Exhibit 1.1
SIERRA PACIFIC RESOURCES
(a Nevada corporation)
7.25% Convertible Notes due 2010
PURCHASE AGREEMENT
Dated: February 11, 2003
TABLE OF CONTENTS
Page
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SECTION 1. Representations and Warranties by the Company.................. 2
(a) Representations and Warranties............................. 2
(i) Offering Memorandum........................................ 2
(ii) Incorporated Documents..................................... 3
(iii) Independent Accountants.................................... 3
(iv) Financial Statements....................................... 3
(v) No Material Adverse Change in Business..................... 3
(vi) Good Standing of the Company............................... 4
(vii) Good Standing of Designated Subsidiaries................... 4
(viii) Capitalization............................................. 4
(ix) Authorization of Agreement................................. 5
(x) Authorization of the Indenture, the Pledge Agreement and
the Control Agreement...................................... 5
(xi) Authorization of the Securities............................ 5
(xii) Description of the Securities, the Indenture and the
Registration Rights Agreement.............................. 5
(xiii) Authorization and Description of Common Stock.............. 5
(xiv) Absence of Defaults and Conflicts.......................... 6
(xv) Absence of Proceedings..................................... 6
(xvi) Absence of Further Requirements............................ 7
(xvii) Possession of Licenses and Permits......................... 7
(xviii) Title to Property.......................................... 7
(xix) Environmental Laws......................................... 8
(xx) Investment Company Act..................................... 8
(xxi) Holding Company Act........................................ 8
(xxii) Internal Controls.......................................... 8
(xxiii) Similar Offerings.......................................... 9
(xxiv) Rule 144A Eligibility...................................... 9
(xxv) No General Solicitation.................................... 9
(xxvi) No Registration Required................................... 9
(xxvii) Reporting Company.......................................... 9
(b) Officer's Certificates..................................... 9
SECTION 2. Sale and Delivery to Initial Purchasers; Closing............... 10
(a) Initial Securities......................................... 10
(b) Option Securities.......................................... 10
(c) Payment.................................................... 10
(d) Denominations; Registration................................ 11
(e) Delivery of Global Securities.............................. 11
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TABLE OF CONTENTS
(Continued)
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SECTION 3. Covenants of the Company....................................... 11
(a) Offering Memorandum........................................ 11
(b) Notice and Effect of Material Events....................... 11
(c) Amendment to Offering Memorandum and Supplements........... 12
(d) Qualification of Securities for Offer and Sale............. 12
(e) DTC........................................................ 12
(f) Use of Proceeds............................................ 12
(g) Restriction on Sale of Securities.......................... 12
(h) Restriction on Sale of Common Stock........................ 12
(i) PORTAL Designation......................................... 13
(j) Listing on Securities Exchange............................. 13
(k) Reporting Requirements..................................... 13
SECTION 4. Payment of Expenses............................................ 13
(a) Expenses................................................... 13
(b) Termination of Agreement................................... 14
SECTION 5. Conditions of Initial Purchasers' Obligations.................. 14
(a) Opinion of Counsel for Company............................. 14
(b) Opinion of Counsel for Initial Purchasers.................. 14
(c) Officers' Certificate...................................... 14
(d) Accountants' Comfort Letter................................ 15
(e) Bring-down Comfort Letter.................................. 15
(f) Maintenance of Ratings..................................... 15
(g) PORTAL..................................................... 15
(h) Approval of Listing........................................ 15
(i) Lock-up Agreements......................................... 15
(j) Conditions to Purchase of Option Securities................ 15
(i) Opinion of Counsel for Company............................. 16
(ii) Opinion of Counsel for Initial Purchasers.................. 16
(iii) Officer's Certificate...................................... 16
(iv) Bring-down Comfort Letter.................................. 16
(k) Transaction Agreements..................................... 16
(l) Additional Documents....................................... 16
(m) Termination of Agreement................................... 16
SECTION 6. Subsequent Offers and Resales of the Securities................ 17
(a) Offer and Sale Procedures.................................. 17
(i) Offers and Sales only to Qualified Institutional Buyers.... 17
(ii) No General Solicitation.................................... 17
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TABLE OF CONTENTS
(Continued)
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(iii) Purchases by Non-Bank Fiduciaries.......................... 17
(iv) Subsequent Purchaser Notification.......................... 17
(v) Minimum Principal Amount................................... 17
(vi) Restrictions on Transfer................................... 17
(vii) Delivery of Offering Memorandum............................ 18
(b) Covenants of the Company................................... 18
(i) Integration................................................ 18
(ii) Rule 144A Information...................................... 18
(iii) Restriction on Repurchases................................. 18
(c) Qualified Institutional Buyer.............................. 18
(d) Resale Pursuant to Rule 144A............................... 18
(e) Additional Representations and Warranties of Initial
Purchasers................................................. 18
SECTION 7. Indemnification................................................ 19
(a) Indemnification of Initial Purchasers...................... 19
(b) Indemnification of Company................................. 20
(c) Actions against Parties; Notification...................... 20
(d) Settlement without Consent if Failure to Reimburse......... 20
SECTION 8. Contribution................................................... 20
SECTION 9. Representations, Warranties and Agreements to Survive Delivery. 22
SECTION 10. Termination of Agreement....................................... 22
(a) Termination; General....................................... 22
(b) Liabilities................................................ 22
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TABLE OF CONTENTS
(Continued)
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SECTION 11. Default by One or More of the Initial Purchasers............... 23
SECTION 12. Notices........................................................ 23
SECTION 13. Parties........................................................ 23
SECTION 14. Governing Law And Time......................................... 24
SECTION 15. Effect of Headings............................................. 24
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TABLE OF CONTENTS
(Continued)
SCHEDULES
Schedule A - List of Initial Purchasers Sch A-1
Schedule B - Pricing Information Sch B-1
EXHIBITS
Exhibit A - Contents of Opinions of Company's Counsel A-1
Exhibit B - Form of Lock-Up Agreement B-1
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SIERRA PACIFIC RESOURCES
(a Nevada corporation)
$250,000,000
7.25% Convertible Notes due 2010
PURCHASE AGREEMENT
February 11, 2003
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
as Representative of the several Initial Purchasers
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 each of the other Initial Purchasers named in
Schedule A hereto (collectively, the "Initial Purchasers", which term shall also
include any initial purchaser substituted as hereinafter provided in Section 11
hereof), for whom Merrill Lynch is acting as representative (in such capacity,
the "Representative"), with respect to (1) the issue and sale by the Company and
the purchase by the Initial Purchasers, acting severally and not jointly, of the
respective principal amounts set forth in said Schedule A of the Company's 7.25%
Convertible Notes due 2010 (the "Notes") and (2) the grant by the Company to the
Initial Purchasers, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of an additional $50,000,000 in
aggregate principal amount of Notes to cover over-allotments, if any. The
aforesaid $250,000.00 in principal amount of Notes (the "Initial Securities") to
be purchased by the Initial Purchasers and all or any part of the aforesaid
$50,000,000 in principal amount of Notes subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities".
