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COMMON SECURITIES GUARANTEE AGREEMENT
Sierra Pacific Power Capital I
Dated as of July 29, 1996
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions Interpretation............................... 2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee................................................ 3
SECTION 2.2. Waiver of Notice and Demand.............................. 3
SECTION 2.3. Obligations Not Affected................................. 3
SECTION 2.4. Rights of Holders........................................ 4
SECTION 2.5. Guarantee of Payment..................................... 4
SECTION 2.6. Subrogation.............................................. 4
SECTION 2.7. Independent Obligations.................................. 5
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions............................... 5
SECTION 3.2. Ranking.................................................. 6
ARTICLE IV
TERMINATION
SECTION 4.1. Termination.............................................. 6
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns................................... 6
SECTION 5.2. Amendments............................................... 6
SECTION 5.3. Notices.................................................. 7
SECTION 5.4. Benefit.................................................. 7
SECTION 5.5. Governing Law............................................ 8
COMMON SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Common Securities Guarantee"), dated as
of July 29, 1996, is executed and delivered by Sierra Pacific Power Company, a
Nevada corporation (the "Guarantor"), for the benefit of the Holders (as defined
herein) of the Common Securities (as defined herein) of Sierra Pacific Power
Capital I, a Delaware business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of July 24, 1996, among the Trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing on the
date hereof 60,000 common securities, having an aggregate stated liquidation
amount of $1,500,000, designated the 8.60% Trust Originated Common Securities
(the "Common Securities");
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of the Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Preferred Securities Guarantee") in substantially identical
terms to this Common Securities Guarantee for the benefit of the holders of the
Preferred Securities (as defined herein), except that (as set forth herein) if
an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of Holders of the Common Securities to receive Guarantee
Payments under this Common Securities Guarantee are subordinated to the rights
of holders of Preferred Securities to receive Guarantee Payments under the
Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Common Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Common Securities Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS INTERPRETATION
In this Common Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Common Securities Guarantee but
not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of execution of
this Common Securities Guarantee have the same meaning when used in this
Common Securities Guarantee unless otherwise defined in this Common
Securities Guarantee;
(c) a term defined anywhere in this Common Securities Guarantee has
the same meaning throughout;
(d) all references to "the Common Securities Guarantee" or "this
Common Securities Guarantee" are to this Common Securities Guarantees
modified, supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to Articles
and Sections are to Articles and Sections of this Common Securities
Guarantee unless otherwise specified; and
(f) a reference to the singular includes the plural and vice versa.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions which are required to be paid on such Common Securities to the
extent the Issuer shall have funds available therefor, (ii) the redemption price
(the "Redemption Price"), and all accrued and unpaid Distributions to the date
of redemption to the extent the Issuer has funds available therefor, with
respect to any Common Securities called for redemption by the Issuer, and (iii)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the
Holders in exchange for Common Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Common Securities to the date of payment, to the extent the
Issuer has funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution"). If an Event of Default (as
defined in the Indenture), has occurred and is continuing, the rights of Holders
of the Common Securities to receive Guarantee Payments under this Common
Securities Guarantee are subordinated to the rights of holders of Preferred
Securities to receive Guarantee Payments.
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"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Common Securities.
"Preferred Securities" mean the securities representing preferred
undivided beneficial interests in the assets of the Issuer.
"Trust Securities" shall mean the Common Securities and the Preferred
Securities.
ARTICLE II
GUARANTEE
SECTION 2.1. GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 2.2. WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this Common
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 2.3. OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the Guarantor
under this Common Securities Guarantee shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Common Securities to
be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Common Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Common Securities (other than an
extension of time for payment of Distributions, Redemption Price,
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Liquidation Distribution or other sum payable that results from the
extension of any interest payment period on the Debentures or any extension
of the maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Common
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Common
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 2.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.4. RIGHTS OF HOLDERS
The Guarantor expressly acknowledges that any Holder of Common
Securities may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Common Securities Guarantee, without first
instituting a legal proceeding against the Issuer or any other Person.
SECTION 2.5. GUARANTEE OF PAYMENT
This Common Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 2.6. SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Common Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Common Securities Guarantee;
PROVIDED, HOWEVER, that the Guarantor shall not
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(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Common Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Common Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders. If an Event of Default (as defined in the
Indenture), has occurred and is continuing, the rights of Holders of the Common
Securities to receive Guarantee Payments under this Common Securities Guarantee
are subordinated to the rights of holders of Convertible Preferred Securities to
receive Guarantee Payments under the Convertible Preferred Securities Guarantee.
SECTION 2.7. INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. LIMITATION OF TRANSACTIONS
So long as any Common Securities remain outstanding, if (i) the
Guarantor shall be in default with respect to its Guarantee Payments or other
obligations hereunder, or (ii) there shall have occurred any Event of Default
under the Indenture then (a) the Guarantor shall not declare or pay any dividend
on, or make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit
plans or the satisfaction by the Guarantor of its obligations pursuant to any
contract or security requiring the Guarantor to purchase shares of Common Stock,
(ii) as a result of a reclassification of the Guarantor's capital stock or the
exchange or conversion of one class or series of the Guarantor's capital stock
for another class or series of the Guarantor's capital stock or, (iii) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock of the
Guarantor or the security being converted or exchanged) or make any guarantee
payments with respect to the foregoing and (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by the Guarantor which
rank PARI PASSU with or junior to the Debentures.
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SECTION 3.2. RANKING
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) PARI PASSU with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
ARTICLE IV
TERMINATION
SECTION 4.1. TERMINATION
This Common Securities Guarantee shall terminate upon (i) full payment
of the Redemption Price of all Common Securities, (ii) upon the distribution of
the Debentures to the Holders of all of the Common Securities, or (iii) upon
full payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Common
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder of Common Securities must restore payment
of any sums paid under the Common Securities or under this Common Securities
Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Common Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Common Securities then outstanding.
SECTION 5.2. AMENDMENTS
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Common Securities Guarantee may only be amended with the prior approval of the
Holders of at least a majority in liquidation amount of all the outstanding
Common Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval.
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SECTION 5.3. NOTICES
All notices provided for in this Common Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Issuer, in care of the Regular Trustees at the
Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders of the Common Securities):
Sierra Pacific Power Capital I
c/o Sierra Pacific Power Company
P.O. Box 10100
(6100 Neil Road)
Reno, Nevada
Attention: Treasurer
(b) if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to
the Holders of the Common Securities):
Sierra Pacific Power Company
P.O. Box 10100
(6100 Neil Road)
Reno, Nevada
Attention: Treasurer
(c) if given to any Holder of Common Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 5.4. BENEFIT
This Common Securities Guarantee is solely for the benefit of the
Holders of the Common Securities and is not separately transferable from the
Common Securities.
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SECTION 5.5. GOVERNING LAW
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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THIS COMMON SECURITIES GUARANTEE is executed as of the day and year
first above written.
SIERRA PACIFIC POWER COMPANY
By:
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Name: Malyn K. Malquist
Title: Senior Vice President and Chief
Financial Officer