purchase Contract Agent or holders of at least 10% of the outstanding PIES to
the Securities Intermediary, the Securities Intermediary shall, Transfer any
remaining Collateral to the Purchase Contract Agent for distribution to such
Holder in accordance with its interest, free and clear of any lien, pledge or
security interest created hereby.

Section 3. Distributions on Pledged Collateral

      Section 3.1 Income Distributions.

      All income distributions, including interest payments received by the
Securities Intermediary or the Collateral Agent on account of the Pledged Senior
Notes, the Pledged Treasury Portfolio Interest or Permitted Investments from
time to time held in the Collateral Account, if any, shall be distributed to the
Purchase Contract Agent for the benefit of the applicable Holders in whose names
the Corporate PIES or Treasury PIES are registered at the close of business on
the Record Date (as specified in the Purchase Contract Agreement) preceding the
date of such distribution as provided in the Purchase Contract Agreement.
Notwithstanding the foregoing, income distributions, including interest payments
received by the Securities Intermediary or the Collateral Agent on account of
the Treasury Portfolio Interest shall not exceed the Treasury Portfolio Return.

      Section 3.2 Principal Payments Following Termination Event.

      All payments received by the Collateral Agent or the Securities
Intermediary following a Termination Event with respect to (1) the Pledged
Senior Notes or security entitlement with respect thereto, (2) the Pledged
Treasury Portfolio Interest or security entitlement with respect thereto or (3)
the Pledged Treasury Securities or security entitlement with respect thereto
shall, in each case, be distributed to the Purchase Contract Agent for the
benefit of the applicable Holders in whose names the Corporate PIES or Treasury
PIES are registered at the close of business on the Record Date (as

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                                                                               8

specified in the Purchase Contract Agreement) preceding the date of such
distribution for distribution to such Holders in accordance with their
respective interests.

      Section 3.3 Principal Payments Prior to or On Purchase Contract Settlement
Date.

            (a) Except as provided in clause 3.3(b) below, if the Securities
Intermediary and Collateral Agent have not received notice of a Termination
Event, all payments received by the Collateral Agent or the Securities
Intermediary of (1) the principal amount with respect to the Pledged Senior
Notes or security entitlement with respect thereto (2) the principal amount with
respect to the Pledged Treasury Portfolio Interest or security entitlement with
respect thereto or (3) the principal amount with respect to Pledged Treasury
Securities or security entitlement with respect thereto, shall be held and
invested at the written direction of the Company in Permitted Investments until
the Purchase Contract Settlement Date and on the Purchase Contract Settlement
Date distributed to the Company as provided in Section 5.8 hereof. Any balance
remaining in the Collateral Account shall be distributed to the Purchase
Contract Agent for the benefit of the applicable Holders for distribution to
such Holders in whose names the Corporate PIES or Treasury PIES are registered
at the close of business on the Record Date (as specified in the Purchase
Contract Agreement) immediately preceding the date of such distribution in
accordance with their respective interests. Upon the request of the Securities
Intermediary or the Collateral Agent, as applicable, the Company shall instruct
the Securities Intermediary or the Collateral Agent, as applicable, as to the
type of Permitted Investments in which any payments made under this Section
shall be invested, provided, however, that if the Company fails to deliver such
instructions by 10:30 a.m. (New York City time), the Securities Intermediary or
the Collateral Agent, as applicable, shall invest such payments in the Permitted
Investments described in clause 6 of the definition of Permitted Investments and
identified by the Company in the Account Direction.

            (b) All payments received by the Collateral Agent or the Securities
Intermediary of (1) the principal amount with respect to the Pledged Senior
Notes or security entitlement with respect thereto (2) the principal amount with
respect to the Pledged Treasury Portfolio Interest or security entitlement with
respect thereto or (3) the principal amount of Pledged Treasury Securities or
security entitlement with respect thereto that, in each case, have been released
from the Pledge shall be distributed to the Purchase Contract Agent, for the
benefit of the Holders, to be distributed to such Holders in whose names the
Corporate PIES or Treasury PIES are registered at the close of business on the
Record Date (as specified in the Purchase Contract Agreement) immediately
preceding the date of such distribution in accordance with their respective
interests.

<PAGE>

                                                                               9

      Section 3.4 Payments to Purchase Contract Agent.

            Payments to the Purchase Contract Agent hereunder shall be made to
the account designated by the Purchase Contract Agent for such purpose (which
shall be: The Bank of New York, ABA 021 000 018; ______; Account Name:
__________; Account No. __________, unless and until otherwise advised by the
Purchase Contract Agent) not later than 12:00 p.m. (New York City time), on the
Business Day such payment is received by the Collateral Agent or the Securities
Intermediary; provided, however, that if such payment is received by the
Collateral Agent or the Securities Intermediary on a day that is not a Business
Day or after 11:00 a.m. (New York City time) on a Business Day, then such
payment shall be made no later than 10:30 a.m. (New York City time), on the next
succeeding Business Day.

      Section 3.5 Assets Not Properly Released.

            If the Purchase Contract Agent or any Holder shall receive any
payments on account of financial assets credited to the Collateral Account and
not released therefrom in accordance with this Agreement, the Purchase Contract
Agent or such Holder shall hold the same as trustee of an express trust for the
benefit of the Company and, upon receipt of an Officers' Certificate so
directing, promptly deliver the same to the Securities Intermediary for credit
to the Collateral Account or to the Company for application to the obligations
of the Holders under the related Purchase Contracts, and the Purchase Contract
Agent and Holders shall acquire no right, title or interest in any such payments
of amounts so received.

Section 4. Control.

      Section 4.1 Establishment of Collateral Account.

            The Securities Intermediary hereby confirms that:

            (1) the Securities Intermediary has established the Collateral
      Account;

            (2) the Collateral Account is a securities account;

            (3) subject to the terms of this Agreement, the Securities
      Intermediary shall treat the Purchase Contract Agent as entitled to
      exercise the rights that comprise any financial asset credited to the
      Collateral Account;

            (4) upon delivery to the Securities Intermediary of any property,
      including Cash, pursuant to this Agreement, the Purchase Contract
      Agreement or the Indenture, the Securities Intermediary will promptly
      indicate by book-entry that such property has been credited to the
      Collateral Account; and

            (5) except with respect to the Pledged Senior Notes, which shall be
      registered in the name of the Purchase Contract Agent, all securities,
      securities entitlements or other property underlying any financial assets
      credited to the Collateral Account shall be registered in the name of the
      Securities Intermediary, endorsed to the Securities Intermediary, or in
      blank or credited to another securities account maintained in the name of
      the Securities Intermediary, and in no case will any financial asset or
      other property credited to the Collateral Account be registered in the
      name of the Purchase Contract Agent or any Holder, payable to the order of
      the Purchase Contract Agent or any Holder or specially endorsed to the
      Purchase Contract Agent or any Holder.

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                                                                              10

      Section 4.2 Treatment as Financial Assets.

            Each item of property (whether investment property, financial asset,
security, security entitlement, instrument or Cash) credited to the Collateral
Account shall be treated as a financial asset under Article 8 of the UCC.

      Section 4.3 Sole Control by Collateral Agent.

            Except as provided in Section 6, at all times prior to the
termination of the Pledge, the Collateral Agent shall have sole control of the
Collateral Account, and the Securities Intermediary shall take instructions and
directions with respect to the Collateral Account solely from the Collateral
Agent. If at any time the Securities Intermediary shall receive an entitlement
order issued by the Collateral Agent and relating to the Collateral Account, the
Securities Intermediary shall comply with such entitlement order without further
consent by the Purchase Contract Agent or any Holder or any other Person. Until
termination of the Pledge, the Securities Intermediary will not comply with any
entitlement orders issued by the Purchase Contract Agent or any Holder.

      Section 4.4 Securities Intermediary's Location.

            The Collateral Account and the rights and obligations of the
Securities Intermediary, the Collateral Agent, the Purchase Contract Agent and
the Holders with respect thereto shall be governed by the laws of the State of
New York. Regardless of any provision in any other agreement, for purposes of
the UCC, New York shall be deemed to be the Securities Intermediary's location
and jurisdiction.

      Section 4.5 No Other Claims.

            Except for the claims and interest of the Collateral Agent, the
Company, the Purchase Contract Agent and the Holders in the Collateral Account,
the Securities Intermediary does not know of any claim to, or interest in, the
Collateral Account or in any financial asset credited thereto. If any Person
asserts any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, warrant of attachment, execution or similar process) against the
Collateral Account or in any financial asset carried therein, the Securities
Intermediary, upon receiving written notice thereof, will promptly notify the
Collateral Agent, the Purchase Contract Agent and the Company.

      Section 4.6 Investment and Release.

            All proceeds of financial assets from time to time deposited in the
Collateral Account shall be invested and reinvested as provided in this
Agreement. At all times prior to termination of the Pledge, no property shall be
released from the Collateral Account except in accordance with this Agreement or
upon written instructions of the Collateral Agent.

      Section 4.7 Statements and Confirmations.

            The Securities Intermediary will promptly send copies of all
statements, confirmations and other correspondence concerning the Collateral
Account and any financial assets credited thereto simultaneously to each of the
Collateral Agent, the Purchase Contract Agent and the Company at their addresses
for notices under this Agreement.

      Section 4.8 Tax Allocations.

            The Company shall report all items of income, gain, expense and loss
recognized in the Collateral Account to the Internal Revenue Service and all
state and local taxing authorities under the names and taxpayer identification
numbers of the Holders that are the beneficial owners thereof. None of the
Collateral Agent, the Securities Intermediary or the Purchase Contract Agent
shall have any responsibility for such tax reporting.

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                                                                              11

      Section 4.9 No Other Agreements.

            The Securities Intermediary has not entered into, and prior to the
termination of the Pledge will not enter into, any agreement with any other
Person relating to the Collateral Account or any financial assets credited
thereto, including, without limitation, any agreement to comply with entitlement
orders of any Person other than the Collateral Agent.

      Section 4.10 Powers Coupled With An Interest.

            The rights and powers granted in this Section 4 to the Collateral
Agent have been granted in order to perfect its security interests in the
Collateral Account, are powers coupled with an interest and will be affected
neither by the bankruptcy of the Purchase Contract Agent or any Holder nor by
the lapse of time. The obligations of the Securities Intermediary under this
Section 4 shall continue in effect until the termination of the Pledge.

Section 5. Initial Deposit; Creation of Treasury PIES; and Recreation of
Corporate PIES; Other.

      Section 5.1 Initial Deposit of Senior Notes.

            Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
Corporate PIES, shall Transfer to the Securities Intermediary, and the
Securities Intermediary shall accept, for credit to the Collateral Account, the
Senior Notes or security entitlements relating to such Senior Notes, and the
Securities Intermediary shall indicate by book entry that a security entitlement
with respect to such Senior Notes has been credited to the Collateral Account.

      Section 5.2 Creation of Treasury PIES by Substitution of Treasury
Securities.

            (a) A Holder of Corporate PIES may separate their interests in
Senior Notes from the related Purchase Contracts in respect of such Holder's
Corporate PIES by substituting Treasury Securities for such interests in Senior
Notes or security entitlements thereto in an aggregate principal amount equal to
the aggregate principal amount of such interests in Senior Notes, at any time
from and after the date of this Agreement except during an Active Remarketing
Period by:

            (1) providing notice to the Purchase Contract Agent, substantially
      in the form of Exhibit C to the Purchase Contract Agreement, of such
      Holder's intention to create Treasury PIES;

            (2) transferring a Treasury Security for each group of 20 Corporate
      PIES from which such Holder wishes to create Treasury PIES to the
      Securities Intermediary which shall then (y) deposit the Treasury Security
      with the Collateral Agent in the Collateral Account under this Agreement
      and instruct the Collateral Agent to hold such Treasury Security as
      Collateral under this Agreement and (z) instruct the Collateral Agent to
      release to the Purchase Contract Agent, on behalf of such Holder, $1,000
      principal amount of Senior Notes formerly subject to the Pledge;

            (3) transferring the related Corporate PIES to the Purchase Contract
      Agent accompanied by a notice to the Purchase Contract Agent,
      substantially in the form of Exhibit D to the Purchase Contract Agreement,
      stating that the Holder has transferred the relevant amount of Treasury
      Securities to the Securities Intermediary and requesting that the Purchase
      Contract Agent instruct the Collateral Agent to release the Senior Notes
      associated with such Corporate PIES, whereupon the Purchase Contract Agent
      shall

<PAGE>

                                                                              12

      promptly give such instruction to the Collateral Agent, substantially in
      the form of Exhibit A hereto; and

            (4) paying to the Collateral Agent any fees or expenses incurred in
      connection with the Collateral Substitution;

provided that, Holders may make Collateral Substitutions only in integral
multiples of 20 Corporate PIES. Under no circumstances may a Holder of Corporate
PIES create Treasury PIES during an Active Remarketing Period.

            Upon receipt from the Purchase Contract Agent of a notice
substantially in the form of Exhibit A hereto, confirmation from the Securities
Intermediary that Treasury Securities have been credited to the Collateral
Account and receipt of payment for any fees or expenses incurred in connection
with the Collateral Substitution, the Collateral Agent shall instruct the
Securities Intermediary by a notice, substantially in the form of Exhibit B
hereto, to release such Pledged Senior Notes from the Pledge by Transfer the
Purchase Contract Agent for distribution to such Holder thereof, free and clear
of any lien, pledge or security interest created hereby.

            (b) Upon credit to the Collateral Account of Treasury Securities or
security entitlements thereto delivered by a Holder of Corporate PIES and
receipt of the related instruction from the Collateral Agent, the Securities
Intermediary shall release the Senior Notes specified in such instruction and
shall promptly Transfer the same to the Purchase Contract Agent for distribution
to such Holder, free and clear of any lien, pledge or security interest created
hereby.

            A Holder may elect not to participate in the Remarketing by creating
Treasury PIES as specified in this Section and Section 5.3(c) of the Purchase
Contract Agreement at any time except during an Active Remarketing Period.

            (c) Notwithstanding any provision herein to the contrary, the
release and Transfer of the Pledged Senior Notes in connection with the
Collateral Substitution pursuant to this Section 5.2 shall be evidenced by an
endorsement by the Collateral Agent on the Pledged Senior Note held by the
Collateral Agent reflecting a reduction in the principal amount of such Pledged
Senior Note equal in amount to the principal amount of such Separated Senior
Note. The Collateral Agent shall confirm any such reduced principal amount by
telecopying or otherwise delivering a photocopy of such endorsement made on the
Pledged Senior Note evidencing such reduced principal amount to the Trustee and
the Company. Upon receipt of such confirmation, the Trustee shall instruct the
Custodian (as defined in the Indenture Officers' Certificate) to increase the
principal amount of the Senior Notes issued in global form held by the Custodian
in an amount equal to the reduced principal amount by an endorsement made the
Custodian on such global Senior Note to reflect such increase.

      Section 5.3 Recreation of Corporate PIES.

            (a) A Holder of a Treasury PIES may recreate Corporate PIES at any
time except during an Active Remarketing Period by:

            (1) providing notice to the Purchase Contract Agent, substantially
      in the form of Exhibit C of the Purchase Contract Agreement, of such
      Holder's intention to create Corporate PIES;

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                                                                              13

            (2) transferring a $1,000 principal amount Senior Note for each
      group of 20 Corporate PIES to be recreated to the Securities Intermediary
      which shall then (y) deposit such Senior Notes in the Collateral Account
      under this Agreement and instruct the Collateral Agent to hold such Senior
      Notes as Collateral and (z) instruct the Collateral Agent to release to
      such Holder one (1) Treasury Security formerly subject to the Pledge;

            (3) transferring the related Treasury PIES to the Purchase Contract
      Agent accompanied by a notice to the Purchase Contract Agent,
      substantially in the form of Exhibit D of the Purchase Contract Agreement,
      (i) stating that the Holder has transferred a $1,000 principal amount
      Senior Note for each 20 Treasury PIES to the Securities Intermediary and
      (ii) requesting that the Purchase Contract Agent instruct the Collateral
      Agent to release the Treasury Securities underlying such Treasury PIES,
      whereupon the Purchase Contract Agent shall promptly give such instruction
      to the Collateral Agent, substantially in the form of Exhibit C hereto;
      and

            (4) paying to the Collateral Agent any fees or expenses incurred in
      connection with the recreation of Corporate PIES;

provided that, Holders of Treasury PIES may recreate Corporate PIES in integral
multiples of 20 Treasury PIES. Under no circumstance may a Holder of Treasury
PIES recreate Corporate PIES during an Active Remarketing Period.

            Upon receipt from the Purchase Contract Agent of a notice
substantially in the form of Exhibit C hereto, confirmation that Senior Notes or
security entitlements thereto have been credited to the Collateral Account as
described in such notice and receipt of payment for any fees or expenses
incurred in connection with the recreation of Corporate PIES, the Collateral
Agent shall instruct the Securities Intermediary by a notice, substantially in
the form provided in Exhibit D hereto, to release such Pledged Treasury
Securities from the Pledge by Transfer to the Holder thereof.

            (b) Upon credit to the Collateral Account of Senior Notes or
security entitlements thereto and receipt of the related instruction from the
Collateral Agent, the Securities Intermediary shall release the applicable
Treasury Securities specified in such instruction and shall promptly Transfer
the same to such Holder, free and clear of any lien, pledge or security interest
created hereby.

            (c) Notwithstanding any provision herein to the contrary, the
Transfer of the Senior Notes in connection with the recreation of Corporate PIES
pursuant to this Section 5.3 shall be evidenced by an endorsement by the
Collateral Agent on the Pledged Senior Note held by the Collateral Agent
reflecting an increase in the principal amount of such Pledged Senior Note equal
in amount to the principal amount of such Senior Note. The Collateral Agent
shall confirm any such increased principal amount by telecopying or otherwise
delivering a photocopy of such endorsement made on the Pledged Senior Note
evidencing such increased principal amount to the Trustee and the Company. Upon
receipt of such confirmation, the Trustee shall instruct the Custodian (as
defined in the Indenture Officers' Certificate) to decrease the principal amount
of Senior Notes issued in global form held by the Custodian in an amount equal
to the increased principal amount by an endorsement made by the Custodian on
such global Senior Note to reflect such decrease.

<PAGE>

                                                                              14

      Section 5.4 Termination Event.

            (a) Upon receipt by the Collateral Agent of written notice from the
Company or the Purchase Contract Agent that a Termination Event has occurred,
the Collateral Agent shall release all Collateral from the Pledge and shall
promptly Transfer any Pledged Senior Notes or security entitlement with respect
thereto, any Pledged Treasury Portfolio Interest or security entitlement with
respect thereto and any Pledged Treasury Securities or security entitlement with
respect thereto to the Purchase Contract Agent for the benefit of the Holders,
for distribution to such Holders in accordance with their respective interests,
free and clear of any lien, pledge or security interest or other interest
created hereby.

            (b) If such Termination Event shall result from the Company's
becoming a debtor under the Bankruptcy Code, and if the Collateral Agent shall
for any reason fail promptly to effectuate the release and Transfer of all
Pledged Senior Notes, the Pledged Treasury Portfolio Interest or the Pledged
Treasury Securities or security entitlements with respect thereto, as the case
may be, as provided by this Section 5.4, the Purchase Contract Agent shall:

            (1) request an opinion letter of a nationally recognized law firm
      reasonably acceptable to the Collateral Agent to the effect that, as a
      result of the Company's being the debtor in such a bankruptcy case, the
      Collateral Agent will not be prohibited from releasing or Transferring the
      Collateral as provided in this Section 5.4, and shall deliver such opinion
      to the Collateral Agent within ten days after the occurrence of such
      Termination Event, and if (A) the Purchase Contract Agent shall be unable
      to obtain such opinion within ten days after the occurrence of such
      Termination Event or (B) the Collateral Agent shall continue, after
      delivery of such opinion, to refuse to effectuate the release and Transfer
      of all Pledged Senior Notes, all Pledged Treasury Portfolio Interest, all
      Pledged Treasury Securities or the Proceeds of any of the foregoing, as
      the case may be, as provided in this Section 5.4, then the Purchase
      Contract Agent shall within thirty days after the occurrence of such
      Termination Event commence an action or proceeding in the court having
      jurisdiction of the Company's case under the Bankruptcy Code seeking an
      order requiring the Collateral Agent to effectuate the release and
      transfer of all Pledged Senior Notes, all Pledged Treasury Portfolio
      Interest or all the Pledged Treasury Securities or security entitlements
      with respect thereto, as the case may be, as provided by this Section 5.4;
      or

            (2) commence an action or proceeding like that described in Section
      5.4(b)(1)(B) hereof within ten days after the occurrence of such
      Termination Event.