The Securities are to be issued pursuant to an indenture dated as of
February 1, 2003 (the "Indenture") between the Company and The Bank of New York,
as trustee (the "Trustee"). The Securities will be convertible into shares of
Common Stock, par value $1.00 per share of the Company ("Common Stock") in
accordance with the terms of the Securities and the Indenture, at the initial
conversion price specified in Schedule B hereto.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after this Agreement has been executed and
delivered. The Securities are to be offered and sold through the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "1933 Act"), in reliance upon exemptions therefrom. Pursuant to the terms
of the Securities and the Indenture, investors that acquire Securities may only
resell or otherwise transfer such Securities if such Securities are hereafter
registered under the 1933 Act or if an exemption from the registration
requirements of the 1933 Act is available (including the exemption afforded by
Rule 144A ("Rule 144A") or Regulation S ("Regulation S") of the rules and
regulations promulgated under the 1933 Act by the Securities and Exchange
Commission (the "Commission")).
Holders of the Securities will be entitled to the benefits of a
Registration Rights Agreement, to be dated February 14, 2003 (the "Registration
Rights Agreement"), between the Company and the Representative for so long as
the Securities constitute "Registrable Securities" (as defined in such
agreement).
The Company has prepared and delivered to each Initial Purchaser copies of
a preliminary offering memorandum dated February 11, 2003 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to each Initial
Purchaser, on the date hereof or the next succeeding day, copies of a final
offering memorandum to be dated February 14, 2003 (the "Final Offering
Memorandum"), each for use by such Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the Securities. "Offering
Memorandum" means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum (whether the Preliminary Offering
Memorandum or the Final Offering Memorandum, or any amendment or supplement to
either such document), including exhibits thereto and any documents incorporated
therein by reference, which has been prepared and delivered by the Company to
the Initial Purchasers in connection with their solicitation of purchases of, or
offering of, the Securities.
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the Offering
Memorandum (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Offering Memorandum; and all references in
this Agreement to amendments or supplements to the Offering Memorandum shall be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934 (the "1934 Act") which is incorporated by reference in the
Offering Memorandum.
SECTION 1. Representations and Warranties by the Company.
(a) Representations and Warranties. The Company represents and warrants to
each Initial Purchaser as of the date hereof and as of the Closing Time referred
to in Section 2(b) hereof, and agrees with each Initial Purchaser, as follows:
(i) Offering Memorandum. The Offering Memorandum does not, and at
the Closing Time will not, 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; provided that this representation, warranty and agreement
shall not apply to statements in or omissions
2
from the Offering Memorandum made in reliance upon and in conformity with
information furnished to the Company in writing by any Initial Purchaser
through Merrill Lynch expressly for use in the Offering Memorandum.
(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Offering Memorandum 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
rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), and, when read together with the other information in the
Offering Memorandum, at the time the Offering Memorandum was issued and at
the Closing Time, did not and will not include 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.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Offering
Memorandum (A) are independent public accountants with respect to the
Company and its subsidiaries within the meaning of Regulation S-X under
the 1933 Act and (B) do not provide to the Company or its subsidiaries any
non-audit services which are prohibited by Section 10A(g) or (h) of the
1934 Act.
(iv) Financial Statements. The financial statements included in the
Offering Memorandum, together with the related schedules and notes,
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; said financial statements have
been 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 Offering Memorandum 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 Offering Memorandum
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in
the Offering Memorandum. Except as disclosed in the Offering Memorandum,
neither the Company nor any of its subsidiaries has any off-balance sheet
arrangements of the character contemplated by Item 303 of Regulation S-K
under the 1934 Act 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 Offering Memorandum, except
as otherwise stated therein, (A) there has been no 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, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the
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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 (C) except for dividends on
the Common Stock, in amounts per share that are consistent with past
practice, there has 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 Offering Memorandum 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
result in a Material Adverse Effect.
(vii) Good Standing of Designated Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X, each a "Significant Subsidiary") has been duly organized
and is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and 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; except as otherwise disclosed in the
Offering Memorandum, all of the issued and outstanding capital stock of
each Significant Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and, in the case of the common stock of
each such Significant Subsidiary, is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding shares
of capital stock of the Significant Subsidiaries was issued in violation
of any preemptive or similar rights of any securityholder of such
Significant Subsidiary. The only Significant Subsidiaries of the Company
are Sierra Pacific Power Company and Nevada Power Company.
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Offering Memorandum
except for issuances, if any, subsequent to September 30, 2002 pursuant to
reservations, agreements, employee benefit plans, non-employee director
plans and/or the common stock investment plan. 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; none of the
outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any securityholder of the
Company.
4
(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company; and the Registration
Rights Agreement has been duly authorized by the Company.
(x) Authorization of the Indenture, the Pledge Agreement and the
Control Agreement. The Indenture, the Pledge Agreement (as such term is
defined in the Indenture) and the Control Agreement (as such term is
defined in the Pledge Agreement) have been duly authorized by the Company
and, when executed and delivered by the Company and the Trustee, will
constitute valid and binding agreements 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).
(xi) Authorization of the Securities. The Securities have been duly
authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, will 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 will be in the form contemplated by, and entitled to the
benefits of, the Indenture.
(xii) Description of the Securities, the Indenture and the
Registration Rights Agreement. The Securities, the Indenture and the
Registration Rights Agreement will conform in all material respects to the
respective statements relating thereto contained in the Offering
Memorandum and will be in substantially the respective forms last
delivered to the Initial Purchasers prior to the date of this Agreement.
(xiii) Authorization and Description of Common Stock. The Common
Stock conforms to all statements relating thereto contained or
incorporated by reference in the Offering Memorandum and such description
conforms to the rights set forth in the instruments defining the same.
Upon issuance and delivery of the Securities in accordance with this
Agreement and the Indenture, the Securities will be convertible at the
option of the holder thereof into shares of Common Stock in accordance
with the terms of the Securities and the Indenture; the shares of Common
Stock issuable upon conversion of the Securities have been duly authorized
and reserved for issuance upon such conversion by all necessary corporate
action and such shares, when issued upon such conversion, will be validly
issued and will be fully paid and non-assessable; no holder of such shares
will be subject to personal liability in respect of liabilities of the
Company solely by reason of being such a holder; and the issuance of such
shares upon
5
such conversion will not be subject to the preemptive or other similar
rights of any securityholder of the Company.
(xiv) Absence of Defaults and Conflicts. Neither the Company nor any
of its 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 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 subsidiaries is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Indenture, the Pledge Agreement, the
Control Agreement and the Registration Rights Agreement and any other
agreement or instrument entered into or issued or to be entered into or
issued by the Company in connection with the transactions contemplated
hereby or thereby or in the Offering Memorandum, the consummation of the
transactions contemplated herein and in the Offering Memorandum (including
the offering, sale, issuance and delivery of the Securities and the use of
the proceeds from the sale of the Securities as described in the Offering
Memorandum under the caption "Use of Proceeds" and the issuance and
delivery of the shares of Common Stock issuable upon conversion of
Securities) and the performance by the Company of its obligations under
this Agreement, the Indenture, the Pledge Agreement, the Control Agreement
or the Registration Rights Agreement or on the Securities have been duly
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 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 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 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 subsidiaries.
(xv) Absence of Proceedings. Except as disclosed in the Offering
Memorandum, 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 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.
6
(xvi) 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 execution or delivery by the Company of
this Agreement, the performance by the Company of its obligations
hereunder, or the consummation by the Company of the transactions
contemplated thereby including, without limitation, the execution and
delivery by the Company of the Indenture, the Pledge Agreement, the
Control Agreement and the Registration Rights Agreement and the
performance by the Company of its obligations thereunder, in the offering,
sale, issuance or delivery of the Securities hereunder, the issuance of
shares of Common Stock upon conversion of Securities or for the
consummation by the Company of all other transactions contemplated by the
Offering Memorandum, except such as (A) have been already obtained, (B)
are contemplated in the Registration Rights Agreement and (C) may be
required under state securities laws.
(xvii) 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;
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.
(xviii) Title to Property. The Company and its Significant
Subsidiaries have good and marketable title to all real property owned by
the Company and its Significant Subsidiaries and good title to all other
properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances
of any kind except such as (a) are described in the Offering Memorandum or
(b) do not, singly or in the aggregate, materially affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its Significant
Subsidiaries; and all of the leases and subleases material to the business
of the Company and its Significant Subsidiaries, considered as one
enterprise, and under which the Company or any of its Significant
Subsidiaries holds properties described in the Offering Memorandum, 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
Significant Subsidiaries under any of the leases or subleases mentioned
above, or affecting or questioning the rights of such the Company or any
Significant Subsidiary thereof to the continued possession of the leased
or subleased premises under any such lease or sublease.
7
(xix) Environmental Laws. Except as described in the Offering
Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its Significant 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"), (B)
the Company and its Significant Subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are each in compliance with their requirements and (C) 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 Significant Subsidiaries.
(xx) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(xxi) Holding Company Act. The Company is a "holding company" under
the Public Utility Holding Company Act of 1935, as amended (the "1935
Act"), but, pursuant to Section 3(a)(1) of the 1935 Act, is exempt from
all provisions of the 1935 Act except Section 9(a)(2) thereof.
(xxii) Internal Controls. (A) The Company has established and
maintains disclosure controls and procedures (as such term is defined in
Rule 13a-14(c) under the 1934 Act, "Disclosure Controls"); and such
Disclosure Controls are (i) designed to ensure that material information
relating to the Company, including its consolidated subsidiaries, is
properly recorded, processed, summarized and communicated to the Company's
senior management, including its principal executive officer and its
principal financial officer, by others within those entities as
appropriate to allow timely decisions regarding required disclosure, (ii)
evaluated by the Company's senior management on a quarterly basis and
(iii) to the best knowledge of the Company, effective in all material
respects to perform the functions for which they were established.
(B) The Company has devised and maintains in effect a system of
internal accounting controls ("Accounting Controls"); and such Accounting
Controls are (i) designed to provide reasonable assurances that
transactions involving the Company and its subsidiaries are properly
authorized, that the assets of the Company and its subsidiaries are
safeguarded against unauthorized or improper use, and that such
8
transactions are properly recorded and reported to permit preparation of
the Company's consolidated financial statements in conformity with GAAP,
all as contemplated in Section 13(b)(2)(B) of the 1934 Act and (ii) to the
best knowledge of the Company, effective in all material respects to
perform the functions for which they were designed.