The Purchase Contract Agent shall be deemed to have complied with Section
5.4(b)(1), and shall not be required to commence any action or proceeding
referred to therein, if it shall have either obtained such an opinion letter or
requested such an opinion from three such nationally recognized law firms
reasonably acceptable to the Collateral Agent.

      Section 5.5 Cash Settlement.

            (a) Unless a Holder has effected an Early Settlement or a Merger
Early Settlement or a Successful Remarketing during the Period for Early
Remarketing has occurred, in the case of Corporate PIES, and unless a
Termination Event has occurred prior to dates required for notice to elect the
Cash Settlement right specified in the Purchase Contract Agreement and the
Collateral Agent has received written notice from the Company, the Purchase
Contract Agent or, in the case of a Termination Event, from the holders of at
least 10% of the outstanding PIES of such Early Settlement, Merger Early
Settlement, Successful Remarketing or

<PAGE>

                                                                              15

Termination Event, as the case may be, upon receipt by the Collateral Agent of
(1) a notice from the Purchase Contract Agent (including a copy of such notice
received from the Holder substantially in the form of Exhibit F to the Purchase
Contract Agreement) promptly after the receipt by the Purchase Contract Agent of
a notice from a Holder of a Corporate PIES or a Treasury PIES that it has
elected, in accordance with the procedures specified in Section 5.8(a)(i) or
(b)(i) of the Purchase Contract Agreement, respectively, to effect a Cash
Settlement and (2) payment by such Holder by deposit in the Collateral Account
on or prior to 11:00 a.m. (New York City time), on the fifth Business Day
immediately preceding the Purchase Contract Settlement Date in the case of
Corporate PIES, and the Business Day immediately preceding the Purchase Contract
Settlement Date in the case of the Treasury PIES, of the Purchase Price in
lawful money of the United States by certified or cashiers' check or wire
transfer, in each case of immediately available funds payable to or upon the
order of the Securities Intermediary, then the Collateral Agent shall upon
receipt of written directions from the Company:

            (1) instruct the Securities Intermediary promptly to invest any such
      Cash in Permitted Investments;

            (2) release from the Pledge (i) in the case of a Holder of Corporate
      PIES, the related Pledged Senior Notes, or (ii) in the case of a Holder of
      Treasury PIES, the related Pledged Treasury Securities, with a principal
      amount or principal amount at maturity, as the case may be, equal to the
      product of (x) the Stated Amount times (y) the number of Purchase
      Contracts as to which such Holder has elected to effect a Cash Settlement;
      and

            (3) instruct the Securities Intermediary to Transfer all such
      Pledged Senior Notes or Pledged Treasury Securities, as the case may be,
      to the Purchase Contract Agent for the benefit of such Holders, in each
      case free and clear of the Pledge created hereby, for distribution to such
      Holder.

            The Company shall instruct the Securities Intermediary as to the
type of Permitted Investments in which any such Cash shall be invested;
provided, however, that if the Company fails to deliver such instructions by
10:00 a.m. (New York City time), the Securities Intermediary shall invest such
Cash in the Permitted Investments described in clause 6 of the definition of
Permitted Investments and identified by the Company in the Account Direction.
Upon receipt of the proceeds upon the maturity of the Permitted Investments on
the Purchase Contract Settlement Date, the Collateral Agent shall (A) instruct
the Securities Intermediary to pay the portion of such proceeds and deliver any
certified or cashier's checks received, in an aggregate amount equal to the
Purchase Price, to the Company on the Purchase Contract Settlement Date, and (B)
instruct the Securities Intermediary to release any amounts in respect of the
interest earned from such Permitted Investments to the Purchase Contract Agent
for distribution to such Holder.

            (b) If a Holder of a Corporate PIES notifies the Purchase Contract
Agent as provided in Section 5.8(a)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by Section 5.8(a)(ii) of the Purchase Contract Agreement, such Holder
shall be deemed to have consented to (A) the disposition of the Pledged Senior
Notes in the Final Remarketing Period in accordance with Section 5.3 of the
Purchase Contract Agreement or, (B) if a Failed Remarketing occurs the
Collateral Agent, for the benefit of the Company, and upon written direction of
the Company as provided in this Agreement, exercising all of its rights as a
secured party with respect to any

<PAGE>

                                                                              16

Pledged Senior Notes under this Agreement and, subject to applicable law, by
either (i) retaining such Senior Notes in full satisfaction of such Holder's
obligations under the related Purchase Contracts or (ii) selling such Senior
Notes in one or more public or private sales.

            (c) If a Holder of a Treasury PIES notifies the Purchase Contract
Agent as provided in Section 5.8(b)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by Section 5.8(b)(ii) of the Purchase Contract Agreement, such Holder
shall be deemed to have elected to pay the Purchase Price in accordance with
Section 5.8(b) hereof.

            (d) Prior to 3:00 p.m. (New York City time), on the fifth Business
Day immediately preceding the Purchase Contract Settlement Date, the Securities
Intermediary shall deliver to the Purchase Contract Agent a notice,
substantially in the form of Exhibit E hereto, stating the amount of cash that
it has received with respect to the Cash Settlement of Corporate PIES.

            (e) Prior to 3:00 p.m. (New York City time), on the Business Day
immediately preceding the Purchase Contract Settlement Date, the Securities
Intermediary shall deliver to the Purchase Contract Agent a notice,
substantially in the form of Exhibit E hereto, stating the amount of cash that
it has received with respect to the Cash Settlement of Treasury PIES.

      Section 5.6 Early Settlement; Merger Early Settlement.

            Unless a Termination Event has occurred and the Collateral Agent has
received from the Company or the Purchase Contract Agent or holders of at least
10% of the outstanding PIES written notice of such Termination Event, upon
receipt by the Collateral Agent of a notice from the Purchase Contract Agent
that a Holder of PIES has elected to effect Early Settlement or Merger Early
Settlement of its obligations under the Purchase Contracts forming a part of
such PIES in accordance with the terms of the Purchase Contracts and the
Purchase Contract Agreement (which notice shall set forth the number of such
Purchase Contracts as to which such Holder has elected to effect Early
Settlement or Merger Early Settlement), and that the Purchase Contract Agent has
received from such Holder, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amounts or Merger Early Settlement
Amounts, as applicable, pursuant to the terms of the Purchase Contract Agreement
and all conditions to such Early Settlement or Merger Early Settlement, as
applicable, have been satisfied, then the Collateral Agent shall release from
the Pledge, (1) Pledged Senior Notes, or Pledged Treasury Portfolio Interest, as
the case may be, in the case of a Holder of Corporate PIES, or (2) Pledged
Treasury Securities, in the case of a Holder of Treasury PIES, with a Value
equal to the product of (i) the Stated Amount times (ii) the number of Purchase
Contracts as to which such Holder has elected to effect Early Settlement or
Merger Early Settlement, as applicable, and shall instruct the Securities
Intermediary to Transfer all such Pledged Senior Notes, Pledged Treasury
Portfolio Interest or Pledged Treasury Securities, as the case may be, to the
Purchase Contract Agent for the benefit of such Holder, in each case free and
clear of the Pledge created hereby, for distribution to such Holder.

            Notwithstanding anything to the contrary contained herein, Holders
may not effect Early Settlement during an Active Remarketing Period and Holders
may effect Early Settlement or Merger Early Settlement of PIES only in integral
multiples of 20 Corporate PIES or 20 Treasury PIES.

<PAGE>

                                                                              17

      Section 5.7 Optional Remarketing.

            Pursuant to the Indenture and the Remarketing Agreement, on or prior
to 5:00 p.m. (New York City time) on the second Business Day, but no earlier
than the fifth Business Day, preceding the first of the three sequential
remarketing dates of any Three-Day Remarketing Period, registered holders of
Separated Senior Notes may elect to have their Separated Senior Notes remarketed
by Transferring their Separated Senior Notes, together with a notice of such
election, substantially in the form of Exhibit F hereto and Exhibit B to the
Indenture Officers' Certificate, to the Collateral Agent and the Trustee,
respectively, whereupon, the Collateral Agent shall hold such Separated Senior
Notes in an account separate from the Collateral Account and cause such
Separated Senior Notes to be included in any Remarketing pursuant to the
Indenture and the Remarketing Procedures. Once such holder of such Separated
Senior Notes delivers such notice and Separated Senior Notes as specified in the
preceding sentence, such election may not be withdrawn and may not be
conditioned upon the level at which the Reset Rate is established in the
Remarketing; provided, however, that if such a holder delivers only such a
notice but not the Separated Senior Notes subject to the notice, then none of
such holders' Separated Senior Notes shall be included in the Remarketing.

            If a Failed Remarketing occurs, the Remarketing Agents shall notify
the Company, the Depositary, the Purchase Contract Agent, the Collateral Agent
and the Trustee by telephone by 4:00 p.m. (New York City time) on the Final
Remarketing Date that a Failed Remarketing has occurred and shall Transfer to
the Collateral Agent, by the third Business Day following the Failed
Remarketing, such Separated Senior Notes, whereupon the Collateral Agent shall
promptly Transfer such Separated Senior Notes to the holders entitled thereto.

<PAGE>

                                                                              18

      Section 5.8 Application of Proceeds in Settlement; Remarketing.

            (a) During the Period for Early Remarketing, unless a Termination
Event has occurred or a Holder has effected an Early Settlement or a Merger
Early Settlement and the Collateral Agent has received written notice of such
Termination Event, Early Settlement, or Merger Early Settlement from the Company
or the Purchase Contract Agent or, in the case of a Termination, Holders of at
least 10% of the Outstanding PIES, (i) the Purchase Contract Agent shall provide
notice, substantially in the form of Exhibit G to the Purchase Contract
Agreement by 11:00 a.m. (New York City time), on the Business Day immediately
preceding the first of the three sequential remarketing dates of any Three-Day
Remarketing Period, to the Remarketing Agents, the Collateral Agent, the Trustee
and the Company of the aggregate principal amount of Pledged Senior Notes
comprising part of Corporate PIES to be remarketed, other than those Pledged
Senior Notes of Holders that have elected not to participate in the Remarketing
pursuant to paragraph 19(i)(B) of the Indenture Officers' Certificate and
Section 5.3(c) of the Purchase Contract Agreement (of which the Purchase
Contract Agent has delivered written notice thereof to the Collateral Agent,
substantially in the form of Exhibit G hereto), and (ii) the Collateral Agent
shall notify, by 11:00 a.m. (New York City time), on the Business Day
immediately preceding the first of the three sequential remarketing dates of any
Three-Day Remarketing Period, the Remarketing Agents, the Trustee and the
Company of the aggregate principal amount of Separated Senior Notes of holders
of Separated Senior Notes that have elected to participate in the Remarketing
(the Senior Notes described in clauses (i) and (ii) collectively being referred
to as the "Remarketing Senior Notes") and, concurrently therewith, the
Collateral Agent shall, without any further instruction from any holder of the
Remarketing Senior Notes, present all Remarketing Senior Notes to the
Remarketing Agents for Remarketing.

            If there has been a Successful Remarketing prior to the Final
Remarketing Period, the Remarketing Agents will on such Remarketing Settlement
Date (i) deduct and retain as a remarketing fee an amount pursuant to the
Remarketing Agreement (the "Remarketing Fee"), (ii) use the remaining Proceeds
with respect to the Pledged Senior Notes from such Successful Remarketing to
purchase the Treasury Portfolio and, on the Remarketing Settlement Date, deliver
such Treasury Portfolio to the Collateral Agent, along with notification
thereof, which shall thereupon, for the benefit of the Company, apply such
Treasury Portfolio, to secure the obligation of all Holders of Corporate PIES to
purchase Common Stock under the Purchase Contracts constituting a part of such
Corporate PIES, in substitution for the Pledged Senior Notes, (iii) if any
Separated Senior Notes were remarketed, remit to the Collateral Agent, along
with notification thereof, for payment to the holders of such Separated Senior
Notes sold in the Remarketing the remaining proceeds from such Successful
Remarketing attributable to such Separated Senior Notes and (iv) if there then
remains any proceeds from such Successful Remarketing, after the application of
such proceeds as set forth in clauses (i) and (ii) above, then remit, along with
notification thereof, any such remaining proceeds attributable to the remarketed
Pledged Senior Notes to the Purchase Contract Agent for the benefit of the
holders of such Pledged Senior Notes, on a pro rata basis, provided, however,
that if such Successful Remarketing is consummated after 4:30 p.m. (New York
City time) on such Remarketing Settlement Date and, despite using its
commercially reasonable efforts, the Remarketing Agents cannot cause the
applications of the proceeds specified above to occur on such Remarketing
Settlement Date, then the Remarketing Agents may make such applications and
remittances on the next succeeding Business Day. Holders of the Remarketing
Senior Notes that are so remarketed will not otherwise be responsible for the
payment of any remarketing fee or expenses

<PAGE>

                                                                              19

in connection with the Remarketing. Following the delivery of the Treasury
Portfolio to the Collateral Agent as set forth above in this paragraph, the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Treasury Portfolio as it had in respect of the Pledged Senior
Notes, as provided herein.

            In the event that any portion of the Pledged Treasury Portfolio
Interest matures before the Purchase Contract Settlement Date, the Collateral
Agent shall invest the Cash Proceeds therefrom in Permitted Investments in
clause 6 of the definition of Permitted Investments, and identified by the
Company in the Account Direction, unless the Company shall otherwise instruct
the Securities Intermediary and the Collateral Agent as to the type of Permitted
Investments in which any such Cash Proceeds shall be invested. The Collateral
Agent shall cause the Securities Intermediary to remit, on the Purchase Contract
Settlement Date, a portion of the Cash Proceeds of the maturing Pledged Treasury
Portfolio Interest and of the investment earnings from the related investment in
Permitted Investments, in an aggregate amount equal to the Treasury Portfolio
Return to the Purchase Contract Agent for the benefit of the Holders of the
related Corporate PIES when received. Without receiving any instruction from any
such Holder of Corporate PIES, the Collateral Agent shall apply, on the Purchase
Contract Settlement Date, the Cash Proceeds of the maturing Pledged Treasury
Portfolio Interest and of the investment earnings from the related investment in
Permitted Investments, in an aggregate amount equal to the aggregate Purchase
Price applicable to such Corporate PIES to satisfy in full such Holder's
obligations to pay the Purchase Price to purchase the shares of Common Stock
under the related Purchase Contracts on the Purchase Contract Settlement Date.
In the event the sum of the Proceeds from the related Pledged Treasury Portfolio
Interest and the investment earnings from the related investment in Permitted
Investments exceeds the sum of the related Treasury Portfolio Return and the
aggregate Purchase Price of the Purchase Contracts being settled thereby, the
Collateral Agent shall instruct the Securities Intermediary to distribute such
excess, when received, to the Purchase Contract Agent for distribution to the
Holders whose Purchase Contracts were settled with such Proceeds, on a pro rata
basis.

            If, by 4:00 p.m. (New York City time), on the ninth Business Day
preceding the Purchase Contract Settlement Date, the Remarketing Agents, despite
using its commercially reasonable efforts, have been and are unable to remarket
all of the Remarketing Senior Notes tendered for purchase at a price equal to at
least the Remarketing Value, the Remarketing Agents shall Transfer to the
Collateral Agent, along with notification thereof, by the sixth Business Day
preceding the Purchase Contract Settlement Date, the Pledged Senior Notes that
were to be remarketed during the Period for Early Remarketing, whereupon the
Collateral Agent shall, for the benefit of the Company, apply such Pledged
Senior Notes, to secure the obligation of the related Holders of Corporate PIES
to purchase Common Stock under the related Purchase Contracts.

            (b) Unless a Termination Event has occurred or a Holder has effected
a Cash Settlement, an Early Settlement or a Merger Early Settlement, or a
Successful Remarketing has occurred during the Period for Early Remarketing,
such Holder shall be deemed to have consented to the Remarketing of its Pledged
Senior Notes during the Final Remarketing on the Final Remarketing Date, in a
Remarketing in accordance with Section 2 of the Remarketing Agreement. Upon
notice of such event from the Purchase Contract Agent, the Collateral Agent
shall, by 11:00 a.m. (New York City time), on the sixth Business Day immediately
preceding the

<PAGE>

                                                                              20

Purchase Contract Settlement Date, without any instruction from such Holders of
Corporate PIES, Transfer the Remarketing Senior Notes to the Remarketing Agents
for Remarketing. Upon receiving such Remarketing Senior Notes, the Remarketing
Agents, pursuant to the terms of the Remarketing Agreement, will use their
commercially reasonable efforts to remarket such Remarketing Senior Notes during
the Final Remarketing Period.

            If there has been a Successful Remarketing during the Final
Remarketing Period, the Remarketing Agents will on such remarketing date (i)
deduct and retain the Remarketing Fee pursuant to the Remarketing Agreement,
(ii) cause the remaining Proceeds of the Remarketing with respect to the Pledged
Senior Notes in an amount equal to the aggregate principal amount of such Senior
Notes to be delivered to the Purchase Contract Agent, on the Remarketing
Settlement Date, (iii), if any Separated Senior Notes were remarketed, remit to
the Collateral Agent, along with notification thereof, for payment to the
holders of such Separated Senior Notes sold in the Remarketing the remaining
proceeds from such Successful Remarketing attributable to the Separated Senior
Notes and (iv) if there then remains any proceeds from such Successful
Remarketing, after the application of such proceeds as set forth in clauses (i)
and (ii) above, remit, along with notification thereof, any excess Proceeds of
the Remarketing to the Purchase Contract Agent for the benefit of the Holders of
Corporate PIES whose Pledged Senior Notes were remarketed, on a pro rata basis.
Holders of the Remarketing Senior Notes that are so remarketed will not
otherwise be responsible for the payment of any remarketing fee or expenses in
connection with the Remarketing. The Purchase Contract Agent shall give written
directions to the Collateral Agent, and the Collateral Agent shall instruct the
Securities Intermediary, to apply a portion of the Proceeds with respect to the
Pledged Senior Notes from such Remarketing, on the Purchase Contract Settlement
Date, equal to the aggregate principal amount of such Pledged Senior Notes to
satisfy in full the obligations of such Holders of Corporate PIES to pay the
Purchase Price to purchase the shares of Common Stock under the related Purchase
Contracts.

            If a Failed Remarketing occurs, the Collateral Agent, (a) having
received notice of such Failed Remarketing from the Remarketing Agents pursuant
to the Remarketing Agreement, shall, on the written direction of the Company,
exercise for the benefit of the Company, its rights as a secured creditor with
respect to the Pledged Senior Notes related to this Corporate PIES Certificate
and (b) subject to applicable law, may (i) retain such Pledged Senior Notes in
full satisfaction of the Holders' obligations under the Purchase Contracts or
(ii) sell such Pledged Senior Notes in one or more public or private sales, the
proceeds, if any, of such sale to constitute full satisfaction of the Holders'
obligations under the Purchase Contracts.

            (c) Unless a Termination Event has occurred or a Holder has effected
a Cash Settlement, an Early Settlement or a Merger Early Settlement, if a
Successful Remarketing has occurred during the Period for Early Remarketing, a
Holder shall be deemed to have elected to pay for the shares of Common Stock to
be issued under such Purchase Contracts from the Proceeds of the Pledged
Treasury Portfolio, in the case of Holders of Corporate PIES, and the related
Pledged Treasury Securities, in the case of Holders of Treasury PIES.