(C) Based on the most recent evaluation of the Company's internal
controls, all significant deficiencies in the design or operation of the
internal controls which could adversely affect the Company's ability to
record, process, summarize and report financial data required to be
disclosed by the Company in its 1934 Act reports within the time periods
specified in the 1934 Act Regulations, any material weaknesses in such
internal controls and any fraud, whether or not material, that involves
management or other employees who have a significant role in such internal
controls have been identified and reported to the Company's auditors and
the audit committee of the board of directors; and all such deficiencies
and weaknesses, if any, have been rectified.
(xxiii) Similar Offerings. Neither the Company nor any of its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
(each, an "Affiliate"), has, directly or indirectly, solicited any offer
to buy, sold or offered to sell or otherwise negotiated in respect of, or
will solicit any offer to buy, sell or offer to sell or otherwise
negotiate in respect of, in the United States or to any United States
citizen or resident, any security which is or would be integrated with the
sale of the Securities in a manner that would require the Securities to be
registered under the 1933 Act.
(xxiv) Rule 144A Eligibility. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same
class as securities listed on a national securities exchange registered
under Section 6 of the 1934 Act, or quoted in a U.S. automated interdealer
quotation system.
(xxv) No General Solicitation. None of the Company, its Affiliates
or any person acting on its or any of their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has engaged or
will engage, in connection with the offering of the Securities, in any
form of general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act.
(xxvi) No Registration Required. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers and to each Subsequent Purchaser in
the manner contemplated by this Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxvii) Reporting Company. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the 1934 Act.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representative or to counsel
for the Initial Purchasers
9
shall be deemed a representation and warranty by the Company to each Initial
Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Initial Securities set forth in Schedule A opposite the name of such Initial
Purchaser, plus any additional principal amount of Initial Securities which such
Initial Purchaser may become obligated to purchase pursuant to the provisions of
Section 11 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Initial Purchasers,
severally and not jointly, to purchase up to an additional $50,000,000 in
aggregate principal amount of Option Securities at the price set forth in
Schedule B. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial Securities upon notice by the Representative to
the Company setting forth the aggregate principal amount of Option Securities as
to which the several Initial Purchasers are then exercising the option and the
time and date of payment and delivery for such Option Securities. Any such time
and date of delivery (a "Date of Delivery") shall be determined by the
Representative, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Securities, each of the Initial Purchasers, acting severally and not
jointly, will purchase that proportion of the total aggregate principal amount
of Option Securities then being purchased which the principal amount of Initial
Securities set forth in Schedule A opposite the name of such Initial Purchaser
bears to the aggregate principal amount of Initial Securities, plus any
additional principal amount of Option Securities which such Initial Purchaser
may become obligated to purchase pursuant to the provisions of Section 11
hereof, subject in each case to such adjustments as the Representative in its
discretion shall make to eliminate any sales or purchases of fractional
Securities.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Thelen
Reid & Priest LLP, counsel for the Initial Purchasers, at 875 Third Avenue, New
York, NY or at such other place as shall be agreed upon by the Representative
and the Company, at 10:00 A.M. (Eastern time) on the third business day after
the date hereof (unless postponed in accordance with the provisions of Section
11), or such other time not later than ten business days after such date as
shall be agreed upon by the Representative and the Company (such time and date
of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Initial Purchasers, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed
10
upon by the Representative and the Company, on each Date of Delivery as
specified in the notice from the Representative to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative for the respective accounts of the Initial Purchasers of
certificates for the Securities to be purchased by them. It is understood that
each Initial Purchaser has authorized the Representative, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Merrill Lynch, individually and not as representative of the Initial
Purchasers, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Initial Purchaser whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Initial Purchaser from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations ($1,000 or
integral multiples thereof) and registered in such names as the Representative
may request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial Securities and the Option Securities, if any, will be made available for
examination and packaging by the Representative in New York, NY not later than
10:00 A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
(e) Delivery of Global Securities. In lieu of the delivery to the Initial
Purchasers of certificates representing the Securities at the Closing Time and
on each Date of Delivery, as contemplated above, the Company, with the approval
of the Representative, may deliver one or more global Securities to a custodian
for The Depository Trust Company ("DTC"), to be held by DTC initially for the
accounts of the several Initial Purchasers.
SECTION 3. Covenants of the Company.
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material change in or
affecting, or any development which is reasonably likely to result in a material
change in or affecting, the condition, financial or otherwise, or the results of
operations or business affairs of the Company and its subsidiaries considered as
one enterprise which (i) make any statement in the Offering Memorandum false or
11
misleading or (ii) are not disclosed in the Offering Memorandum. In such event
or if during such time any event shall occur as a result of which it is
necessary, in the reasonable opinion of any of the Company, its counsel, the
Initial Purchasers or counsel for the Initial Purchasers, to amend or supplement
the Final Offering Memorandum in order that the Final Offering Memorandum not
include any untrue statement 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 then existing, the Company will forthwith amend or supplement
the Final Offering Memorandum by preparing and furnishing to each Initial
Purchaser an amendment or amendments of, or a supplement or supplements to, the
Final Offering Memorandum (in form and substance satisfactory in the reasonable
opinion of counsel for the Initial Purchasers) so that, as so amended or
supplemented, the Final Offering Memorandum will not 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 existing at the time
it is delivered to a Subsequent Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers. Neither the consent of the Initial
Purchasers, nor the Initial Purchaser's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Representative may designate and will
maintain such qualifications in effect as long as required for the sale of the
Securities; 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 to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) DTC. The Company will cooperate with the Representative and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(f) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
(g) Restriction on Sale of Securities. During a period of 90 days from the
date of the Offering Memorandum, the Company will not, without the prior written
consent of Merrill Lynch, directly or indirectly, issue, sell, offer or agree to
sell, grant any option for the sale of, or otherwise dispose of, any other debt
securities of the Company or securities of the Company that are convertible
into, or exchangeable for, the Securities or such other debt securities.
(h) Restriction on Sale of Common Stock. During a period of 90 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of Merrill Lynch, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to
12
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any share of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or file any registration statement under the 1933 Act with respect
to any of the foregoing or (ii) enter into any swap or any other agreement or
any transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder, (B) any
shares of Common Stock issued by the Company upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Offering Memorandum, (C) any shares of Common Stock issued or
options to purchase Common Stock granted pursuant to any existing employee
benefit plan or non-employee director stock plan of the Company referred to or
contemplated by the Offering Memorandum or any renewal or extension of such plan
as may be approved by the requisite holders of shares of the Company's Common
Stock, or (D) any shares of Common Stock issued pursuant to the common stock
investment plan.
(i) PORTAL Designation. The Company will use its best efforts to permit
the Securities to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market.
(j) Listing on Securities Exchange. The Company will use its best efforts
to have the Common Stock issuable upon conversion of Securities listed on the
New York Stock Exchange.
(k) Reporting Requirements. The Company, during the period when the
Offering Memorandum is required to be delivered pursuant to Section 6(a)(vii)
hereof, 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.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any document incorporated therein by reference) and of each
amendment or supplement thereto, (ii) the preparation, printing and delivery to
the Initial Purchasers of this Agreement, any agreement among Initial
Purchasers, the Indenture and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Initial Purchasers, and certificates for Common Stock
issuable upon conversion of Securities, including any transfer taxes, any stamp
or other duties payable upon the delivery of such securities and any charges of
DTC in connection therewith, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(d) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Initial Purchasers in connection therewith and in connection with the
preparation of the Blue Sky Survey, any supplement
13
thereto, (vi) the fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities, (vii) any fees payable in connection with the rating of the
Securities, and (viii) any fees and expenses payable in connection with the
initial and continued designation of the Securities as PORTAL securities under
the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations
of the several Initial Purchasers hereunder are subject to the accuracy, as of
the date of this Agreement and as of the Closing Time, of the representations
and warranties of the Company contained in Section 1 hereof or in certificates
of any officer of the Company or any of its subsidiaries 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) Opinion of Counsel for Company. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of each of Woodburn and Wedge and Choate, Hall & Stewart,
counsel for the Company, in form and substance satisfactory to counsel for
the Initial Purchasers, together with signed or reproduced copies of such
letter for each of the other Initial Purchasers to the effect set forth in
Exhibit A hereto and to such further effect as counsel to the Initial
Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time,
the Representative shall have received the favorable opinion, dated as of
the Closing Time, of each of Thelen Reid & Priest LLP and Shearman &
Sterling, counsel for the Initial Purchasers, together with signed or
reproduced copies of such letter for each of the other Initial Purchasers,
with respect to such matters as the Representative shall reasonably
request. In giving such opinions 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 Representative. 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.
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any 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, whether or not arising in the ordinary
course of business, and the Representative 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
the Closing Time, to the effect that (i) there has been no such
14
material adverse change or development, (ii) the representations and
warranties in Section 1 hereof are true and correct with the same force
and effect as though expressly made at and as of the Closing Time, and
(iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Time.
(d) Accountants' Comfort Letter. At the time of the execution of
this Agreement, the Representative shall have received from Deloitte &
Touche LLP a letter dated such date, in form and substance satisfactory to
the Representative, together with signed or reproduced copies of such
letter for each of the other Initial Purchasers containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to Initial Purchasers with respect to the financial statements
and other financial information contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the
Representative shall have received from Deloitte & Touche LLP a letter,
dated as of the Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (d) of this
Section, except that the "specified date" referred to shall be a date not
more than three business days prior to the Closing Time.
(f) Maintenance of Ratings. Since the date of this Agreement, there
shall not have occurred a downgrading in the rating assigned to the
Securities or any of the Company's other debt securities 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 securities rating agency, other than Moody's Investors Service, Inc.,
shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of the Securities or any
of the Company's other debt securities.
(g) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(h) Approval of Listing. At the Closing Time, the shares of Common
Stock issuable upon conversion of Securities shall have been approved for
listing on the New York Stock Exchange, subject only to official notice of
issuance.
(i) Lock-up Agreements. At the Closing Time, the Representative
shall have received an agreement substantially in the form of Exhibit B
hereto signed by the persons listed in such Exhibit.
(j) Conditions to Purchase of Option Securities. In the event that
the Initial Purchasers exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company, any subsidiary of
the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representative shall
have received:
15
(i) Opinion of Counsel for Company. The favorable opinion of
each of Woodburn and Wedge and Choate, Hall & Stewart, counsel for
the Company, in form and substance satisfactory to counsel for the
Initial Purchasers, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(a)
hereof.
(ii) Opinion of Counsel for Initial Purchasers. The favorable
opinion of each of Thelen Reid & Priest LLP and Shearman & Sterling,
counsel for the Initial Purchasers, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(b) hereof.
(iii) Officer's Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(c) hereof remains true and correct as of such
Date of Delivery.
(iv) Bring-down Comfort Letter. A letter from Deloitte &
Touche LLP, in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in
the same form and substance as the letter furnished to the
Representative pursuant to Section 5(d) hereof, it being understood
that the "specified date" referred to therein shall be a date not
more than three days prior to such Date of Delivery.
(k) Transaction Agreements. The Registration Rights Agreement, the
Indenture, the Pledge Agreement and the Control Agreement, each in form
and substance reasonably satisfactory to the Initial Purchaser, shall have
been duly executed and delivered by the Company and shall be in full force
and effect at the Closing Time.
(l) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the Initial Purchasers 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 Securities 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 issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the
Representative and counsel for the Initial Purchasers.
(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of Option Securities on a Date of Delivery which is after the
Closing Time, the obligations of the several Initial Purchasers to
purchase the relevant Option Securities, may be terminated by the
Representative by notice to the Company at any time at or prior to Closing
Time or such Date of Delivery, as the case may be, and such termination
shall be without liability of any party to any other party
16
except as provided in Section 4 and except that Sections 1, 7, 8 and 9
shall survive any such termination and remain in full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Qualified Institutional Buyers. Offers
and sales of the Securities shall only be made to persons whom the offeror
or seller reasonably believes to be qualified institutional buyers, as
defined in Rule 144A under the 1933 Act ("Qualified Institutional
Buyers").