            (d) In the event that all or any portion of the Pledged Treasury
Securities matures before the Purchase Contract Settlement Date, the Collateral
Agent shall invest the Cash Proceeds therefrom in Permitted Investments in
clause 6 of the definition of Permitted Investments and identified by the
Company in the Account Direction, unless the Company shall

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                                                                              21

otherwise instruct the Securities Intermediary and the Collateral Agent as to
the type of Permitted Investments in which any such Cash Proceeds shall be
invested.

            (e) Without receiving any instruction from any such Holder of
Treasury PIES, the Collateral Agent shall apply, on the Purchase Contract
Settlement Date, the Cash Proceeds of the maturing Pledged Treasury Securities
and of the investment earnings from the related investment in Permitted
Investments, in each case, in an amount equal to the aggregate Purchase Price
applicable to such Treasury PIES to satisfy in full such Holder's obligations to
pay the Purchase Price to purchase the shares of Common Stock under the related
Purchase Contracts on the Purchase Contract Settlement Date. In the event the
sum of the Proceeds from the related Pledged Treasury Securities and the
investment earnings from the related investment in Permitted Investments exceeds
the aggregate Purchase Price of the Purchase Contracts being settled thereby,
the Collateral Agent shall instruct the Securities Intermediary to distribute
such excess, when received, to the Purchase Contract Agent for distribution to
the Holders whose Purchase Contracts were settled with such Proceeds, on a pro
rata basis.

            (f) Notwithstanding the Pledge and, if applicable, the delivery of
Separated Senior Notes to the Collateral Agent for Remarketing, in each case, as
set forth herein, the Company's obligation to pay interest, including any
accrued and unpaid, on all outstanding Senior Notes (whether then comprising a
part of Corporate PIES or as Separated Senior Notes) pursuant to the Indenture
shall remain.

Section 6. Voting Rights.

            The Purchase Contract Agent may exercise, or refrain from
exercising, any and all voting and other consensual rights pertaining to the
Pledged Senior Notes or any part thereof in accordance with the terms of the
Purchase Contract Agreement. The Purchase Contract Agent shall give the Company
and the Collateral Agent at least five calendar days' prior written notice of
the manner in which it intends to exercise, or its reasons for refraining from
exercising, any such right. Upon receipt of any notices and other communications
in respect of any Pledged Senior Notes, including notice of any meeting at which
holders of the Senior Notes are entitled to vote or solicitation of consents,
waivers or proxies of holders of the Senior Notes, the Collateral Agent shall
use its reasonable efforts to send promptly to the Purchase Contract Agent such
notice or communication, and as soon as reasonably practicable after receipt of
a written request therefor from the Purchase Contract Agent, execute and deliver
to the Purchase Contract Agent such proxies and other instruments in respect of
such Pledged Senior Notes (in form and substance satisfactory to the Collateral
Agent) as are prepared by the Purchase Contract Agent with respect to the
Pledged Senior Notes.

Section 7. Rights and Remedies.

      Section 7.1 Rights and Remedies of the Collateral Agent.

            (a) In addition to the rights and remedies specified in Section 5.5
hereof or otherwise available at law or in equity, after an event of default (as
specified in Section 7.1(b) below) hereunder, the Collateral Agent shall have
all of the rights and remedies with respect to the Collateral of a secured party
under the UCC (whether or not the UCC is in effect in the jurisdiction where the
rights and remedies are asserted) and the TRADES Regulations and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted. Without limiting the generality of the foregoing, such remedies may
include, to the extent permitted by applicable law, (i) retention of the Pledged
Senior Notes, Pledged Treasury Portfolio Interest or Pledged Treasury Securities
in full satisfaction of the Holders' obligations under the Purchase Contracts or
(ii) sale of the Pledged

<PAGE>

                                                                              22

Senior Notes, Pledged Treasury Portfolio Interest or Pledged Treasury Securities
in one or more public or private sales.

            (b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of principal payments of any Pledged
Treasury Securities or on account of any Pledged Treasury Portfolio Interest as
provided in Section 3 hereof, in satisfaction of the Obligations of the Holder
of the PIES of which such Pledged Treasury Securities or Pledged Treasury
Portfolio Interest are a part under the related Purchase Contracts, the
inability to make such payments shall constitute an event of default hereunder
and the Collateral Agent shall have and may exercise and, upon receiving written
instructions from the Company pursuant to and in accordance with Section 9.2
shall exercise, with reference to such Pledged Treasury Securities or Pledged
Treasury Portfolio Interest, as applicable, any and all of the rights and
remedies available to a secured party under the UCC and the TRADES Regulations
after default by a debtor, and as otherwise granted herein or under any other
law.

            (c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the principal amount of
the Pledged Senior Notes, (ii) the principal amount of the Pledged Treasury
Securities and (iii) the principal amount of the Pledged Treasury Portfolio
Interest, subject, in each case, to the provisions of Section 3 hereof, and as
otherwise granted herein.

            (d) Subject to Section 9.1, the Purchase Contract Agent and each
Holder of PIES agrees that, from time to time, upon the written request of the
Collateral Agent, the Purchase Contract Agent or such Holder shall execute and
deliver such further documents and do such other acts and things as the
Collateral Agent may reasonably request in order to maintain the Pledge, and the
perfection and priority thereof, and to confirm the rights of the Collateral
Agent hereunder. The Purchase Contract Agent shall have no liability to any
Holder for executing any documents or taking any such acts requested by the
Collateral Agent hereunder, except for liability for its own grossly negligent
acts, its own grossly negligent failure to act or its own willful misconduct.

      Section 7.2 Substitutions.

            Whenever a Holder has the right to substitute Treasury Securities,
Senior Notes or security entitlements to either of them for financial assets
held in the Collateral Account, such substitution shall not constitute a
novation of the security interest created hereby.

Section 8. Representations and Warranties; Covenants.

      Section 8.1 Representations and Warranties.

            Each Holder from time to time, acting through the Purchase Contract
Agent as attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any representation or warranty made by or on behalf of a
Holder), hereby represents and warrants to the Collateral Agent (with respect to
its interest in the Collateral), which representations and warranties shall be
deemed repeated on each day a Holder Transfers Collateral that:

            (1) such Holder has the power to grant a security interest in and
      lien on the Collateral;

<PAGE>

                                                                              23

            (2) such Holder is the sole beneficial owner of the Collateral and,
      in the case of Collateral delivered in physical form, is the sole holder
      of such Collateral and is the sole beneficial owner of, or has the right
      to Transfer, the Collateral it Transfers to the Securities Intermediary
      for credit to the Collateral Account, free and clear of any security
      interest, lien, encumbrance, call, liability to pay money or other
      restriction other than the security interest and lien granted under
      Section 2 hereof;

            (3) upon the Transfer of the Collateral to the Securities
      Intermediary for credit to the Collateral Account, the Collateral Agent,
      for the benefit of the Company, will have a valid and perfected first
      priority security interest therein (assuming that any central clearing
      operation or any Securities Intermediary or other entity not within the
      control of the Holder involved in the Transfer of the Collateral,
      including the Collateral Agent and the Securities Intermediary, gives the
      notices and takes the action required of it hereunder and under applicable
      law for perfection of that interest and assuming the establishment and
      exercise of control pursuant to Section 4 hereof); and

            (4) the execution and performance by the Holder of its obligations
      under this Agreement will not result in the creation of any security
      interest, lien or other encumbrance on the Collateral other than the
      security interest and lien granted under Section 2 hereof or violate any
      provision of any existing law or regulation applicable to it or of any
      mortgage, charge, pledge, indenture, contract or undertaking to which it
      is a party or which is binding on it or any of its assets.

      Section 8.2 Covenants.

            The Purchase Contract Agent and the Holders from time to time,
acting through the Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable for any covenant
made by or on behalf of a Holder), hereby covenant to the Collateral Agent that
for so long as the Collateral remains subject to the Pledge:

            (1) neither the Purchase Contract Agent nor such Holders will create
      or purport to create or allow to subsist any mortgage, charge, lien,
      pledge or any other security interest whatsoever over the Collateral or
      any part of it other than pursuant to this Agreement; and

            (2) neither the Purchase Contract Agent nor such Holders will sell
      or otherwise dispose (or attempt to dispose) of the Collateral or any part
      of it except for the beneficial interest therein, subject to the Pledge
      hereunder, transferred in connection with the Transfer of the PIES.

<PAGE>

                                                                              24

Section 9. The Collateral Agent and the Securities Intermediary.

            It is hereby agreed as follows:

      Section 9.1 Appointment, Powers and Immunities.

            The Collateral Agent and the Securities Intermediary shall each act
solely as agent for the Company hereunder and not in its individual capacity
with such powers as are specifically vested in the Collateral Agent or the
Securities Intermediary, as the case may be, by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. The
Collateral Agent and the Securities Intermediary shall:

            (1) have no duties or responsibilities except those expressly set
      forth in this Agreement and no implied covenants or obligations shall be
      inferred from this Agreement against the Collateral Agent or the
      Securities Intermediary, nor shall the Collateral Agent or the Securities
      Intermediary be bound by the provisions of any agreement by any party
      hereto beyond the specific terms hereof;

            (2) not be responsible for, and neither the Collateral Agent nor the
      Securities Intermediary makes any representation or warranty with respect
      to, any recitals contained in this Agreement, or in any certificate or
      other document referred to or provided for in, or received by it under,
      this Agreement, the PIES or the Purchase Contract Agreement, or for the
      value, validity, effectiveness, genuineness, enforceability or sufficiency
      of this Agreement (other than as against the Collateral Agent or the
      Securities Intermediary, as the case may be), the PIES or the Purchase
      Contract Agreement or any other document referred to or provided for
      herein or therein, for the sufficiency of the Collateral as security or
      for any failure by the Company or any other Person (except the Collateral
      Agent or the Securities Intermediary, as the case may be) to perform any
      of its obligations hereunder or thereunder or for the due creation,
      perfection, validity, priority or, except, in the case of the Collateral
      Agent, as expressly required hereby, maintenance of any security interest
      created hereunder;

            (3) not be required to initiate or conduct any litigation or
      collection proceedings hereunder or to exercise any other rights or
      remedies available to a secured party under the UCC or TRADES regulations
      after a default of a debtor (except, in the case of the Collateral Agent,
      pursuant to directions furnished under Section 9.2 hereof, subject to
      Section 9.6 hereof);

            (4) not be responsible for any action taken or omitted to be taken
      by it hereunder or under any other document or instrument referred to or
      provided for herein or in connection herewith or therewith, except for its
      own gross negligence or willful misconduct; and

            (5) not be required to advise any party as to selling or retaining,
      or taking or refraining from taking any action with respect to, any
      securities or other property deposited hereunder.

Subject to the foregoing, during the term of this Agreement, the Collateral
Agent shall take all reasonable action in connection with the safekeeping and
preservation of the Collateral hereunder.

<PAGE>

                                                                              25

            No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. Notwithstanding the foregoing, each
of the Collateral Agent and the Securities Intermediary in its individual
capacity hereby waives any right of setoff, bankers' lien, liens or perfection
rights as Securities Intermediary or any counterclaim with respect to any of the
Collateral.

      Section 9.2 Instructions of the Company.

            The Company shall have the right, by one or more instruments in
writing executed and delivered to the Collateral Agent, to direct the time,
method and place of conducting any proceeding for the realization of any right
or remedy available to the Collateral Agent, or of exercising any power
conferred on the Collateral Agent, or to direct the taking or refraining from
taking of any action authorized by this Agreement; provided, however, that (i)
such direction shall not conflict with the provisions of any law or of this
Agreement and (ii) the Collateral Agent shall be adequately indemnified as
provided herein. Nothing contained in this Section 9.2 shall impair the right of
the Collateral Agent in its discretion to take any action or omit to take any
action which it deems proper and which is not inconsistent with such direction.

            In the event the Collateral Agent or the Securities Intermediary is
uncertain as to the application of any provision in this Agreement or any other
agreement relating to the transactions contemplated hereby, or such provision is
ambiguous as to its application or is, or appears to be, in conflict with any
other applicable provision hereof, or in the event this Agreement permits any
determination by the Collateral Agent or the Securities Intermediary or is
silent or incomplete as to the course of action the Collateral Agent or the
Securities Intermediary is required to take with respect to a particular set of
facts, the Collateral Agent or the Securities Intermediary may seek instructions
from the Company and shall not be liable to any Person to the extent that it
acts in good faith in accordance with the instructions of the Company; provided,
that, if the Collateral Agent or the Securities Intermediary shall not have
received instructions from the Company pursuant to its request within twenty
(20) days after the date of such request, until instructed otherwise by the
Company, the Collateral Agent or the Securities Intermediary may, but shall be
under no duty to, take or refrain from taking such action as it shall deem
advisable in the best interests of the Company.

      Section 9.3 Reliance by Collateral Agent and Securities Intermediary.

            Each of the Securities Intermediary and the Collateral Agent shall
be entitled to rely upon, and shall not incur any liability to anyone in acting
upon, any certification, order, judgment, opinion, notice, instructions or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex or facsimile) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of any fact or matter
stated therein) and upon advice and statements of legal counsel and other
experts selected by the Collateral Agent or the Securities Intermediary, as the
case may be. As to any matters not expressly provided for by this Agreement, the
Collateral Agent and the Securities Intermediary shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Company in accordance with Section 9.2 of this
Agreement.

      Section 9.4 Rights in Other Capacities.

            The Collateral Agent and the Securities Intermediary and their
affiliates may (without having to account therefor to the Company) accept

<PAGE>

                                                                              26

deposits from, lend money to, make their investments in and generally engage in
any kind of banking, trust or other business with the Purchase Contract Agent or
the Securities Intermediary, as the case may be, any other Person interested
herein and any Holder of PIES (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent or the Securities
Intermediary, as the case may be, and the Collateral Agent, the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent and any Holder of PIES without having to account for
the same to the Company; provided that each of the Securities Intermediary and
the Collateral Agent covenants and agrees with the Company that it shall not
accept, receive or permit there to be created in favor of itself and shall take
no affirmative action to permit there to be created in favor of any other
Person, any security interest, lien or other encumbrance of any kind in or upon
the Collateral other than the lien created by the Pledge.

      Section 9.5 Non-Reliance on Collateral Agent and Securities Intermediary.

            Neither the Securities Intermediary nor the Collateral Agent shall
be required to keep itself informed as to the performance or observance by the
Purchase Contract Agent or any Holder of PIES of this Agreement, the Purchase
Contract Agreement, the PIES or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Purchase Contract
Agent or any Holder of PIES. Neither the Collateral Agent nor the Securities
Intermediary shall have any duty or responsibility to provide the Company with
any credit or other information concerning the affairs, financial condition or
business of the Purchase Contract Agent or any Holder of PIES (or any of their
respective affiliates) that may come into the possession of the Collateral Agent
or the Securities Intermediary or any of their respective affiliates.

      Section 9.6 Compensation and Indemnity.

            The Company agrees to:

            (1) pay the Collateral Agent and the Securities Intermediary from
      time to time such compensation as shall be agreed in writing between the
      Company and the Collateral Agent or the Securities Intermediary, as the
      case may be, for all services rendered by them hereunder including the
      reasonable costs and fees of agents and advisors appointed pursuant to and
      in accordance with Section 9.9, which such fees and costs shall be subject
      to the prior consent of the Company; and

            (2) indemnify the Collateral Agent and the Securities Intermediary
      for, and to hold each of them harmless from and against, any loss,
      liability or reasonable out-of-pocket expense incurred without gross
      negligence, willful misconduct or bad faith on its part, arising out of or
      in connection with the acceptance or administration of its powers and
      duties under this Agreement, including the reasonable costs and expenses
      (including reasonable fees and expenses of counsel) of defending itself
      against any claim or liability in connection with the exercise or
      performance of such powers and duties.

      Section 9.7 Failure to Act.

            Subject to Section 9.2 of this Agreement, in the event of any
dispute between or conflicting claims by or among the parties hereto or any
other Person with respect to any funds or property deposited hereunder, the
Collateral Agent and the Securities Intermediary shall be entitled, after prompt
notice to the Company and the Purchase Contract Agent, at its sole option, to
refuse to comply with any and all claims, demands or instructions with respect
to such property or funds so long as such dispute or conflict shall continue,
and the Collateral Agent and the Securities Intermediary shall not be or become
liable in any way to any

<PAGE>

                                                                              27

of the parties hereto for its failure or refusal to comply with such conflicting
claims, demands or instructions. The Collateral Agent and the Securities
Intermediary shall be entitled to refuse to act until either:

            (1) such conflicting or adverse claims or demands shall have been
      finally determined by a court of competent jurisdiction or settled by
      agreement between the conflicting parties as evidenced in a writing
      satisfactory to the Collateral Agent or the Securities Intermediary; or

            (2) the Collateral Agent or the Securities Intermediary shall have
      received security or an indemnity satisfactory to it sufficient to save it
      harmless from and against any and all loss, liability or reasonable
      out-of-pocket expense which it may incur by reason of its acting.

The Collateral Agent and the Securities Intermediary may in addition elect to
commence an interpleader action or seek other judicial relief or orders as the
Collateral Agent or the Securities Intermediary may deem necessary.
Notwithstanding anything contained herein to the contrary, neither the
Collateral Agent nor the Securities Intermediary shall be required to take any
action that is in its opinion contrary to law or to the terms of this Agreement,
or which would in its opinion subject it or any of its officers, employees or
directors to liability.

      Section 9.8 Resignation of Collateral Agent and Securities Intermediary.

            (a) Subject to the appointment and acceptance of a successor
Collateral Agent as provided below:

            (1) the Collateral Agent may resign at any time by giving notice
      thereof to the Company, the Purchase Contract Agent as attorney-in-fact
      for the Holders of PIES and the Trustee;

            (2) the Collateral Agent may be removed at any time by the Company;
      and

            (3) if the Collateral Agent fails to perform any of its material
      obligations hereunder in any material respect for a period of not less
      than 20 days after receiving written notice of such failure by the
      Purchase Contract Agent and such failure shall be continuing, the
      Collateral Agent may be removed by the Purchase Contract Agent; provided,
      however, that neither this provision nor any other provision of this
      Agreement or the Purchase Contract Agreement shall require the Purchase
      Contract Agent to keep itself informed as to or to monitor the performance
      or observance by the Collateral Agent or the Securities Intermediary of
      their obligations hereunder.

The Purchase Contract Agent shall promptly notify the Company of any removal of
the Collateral Agent pursuant to clause (3) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the right
to appoint a successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed and shall have accepted such appointment within 30 days
after the retiring Collateral Agent's giving of notice of resignation or such
removal, then the retiring Collateral Agent may petition any court of competent
jurisdiction for the appointment of a successor Collateral Agent. The Collateral
Agent shall be a bank which has an office in New York, New York or Minneapolis,
Minnesota with a combined capital and surplus of at least $50,000,000 and shall
not be the Purchase Contract Agent or any of its

<PAGE>

                                                                              28

affiliates. Upon the acceptance of any appointment as Collateral Agent hereunder
by a successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent, and the retiring Collateral Agent shall take
all appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor Collateral Agent. The retiring
Collateral Agent shall, upon such succession, be discharged from its duties and
obligations as Collateral Agent hereunder. After any retiring Collateral Agent's
resignation hereunder as Collateral Agent, the provisions of this Section 9
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Collateral Agent. Any
resignation or removal of the Collateral Agent hereunder shall be deemed for all
purposes of this Agreement as the simultaneous resignation or removal, as the
case may be, of the Securities Intermediary.

            (b) Subject to the appointment and acceptance of a successor
Securities Intermediary as provided below:

            (1) the Securities Intermediary may resign at any time by giving
      notice thereof to the Company, the Purchase Contract Agent as
      attorney-in-fact for the Holders of PIES and the Trustee;

            (2) the Securities Intermediary may be removed at any time by the
      Company; and

            (3) if the Securities Intermediary fails to perform any of its
      material obligations hereunder in any material respect for a period of not
      less than 20 days after receiving written notice of such failure by the
      Purchase Contract Agent and such failure shall be continuing, the
      Securities Intermediary may be removed by the Purchase Contract Agent.

The Purchase Contract Agent shall promptly notify the Company of any removal of
the Securities Intermediary pursuant to clause (3) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the right
to appoint a successor Securities Intermediary. If no successor Securities
Intermediary shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Securities Intermediary's giving
of notice of resignation or such removal, then the retiring Securities
Intermediary may petition any court of competent jurisdiction for the
appointment of a successor Securities Intermediary. The Securities Intermediary
shall be a bank which has an office in New York, New York with a combined
capital and surplus of at least $50,000,000 and shall not be the Purchase
Contract Agent or any of its affiliates. Upon the acceptance of any appointment
as Securities Intermediary hereunder by a successor Securities Intermediary,
such successor Securities Intermediary shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Securities Intermediary, and the retiring Securities Intermediary shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor Securities Intermediary. The
retiring Securities Intermediary shall, upon such succession, be discharged from
its duties and obligations as Securities Intermediary hereunder. After any
retiring Securities Intermediary's resignation hereunder as Securities
Intermediary, the provisions of this Section 9 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Securities Intermediary.

<PAGE>

                                                                              29

      Section 9.9 Right to Appoint Agent or Advisor.

            The Collateral Agent shall have the right to appoint agents or
advisors in connection with any of its duties hereunder, and the Collateral
Agent shall not be liable for any action taken or omitted by, or in reliance
upon the advice of, such agents or advisors selected in good faith. The
appointment of agents pursuant to this Section 9.9 shall be subject to prior
consent of the Company, which consent shall not be unreasonably withheld.

      Section 9.10 Survival.

            The provisions of this Section 9 shall survive termination of this
Agreement and the resignation or removal of the Collateral Agent or the
Securities Intermediary.

      Section 9.11 Exculpation.

            Anything contained in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or the Securities
Intermediary or their officers, directors, employees or agents be liable under
this Agreement to the Company, the Purchase Contract Agent or any third party
for indirect, special, punitive or consequential loss or damage of any kind
whatsoever, including lost profits, whether or not the likelihood of such loss
or damage was known to the Collateral Agent or the Securities Intermediary, or
any of them, incurred without any act or deed that is found to be attributable
to gross negligence or willful misconduct on the part of the Collateral Agent or
the Securities Intermediary. Any and all exculpatory provisions, immunities and
indemnities in favor of the Collateral Agent or the Securities Intermediary
under this Agreement shall inure to the benefit of the Collateral Agent or the
Securities Intermediary, as applicable, in its individual capacity or as a party
to any agreement referred to herein or therein, whether or not expressly so
provided.

Section 10. Amendment.

      Section 10.1 Amendment Without Consent of Holders.

            Without the consent of any Holders, the Company (when authorized by
a Board Resolution), the Collateral Agent, the Securities Intermediary and the
Purchase Contract Agent, at any time and from time to time, may amend this
Agreement, in form satisfactory to the Company, the Collateral Agent, the
Securities Intermediary and the Purchase Contract Agent, to:

            (1) evidence the succession of another Person to the Company, and
      the assumption to by any such successor of the covenants of the Company;

            (2) evidence and provide for the acceptance of appointment hereunder
      by a successor Collateral Agent, Securities Intermediary or Purchase
      Contract Agent;

            (3) add to the covenants of the Company for the benefit of the
      Holders, or to surrender any right or power herein conferred upon the
      Company, provided such covenants or such surrender do not adversely affect
      the validity, perfection or priority of the Pledge created hereunder; or

            (4) cure any ambiguity (or formal defect), to correct or supplement
      any provisions herein which may be inconsistent with any other such
      provisions herein, or to make any other provisions with respect to such
      matters or questions arising under this Agreement, provided such action
      shall not adversely affect the interests of the Holders.

      Section 10.2 Amendment with Consent of Holders.

            With the consent of the Holders of not less than a majority of the
Purchase Contracts at the time outstanding, by Act of said Holders delivered to
the Company, the Purchase Contract Agent, the Securities Intermediary and the

<PAGE>

                                                                              30

Collateral Agent, the Company, when duly authorized by a Board Resolution, the
Purchase Contract Agent, the Securities Intermediary and the Collateral Agent
may amend this Agreement for the purpose of modifying in any manner the
provisions of this Agreement or the rights of the Holders in respect of the
PIES; provided, however, that no such supplemental agreement shall, without the
unanimous consent of the Holders of each Outstanding PIES adversely affected
thereby, other than as expressly contemplated by the Agreement,

            (1) change the amount or type of Collateral underlying a PIES,
      impair the right of the Holder of any PIES to receive distributions on the
      underlying Collateral or otherwise adversely affect the Holder's rights in
      or to such Collateral;

            (2) otherwise effect any action that would require the consent of
      the Holder of each Outstanding PIES affected thereby pursuant to the
      Purchase Contract Agreement if such action were effected by an agreement
      supplemental thereto; or

            (3) reduce the percentage of Purchase Contracts the consent of whose
      Holders is required for any such amendment;

provided that if any amendment or proposal referred to above would adversely
affect only the Corporate PIES or only the Treasury PIES after PIES of such
class are created and remain Outstanding, then only the affected class of Holder
as of the record date for the Holders entitled to vote thereon will be entitled
to vote on such amendment or proposal, and such amendment or proposal shall not
be effective except with the consent of Holders of not less than a majority of
such class; provided, further, that the unanimous consent of the Holders of each
outstanding Purchase Contract of such class affected thereby shall be required
to approve any amendment or proposal specified in clauses (1) through (3) above.

            It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.

      Section 10.3 Execution of Amendments.

            In executing any amendment permitted by this Section, the Collateral
Agent, the Securities Intermediary and the Purchase Contract Agent shall be
entitled to receive and (subject to Section 7.1 of the Purchase Contract
Agreement with respect to the Purchase Contract Agent) shall be fully protected
in relying upon, an Opinion of Counsel (as defined in the Purchase Contract
Agreement) stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent, if any, to the
execution and delivery of such amendment have been satisfied.

<PAGE>

                                                                              31

      Section 10.4 Effect of Amendments.

            Upon the execution of any amendment under this Section, this
Agreement shall be modified in accordance therewith, and such amendment shall
form a part of this Agreement for all purposes; and every Holder of Certificates
theretofore or thereafter authenticated, executed on behalf of the Holders and
delivered under the Purchase Contract Agreement shall be bound thereby.

      Section 10.5 Reference to Amendments.

            Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any amendment pursuant to this Section may, and
shall if required by the Collateral Agent or the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent and the Collateral
Agent as to any matter provided for in such amendment. If the Company shall so
determine, new Security Certificates so modified as to conform, in the opinion
of the Collateral Agent, the Purchase Contract Agent and the Company, to any
such amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract Agent
in accordance with the Purchase Contract Agreement in exchange for Outstanding
PIES Certificates.

Section 11. Merger, Consolidation, Sale or Conveyance.

      Section 11.1 When Company May Merge, Etc.

            The Company shall not consolidate with or merge into, or sell, lease
(for a term extending beyond the last stated maturity of the PIES and the Senior
Notes then Outstanding) or convey all or substantially all of its assets to, any
Person or group of Affiliated Persons in one transaction or a series of related
transactions, unless the Company shall be the continuing corporation, or the
successor or transferee Person expressly assumes by one or more supplemental
agreements, in form satisfactory to the Collateral Agent, all the obligations of
the Company with respect to this Agreement, and the Company or the successor or
transferee Person, as the case may be, (i) shall be a Corporation organized and
existing under the laws of one of the states in the United States and (ii) shall
not, immediately after such consolidation or merger or sale, lease or
conveyance, be in default in the performance or any covenant or condition
hereunder. The Company shall deliver to the Collateral Agent an Officers'
Certificate (as defined in the Original Indenture) and an Opinion of Counsel (as
defined in the Original Indenture), each stating that such consolidation, merger
sale, lease or conveyance and such supplemental agreement comply with this
Agreement and that all conditions precedent to the consummation of any such
consolidation, or merger, or any sale, lease or conveyance have been met.

      Section 11.2 Successor Corporation Substituted.

            Upon any consolidation or merger, or any sale, lease or conveyance
of all or substantially all of the assets of the Company in accordance with
Section 11.1, the successor corporation or the transferee corporation formed by
such consolidation or into which the Company is merged or to which such transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Agreement with the same effect as if such
successor corporation had been named as the Company herein.

            Such successor or transferee Person thereupon may cause to be
signed, and may issue either in its own name or in the name of Sierra Pacific
Resources, any or all of the Certificates evidencing PIES issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Purchase Contract Agent; and, upon the order of such successor or such
transferee Person, instead of the Company, and subject to all the terms,
conditions and limitations in this Agreement prescribed, the Purchase Contract
Agent shall

<PAGE>

                                                                              32

authenticate and execute on behalf of the Holders and deliver any Certificates
which previously shall have been signed and delivered by the officers of the
Company to the Purchase Contract Agent for authentication and execution, and any
Certificate evidencing PIES which such successor corporation or transferee
corporation thereafter shall cause to be signed and delivered to the Purchase
Contract Agent for that purpose. All the Certificates issued shall in all
respects have the same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with the terms of
this Agreement as though all of such Certificates had been issued at the date of
the execution hereof.

            In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance such change in phraseology and form
(but not in substance) may be made in the Certificates evidencing PIES
thereafter to be issued as may be appropriate.

      Section 11.3 Limitation.

            Nothing in this Agreement shall be deemed to prevent or restrict;
(a) any consolidation or merger after the consummation of which the Company
would be the surviving or resulting entity or any conveyance or other transfer
or lease of any part of the properties of the Company which does not constitute
the entirety, or substantially the entirety, thereof; or (b) the approval by the
Company of, or the consent by the Company to, any consolidation or merger to
which any Restricted Subsidiary (as defined in the Original Indenture) or any
other subsidiary or affiliate of the Company may be a party or any conveyance,
transfer or lease by any Subsidiary (as defined in the Original Indenture) or
any such other subsidiary or affiliate of any of its assets.

Section 12. Miscellaneous.

      Section 12.1 No Waiver.

            No failure on the part of the Collateral Agent or any of its agents
to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Collateral Agent or any
of its agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.

      Section 12.2 Governing Law; Jurisdiction and Venue.

            THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

            The Company, the Collateral Agent, the Securities Intermediary, the
Purchase Contract Agent and the Holders from time to time of the PIES, acting
through the Purchase Contract Agent as their attorney-in-fact, hereby submit to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. The Company, the
Collateral Agent, the Securities Intermediary and the Holders from time to time
of the PIES, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.

      Section 12.3 Notices.

            All notices, requests, consents and other communications provided
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made in writing (including,
without limitation, by

<PAGE>

                                                                              33

telecopy) delivered to the intended recipient specified below. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopier or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.

            If to the Company:

            Sierra Pacific Resources
            6100 Neil Road
            P.O. Box 30150
            Reno, Nevada 89520-0400
            Telecopier No.: (775) 834-5643
            Attention:  Manager of Finance and Treasury

            If to the Collateral Agent or the Securities Intermediary:

            Wells Fargo Bank, National Association
            Sixth and Marquette
            MAC N9303-120
            Minneapolis, Minnesota 55479
            Telecopier No.: (612) 667-9825
            Attention:  Jane Schweiger

            If to the Purchase Contract Agent or the Trustee:

            The Bank of New York
            101 Barclay Street, Floor 8 West
            New York, New York 10286
            Telecopier No.: (212) 815-5707
            Attention:  Corporate Trust Division -- Corporate Finance Unit

      Section 12.4 Successors and Assigns.

            This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Company, the Collateral Agent, the
Securities Intermediary and the Purchase Contract Agent, and the Holders from
time to time of the PIES, by their acceptance of the same, shall be deemed to
have agreed to be bound by the provisions hereof and to have ratified the
agreements of, and the grant of the Pledge hereunder by, the Purchase Contract
Agent.

      Section 12.5 Counterparts.

            This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Agreement by signing any such counterpart.

      Section 12.6 Effect of Headings and Table of Contents.

            The headings and table of contents contained in this Agreement shall
not constitute a part, or to effect the meaning or interpretation of, this
Agreement.

      Section 12.7 Severability.

            If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall

<PAGE>

                                                                              34

remain in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the parties hereto as nearly
as may be possible and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.

      Section 12.8 Expenses, etc.

            The Company agrees to reimburse the Collateral Agent and the
Securities Intermediary for:

            (1) all reasonable costs and expenses of the Collateral Agent and
      the Securities Intermediary (including, without limitation, the reasonable
      fees and expenses of counsel to the Collateral Agent and the Securities
      Intermediary or any agent or advisor appointed by the Collateral Agent
      pursuant to and in accordance with Section 9.9), in connection with (i)
      the negotiation, preparation, execution and delivery or performance of
      this Agreement and (ii) any modification, supplement or waiver of any of
      the terms of this Agreement;

            (2) all reasonable costs and expenses of the Collateral Agent and
      the Securities Intermediary (including, without limitation, reasonable
      fees and expenses of counsel to the Collateral Agent and the Securities
      Intermediary) in connection with (i) any enforcement or proceedings
      resulting or incurred in connection with causing any Holder of PIES to
      satisfy its obligations under the Purchase Contracts forming a part of the
      PIES and (ii) the enforcement of this Section 12.8; and

            (3) all transfer, stamp, documentary or other similar taxes,
      assessments or charges levied by any governmental or revenue authority in
      respect of this Agreement or any other document referred to herein and all
      costs, expenses, taxes, assessments and other charges incurred in
      connection with any filing, registration, recording or perfection of any
      security interest contemplated hereby.

      Section 12.9 Security Interest Absolute.

            All rights of the Collateral Agent and security interests hereunder,
and all obligations of the Holders from time to time hereunder, shall be
absolute and unconditional irrespective of:

            (1) any lack of validity or enforceability of any provision of the
      Purchase Contracts or the PIES or any other agreement or instrument
      relating thereto;

            (2) any change in the time, manner or place of payment of, or any
      other term of, or any increase in the amount of, all or any of the
      obligations of Holders of the PIES under the related Purchase Contracts,
      or any other amendment or waiver of any term of, or any consent to any
      departure from any requirement of, the Purchase Contract Agreement or any
      Purchase Contract or any other agreement or instrument relating thereto;
      or

            (3) any other circumstance which might otherwise constitute a
      defense available to, or discharge of, a borrower, a guarantor or a
      pledgor.

<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

                                SIERRA PACIFIC RESOURCES

                                By: _______________________________
                                    Name:
                                    Title:

                                THE BANK OF NEW YORK, not individually but
                                solely as Purchase Contract Agent and as
                                attorney-in-fact of the Holders from time to
                                time of the PIES

                                By: _______________________________
                                    Name:
                                    Title:

                                WELLS FARGO BANK, NATIONAL
                                ASSOCIATION, as Collateral Agent

                                By: _______________________________
                                    Name:
                                    Title:

                                WELLS FARGO BANK, NATIONAL ASSOCIATION, as
                                Securities Intermediary

                                By: _______________________________
                                    Name:
                                    Title:

<PAGE>

                                                                       EXHIBIT A

                                     NOTICE
                FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
                           (Creation of Treasury PIES)

Wells Fargo Bank, National Association, as Collateral Agent
Sixth and Marquette
MAC N9303-120
Minneapolis, Minnesota 55479
Attention: Jane Schweiger
Fax (612) 667-9825

            Re: PIES of Sierra Pacific Resources

      Reference is made to the Pledge Agreement dated as of _________, 2005 (the
"Pledge Agreement"), among Sierra Pacific Resources (the "Company"), you, as
Collateral Agent and as Securities Intermediary, and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time. Capitalized terms used herein but not defined shall have the
meanings attributable to them in the Pledge Agreement.

      We hereby notify you that, in accordance with Section 5.2 of the Pledge
Agreement and Section 3.13 of the Purchase Contract Agreement, the holder of
securities named below (the "Holder") has elected to substitute $__________
Value of Treasury Securities (CUSIP No.) in exchange for an equal Value of
Pledged Senior Notes and has delivered to the undersigned Purchase Contract
Agent a notice stating that the Holder has Transferred such Treasury Securities
to the Securities Intermediary, for credit to the Collateral Account.

      We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Treasury Securities have been credited to the Collateral
Account, to release by Transfer to the undersigned Purchase Contract Agent, on
behalf of the undersigned Holder an equal Value of Pledged Senior Notes in
accordance with Section 5.2 of the Pledge Agreement.

                           THE BANK OF NEW YORK,
                           as Purchase Contract Agent

                           By:______________________________
                              Name:
                              Title:
                              Date:

      Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements thereto for the Pledged Senior Notes:

__________________________________________________
      Name of Holder

__________________________________________________
      TRADES Account No.

__________________________________________________
Social Security or Taxpayer Identification Number

__________________________________________________
      Address

<PAGE>

                                                                       EXHIBIT B

                                     NOTICE
                FROM COLLATERAL AGENT TO SECURITIES INTERMEDIARY
                           (Creation of Treasury PIES)

Wells Fargo Bank, National Association, as Securities Intermediary
Sixth and Marquette
MAC N9303-120
Minneapolis, Minnesota 55479
Attention: Jane Schweiger
Fax (612) 667-9825

            Re: PIES of Sierra Pacific Resources

                Securities Account No. _______entitled "Wells Fargo Bank,
                National Association, as Collateral Agent, Securities Account
                (Sierra Pacific Resources)" (the "Collateral Account")

      Reference is made to the Pledge Agreement, dated as of _______, 2005 (the
"Pledge Agreement"), among Sierra Pacific Resources (the "Company"), you, as
Securities Intermediary, The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the holders of PIES from time to time, and the undersigned,
as Collateral Agent. Capitalized terms used herein but not defined shall have
the meanings attributable to them in the Pledge Agreement.

      When you have confirmed that $__________ Value of Treasury Securities
(CUSIP No. ) has been credited to the Collateral Account by or for the benefit
of _________, as Holder of PIES (the "Holder"), you are hereby instructed to
release from the Collateral Account an equal Value of Senior Notes by Transfer
to the Purchase Contract Agent in accordance with Section 5.2 of the Pledge
Agreement.

                                         WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                         as Collateral Agent

                                         By:______________________________
                                            Name:
                                            Title:
                                            Date:

      Please print name and address of Holder:

__________________________________________________
      Name

__________________________________________________
      TRADES Account No.

__________________________________________________
Social Security or Taxpayer Identification Number

__________________________________________________
      Address

<PAGE>

                                                                       EXHIBIT C

                                     NOTICE
                FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
                         (Recreation of Corporate PIES)

Wells Fargo Bank, National Association, as Collateral Agent
Sixth and Marquette
MAC N9303-120
Minneapolis, Minnesota 55479
Attention: Jane Schweiger
Fax (612) 667-9825

            Re: PIES of Sierra Pacific Resources

      Reference is made to the Pledge Agreement, dated as of _________, 2005
(the "Pledge Agreement"), among Sierra Pacific Company (the "Company"), you, as
Collateral Agent and as Securities Intermediary, and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time. Capitalized terms used herein but not defined shall have the
meanings attributable to them in the Pledge Agreement.

      We hereby notify you that, in accordance with Section 5.3 of the Pledge
Agreement and Section 3.14 of the Purchase Contract Agreement, the holder of
securities listed below (the "Holder") has elected to substitute $__________
Value of Senior Notes in exchange for $__________ Value of Pledged Treasury
Securities and has delivered to the undersigned a notice stating that the Holder
has Transferred such Senior Notes or security entitlements thereto to the
Securities Intermediary, for credit to the Collateral Account.