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be
used in the United States in connection with the offering or sale of the
Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, each third party shall, in the judgment of the applicable
Initial Purchaser, be a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933
Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except (1) to the Company or its
subsidiaries, (2) outside the United States in accordance with Regulation
S under the 1933 Act ("Regulation S"), or (3) inside the United States in
accordance with (x) Rule 144A to a person whom the seller reasonably
believes is a Qualified Institutional Buyer that is purchasing such
Securities for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the 1933 Act.
(v) Minimum Principal Amount. No sale of the Securities to any one
Subsequent Purchaser will be for less than U.S. $100,000 principal amount
and no Security will be issued in a smaller principal amount. If the
Subsequent Purchaser is a non-bank fiduciary acting on behalf of others,
each person for whom it is acting must purchase at least U.S. $100,000
principal amount of the Securities.
(vi) Restrictions on Transfer. The transfer restrictions and the
other provisions set forth in the Offering Memorandum under the heading
"Notice to Investors", including the legend required thereby, shall apply
to the Securities except as otherwise agreed by the Company and the
Initial Purchasers.
17
(vii) Delivery of Offering Memorandum. Each Initial Purchaser will
deliver to each purchaser of the Securities from such Initial Purchaser,
in connection with its original distribution of the Securities, a copy of
the Offering Memorandum, as amended and supplemented at the date of such
delivery.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Integration. The Company agrees that it will not and will cause
its Affiliates not to, directly or indirectly, solicit any offer to buy,
sell or make any offer or sale of, or otherwise negotiate in respect of,
securities of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the 1933 Act, such offer or
sale would render invalid (for the purpose of (i) the sale of the
Securities by the Company to the Initial Purchasers, (ii) the resale of
the Securities by the Initial Purchasers to Subsequent Purchasers or (iii)
the resale of the Securities by such Subsequent Purchasers to others) the
exemption from the registration requirements of the 1933 Act provided by
Section 4(2) thereof or by Rule 144A or Regulation S thereunder or
otherwise.
(ii) Rule 144A Information. The Company agrees that, in order to
render the Securities eligible for resale pursuant to Rule 144A under the
1933 Act, while any of the Securities remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act.
(iii) Restriction on Repurchases. Until the expiration of two years
after the original issuance of the Securities, the Company will not, and
will cause its Affiliates not to, resell any Securities which are
"restricted securities" (as such term is defined under Rule 144(a)(3)
under the 1933 Act), whether as beneficial owner or otherwise (except as
agent acting as a securities broker on behalf of and for the account of
customers in the ordinary course of business in unsolicited broker's
transactions).
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a Qualified Institutional Buyer.
(d) Resale Pursuant to Rule 144A. Each Initial Purchaser understands that
the Securities have not been and will not be registered under the 1933 Act and
may not be offered or sold except pursuant to an exemption from the registration
requirements of the 1933 Act. Each Initial Purchaser severally represents and
agrees, that, except as permitted by Section 6(a) above, it has offered and sold
Securities and will offer and sell Securities only in accordance with Rule 144A
under the 1933 Act or another applicable exemption from the registration
requirements of the 1933 Act.
(e) Additional Representations and Warranties of Initial Purchasers. Each
Initial Purchaser severally represents and agrees that it has not entered and
will not enter into any
18
contractual arrangements with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the Company.
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to indemnify
and hold harmless each Initial Purchaser and each person, if any, who controls
any Initial Purchaser 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 any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or
supplement thereto), 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 that (subject to Section
7(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), 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
Initial Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum (or any amendment thereto) and provided, further, that this indemnity
agreement shall not inure to the benefit of any Initial Purchaser or any person
who controls such Initial Purchaser on account of any such loss, liability,
claim, damage or expense arising out of any such defect or alleged defect in any
Preliminary Offering Memorandum if a copy of the Final Offering Memorandum
(exclusive of the documents incorporated by reference therein) shall not have
been given or sent by such Initial Purchaser with or prior to the written
confirmation of the sale involved to the extent that (i) the Final Offering
Memorandum would have cured such defect or alleged defect and (ii) sufficient
quantities of the Final Offering Memorandum were timely made available to such
Initial Purchaser.
19
(b) Indemnification of Company. Each Initial Purchaser severally agrees to
indemnify and hold harmless the Company 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 Offering Memorandum in reliance upon
and in conformity with written information furnished to the Company by such
Initial Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum.
(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 7(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 7(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 or Section 8
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 7(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 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any
20
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 Initial Purchasers on
the other hand from the offering of the Securities 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 Initial Purchasers 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.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers 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 Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation (even if the Initial Purchasers 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. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 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, no Initial Purchaser shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities purchased and sold by it hereunder exceeds the
amount of any damages which such Initial Purchaser has otherwise been required
to pay by reason of 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.
21
For purposes of this Section, each person, if any, who controls an Initial
Purchaser 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 such Initial Purchaser,
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 Initial Purchasers' respective obligations to
contribute pursuant to this Section are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
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 any investigation made by or on behalf of any Initial Purchaser or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Initial Purchasers.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Representative 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 Offering Memorandum (exclusive of
any supplement thereto), any material adverse change, or any development which
is reasonably likely to result in a material adverse change, in the condition,
financial or otherwise, or in the 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, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or in 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 Representative, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or the New York Stock Exchange, 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 a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States or
with respect to Clearstream or Euroclear systems in Europe, or (iv) if a banking
moratorium has been declared by either Federal or New York authorities.
(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, 7,
8 and 9 shall survive such termination and remain in full force and effect.