      We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Senior Notes have been credited to the Collateral
Account, to release to the undersigned Holder an equal Value of Treasury
Securities or security entitlements thereto related to _____ Treasury PIES of
such Holder in accordance with Section 5.3 of the Pledge Agreement and Section
3.14 of the Purchase Contract Agreement.

                                            THE BANK OF NEW YORK,
                                            as Purchase Contract Agent

                                            By:______________________________
                                               Name:
                                               Title:
                                               Date:

Please print name and address of Holder electing to substitute Pledged Senior
Notes or security entitlements thereto for Pledged Treasury Securities:

__________________________________________________
      Name

__________________________________________________
      DTC Participant No.

__________________________________________________
Social Security or Taxpayer Identification Number

__________________________________________________
      Address

<PAGE>

                                                                       EXHIBIT D

                                     NOTICE
                FROM COLLATERAL AGENT TO SECURITIES INTERMEDIARY
                         (Recreation of Corporate PIES)

Wells Fargo Bank, National Association, as Securities Intermediary
Sixth and Marquette
MAC N9303-120
Minneapolis, Minnesota 55479
Attention: Jane Schweiger
Fax (612) 667-9825

            Re: PIES of Sierra Pacific Resources

                Securities Account No. ________ entitled "Wells Fargo Bank,
                National Association, as Collateral Agent, Securities Account
                (Sierra Pacific Resources)"

      Reference is made to the Pledge Agreement, dated as of _________, 2005
(the "Pledge Agreement"), among Sierra Pacific Resources (the "Company"), you,
as Securities Intermediary, The Bank of New York, as Purchase Contract Agent and
as attorney-in-fact for the holders of PIES from time to time, and the
undersigned, as Collateral Agent. Capitalized terms used herein but not defined
shall have the meanings attributable to them in the Pledge Agreement.

      When you have confirmed that $_________ Value of Senior Notes has been
credited to the Collateral Account by or for the benefit of _________, as Holder
of PIES (the "Holder"), you are hereby instructed to release from the Collateral
Account $__________ Value of Treasury Securities (CUSIP No. ) or security
entitlements thereto by Transfer to the undersigned Holder in accordance with
Section 5.3 of the Pledge Agreement.

                                         WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                         as Collateral Agent

                                         By:______________________________
                                            Name:
                                            Title:
                                            Date:

Please print name and address of Holder:

__________________________________________________
      Name

__________________________________________________
DTC Participant No.

__________________________________________________
Social Security or Taxpayer Identification Number

__________________________________________________
      Address

<PAGE>

                                                                       EXHIBIT E

                            NOTICE OF CASH SETTLEMENT
             FROM SECURITIES INTERMEDIARY TO PURCHASE CONTRACT AGENT
                            (Cash Settlement Amounts)

The Bank of New York
101 Barclay Street, Floor 8 West
New York, New York 10286
Telecopier No.: (212) 815-5707
Attention: Corporate Trust Division -- Corporate Finance Unit

            Re: PIES of Sierra Pacific Resources

      Reference is made to the Pledge Agreement, dated as of ________, 2005 (the
"Pledge Agreement"), among Sierra Pacific Resources (the "Company"), you, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time, as Collateral Agent and the undersigned, as Securities
Intermediary. Capitalized terms used herein but not defined shall have the
meanings attributable to them in the Pledge Agreement.

      In accordance with Section [5.5(d)] [5.5(e)] of the Pledge Agreement, we
hereby notify you that as of 11:00 a.m. (New York City time), [on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date] [on
the Business Day immediately preceding the Purchase Contract Settlement Date],
we have received [$_____ in immediately available funds paid in an aggregate
amount equal to the Purchase Price to the Company on the Purchase Contract
Settlement Date with respect to __________ Corporate PIES] [$_________ in
immediately available funds paid in an aggregate amount equal to the Purchase
Price to the Company on the Purchase Contract Settlement Date with respect to
______ Treasury PIES.]

                                         WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                         as Securities Intermediary

                                         By:______________________________
                                            Name:
                                            Title:
                                            Date:

<PAGE>

                                                                       EXHIBIT F

                 NOTICE FROM HOLDER OF SEPARATED SENIOR NOTES TO
                     COLLATERAL AGENT REGARDING REMARKETING

Wells Fargo Bank, National Association, as Collateral Agent
Sixth and Marquette
MAC N9303-120
Minneapolis, Minnesota 55479
Attention: Jane Schweiger
Fax (612) 667-9825

            Re: Senior Notes of Sierra Pacific Resources

      Reference is made to the Pledge Agreement, dated as of ________, 2005 (the
"Pledge Agreement"), among Sierra Pacific Resources (the "Company"), you, as
Collateral Agent, and as Securities Intermediary, and The Bank of New York, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time. Capitalized terms used herein but not defined shall have the
meanings attributable to them in the Pledge Agreement.

      The undersigned hereby notifies you in accordance with Section 5.7 of the
Pledge Agreement, that the undersigned elects to have $_________ principal
amount of Senior Notes for delivery to the Remarketing Agents on the Business
Day immediately preceding the first of the three sequential remarketing dates of
any Three-Day Remarketing Period for such Senior Notes to be included in any
Remarketing. The undersigned will, upon request of the Remarketing Agents,
promptly execute and deliver any additional documents deemed by the Remarketing
Agents or by the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Senior Notes which are the subject of this
notice.

      The undersigned hereby instructs the you, upon receipt of the Proceeds of
such Remarketing from the Remarketing Agents to deliver such Proceeds to the
undersigned in accordance with the instructions indicated below under "Payment
Instructions." The undersigned hereby instructs you, in the event of a
unsuccessful Remarketing, upon receipt of the Senior Notes tendered herewith
from the Remarketing Agents, to deliver the Senior Notes to the person(s) and at
the address(es) indicated below under "Delivery Instructions." The undersigned
acknowledges and agrees that the Collateral Agent and the Remarketing Agents may
withhold from the Proceeds such amounts as they may determine to be appropriate
in respect of taxes which may be applicable.

      With this notice, the undersigned hereby (i) represents and warrants that
the undersigned has full power and authority to tender, sell, assign and
transfer the Notes tendered hereby and that the undersigned is the record owner
of any Notes tendered herewith in physical form or a participant in The
Depository Trust Company ("DTC") and the beneficial owner of any Notes tendered
herewith by book-entry transfer to your account at DTC and (ii) agrees to be
bound by the terms and conditions of the Pledge Agreement.

Date:
                                       By: __________________________________

                                         Name:
                                         Title:
                                         Signature Guarantee:

<PAGE>

Please print name and address of Holder:

__________________________________________________
      Name

__________________________________________________
Social Security or Taxpayer Identification Number

__________________________________________________
      Address

                              HOLDER'S INSTRUCTIONS

A. PAYMENT INSTRUCTIONS

Proceeds of the remarketing should be paid by check in the name of the person(s)
set forth below and mailed to the address set forth below

                                     Name(s)

                      _____________________________________
                                 (Please Print)

                                     Address

                      _____________________________________
                                 (Please Print)

                      _____________________________________

                      _____________________________________
                                   (Zip Code)

                      _____________________________________
                 (Tax Identification or Social Security Number)

                  If a DTC Participant, add wire transfer
                  instructions and DTC Account No.

                      _____________________________________
                           Wire transfer instructions

                      _____________________________________
                               DTC Account Number

B. DELIVERY INSTRUCTIONS

In the event of a Failed Remarketing, Senior Notes which are in physical form
should be delivered to the person(s) set forth below and mailed to the address
set forth below.

                                     Name(s)

                      _____________________________________
                                 (Please Print)

                                     Address

                      _____________________________________
                                 (Please Print)
                      _____________________________________
                      _____________________________________
                                   (Zip Code)
                      _____________________________________
                 (Tax Identification or Social Security Number)

                 In the event of a Failed Remarketing, Senior
                 Notes which are in book-entry form should be
                 credited to the account at The Depositary Trust
                 Company set forth below.

                  _____________________________________
                       DTC Account Number

                 Name of Account Party: _______________

<PAGE>

                                                                       EXHIBIT G

                       NOTICE FROM PURCHASE CONTRACT AGENT
                               TO COLLATERAL AGENT

Wells Fargo Bank, National Association, as Collateral Agent
Sixth and Marquette
MAC N9303-120
Minneapolis, Minnesota 55479
Attention: Jane Schweiger
Fax (612) 667-9825

                  Re: Senior Notes of Sierra Pacific Resources

            Reference is made to the Pledge Agreement, dated as of ________,
2005 (the "Pledge Agreement"), among Sierra Pacific Resources (the "Company"),
you, as Collateral Agent and Securities Intermediary, and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time. Capitalized terms used herein but not defined shall have the
meanings attributable to them in the Pledge Agreement.

            The undersigned hereby notifies you, in accordance with paragraph
19(i)(B) of the Indenture Officers' Certificate and Section 5.8 of the Pledge
Agreement, that the undersigned has received notice from the Holder named below
(the "Holder") that the Holder has elected not to participate in the Remarketing
through compliance with the procedures for creating Treasury PIES set forth in
Section 3.13 of the Purchase Contract Agreement and Section 5.2 of the Pledge
Agreement.

            Accordingly, the undersigned hereby notifies you in accordance with
Section 3.13 of the Purchase Contract Agreement and Section 5.2 of the Pledge
Agreement that the Holder has elected to substitute $______________ Value of
Treasury Securities in exchange for an equal Value of Pledged Senior Notes and
has delivered to the undersigned a notice stating that the Holder has
Transferred such Treasury Securities to the Securities Intermediary, for credit
to the Collateral Account.

            The undersigned hereby requests that you as the Collateral Agent,
upon confirmation from the Securities Intermediary that such Treasury Securities
have been credited to the Collateral Account, release to us for delivery to such
Holder _________ principal amount of the Pledged Senior Note in accordance with
Section 5.2 of the Pledge Agreement.

                                        THE BANK OF NEW YORK,
                                        as Purchase Contract Agent

                                        By:______________________________
                                           Name:
                                           Title:
                                           Date:

<PAGE>

                                                                       EXHIBIT H

                      AGENCY AND CUSTODY ACCOUNT DIRECTION
                                FOR CASH BALANCES

Direction to use Wells Fargo Funds for Cash Balances for the following
account(s):

      Account Names: Wells Fargo Bank, National Association, as Collateral
                     Agent, Securities Account (Sierra Pacific Resources)

      Account Number(s): _______________

You are hereby directed to invest, as indicated below or as I shall direct
further from time to time, all cash in the Account in the following money market
portfolio of Wells Fargo Advantage Money Markey Funds -- Service Class (the
"Fund") (Check One):

[ ]   Wells Fargo Advantage Government Money Market Fund
[ ]   Wells Fargo Advantage 100% Treasury Money Market Fund
[ ]   Wells Fargo Advantage Treasury Plus Money Market Fund
[ ]   Wells Fargo Advantage National Tax-Free Money Market Fund

I acknowledge that I have received, at my request, and reviewed the Fund's
prospectus and have determined that the Fund is an appropriate investment for
the Account.

I understand from reading the Fund's prospectus that Wells Fargo Bank, National
Association, ("Wells Fargo Bank") serves as investment advisor, custodian and
transfer agent for the Fund; I also understand that Wells Fargo Bank will be
paid, and its bank affiliates may be paid, fees for services to the Fund and
that those fees may include Processing Organization fees as described in the
Fund's prospectus.

I understand that you will not exclude amounts invested in the Fund from Account
assets subject to fees under the Account agreement between us.

I understand that investments in the Fund are not obligations of, or endorsed or
guaranteed by, Wells Fargo Bank or its affiliates and are not insured by the
Federal Deposit Insurance Corporation.

I acknowledge that I have full power to direct investments of the Account.

I understand that I may change this direction at any time and that it shall
continue in effect until revoked or modified by me by written notice to you.

                                                     ___________________________
                                                     Signature

                                                     ___________________________
                                                     Date<PAGE>

                                                                     EXHIBIT 4.9

================================================================================

                            SIERRA PACIFIC RESOURCES

                             (a Nevada corporation)

                                  Senior Notes

                              REMARKETING AGREEMENT

Dated: ____________, 2005

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
<S>                                                                                 <C>
SECTION 1.     Representations and Warranties...................................      3

SECTION 2.     Modification and Remarketing of Senior Notes.....................     11

SECTION 3.     Covenants of the Company.........................................     14

SECTION 4.     Payment of Expenses..............................................     17

SECTION 5.     Conditions of Remarketing Agents' Obligations....................     17

SECTION 6.     Indemnification..................................................     20

SECTION 7.     Contribution.....................................................     21

SECTION 8.     Representations, Warranties and Agreements to Survive............     22

SECTION 9.     Termination of Agreement.........................................     23

SECTION 10.    Other Matters Relating to the Remarketing Agents.................     23

SECTION 11.    Notices..........................................................     25

SECTION 12.    Parties..........................................................     25

SECTION 13.    Governing Law....................................................     26

SECTION 14.    Waiver of Trial by Jury..........................................     26

SECTION 15.    Time.............................................................     26

SECTION 16.    Counterparts.....................................................     26

SECTION 17.    Effect of Headings...............................................     26

       Schedule A  -  Additional Definitions

       Schedule B  -  Opinion of Woodburn and Wedge

       Schedule C  -  Opinion of Choate, Hall & Stewart LLP
</TABLE>

<PAGE>

                            SIERRA PACIFIC RESOURCES

                             (a Nevada corporation)

                                  Senior Notes

                              REMARKETING AGREEMENT

                                                                  ________, 2005

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
             Incorporated

LEHMAN BROTHERS INC.

c/o  Merrill Lynch & Co.
     Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated
4 World Financial Center
New York, New York  10080

Ladies and Gentlemen:

      Sierra Pacific Resources, a Nevada corporation (the "COMPANY") confirms
its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MERRILL LYNCH") and Lehman Brothers Inc. ("LEHMAN BROTHERS")
(together, the "REMARKETING AGENTS"), with respect to the remarketing by the
Remarketing Agents of up to $235,218,000 in aggregate principal amount of the
Company's Senior Notes (the "SENIOR NOTES"). The Senior Notes have been issued
under an indenture, dated as of May 1, 2000 (the "ORIGINAL INDENTURE"), between
the Company and The Bank of New York, as trustee (the "TRUSTEE"), as heretofore
supplemented by an officer's certificate establishing the form, terms and
provisions of the Senior Notes, as originally issued, and as to be further
supplemented by an officer's certificate containing modifications thereto
effective as of the date of the consummation of the aforesaid remarketing of the
Senior Notes (each of such officer's certificates an "OFFICER'S CERTIFICATE",
the second Officer's Certificate the "SECOND OFFICER'S CERTIFICATE" and the
Original Indenture, as so supplemented, the "INDENTURE").

      The Company understands that the Remarketing Agents and any purchasers of
the Senior Notes may make a public offering of such Senior Notes.

      The Senior Notes were originally issued and delivered as a component of
the Company's Premium Income Equity Securities ("NEW PIES"). The Company filed
with the Securities and Exchange Commission (the "COMMISSION") a registration
statement on Form S-4 (No. 333-124083) for the registration of the New PIES
(including the various components thereof) under the Securities Act of 1933, as
amended (the "1933 ACT"), and the qualification of the Indenture (excluding the
Second Officer's Certificate) under the Trust Indenture Act of 1939, as amended
(the "1939 ACT"). The Company filed amendments to such registration statement on
May 6, 2005, May 11, 2005 and May 17, 2005, and such registration statement, as
so amended, was declared effective by the Commission as of May 17, 2005. Such
registration statement, including

<PAGE>

the exhibits and schedules thereto, at the time it became effective, is referred
to herein as the "S-4 REGISTRATION STATEMENT"; and each preliminary prospectus
and the final prospectus used in connection with the Exchange Offer (as
hereinafter defined) are hereinafter referred to, collectively, as the "EXCHANGE
OFFER PROSPECTUS".

      The New PIES were offered, issued and delivered in exchange for
outstanding securities of the Company (the "EXCHANGE OFFER"), as set forth in
the S-4 Registration Statement. As further described in the S-4 Registration
Statement, the Senior Notes are to be subject to a remarketing procedure
conducted by the Remarketing Agents pursuant to this Agreement. The Company has
entered into a Purchase Agreement, dated April 15, 2005 (the "PURCHASE
AGREEMENT"), with Merrill Lynch, Pierce, Fenner & Smith Incorporated and Lehman
Brothers Inc. (together, the "UNDERWRITERS") pursuant to which the Underwriters
have agreed, subject to the conditions set forth therein, to purchase Senior
Notes which the Remarketing Agents have not remarketed to other investors.

      The Company has filed with the Commission a registration statement on Form
S-3 (No. 333-123835), for the registration of various securities, including the
Senior Notes, under the 1933 Act, and the offer and sale thereof from time to
time in accordance with Rule 415 of the rules and regulations of the Commission
under the 1933 Act (the "1933 ACT REGULATIONS"), and for the qualification of
the Indenture under the 1939 Act. Such registration statement was declared
effective by the Commission as of May 19, 2005. Such registration statement,
including the exhibits and schedules thereto, at the time it became effective,
is referred to herein as the "REGISTRATION STATEMENT"; the final prospectus and
the final prospectus supplement relating to the remarketing of the Senior Notes
by the Remarketing Agents, in the forms first furnished to the Remarketing
Agents by the Company for use in connection with the remarketing of the Senior
Notes by the Remarketing Agents, are collectively referred to herein as the
"REMARKETING PROSPECTUS"; and, if the Remarketing Agents shall remarket Senior
Notes to the Underwriters pursuant to the Purchase Agreement, the final
prospectus and the final prospectus supplement relating to the offering of the
Senior Notes by the Underwriters, in the forms first furnished to the
Underwriters by the Company for use in connection with the offering of the
Senior Notes by the Underwriters, are collectively referred to herein as the
"PROSPECTUS".

      Notwithstanding the foregoing, all references herein to the "S-4
Registration Statement" and the "Registration Statement" shall also be deemed to
include all documents filed pursuant to the Securities Exchange Act of 1934 (the
"1934 ACT") at the respective times such registration statements become
effective, and all references herein to the Remarketing Prospectus, Prospectus
and the Exchange Offer Prospectus shall also be deemed to include all documents
filed pursuant to the 1934 Act prior to the date thereof or, in the case of a
prospectus filed pursuant to Rule 424(b) of the 1933 Act Regulations, prior to
the time of such filing, and, in any case which are incorporated therein by
reference pursuant to Item 12 of Form S-3 or Item 11 of Form S-4 under the 1933
Act. A "preliminary prospectus" shall be deemed to refer to (i) any prospectus
used before the related registration statement becomes effective and (ii) any
prospectus that omits information to be included upon pricing in a form of
prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations and is used after the registration statement becomes effective and
prior to the filing of the related Prospectus pursuant to Rule 424(b) by the
Company. For purposes of this Agreement, all references to any registration
statement, prospectus or preliminary prospectus or to any amendment or
supplement to any of the foregoing shall be deemed to include the copy of such
document filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR").

                                       2
<PAGE>

      All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in any
registration statement, prospectus or the preliminary prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in such registration statement, prospectus or preliminary
prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to any registration statement, prospectus or
preliminary prospectus shall be deemed to mean and include the filing of any
document under the 1934 Act which is incorporated by reference in such
registration statement, prospectus or preliminary prospectus, as the case may
be.

      SECTION 1. Representations and Warranties.

      (a) Representations and Warranties by the Company. The Company represents
and warrants to each Remarketing Agent as of the date of this Agreement, the
Remarketing Commencement Date (as defined in Section 2(d)), the Remarketing Date
(as defined in Section 2(e)) and the Closing Time (as defined in Section
2(e)(iii)) (unless a particular date, or another date, is specifically
referenced, in which case such specific date), and agrees with each Remarketing
Agent, as follows:

            (i) Compliance with Registration Requirements. The Company meets the
      requirements for use of Form S-3 under the 1933 Act. The Registration
      Statement has become effective under the 1933 Act and no stop order
      suspending the effectiveness of the Registration Statement has been issued
      under the 1933 Act and no proceedings for that purpose have been
      instituted or are pending or, to the knowledge of the Company,
      contemplated by the Commission, and any request on the part of the
      Commission for additional information has been complied with.

            At the time the Registration Statement became effective and at the
      Closing Time, the Registration Statement complied and will comply in all
      material respects with the requirements of the 1933 Act and the 1933 Act
      Regulations and the 1939 Act and the rules and regulations of the
      Commission under the 1939 Act (the "1939 ACT REGULATIONS"), and did not
      and will not contain an untrue statement of a material fact or omit to
      state a material fact required to be stated therein or necessary to make
      the statements therein not misleading. Neither the Remarketing Prospectus
      nor any amendments or supplements thereto, at the time the Remarketing
      Prospectus or any such amendment or supplement is first furnished to the
      Remarketing Agents or at the Closing Time, will include an untrue
      statement of a material fact or omit to state a material fact necessary in
      order to make the statements therein, in the light of the circumstances
      under which they were made, not misleading. Neither the Prospectus nor any
      amendments or supplements thereto, at the time the Prospectus or any such
      amendment or supplement is issued or at the Closing Time, will include an
      untrue statement of a material fact or omit to state a material fact
      necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading. The
      representations and warranties in this subsection shall not apply to
      statements in or omissions from the Registration Statement, the
      Remarketing Prospectus or the Prospectus made in reliance upon and in
      conformity with written information furnished to the Company by any
      Remarketing Agent specifically for use with respect to such documents.

            Each preliminary prospectus and the prospectus filed as part of the
      Registration Statement as originally filed or as part of any amendment
      thereto will comply when so filed in all material respects with the 1933
      Act Regulations and each preliminary

                                       3
<PAGE>

      prospectus and the Remarketing Prospectus delivered to the Remarketing
      Agents for use in connection with the offering of the Senior Notes by the
      Remarketing Agents will, at the time of such delivery, be identical to the
      electronically transmitted copies thereof filed with the Commission
      pursuant to EDGAR, except to the extent permitted by Regulation S-T.

            (ii) Incorporated Documents. The documents incorporated or deemed to
      be incorporated by reference in the Registration Statement and the
      Remarketing Prospectus, at the time they were or hereafter are filed with
      the Commission, complied and will comply in all material respects with the
      requirements of the 1934 Act and the 1934 Act Regulations, and, when read
      together with the other information in the Remarketing Prospectus, at the
      time the Registration Statement became effective, at the time the
      Remarketing Prospectus is issued and at the Closing Time, did not and will
      not contain an untrue statement of a material fact or omit to state a
      material fact required to be stated therein or necessary to make the
      statements therein, in the light of the circumstances under which they
      were made, not misleading.

            (iii) Independent Auditors. Deloitte & Touche LLP, which certified
      certain of the financial statements and supporting schedules included in
      the Registration Statement and the Remarketing Prospectus (i) is a
      registered public accounting firm and is independent with respect to the
      Company and its subsidiaries, each within the meaning of the 1934 Act and
      (ii) is in compliance with its obligations under the 1934 Act with respect
      to the Company and its subsidiaries.

            (iv) Financial Statements. The financial statements included in the
      Registration Statement and the Remarketing Prospectus, together with the
      related schedules and notes, present and will present fairly the financial
      position of the Company and its consolidated subsidiaries at the dates
      indicated and the statement of operations, stockholders' equity and cash
      flows of the Company and its consolidated subsidiaries for the periods
      specified; such financial statements have been and will be prepared in
      conformity with generally accepted accounting principles ("GAAP") applied
      on a consistent basis, except as noted therein, throughout the periods
      involved. The supporting schedules, if any, included in the Registration
      Statement and the Remarketing Prospectus present and will present fairly
      in accordance with GAAP the information required to be stated therein. The
      selected financial data and the summary financial information included in
      the Registration Statement and the Remarketing Prospectus present and will
      present fairly the information shown therein and have been and will be
      compiled on a basis consistent with that of the audited financial
      statements included in the Registration Statement and the Remarketing
      Prospectus. The financial statements included in the Registration
      Statement and the Remarketing Prospectus comply with Regulation G and Item
      10 of Regulation S-K of the Commission. Except as disclosed in the
      Registration Statement and the Remarketing Prospectus, neither the Company
      nor any of its subsidiaries has or will have any off-balance sheet
      arrangements of the character contemplated by Item 303 of Regulation S-K
      or otherwise by Section 13(j) of the 1934 Act, or has any other contingent
      obligation or liability, which, in any case, is material, or is reasonably
      likely to be material, to the Company and its consolidated subsidiaries
      considered as one enterprise.

            (v) No Material Adverse Change in Business. Since the respective
      dates as of which information is given in the Registration Statement and
      the Remarketing Prospectus, except as otherwise stated therein, (i) there
      has been or will have been no

                                       4
<PAGE>

      material adverse change, or any development which is reasonably likely to
      result in a material adverse change, in the condition, financial or
      otherwise, results of operations or business affairs of the Company and
      its subsidiaries considered as one enterprise (any such change or
      development, a "MATERIAL ADVERSE CHANGE"), (ii) there have been or will
      have been no transactions entered into by the Company or any of its
      subsidiaries, other than those in the ordinary course of business, which
      are material with respect to the Company and its subsidiaries considered
      as one enterprise and (iii) there has been or will have been no dividend
      or distribution of any kind declared, paid or made by the Company on any
      class of its capital stock.

            (vi) Good Standing of the Company. The Company has been duly
      organized and is validly existing as a corporation in good standing under
      the laws of the State of Nevada and has corporate power and authority to
      own, lease and operate its properties and to conduct its business as
      described in the Registration Statement and the Remarketing Prospectus and
      to enter into and perform its obligations under this Agreement; and the
      Company is duly qualified as a foreign corporation to transact business
      and is in good standing in each other jurisdiction in which such
      qualification is required, whether by reason of the ownership or leasing
      of property or the conduct of business, except where the failure so to
      qualify or to be in good standing would not have a material adverse
      effect, and would not result in any development which is reasonably likely
      to have a material adverse effect, on the condition, financial or
      otherwise, results of operations or business affairs of the Company and
      its subsidiaries considered as one enterprise, whether or not arising in
      the ordinary course of business (any such effect or development, a
      "MATERIAL ADVERSE EFFECT").

            (vii) Good Standing of Subsidiaries. Each Significant Subsidiary (as
      defined below) of the Company has been duly organized and is validly
      existing as a corporation in good standing under the laws of its
      jurisdiction of organization, has corporate power and authority to own,
      lease and operate its properties and to conduct its business as described
      in the Registration Statement and the Remarketing Prospectus; and each
      Significant Subsidiary is duly qualified as a foreign corporation to
      transact business and is in good standing in each jurisdiction in which
      such qualification is required, whether by reason of the ownership or
      leasing of property or the conduct of business, except where the failure
      so to qualify or to be in good standing would not result in a Material
      Adverse Effect. The shares of issued and outstanding capital stock of each
      Significant Subsidiary have been duly authorized and validly issued and
      are fully paid and non-assessable; none of the issued and outstanding
      shares of capital stock of either Significant Subsidiary was issued in
      violation of any preemptive or other similar rights of any securityholder
      of such Significant Subsidiary; and all shares of common stock of each
      Significant Subsidiary are owned by the Company, free and clear of any
      security interests and other liens and encumbrances and of any equities,
      claims and other adverse interests. Nevada Power Company and Sierra
      Pacific Power Company, each a Nevada corporation (and each a "SIGNIFICANT
      SUBSIDIARY"), are each a "significant subsidiary" within the meaning of
      Rule 405 under the 1933 Act, and the Company has no other such significant
      subsidiary.

            (viii) Capitalization. The authorized, issued and outstanding
      capital stock of the Company is as set forth in the Registration Statement
      and the Remarketing Prospectus. The shares of issued and outstanding
      capital stock of the Company have been duly authorized and validly issued
      and are fully paid and non-assessable; and none

                                       5
<PAGE>

      of the issued and outstanding shares of capital stock of the Company was
      issued in violation of any preemptive or other similar rights of any
      securityholder of the Company.

            (ix) Authorization of this Agreement. The Company has all corporate
      power and authority necessary to execute and deliver this Agreement, to
      perform its obligations hereunder and to consummate the transactions
      contemplated hereby. This Agreement has been duly authorized, executed and
      delivered by the Company.

            (x) Authorization and Description of Indenture. The Indenture and
      the transactions contemplated thereby have been duly authorized by the
      Company; the Indenture (excluding the Second Officer's Certificate) has
      been duly executed and delivered by the Company; at the Closing Time, the
      Indenture will have been duly executed and delivered by the Company and
      will constitute a legally valid and binding agreement of the Company,
      enforceable against the Company in accordance with its terms, subject to
      the effects of bankruptcy, insolvency, fraudulent conveyance,
      reorganization, moratorium and other similar laws relating to or affecting
      creditors' rights generally, general equitable principles (whether
      considered in a proceeding in equity or at law) and an implied covenant of
      good faith and fair dealing; the Indenture (excluding the Second Officer's
      Certificate) has been and, at the Closing Time, the Indenture will have
      been duly qualified under the 1939 Act and the 1939 Act Regulations; and
      the Indenture conforms and will conform in all material respects to the
      description thereof contained in the Registration Statement and the
      Prospectus.

            (xi) Authorization of the Senior Notes. (i) The Senior Notes have
      been duly authorized, executed and delivered by the Company and
      authenticated by the Trustee and constitute valid and binding obligations
      of the Company, enforceable against the Company in accordance with their
      terms, except as the enforcement thereof may be limited by bankruptcy,
      insolvency (including, without limitation, all laws relating to fraudulent
      transfers), reorganization, moratorium or similar laws affecting
      enforcement of creditors' rights generally and except as enforcement
      thereof is subject to general principles of equity (regardless of whether
      enforcement is considered in a proceeding in equity or at law) and an
      implied covenant of good faith and fair dealing.

                  (ii) The modifications of the terms of the Senior Notes
            pursuant to Section 2 hereof have been duly authorized by the
            Company; and, when the Second Officer's Certificate implementing
            such modifications shall have been duly executed and delivered to
            the Trustee and new certificates representing the Senior Notes, as
            so modified, shall have been duly executed and delivered by the
            Company and authenticated by the Trustee, such modifications will
            have been duly implemented and will be effective, and the Senior
            Notes, as so modified, will constitute valid and binding obligations
            of the Company, enforceable against the Company in accordance with
            their terms (subject to the limitations on enforcement referred to
            in subclause (i) above).

            (xii) Description of the Senior Notes and the Indenture. The Senior
      Notes and the Indenture will conform in all material respects to the
      respective statements relating thereto contained in the Registration
      Statement and the Remarketing Prospectus and will be in substantially the
      respective forms filed or incorporated by reference, as the case may be,
      as exhibits to the Registration Statement.

                                       6
<PAGE>

            (xiii) Absence of Defaults and Conflicts. Neither the Company nor
      any of its Significant Subsidiaries is in violation of its charter or
      by-laws or in default in the performance or observance of any obligation,
      agreement, covenant or condition contained in any contract, indenture,
      mortgage, deed of trust, loan or credit agreement, note, lease or other
      agreement or instrument to which the Company or any of its Significant
      Subsidiaries is a party or by which any of them may be bound, or to which
      any of the property or assets of the Company or any of its Significant
      Subsidiaries is subject (collectively, "AGREEMENTS AND INSTRUMENTS")
      except for such defaults as would not result in a Material Adverse Effect.
      The execution, delivery and performance by the Company of this Agreement,
      the Indenture and the Senior Notes, and the consummation by the Company of
      the transactions contemplated herein and in the Registration Statement and
      performance by the Company with its obligations hereunder and under the
      Indenture and the Senior Notes have been authorized by all necessary
      corporate action and do not and will not, whether with or without the
      giving of notice or passage of time or both, conflict with or constitute a
      breach of, or a default or a Repayment Event (as defined below) under, or
      result in the creation or imposition of any lien, charge or encumbrance
      upon any property or assets of the Company or any of its Significant
      Subsidiaries pursuant to, the Agreements and Instruments except for such
      conflicts, breaches or defaults or liens, charges or encumbrances that,
      singly or in the aggregate, would not result in a Material Adverse Effect,
      nor will such action result in any violation of the provisions of the
      charter or by-laws of the Company or any of its Significant Subsidiaries
      or any applicable law, statute, rule, regulation, judgment, order, writ or
      decree of any government, government instrumentality or court, domestic or
      foreign, having jurisdiction over the Company or any of its subsidiaries
      or any of their assets, properties or operations. As used herein, a
      "REPAYMENT EVENT" means any event or condition which gives the holder of
      any note, debenture or other evidence of indebtedness (or any person
      acting on such holder's behalf) the right to require the repurchase,
      redemption or repayment of all or a portion of such indebtedness by the
      Company or any of its Significant Subsidiaries.

            (xiv) Labor. No labor disturbance by the employees of the Company or
      any of its subsidiaries exists or, to the knowledge of the Company or any
      of its Significant Subsidiaries, is imminent, which might be expected to
      have a Material Adverse Effect.

            (xv) ERISA. The Company is in compliance in all material respects
      with all applicable provisions of the Employee Retirement Income Security
      Act of 1974, as amended, including the regulations and published
      interpretations thereunder ("ERISA"); no "reportable event" (as defined in
      ERISA) has occurred with respect to any "pension plan" (as defined in
      ERISA) for which the Company would have any material liability; the
      Company has not incurred and the Company does not expect to incur material
      liability; the Company has not incurred and the Company does not expect to
      incur material liability under (i) Title IV of ERISA with respect to
      termination of, or withdrawal from, any "pension plan" or (ii) Sections
      412 or 4971 of the Internal Revenue Code of 1986, as amended, including
      the regulations and published interpretations thereunder (the "CODE"); and
      each "pension plan" for which the Company would have any liability that is
      intended to be qualified under Section 401(a) of the Code is so qualified
      in all material respects and to the Company's knowledge nothing has
      occurred, whether by action or by failure to act, which might reasonably
      be expected to cause the loss of such qualification.

                                       7
<PAGE>

            (xvi) Tax. Each of the Company and its Significant Subsidiaries has
      filed all federal, state and local income and franchise tax returns
      required to be filed through the date hereof and has paid all taxes due
      thereon, and no tax deficiency has been determined adversely to the
      Company or any of its Significant Subsidiaries which has had, nor does the
      Company have any knowledge of any tax deficiency which, if determined
      adversely to the Company or any of its Significant Subsidiaries, might
      have, a Material Adverse Effect.

            (xvii) Insurance. The Company and its Significant Subsidiaries
      carry, or are covered by, insurance in such amounts and covering such
      risks that the Company reasonably believes is adequate for the conduct of
      its business and the value of its properties and as is customary for
      companies engaged in similar businesses in similar industries.

            (xviii) Absence of Proceedings. Except as disclosed in the
      Registration Statement and the Prospectus, there is no action, suit,
      proceeding, inquiry or investigation before or brought by any court or
      governmental agency or body, domestic or foreign, now pending, or, to the
      knowledge of the Company, threatened, against or affecting the Company or
      any of its Significant Subsidiaries which, singly or in the aggregate,
      might reasonably be expected to result in a Material Adverse Effect, or
      which might reasonably be expected to materially and adversely affect the
      consummation of the transactions contemplated by this Agreement or the
      performance by the Company of its obligations hereunder.

            (xix) Possession of Licenses and Permits. The Company and its
      Significant Subsidiaries possess such permits, licenses, approvals,
      consents and other authorizations (collectively, "GOVERNMENTAL LICENSES")
      issued by the appropriate federal, state, local or foreign regulatory
      agencies or bodies necessary to conduct the business now operated by them
      except where the failure to possess such Governmental Licenses would not
      have a Material Adverse Effect; the Company and its Significant
      Subsidiaries are in compliance with the terms and conditions of all such
      Governmental Licenses, except where the failure so to comply would not,
      singly or in the aggregate, have a Material Adverse Effect; all of the
      Governmental Licenses are valid and in full force and effect, except where
      the invalidity of such Governmental Licenses or the failure of such
      Governmental Licenses to be in full force and effect would not have a
      Material Adverse Effect; and neither the Company nor any of its
      Significant Subsidiaries has received any notice of proceedings relating
      to the revocation or modification of any such Governmental Licenses which,
      singly or in the aggregate, if the subject of an unfavorable decision,
      ruling or finding, would result in a Material Adverse Effect.

            (xx) Absence of Further Requirements. No filing with, or
      authorization, approval, consent, license, order, registration,
      qualification or decree of, any court or governmental authority or agency
      is necessary or required for the performance by the Company of its
      obligations hereunder, in connection with the issuance or delivery of the
      Senior Notes, the modification of the terms of the Senior Notes and the
      remarketing of the Senior Notes as contemplated in Section 2, or for the
      consummation by the Company of any of the other transactions contemplated
      by this Agreement, the Registration Statement or the Remarketing
      Prospectus, except such as have been already obtained or as may be
      required under the 1933 Act or the 1933 Act Regulations or state
      securities laws and except for the qualification of the Indenture under
      the 1939 Act.

                                       8
<PAGE>

            (xxi) Title to Property. The Company and its Significant
      Subsidiaries have good title to all real property and personal property
      owned by them, in each case free and clear of all liens, encumbrances,
      equities or claims except such as are described or contemplated in the
      Registration Statement and the Remarketing Prospectus or would not,
      individually or in the aggregate, have a Material Adverse Effect and do
      not materially interfere with the use made or to be made of such property
      by the Company and its Significant Subsidiaries.

            (xxii) Leases. All of the leases and subleases material to the
      business of the Company and each of its Significant Subsidiaries and under
      which the Company or any of its Significant Subsidiaries holds properties
      described in the Registration Statement and the Remarketing Prospectus,
      are in full force and effect, and neither the Company nor any of its
      Significant Subsidiaries has any notice of any material claim of any sort
      that has been asserted by anyone adverse to the rights of the Company or
      any of its subsidiaries under any of the leases or subleases mentioned
      above, or affecting or questioning the rights of such Company or any
      subsidiary thereof to the continued possession of the leased or subleased
      premises under any such lease or sublease.

            (xxiii) Environmental Laws. Except as described in the Registration
      Statement and the Remarketing Prospectus and except such matters as would
      not, singly or in the aggregate, result in a Material Adverse Effect, (i)
      neither the Company nor any of its subsidiaries is in violation of any
      federal, state, local or foreign statute, law, rule, regulation,
      ordinance, code, policy or rule of common law or any judicial or
      administrative interpretation thereof, including any judicial or
      administrative order, consent, decree or judgment, relating to pollution
      or protection of human health, the environment (including, without
      limitation, ambient air, surface water, groundwater, land surface or
      subsurface strata) or wildlife, including, without limitation, laws and
      regulations relating to the release or threatened release of chemicals,
      pollutants, contaminants, wastes, toxic substances, hazardous substances,
      petroleum or petroleum products (collectively, "HAZARDOUS MATERIALS") or
      to the manufacture, processing, distribution, use, treatment, storage,
      disposal, transport or handling of Hazardous Materials (collectively,
      "ENVIRONMENTAL LAWS"), (ii) the Company and its subsidiaries have all
      permits, authorizations and approvals required under any applicable
      Environmental Laws and are each in compliance with their requirements,
      (iii) there are no pending or threatened administrative, regulatory or
      judicial actions, suits, demands, demand letters, claims, liens, notices
      of noncompliance or violation, investigation or proceedings relating to
      any Environmental Law against the Company or any of its subsidiaries.

            (xxiv) Investment Company Act. The Company is not required, and upon
      the remarketing of the Senior Notes as herein contemplated will not be
      required, to register as, an "investment company" under the Investment
      Company Act of 1940, as amended (the "1940 ACT").