22
SECTION 11. Default by One or More of the Initial Purchasers. If one or
more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Initial Purchasers, or any other initial purchasers, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representative shall not
have completed such arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not exceed
10% of the aggregate principal amount of the Securities to be purchased
hereunder, each of the non-defaulting Initial Purchasers shall be
obligated, severally and not jointly, to purchase the full amount thereof
in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Initial Purchasers, or
(b) if the principal amount of Defaulted Securities exceeds 10% of
the aggregate principal amount of the Securities to be purchased
hereunder, this Agreement shall terminate without liability on the part of
any non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangements. As used herein, the term "Initial Purchaser" includes any
person substituted for an Initial Purchaser under this Section.
SECTION 12. 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 Initial
Purchasers shall be directed to the Representative at 4 World Financial Center,
New York, New York 10080, attention of Mr. Fritz Schlopy; notices to the Company
shall be directed to it at 6100 Neil Road, Reno, Nevada, 89520-0400 attention of
Mr. Richard K. Atkinson.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
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. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers 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 Securities from
any Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.
23
SECTION 14. Governing Law And Time. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
--------------------
24
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 Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
SIERRA PACIFIC RESOURCES
By:
---------------------------------
Title
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By:
---------------------------------
Authorized Signatory
For itself and as Representative of the other Initial Purchasers named in
Schedule A hereto.
SCHEDULE A
Principal
Amount of
Name of Initial Purchaser Initial Securities
------------------------- ------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated. $ 250,000,000
--------------
Total.............................................. $ 250,000,000
==============
Sch A-1
SCHEDULE B
SIERRA PACIFIC RESOURCES
$250,000,000 Convertible Notes due 2010
1. The initial public offering price of the Securities shall be 100% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97.25% of the principal amount thereof; provided, however,
that the purchase price to be paid by the Initial Purchasers for Option
Securities shall, in addition, include accrued interest, if any, on such Option
Securities from the Closing Time.
3. The interest rate on the Securities shall be 7.25% per annum.
4. The Securities will mature on February 14, 2010. The Company may redeem
some or all of the Securities at any time on or after February 14, 2008 at the
redemption prices described in the Offering Memorandum. The Securities will not
be convertible prior to August 14, 2003. At any time on or after August 14, 2003
through the close of business on February 14, 2010, holders may convert each
$1,000 principal amount of their Securities into 219.1637 shares of our Common
Stock, which is equivalent to an initial conversion price of $4.5628 per share,
subject to adjustment. Upon conversion, the Company will deliver a combination
of cash and shares of Common Stock as described in the Offering Memorandum. In
the event the shareholder approval condition (as described in the Offering
Memorandum) shall have been satisfied prior to conversion, the Company may elect
to satisfy our obligation upon conversion entirely with shares of Common Stock.
Sch B-1
EXHIBIT A
CONTENTS OF OPINIONS OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Nevada.
(2) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the Purchase
Agreement.
(3) The Company 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.
(4) The Company has 250 million shares of Common Stock authorized under
its charter; the shares of issued and outstanding Common Stock (excluding shares
issued pursuant to reservations, agreements, employee benefit plans,
non-employee director plans or the common stock investment plan) have been duly
authorized and validly issued and are fully paid and non-assessable; and none of
the 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.
(5) Each Significant Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and 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; all of the issued and
outstanding common stock of each Significant Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and, to the best of our
knowledge and information, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; and none of the outstanding shares of capital
stock of any Significant Subsidiary was issued in violation of any preemptive or
similar rights of any securityholder of such Significant Subsidiary.
(6) The Purchase Agreement and the Registration Rights Agreement have been
duly authorized, executed and delivered by the Company.
(7) The Indenture, the Pledge Agreement and the Control Agreement have
been duly authorized, executed and delivered by the Company and (assuming the
due authorization, execution and delivery thereof by the Trustee) constitute
valid and binding agreements of the
A-1
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 other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(8) The Securities are in the form contemplated by the Indenture, have
been duly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and issued and delivered against payment of the purchase price therefor in
accordance with the Purchase Agreement, will 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, reorganization, moratorium (including, without limitation, all laws
relating to fraudulent transfers), or other similar laws relating to or
affecting enforcement of creditor's rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be entitled to the benefits of the Indenture.
(9) The Securities, the Indenture and the Registration Rights Agreement
conform in all material respects to the descriptions thereof contained in the
Offering Memorandum.
(10) Upon issuance and delivery of the Securities in accordance with this
Agreement and the Indenture, the Securities will be convertible at the option of
the holder thereof into shares of Common Stock in accordance with the terms of
the Securities and the Indenture; the shares of Common Stock issuable upon
conversion of Securities have been duly authorized and reserved for issuance
upon such conversion by all necessary corporate action and such shares, when
issued upon such conversion, will be validly issued and will be fully paid and
non-assessable; no holder of such shares will be subject to personal liability
in respect of liabilities of the Company solely by reason of being such a
holder; and the issuance of such shares upon such conversion will not be subject
to any preemptive or other similar rights of any securityholder of the Company.
(11) The Common Stock conforms in all material respects to the description
thereof in the Offering Memorandum.
(12) The documents incorporated by reference in the Offering Memorandum
(other than the financial statements and supporting schedules therein, as to
which no opinion need be rendered), when they were filed with the Commission
complied as to form in all material respects with the requirements of the 1934
Act and the 1934 Act Regulations.
(13) The information in the Offering Memorandum under "Description of the
Notes", "Description of Common Stock" and "Certain Federal Income Tax
Considerations", and to the extent that it constitutes matters of law, summaries
of legal documents including the Company's charter and bylaws or other legal
conclusions, is correct in all material respects.