            (xxv) Holding Company Act. The Company is a "holding company" under
      the Public Utility Holding Company Act of 1935, as amended (the "1935
      ACT"), but the Company and all of its subsidiaries are exempt from all
      provisions of the 1935 Act (except Section 9(a)(2) thereof) by virtue of
      the exemption set forth in Section 3(a)(1) thereof.

                                       9
<PAGE>

            (xxvi) Internal Controls. (i) The Company has devised and
      established and maintains the following, among other, internal controls
      (without duplication):

                  (A) a system of "internal accounting controls" as contemplated
            in Section 13(b)(2)(B) of the 1934 Act;

                  (B) "disclosure controls and procedures" as such term is
            defined in Rule 13a-15(e) under the 1934 Act; and

                  (C) "internal control over financial reporting" (as such term
            is defined in Rule 13a-15(f) under the 1934 Act (the internal
            controls referred to in clauses (A) an (B) above and this clause (C)
            being hereinafter called, collectively, the "INTERNAL CONTROLS").

                  (ii) The Internal Controls are evaluated by the Company's
      senior management periodically as appropriate and, in any event, as
      required by law.

                  (iii) The Internal Controls are, individually and in the
      aggregate, effective in all material respects to perform the functions for
      which they were established.

                  (iv) Based on the most recent evaluations of the Internal
      Controls, all material weaknesses, if any, and significant deficiencies,
      if any, in the design or operation of the Internal Controls which could
      adversely affect the Company's ability to timely record, process,
      summarize and report financial information and any fraud, whether or not
      material, that involves management or other employees who have a
      significant role in the Internal Controls have been identified and
      reported to the Company's independent auditors and the audit committee of
      the Company's board of directors; and all such weaknesses, if any, have
      been rectified; and all deficiencies which, individually or in the
      aggregate, could constitute significant deficiencies and which have not
      yet been rectified (A) are in the process of being rectified and (B) have
      not had and will not have, individually or in the aggregate, a material
      adverse effect on the effectiveness of the Internal Controls. (For
      purposes of clarification, the Company further represents and warrants,
      that, as of the date of this Agreement, no such weaknesses in the design
      or operation of the Internal Controls had been identified.)

            (xxvii) Compliance with Sarbanes Oxley. The Company is in compliance
      in all material respects with the Sarbanes-Oxley Act of 2002 and the rules
      and regulations of the Commission and the New York Stock Exchange that
      have been adopted thereunder, all to the extent that such Act and such
      rules and regulations are in effect and applicable to the Company.

      (b) Other. The representations and warranties of the Company contained in
the Dealer Manager Agreement, dated April 15, 2005 (the "DEALER MANAGER
AGREEMENT"), among the Company and Merrill Lynch and Lehman Brothers, as dealer
managers, were, are and/or will be true and correct when made and as of the
applicable dates referred to in subsection (a) of this Section.

      (c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Remarketing Agents or to
counsel for the Remarketing

                                       10
<PAGE>

Agents shall be deemed a representation and warranty by the Company to each
Remarketing Agents as to the matters covered thereby.

      SECTION 2. Modification and Remarketing of Senior Notes.

      (a) Acceptance of Appointment. Merrill Lynch and Lehman Brothers hereby
accept their appointment as Remarketing Agents and hereby agree, subject to the
terms and conditions set forth herein, to use commercially reasonable efforts to
remarket all Senior Notes which are to be remarketed in accordance with the
provisions of the Indenture. Schedule A hereto sets forth the definitions of
capitalized terms not otherwise defined herein relating to such remarketing.

      (b) Modification of Terms of Senior Notes. (i) The terms of the Senior
Notes which shall be effective as of the Remarketing Settlement Date (or, in the
event of a Failed Remarketing or a Non-Remarketing, as of the Purchase Contract
Settlement Date) shall be set forth in the Second Officer's Certificate. All
such modified terms of the Senior Notes are herein sometimes called the "RESET
TERMS".

            (ii) The Second Officer's Certificate will contain covenants and the
mandatory redemption and repurchase provisions in respect of the Senior Notes
similar to the Company's 8 5/8 notes due 2014 (except as otherwise provided in
subsections (f) and (g)) and such provisions shall be in effect as of the
Remarketing Settlement Date.

      (c) Remarketing Periods and Remarketing Notices. The Company may select
the remarketing periods as provided in the Officer's Certificate. The Company
will also provide notices of any remarketing, and further notices of the results
of any attempted remarketing, as provided in the Officer's Certificate.

      (d) Remarketing Efforts. (i) Subject to the conditions set forth herein,
on each day during each Three-Day Remarketing Period during the Period for Early
Remarketing and on each day during the Final Remarketing Period (the first day
of any such period, a "REMARKETING COMMENCEMENT DATE") (A) the Company, in
consultation with the Remarketing Agents, shall propose the stated maturity,
optional redemption provisions, if any, and other terms of the Senior Notes
(other than the interest rate and the provisions referred to in subsection
(b)(ii) of this Section) to be in effect as of the Remarketing Settlement Date,
which terms shall be satisfactory to the Remarketing Agents and (B) the
Remarketing Agents shall use commercially reasonable efforts to remarket all
Senior Notes which are to be remarketed (as set forth in notices to the Company
and the Remarketing Agents by the Purchase Contract Agent and/or the Collateral
Agent, as described in the Officer's Certificate), with the proposed terms
referred to in clause (A) above, at an aggregate purchase price equal to (x) if
remarketing occurs during the Period for Early Remarketing, the applicable
Remarketing Value or (y) if the remarketing occurs during the Final Remarketing
Period, the Contract Settlement Value.

            (ii) In the conduct of such remarketing activities, the Remarketing
Agents shall consult with the Company and with prospective purchasers of the
Senior Notes being remarketed (including the Underwriters), and, taking into
account, among other things, prevailing financial market conditions and the
creditworthiness and prospects of the Company, as well as the proposed terms of
the Senior Notes referred to in clause (A) in subsection (d)(i) above, the
Remarketing Agents shall determine the interest rate on the Senior Notes, to be
effective as of the Remarketing Settlement Date, which will enable them to sell
the Senior Notes being remarketed, with the proposed terms referred to in clause
(i)(A) above, at the applicable purchase price referred to above.

                                       11
<PAGE>

      (e) Successful Remarketing. If any remarketing is successful (a
"SUCCESSFUL REMARKETING" and the date thereof, the "REMARKETING DATE"), then:

            (i) by approximately 4:30 p.m. (New York City time) on such
      Remarketing Date, (A) the Remarketing Agents shall advise by telephone
      (promptly confirmed by facsimile or electronic transmission) the Company,
      the Purchase Contract Agent, the Collateral Agent, the Securities
      Intermediary, the Depositary and the Trustee, of the Reset Terms, (B) the
      Remarketing Agents shall advise by telephone (promptly confirmed by
      facsimile or electronic transmission) each purchaser or DTC participant
      (the "DEPOSITARY PARTICIPANT") thereof purchasing Senior Notes sold in the
      remarketing of the Reset Terms and the number of Senior Notes such
      purchaser is to purchase and (C) the Remarketing Agents shall request by
      telephone (promptly confirmed by facsimile or electronic transmission)
      each purchaser to give instructions to its Depositary Participant to pay
      the purchase price on the third Business Day after the Remarketing Date
      (the "REMARKETING SETTLEMENT DATE", which, if the Remarketing Date is the
      last day of the Final Remarketing Period, shall be the Purchase Contract
      Settlement Date) in same day funds against delivery of the remarketed
      Senior Notes purchased through the facilities of the Depositary;

            (ii) in accordance with the Depositary's normal procedures, at the
      Closing Time the transactions described in clause (i) above shall be
      executed through the Depositary, and the accounts of the respective
      Depositary Participants shall be debited and credited, respectively, and
      such remarketed Senior Notes delivered by book-entry, as necessary to
      effect purchases and sales thereof; provided, however, that the settlement
      procedures set forth herein, including provisions for payment by
      purchasers of the remarketed Senior Notes, shall be subject to
      modification to the extent required by the Depositary or if the book-entry
      system is no longer available for the remarketed Senior Notes at the time
      of the remarketing, to facilitate the remarketing of the remarketed Senior
      Notes in certificated form and the Remarketing Agents may modify such
      settlement procedures in order to facilitate the settlement process;

            (iii) the delivery of all certificates, opinions and other documents
      contemplated by Section 5 shall be made at the offices of Dewey Ballantine
      LLP in New York, New York at 9:00 A.M. (Eastern Time), or at such other
      place and/or time as shall be mutually agreed upon by the parties hereto,
      on the Remarketing Settlement Date (such time and date of delivery being
      herein call "CLOSING TIME"); and

            (iv) upon receipt of the proceeds from a Successful Remarketing, the
      Remarketing Agents shall:

                  (A) (I) if the Successful Remarketing occurs during the Period
            for Early Remarketing, use the portion of the remaining proceeds
            from such Successful Remarketing attributable to the Pledged Senior
            Notes to purchase the appropriate U.S. Treasury securities (the
            "TREASURY PORTFOLIO" and the related interest in the Treasury
            Portfolio applicable to a Corporate PIES, the "TREASURY PORTFOLIO
            INTEREST"), in open market transactions and/or at Treasury auctions,
            in the amount and types of Treasury securities described in clauses
            (a)(i), (a)(ii) and (b) of the definition of Remarketing Value in
            the Purchase Contract Agreement with respect to such Pledged Senior
            Notes, deliver such Treasury Portfolio, along with notification
            thereof, to the Collateral Agent on the Remarketing Settlement Date
            or as soon thereafter as is practicable, or (II) if such Successful
            Remarketing

                                       12
<PAGE>

            occurs during the Final Remarketing Period, remit to the Collateral
            Agent an amount of the remaining proceeds equal to the aggregate
            principal amount of remarketed Pledged Senior Notes; remit, along
            with notification thereof, any remaining balance of such proceeds
            after the application of such proceeds as set forth in clauses (I)
            and (II) above, if any, to the Purchase Contract Agent for the
            benefit of the Holders of the remarketed Pledged Senior Notes, on a
            pro rata basis;

                  (B) deduct and retain for themselves an amount equal to .25%
            of the principal amount of the remarketed Senior Notes as a fee
            (such fee, the "REMARKETING FEE") for the performance of their
            services as Remarketing Agents hereunder. The Remarketing Agents'
            fee shall be divided between Merrill Lynch and Lehman Brothers, with
            Merrill Lynch receiving 60.0% and Lehman Brothers 40.0% of the total
            fee; and

                  (C) if any Separated Senior Notes were included in such
            Successful Remarketing, remit to the Collateral Agent, along with
            notification thereof, for payment to the holders of such Separated
            Senior Notes, portions of the remaining proceeds from such
            Successful Remarketing attributable to such remarketed Separated
            Senior Notes.

Any distributions to Holders of funds described in paragraphs (A) and (C) above
shall be payable at the office of the Purchase Contract Agent in The City of New
York maintained for that purpose or, at the option of the Holder or the holder
of Separated Senior Notes, as applicable, by check mailed to the address of the
Person entitled thereto at such address as it appears on the Register or by wire
transfer in immediately available funds to an account specified by the Holder or
the holder of Separated Senior Notes, as applicable.

      (f) Failed Remarketing. If (i)(A) by 4:00 p.m. (New York City time) on the
ninth Business Day preceding the Purchase Contract Settlement Date, the
Remarketing Agents, despite using their commercially reasonable efforts, have
been and are unable to remarket all of the Senior Notes to be remarketed at a
price equal to the Remarketing Value, and (B) by 4:00 p.m. (New York City time),
on the last day in the Final Remarketing Period, the Remarketing Agents, despite
using their commercially reasonable efforts, have been and are unable to
remarket all of the Senior Notes to be remarketed at a price equal to the
Contract Settlement Value, or (ii) the Remarketing Agents have determined that
the Remarketing may not be commenced or consummated as contemplated herein and
by the Remarketing Procedures under applicable law, a failed Remarketing (a
"FAILED REMARKETING") shall be deemed to have occurred. If a Failed Remarketing
occurs, the Remarketing Agents and the Company, as applicable, shall take the
following actions:

            (i) the Remarketing Agents shall notify by telephone the Company,
      the Depositary, Purchase Contract Agent, the Collateral Agent and the
      Trustee, that a Failed Remarketing has occurred;

            (ii) the Company shall cause a notice of the Failed Remarketing to
      be sent to the holders of all Senior Notes and to be published, in an
      Authorized Newspaper, in each case, no later than the Business Day
      preceding the Purchase Contract Settlement Date;

            (iii) the Remarketing Agents shall determine the interest rate that
      will be equal to the Two Year Benchmark Rate plus the Applicable Spread,
      such interest rate to

                                       13
<PAGE>

      be the interest rate on the Senior Notes effective as of the Purchase
      Contract Settlement Date; and

            (iv) the Remarketing Agents shall remit the Pledged Senior Notes
      that were to be remarketed to the Purchase Contract Agent and the
      Separated Senior Notes that were to be remarketed to the Collateral Agent;

it being understood that if a Failed Remarketing shall have occurred, there
shall be no modifications to the terms of the Senior Notes except the reset of
the interest rate as set forth above.

      (g) Non-Remarketing. If, on the eighth Business Day preceding the Purchase
Contract Settlement Date, only Treasury PIES (and no Corporate PIES) are
outstanding and no holders of Senior Notes have elected to have any Senior Notes
remarketed, then a non-remarketing (a "NON-REMARKETING") shall be deemed to have
occurred and:

            (i) the Remarketing Agents shall, in their sole discretion,
      determine the interest rate that, in its judgment, would have been
      established had a Successful Remarketing of all Senior Notes been
      conducted on such date, such interest rate to be the interest rate on the
      Senior Notes effective as of the Purchase Contract Settlement Date;

            (ii) the Remarketing Agents shall advise by telephone the Company,
      the Depositary and the Trustee of such Reset Rate; and

            (iii) the Company shall cause a notice of such Reset Rate to be sent
      to the holders of all Senior Notes and to be published in an Authorized
      Newspaper, in each case, no later than the Business Day preceding the
      Purchase Contract Settlement Date;

it being understood that if a Non-Remarketing shall have occurred, there shall
be no modifications to the terms of the Senior Notes except the reset of the
interest rate as set forth above.

      (h) Compensation for Services Performed. If a Failed Remarketing shall
have occurred (other than by reason of the failure of the Remarketing Agents to
perform their obligations hereunder) or if a Non-Remarketing shall have
occurred, the Remarketing Agents shall be entitled to receive reasonable
compensation for the services they have performed under this Agreement,
including, without limitation, the determination of the interest rate on the
Senior Notes to be in effect on and after the Purchase Contract Settlement Date.

      SECTION 3. Covenants of the Company. The Company covenants with each
Remarketing Agent as follows:

      (a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will notify the Remarketing Agents promptly,
(i) when any post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Remarketing Prospectus or any amended
Remarketing Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Remarketing Prospectus or any document incorporated by reference therein or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use

                                       14
<PAGE>

of any preliminary prospectus, or of the suspension of the qualification of the
Senior Notes for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make commercially reasonable efforts to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.

      (b) Filing of Amendments. The Company will give the Remarketing Agents
notice of its intention to file or prepare any amendment to the Registration
Statement or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or to the
Remarketing Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Remarketing Agents with copies of any such documents
a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file or use any such document to which the Remarketing
Agents or counsel for the Remarketing Agents shall reasonably object.

      (c) Delivery of Registration Statements. The Company will deliver to the
Remarketing Agents and counsel for the Remarketing Agents, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto and signed copies of all consents and certificates of experts,
and will also deliver to the Remarketing Agents, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Remarketing Agents. The copies of the
Registration Statement and each amendment thereto furnished to the Remarketing
Agents will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

      (d) Delivery of Prospectuses. The Company will deliver to each Remarketing
Agent, without charge, as many copies of each preliminary prospectus as such
Remarketing Agent reasonably requests, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Remarketing Agent, without charge, during the period when the
Remarketing Prospectus is required to be delivered under the 1933 Act, such
number of copies of the Remarketing Prospectus (as amended or supplemented) as
such Remarketing Agent may reasonably request. The Remarketing Prospectus and
any amendments or supplements thereto furnished to the Remarketing Agents will
be identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

      (e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Senior Notes as contemplated in this
Agreement and in the Remarketing Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the Senior
Notes, any event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Remarketing Agents or for the
Company, to amend the Registration Statement or amend or supplement the
Remarketing Prospectus in order that the Remarketing Prospectus will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the

                                       15
<PAGE>

Remarketing Prospectus in order to comply with the requirements of the 1933 Act
or the 1933 Act Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Remarketing Prospectus comply with such requirements, and the
Company will furnish to the Remarketing Agents such number of copies of such
amendment or supplement as the Remarketing Agents may reasonably request.

      (f) Blue Sky Qualifications. The Company will use its reasonable best
efforts, in cooperation with the Remarketing Agents, to qualify the Senior Notes
for offering and sale under the applicable securities laws of such states and
other jurisdictions as the Remarketing Agents may designate and to maintain such
qualifications in effect for a period of not less than one year from the
effective date of the Registration Statement; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or so subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will also supply the Remarketing Agents with such
information as is necessary for the determination of the legality of the Senior
Notes for investment under the laws of such jurisdictions as the Remarketing
Agents may request.

      (g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.

      (h) Listing. The Company will use its reasonable best efforts to effect
the listing of the Senior Notes on the New York Stock Exchange ("NYSE").

      (i) Restriction on Sale of Securities. During a period of 90 days from the
date of the Remarketing Prospectus, the Company will not, without the prior
written consent of Merrill Lynch, directly or indirectly, issue, sell, offer or
contract to sell, grant any option for the sale of, or otherwise transfer or
dispose of, any debt securities of the Company substantially similar to the
Senior Notes, except that this paragraph (i) shall not prevent any remarketings
of the debt component of the Company's Premium Income Equity Securities that
were not tendered in the Exchange Offer ("OLD PIES") or (ii) the offering of
securities by the Company the proceeds of which are used to exercise
equity-clawback provisions in debt of the Company's subsidiaries.

      (j) Reporting Requirements. The Company, during the period when the
Remarketing Prospectus is required to be delivered under the 1933 Act, will file
all documents required to be filed with the Commission pursuant to the 1934 Act
within the time periods required by the 1934 Act and the 1934 Act Regulations.

      (k) Other. The Company shall perform all of its obligations under the
Dealer Manager Agreement (except to the extent that any obligation of the
Company is waived under such agreement).

                                       16
<PAGE>

      SECTION 4. Payment of Expenses.

      (a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under, or otherwise relating to the transactions
contemplated by, this Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Remarketing Agents of this Agreement,
any agreement among Remarketing Agents, the Second Officer's Certificate and any
other documents relating to the modification of the Senior Notes and such other
documents as may be required in connection with the remarketing, sale or
delivery of the Senior Notes, (iii) the preparation, issuance and delivery of
the certificates for the Senior Notes to the Remarketing Agents, (iv) the fees
and expenses of the Company's counsel, accountants and other advisors, (v) the
fees and expenses of counsel for the Remarketing Agents, (vi) the printing and
delivery to the Remarketing Agents of copies of each preliminary prospectus and
of the Remarketing Prospectus and any amendments or supplements thereto, (vii)
the qualification of the Senior Notes under securities laws in accordance with
the provisions of Section 3(f) hereof, including filing fees and the
preparation, printing and delivery to the Remarketing Agents of copies of the
Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of the
Trustee, including the fees and expenses of counsel for the Trustee in
connection with the Second Officer's Certificate and the Senior Notes, (ix) the
costs and expenses relating to investor presentations on any "road show"
undertaken in connection with the remarketing of the Senior Notes, including,
without limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection with
the road show presentations, travel and lodging expenses of the representatives
and officers of the Company and any such consultants, and the cost of aircraft
and other transportation chartered in connection with the road show, (x) any
fees payable in connection with the rating of the Senior Notes and (xi) the fees
and expenses incurred in connection with the listing of the Senior Notes on the
NYSE.

      (b) Termination of Agreement. If this Agreement is terminated by the
Remarketing Agents in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Remarketing Agents for all of
their out of pocket expenses.

      SECTION 5. Conditions of Remarketing Agents' Obligations. The obligations
of the several Remarketing Agents hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:

      (a) Effectiveness of Registration Statement. At Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Remarketing Agents. The Remarketing Prospectus shall have been
filed with the Commission in accordance with Rule 424(b).

      (b) Actions by the Company. The Company shall have taken all actions
reasonably required for the remarketing of the Senior Notes, including, without
limitation,

                                       17
<PAGE>

            (i) the preparation and delivery to the Remarketing Agents of a
      preliminary prospectus relating to the remarketing of the Senior Notes and
      the Remarketing Prospectus, each in such quantities as the Remarketing
      Agents shall reasonably request;

            (ii) the participation by the Company in such "road shows" or other
      investor presentations or marketing efforts as the Remarketing Agents
      shall reasonably recommend;

            (iii) continuing discussions with Moody's Investors Service and
      Standard & Poor's regarding the Company's securities and its business and
      affairs, all consistent with the Company's current practice and to the
      extent necessary or appropriate for such rating agencies to establish a
      rating for the Senior Notes;

            (iv) the cooperation by the Company with the Remarketing Agents in,
      and the facilitation by the Company of, the performance by the Remarketing
      Agents of their due diligence responsibilities, including without
      limitation providing such access to officers and other employees, and to
      books and records, of the Company and its subsidiaries as the Remarketing
      Agents shall reasonably request; and

            (v) the compliance by the Company with all applicable requirements
      of federal and state securities laws in connection with the remarketing of
      the Senior Notes.

      (c) Modification of Terms of Securities. The terms of the Senior Notes to
be effective as of the Remarketing Settlement Date shall have been determined
and established as contemplated in Section 2 hereof.

      (d) Listing of Securities. The Senior Notes shall have been authorized for
listing, upon official notice of the consummation of the remarketing thereof, on
the NYSE.

      (e) Opinion of Counsel for Company. At Closing Time, the Remarketing
Agents shall have received the favorable opinion, dated as of Closing Time, of
each of Woodburn and Wedge and Choate, Hall & Stewart LLP, counsel for the
Company, in form and substance satisfactory to counsel for the Remarketing
Agents, to the effect set forth in Schedules B and C, respectively, and to such
further effect as counsel to the Remarketing Agents may reasonably request.

      (f) Opinion of Counsel for Remarketing Agents. At Closing Time, the
Remarketing Agents shall have received the favorable opinion, dated as of
Closing Time, of Dewey Ballantine LLP, counsel for the Remarketing Agents, with
respect to such matters as the Remarketing Agents shall reasonably request. In
giving such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York and the
federal law of the United States, upon the opinions of counsel satisfactory to
the Remarketing Agents. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.

      (g) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Remarketing Prospectus, any Material Adverse Change and the
Remarketing Agents shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been

                                       18
<PAGE>

no such Material Adverse Change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or, to their knowledge,
contemplated by the Commission.

      (h) Accountant's Comfort Letter. On the date of this Agreement, the
Remarketing Agents shall have received from Deloitte & Touche LLP a letter dated
such date, in form and substance satisfactory to the Remarketing Agents,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Remarketing Prospectus.

      (i) Bring-down Comfort Letter. At Closing Time, the Remarketing Agents
shall have received from Deloitte & Touche LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (h) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time, and to such further effect as the Remarketing Agents shall
reasonably request.

      (j) Maintenance of Rating. Since the date of this Agreement, there shall
not have occurred a downgrading in the rating assigned to the debt securities of
the Company or any of its subsidiaries by any "nationally recognized statistical
rating agency", as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act, and no such organization shall have publicly
announced that it has under credit watch, surveillance or review, with negative
implications, its rating of any of the Company's or any of its subsidiaries'
debt securities, after such organization did not have such security under credit
watch, surveillance or review, as the case may be.

      (k) Additional Documents. At Closing Time, counsel for the Remarketing
Agents shall have been furnished with such documents and opinions as they may
require for the purpose of enabling them to pass upon the issuance and sale of
the Senior Notes as herein contemplated, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the modification and remarketing of the Senior Notes as herein
contemplated shall be satisfactory in form and substance to the Remarketing
Agents and counsel for the Remarketing Agents.

      (l) Termination of Agreement. (i) If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Remarketing Agents by notice to the Company
at any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.

            (ii) The Company hereby agrees that, if any condition specified in
      this Section shall not have been fulfilled when and as required to be
      fulfilled, purchasers who have been solicited by the Remarketing Agents
      and have committed to purchase Senior Notes in the Remarketing shall have
      the right to terminate their commitments.

                                       19
<PAGE>

      SECTION 6. Indemnification.

      (a) Indemnification of Remarketing Agents. The Company agrees to indemnify
and hold harmless each Remarketing Agent, its affiliates, as such term is
defined in Rule 501(b) under the 1933 Act (each, an "AFFILIATE"), its selling
agents and each person, if any, who controls any Remarketing Agent within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

            (i) against any and all loss, liability, claim, damage and expense
      whatsoever, as incurred, arising out of any untrue statement or alleged
      untrue statement of a material fact contained in the Registration
      Statement or the S-4 Registration Statement (or any amendment to either
      thereof), or the omission or alleged omission therefrom of a material fact
      required to be stated therein or necessary to make the statements therein
      not misleading or arising out of any untrue statement or alleged untrue
      statement of a material fact contained in any preliminary prospectus or
      the Remarketing Prospectus or the Exchange Offer Prospectus (or any
      amendment or supplement to any thereof), or the omission or alleged
      omission therefrom of a material fact necessary in order to make the
      statements therein, in the light of the circumstances under which they
      were made, not misleading;

            (ii) against any and all loss, liability, claim, damage and expense
      whatsoever, as incurred, to the extent of the aggregate amount paid in
      settlement of any litigation, or any investigation or proceeding by any
      governmental agency or body, commenced or threatened, or of any claim
      whatsoever based upon any such untrue statement or omission, or any such
      alleged untrue statement or omission; provided, however, that (subject to
      Section 6(d) below) any such settlement is effected with the written
      consent of the Company;

            (iii) against any and all expense whatsoever, as incurred (including
      the fees and disbursements of counsel chosen by the Remarketing Agents),
      reasonably incurred in investigating, preparing or defending against any
      litigation, or any investigation or proceeding by any governmental agency
      or body, commenced or threatened, or any claim whatsoever based upon any
      such untrue statement or omission, or any such alleged untrue statement or
      omission, to the extent that any such expense is not paid under (i) or
      (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Remarketing Agent expressly for use in the document containing such defect or
alleged defect;

      (b) Indemnification of Company. Each Remarketing Agent severally agrees to
indemnify and hold harmless the Company, its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Remarketing Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Remarketing

                                       20
<PAGE>

Agent expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Remarketing Prospectus (or any amendment
or supplement thereto).

      (c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

      (d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

      SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Remarketing Agents on the other hand from the offering of the
Senior Notes pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Remarketing Agents on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

                                       21
<PAGE>

      The relative benefit received by the Company in connection with the
remarketing of the Senior Notes pursuant to this Agreement shall be deemed to be
the total purchase price paid by the purchasers of the Senior Notes remarketed
pursuant to this Agreement after giving effect to the payment of the Remarketing
Fee. The relative benefit received by the Remarketing Agents shall be the
aggregate amount retained by the Remarketing Agents as their remarketing fee
pursuant to Section 2.

      The relative fault of the Company on the one hand and the Remarketing
Agents on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Remarketing Agents and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

      The Company and the Remarketing Agents agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Remarketing Agents were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

      Notwithstanding the provisions of this Section 7, no Remarketing Agent
shall be required to contribute any amount in excess of the amount by which the
total price at which the Senior Notes remarketed by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Remarketing Agent has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.

      No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

      For purposes of this Section 7, each person, if any, who controls a
Remarketing Agent within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act and each Remarketing Agent's Affiliates and selling agents shall
have the same rights to contribution as such Remarketing Agent, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company. The Remarketing Agents' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to their respective shares of the total remarketing fee pursuant to Section 2
hereto and not joint.

      SECTION 8. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Remarketing Agent or its
Affiliates or selling agents, any person controlling any Remarketing Agent, its

                                       22
<PAGE>

officers or directors or any person controlling the Company, and (ii) delivery
of and payment for the Senior Notes.

      SECTION 9. Termination of Agreement.

      (a) Termination; General. The Remarketing Agents may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Remarketing Prospectus
(exclusive of any supplement thereto), any Material Adverse Change or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Remarketing Agents, impracticable or
inadvisable to remarket the Senior Notes or to enforce contracts for the sale of
the Senior Notes, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or NYSE, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(v) if a banking moratorium has been declared by either Federal or New York
authorities, or (vi) the Remarketing Settlement Date shall not have occurred on
or prior to November 15, 2005; provided however, that if an event or
circumstance described in clause (i), (iii), (iv) or (v) shall have occurred
prior to the Remarketing Date, the Remarketing Agents may terminate this
Agreement pursuant to any such clause only if (x) such event or circumstance
shall be continuing on the Remarketing Date or (y) such event or circumstance,
shall be such that, in the judgment of the Remarketing Agents, it will be
impracticable or inadvisable to market the Senior Notes or to enforce contracts
for the sale of the Senior Notes.

      (b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof; and provided, further, that Sections 1,
6, 7 and 8 shall survive such termination and remain in full force and effect.

      (c) The Company hereby agrees that, if any of the events or circumstances
listed in clauses (i), (ii), (iii), (iv) or (v) in subsection (a) above shall
have occurred, purchasers who have been solicited by the Remarketing Agents and
have committed to purchase Senior Notes in the Remarketing shall have the right
to terminate their commitments.

      SECTION 10. Other Matters Relating to the Remarketing Agents.

      (a) Resignation; Removal. A Remarketing Agent may resign and be discharged
from its duties and obligations hereunder by giving 30 days' prior written
notice to the Company, the Depositary and the Trustee. The Company may remove
any Remarketing Agent by giving 30 days' prior written notice to the removed
Remarketing Agent, the Depositary and the Trustee upon any of the following
events:

                                       23
<PAGE>

            (i) such Remarketing Agent shall become involved as a debtor in a
      bankruptcy, insolvency or similar proceeding;

            (ii) such Remarketing Agent shall not be among the ten underwriters
      with the largest volume underwritten in dollars, on a lead managed basis,
      of U.S. domestic debt securities during the twelve-month period ended as
      of the last calendar quarter preceding the date such notice is given;

            (iii) such Remarketing Agent shall be subject to one or more legal
      restrictions preventing the performance of its obligations hereunder; or

            (iv) the Company shall determine in its sole discretion that such
      Remarketing Agent, using its commercially reasonable efforts, would be
      unable to make an effective contribution to the Remarketing on the terms
      and in the manner contemplated herein.

If any Remarketing Agent resigns or is removed, the Company shall use its
reasonable efforts to appoint a successor Remarketing Agent, and under such
successor a party to this Agreement, as soon as reasonably practicable. Sections
1, 6, 7 and 8 shall survive the resignation or removal of any Remarketing Agent.

      (b) Dealing in the Senior Notes. Any Remarketing Agent, when acting as a
Remarketing Agent or in its individual or any other capacity, may, to the extent
permitted by law, buy, sell, hold and deal in any of the Senior Notes, including
in connection with the Remarketing. Any Remarketing Agent may exercise any vote
or join in any action which any beneficial owner of Senior Notes may be entitled
to exercise or take pursuant to the Indenture with like effect as if it did not
act in any capacity hereunder. Any Remarketing Agent, in its individual
capacity, either as principal or agent, may also engage in or have an interest
in any financial or other transaction with the Company as freely as if it did
not act in any capacity hereunder.

      (c) Remarketing Agents' Performance; Duty of Care; Etc. (i) (i) The duties
      and obligations of the Remarketing Agents shall be determined solely by
      the express provisions of this Agreement, and, to the extent the
      Remarketing Procedures are set forth elsewhere, in the Indenture and the
      Purchase Contract Agreement. No implied covenants or obligations of or
      against the Remarketing Agents shall be read into this Agreement, the
      Indenture or the Purchase Contract Agreement.

            (ii) In the absence of bad faith, gross negligence or willful
      misconduct on the part of such Remarketing Agent, each Remarketing Agent
      may conclusively rely upon any document furnished to it, which purports to
      conform to the requirements of this Agreement, the Indenture or the
      Purchase Contract Agreement as to the truth of the statements expressed in
      any of such documents. Each Remarketing Agent shall be protected in acting
      upon any document or communication reasonably believed by it to have been
      signed, presented or made by the proper party or parties. No Remarketing
      Agent, acting under this Agreement, shall incur any liability to the
      Company or to any holder of Senior Notes, in its individual capacity or as
      Remarketing Agent, for any action or failure to act, on its part in
      connection with a Remarketing or otherwise (including, but not limited to,
      in respect of the settlement of any Successful Remarketing that is
      delayed, incomplete or abandoned for any reason), except if such liability
      is judicially determined to have resulted from the gross negligence or
      willful misconduct on its part.

                                       24
<PAGE>

            (iii) Each Remarketing Agent, in offering Senior Notes for
      remarketing and sale pursuant to this Agreement and in performing its
      other obligations under this Agreement, is acting solely as agent and not
      as principal. No Remarketing Agent shall have any obligation whatsoever to
      purchase any Senior Notes hereunder or in any way be obligated to provide
      funds to make payment upon delivery of Senior Notes for remarketing or to
      otherwise expend or risk its own funds or incur or be exposed to financial
      liability in the performance of its duties under this Agreement. Each
      Remarketing Agent will make commercially reasonable efforts to assist in
      obtaining performance by each purchaser whose commitment to purchase
      Senior Notes in the Remarketing was solicited by such Remarketing Agent,
      but no Remarketing Agent shall have any liability in the event such
      purchase is not consummated for any reason.

            (iv) If there shall be a failure to deliver Senior Notes to a
      purchaser who has committed to purchase Senior Notes in a Remarketing, the
      Company shall (A) hold each Remarketing Agent harmless against any loss,
      claim or damage arising from or as a result of such failure and (B)
      notwithstanding such failure, pay to the Remarketing Agent that solicited
      such commitment any commission to which it would have been entitled in
      connection with the sale of Senior Notes to such purchaser.

            (v) If at any time during the term of this Agreement, any Event of
      Default (as defined in the Indenture) under the Indenture, or any event
      that with the passage of time or the giving of notice or both would become
      on Event of Default under the Indenture, has occurred and is continuing
      under the Indenture, then the obligations and duties of the Remarketing
      Agents under this Agreement shall be suspended until such default or event
      has been cured. The Company will cause the Trustee and the Purchase
      Contract Agent to give the Remarketing Agent notice of all such defaults
      and events of which such Trustee, agent or administrator is aware.

            (vi) The right of each holder of Senior Notes to have its Senior
      Notes remarketed, pursuant to the Indenture, will be limited to the extent
      that (A) the Remarketing Agents conduct a Remarketing pursuant to the
      terms of this Agreement, (B) the Remarketing Agents are able to find a
      purchaser or purchasers for the Senior Notes, (C) such purchaser or
      purchasers deliver the purchase price therefor to the Remarketing Agent
      and (D) the commencement or consummation of the Remarketing is not
      prohibited by applicable law.

            (vii) The Company shall have no obligations whatsoever to purchase
      any Senior Notes hereunder and shall in no way be obligated to provide
      funds to make payment upon delivery of Senior Notes for remarketing.

      SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Remarketing Agents shall be directed to Merrill Lynch & Co. at 4 World Financial
Center, New York, New York 10080, attention of Karl F. Schlopy and to Lehman
Brothers Inc., 745 Seventh Avenue, New York, New York 10019, attention of James
R. Schaefer; and notices to the Company shall be directed to it at Sierra
Pacific Resources, P.O. Box 10100 (6100 Neil Road), Reno, Nevada 89520,
attention of the General Counsel.

      SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the Remarketing Agents and the Company and their respective
successors. Nothing

                                       25
<PAGE>

expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Remarketing Agents and the
Company and their respective successors and the controlling persons and officers
and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. Any amendments to
this Agreement, however, that affect the duties of the Purchase Contract Agent
pursuant to Section 2 hereof, may be made only with the consent of such Purchase
Contract Agent. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Remarketing Agents and
the Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Senior Notes
from any Remarketing Agent shall be deemed to be a successor by reason merely of
such purchase.

      SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

      SECTION 14. WAIVER OF TRIAL BY JURY. THE REMARKETING AGENTS AND THE
COMPANY EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, SUIT OR
PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

      SECTION 15. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT
AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.

      SECTION 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

      SECTION 17. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.

                                       26
<PAGE>

      If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Remarketing Agents and the Company in accordance with its terms.

                                             Very truly yours,

                                             SIERRA PACIFIC RESOURCES

                                             By:________________________________
                                                Name:
                                                Title:

CONFIRMED AND ACCEPTED,
 as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
              INCORPORATED

By:_______________________________________
   Name:
   Title:

LEHMAN BROTHERS INC.

By:_______________________________________
   Name:
   Title:

                                       27
<PAGE>

                                                                      SCHEDULE A

                             ADDITIONAL DEFINITIONS

      "APPLICABLE SPREAD" has the meaning set forth in Section 20 of the
Officers' Certificate.

      "AUTHORIZED NEWSPAPER" has the meaning set forth in Section 1.1(d) of the
Purchase Contract Agreement.

      "BUSINESS DAY" has the meaning set forth in Section 1.1(d) of the Purchase
Contract Agreement.

      "COLLATERAL AGENT" has the meaning set forth in Section 1.1(d) of the
Purchase Contract Agreement.

      "CONTRACT SETTLEMENT VALUE" means a price equal to the aggregate principal
amount of remarketed securities plus the applicable Remarketing Fee.

      "CORPORATE PIES" has the meaning set forth in Section 1.1(d) of the
Purchase Contract Agreement.

      "DEPOSITARY" has the meaning set forth in Section 1.1(d) of the Purchase
Contract Agreement.

      "FINAL REMARKETING PERIOD" has the meaning set forth in Section 1 of the
Pledge Agreement.

      "HOLDERS" has the meaning set forth in Section 20 of the Officers'
Certificate.

      "PERIOD FOR EARLY REMARKETING" has the meaning set forth in Section 1 of
the Pledge Agreement.

      "PLEDGED SENIOR NOTES" has the meaning set forth in Section 1 of the
Pledge Agreement.

      "PURCHASE CONTRACT AGENT" has the meaning set forth in Section 1.1(d) of
the Purchase Contract Agreement.

      "PURCHASE CONTRACT AGREEMENT" has the meaning set forth in Section 20 of
the Officers' Certificate.

      "PURCHASE CONTRACT SETTLEMENT DATE" has the meaning set forth in Section
20 of the Officers' Certificate.

      "REMARKETING VALUE" has the meaning set forth in Section 1.1(d) of the
Purchase Contract Agreement.

         "SECURITIES INTERMEDIARY" has the meaning set forth in Section 1.1(d)
of the Purchase Contract Agreement.

                                     Sch A-1
<PAGE>

      "SEPARATED SENIOR NOTES" has the meaning set forth in Section 20 of the
Officers' Certificate.

      "THREE-DAY REMARKETING PERIOD" has the meaning set forth in Section 1 of
the Pledge Agreement.

      "TREASURY PIES" has the meaning set forth in Section 1.1(d) of the
Purchase Contract Agreement.

      "TWO YEAR BENCHMARK RATE" has the meaning set forth in Section 20 of the
Officers' Certificate.

                                       2
<PAGE>

                                                                      SCHEDULE B

                          OPINION OF WOODBURN AND WEDGE

                                     Sch B-1
<PAGE>

                                                                      SCHEDULE C

                      OPINION OF CHOATE, HALL & STEWART LLP

                                     Exh A-1

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