(14) All descriptions in the Offering Memorandum of contracts and other
documents to which the Company or any of its subsidiaries are a party are
accurate in all material respects;
A-2
to the best of our knowledge, there are no franchises, contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments that would be
required to be described in the Offering Memorandum that are not described or
referred to in the Offering Memorandum other than those described or referred to
therein or incorporated by reference thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(15) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency, domestic or foreign is necessary or required in connection with the due
authorization, execution and delivery by the Company of the Purchase Agreement,
the performance by the Company of its obligations thereunder or the consummation
by the Company of the transactions contemplated thereby including, without
limitation, the execution and delivery by the Company of the Indenture, the
Pledge Agreement, the Control Agreement and the Registration Rights Agreement
and the performance by the Company of its obligations thereunder, the offering,
sale, issuance or delivery by the Company of the Securities and the issuance and
delivery by the Company of Common Stock upon conversion of Securities, or for
the consummation by the Company of all other transactions contemplated by the
Offering Memorandum, except such as (A) have been obtained, (B) are contemplated
in the Registration Rights Agreement and (C) may be required under state
securities laws.
(16) It is not necessary in connection with the offer, sale and delivery
of the Securities to the Initial Purchasers and to each Subsequent Purchaser in
the manner contemplated by the Purchase Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture under the
Trust Indenture Act.
(17) The execution, delivery and performance of the Purchase Agreement,
the Indenture, the Pledge Agreement, the Control Agreement and the Registration
Rights Agreement, the consummation of the transactions contemplated in the
Purchase Agreement and in the Offering Memorandum (including the offering, sale,
issuance and delivery of the Securities and the use of the proceeds from the
sale of the Securities as described in the Offering Memorandum under the caption
"Use Of Proceeds" and the issuance and delivery of shares of Common Stock upon
conversion of Securities) and the performance by the Company of its obligations
under the Purchase Agreement, the Indenture, the Pledge Agreement, the Control
Agreement or the Registration Rights Agreement or on the Securities do not and
will not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xiv) of the Purchase Agreement) under or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any Significant Subsidiary thereof pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, known to us, to which the Company or
any of its Significant Subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
Significant Subsidiary thereof is subject (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not have 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, known to us of any government,
A-3
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its Significant Subsidiaries or any of their
respective properties, assets or operations.
(18) The Company is not an "investment company" or an entity "controlled"
by an "investment company," as such terms are defined in the 1940 Act.
(19) The Company is a "holding company" under the 1935 Act, but, pursuant
to Section 3(a)(1) of the 1935 Act, is exempt from all provisions of the 1935
Act except Section 9(a)(2) thereof.
(20) To the best of our knowledge, there are no pending or threatened
actions, suits, proceedings, inquiries or investigations, to which the Company
or any subsidiary is a party, or to which the property of the Company or any
subsidiary thereof is subject, before or brought by any court or governmental
agency or body, 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 in the Purchase Agreement or the performance by the Company of its
obligations thereunder or the transactions contemplated by the Offering
Memorandum.
(21) Nothing has come to our attention that would lead us to believe that
the Offering Memorandum or any amendment or supplement thereto (except for
financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom as to which we need make
no statement), at the time the Offering Memorandum was issued, at the time any
such amended or supplemented Offering Memorandum was issued or at the Closing
Time, included or includes an untrue statement of a material fact or omitted or
omits 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.
ALLOCATION OF OPINIONS OF COUNSEL FOR THE COMPANY
A. Choate, Hall & Stewart will make all the statements set forth above
relying on Woodburn and Wedge as to the matters governed by or relating to the
law of the State of Nevada.
B. Woodburn & Wedge will make the statements set forth in paragraphs 1, 2,
4, 5, 6, 7, 10, 15 and 17 to the extent the matters set forth therein are
governed by or relate to the law of the State of Nevada or instruments governed
thereby, or relate to the State of Nevada or agencies thereof. In addition,
Woodburn and Wedge will state, in customary fashion, their belief that a Nevada
court, or a federal court applying Nevada choice of law principles, would give
effect to the choice of law provisions of the Indenture and the Securities.
A-4
EXHIBIT B
FORM OF LOCK-UP AGREEMENT FROM DIRECTORS AND OFFICERS
February ___, 2003
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
As Representative of the several Initial Purchasers
Named in the Purchase Agreement Referred to below
4 World Financial Center
New York, New York 10080
Re: Proposed Rule 144A Offering by Sierra Pacific Resources
Dear Sirs:
The undersigned, a stockholder and an officer and/or director of Sierra
Pacific Resources, a Nevada corporation (the "Company"), understands that
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), as Representative of the several initial purchasers named
therein proposes to enter into a Purchase Agreement (the "Purchase Agreement")
with the Company providing for the offering of 7.25% Convertible Notes due 2010.
Such notes are to be convertible into shares of the Company's common stock, par
value $1.00 per share (the "Common Stock"). In recognition of the benefit that
such an offering will confer upon the undersigned as a stockholder and an
officer and/or director of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each Initial Purchaser to be named in the Purchase
Agreement that, during a period of 90 days from the date of the Purchase
Agreement, the undersigned will not, without the prior written consent of
Merrill Lynch, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of, or otherwise
dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise.
Very truly yours,
Signature:
-------------------------
Print Name:
------------------------
B-1
SCHEDULE 1
TO
EXHIBIT B
SIERRA PACIFIC POWER COMPANY
List of Persons Subject to Lock-up
Name Title
- ---- -----
Edward P. Bliss Director
Mary Lee Coleman Director
Krestine M. Corbin Director
Theodore J. Day Director
James R. Donnelley Director
Jerry E. Herbst Director
Walter M. Higgins III Director, President and Chief
Executive Officer
John F. O'Reilly Director
Clyde T. Turner Director
Dennis E. Wheeler Director
Michael W. Yackira Executive Vice President, Strategy
and Policy
Jeffrey L. Ceccarelli President, Sierra Pacific Power Company
Donald L. Shalmy President, Nevada Power Company
C. Stanley Hunterton Senior Vice President, General Counsel
and Corporate Secretary
Victor H. Pena Senior Vice President, Chief
Administrative Officer
Richard K. Atkinson Vice President and Chief Financial Officer
John E. Brown Controller