<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 2000
REGISTRATION NO. 333-80149
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SIERRA PACIFIC RESOURCES
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NEVADA 88-0198358
(State or other jurisdiction (I.R.S. Employer
of Identification Number)
incorporation or organization)
</TABLE>
P.O. BOX 30150 (6100 NEIL ROAD)
RENO, NEVADA 89520-3150
(775) 834-4011
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
SIERRA PACIFIC RESOURCES CAPITAL TRUST I
SIERRA PACIFIC RESOURCES CAPITAL TRUST II
(Exact name of each registrant as specified in its Trust Agreement)
<TABLE>
<S> <C>
DELAWARE EACH TO BE APPLIED FOR
(State or other jurisdiction (I.R.S. Employer
of Incorporation or Identification Number)
organization
of each registrant)
</TABLE>
C/O SIERRA PACIFIC RESOURCES
P.O. BOX 30150 (6100 NEIL ROAD)
RENO, NEVADA 89520-3150
(775) 834-4011
(Address, including zip code, and telephone number, including area code, of each
registrant's principal executive offices)
------------------------------
WILLIAM E. PETERSON, ESQ.
Senior Vice President, General Counsel and Corporate Secretary
Sierra Pacific Resources
P.O. Box 30150 (6100 Neil Road)
Reno, Nevada 89520-3150
(775) 834-4011
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
WILLIAM C. ROGERS, ESQ. J. ANTHONY TERRELL, ESQ.
Choate, Hall & Stewart Thelen Reid & Priest LLP
53 State Street 40 West 57th Street, 26th Flr
Boston, Massachusetts 02109 New York, New York 10019
(617) 248-5000 (212) 603-2000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is to be a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for the
same offering. / /
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED MAY 1, 2000
P_R_O_S_P_E_C_T_U_S__S_U_P_P_L_E_M_E_N_T
(TO PROSPECTUS DATED MAY , 2000)
$ [LOGO]
% NOTES DUE
-------------
We will pay interest on the notes on May 15 and November 15 of each year,
beginning November 15, 2000. The notes will mature on May 15, . We may
redeem some or all of the notes at any time before maturity at a make-whole
redemption price described more fully under the heading "Description of the
Notes--Optional Redemption" on page S-40 of this prospectus supplement.
The notes are unsecured and will rank equally with all of our other
unsecured senior indebtedness. The notes will not be entitled to the benefit of
any sinking fund.
------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Public offering price (1).............................. % $
Underwriting discount.................................. % $
Proceeds, before expenses, to Sierra Pacific
Resources.............................................. % $
</TABLE>
(1) Plus accrued interest from May , 2000, if settlement occurs after that
date
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about May , 2000.
------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
SALOMON SMITH BARNEY
------------------
The date of this prospectus supplement is May , 2000.
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Special Note Regarding Forward-Looking Statements........... S-4
The Offering................................................ S-5
Selected Information about Sierra Pacific Resources......... S-6
Consolidated Ratios of Earnings to Fixed Charges and
Preferred Dividends....................................... S-13
Selected Pro Forma Consolidated Financial and Operating
Data...................................................... S-13
Capitalization.............................................. S-14
Use of Proceeds............................................. S-15
Recent Developments......................................... S-15
Management's Discussion and Analysis of Results of
Operations and Financial Condition........................ S-17
Description of the Notes.................................... S-39
United States Federal Tax Considerations.................... S-42
Underwriting................................................ S-47
Legal Matters............................................... S-48
Experts..................................................... S-48
Where You Can Find More Information......................... S-49
Incorporation of Information We File with the SEC........... S-49
PROSPECTUS
Sierra Pacific Resources.................................... 1
The Trusts.................................................. 1
Use of Proceeds............................................. 2
Consolidated Ratios of Earnings to Fixed Charges and
Preferred Dividends....................................... 3
Description of the Debt Securities.......................... 3
General................................................... 3
Terms of the Debt Securities.............................. 4
Consolidation, Merger or Sale............................. 5
Modification of Indentures; Waiver........................ 6
Events of Default......................................... 6
Remedies.................................................. 7
Acceleration of Maturity................................ 7
Waiver of Default....................................... 7
Right to Direct Proceedings; Limitations................ 7
No Impairment of Right to Receive Payment............... 8
Notice of Default....................................... 8
Special Terms Relating to the Subordinated Debt Securities
to be Held by Trusts.................................... 8
Subordination........................................... 8
Redemption.............................................. 8
Option to Extend Interest Payment Date.................. 9
Restrictions on Certain Payments........................ 9
Option to Change Stated Maturity Date................... 10
Special Terms Relating to the Senior Debt Securities...... 11
Limitations Upon Liens on Stock of Restricted
Subsidiaries........................................... 11
Limitations on the Issuance or Disposition of Stock of
Restricted Subsidiaries................................ 11
Defeasance................................................ 11
Form, Registration, Transfer and Exchange................. 11
Global Securities......................................... 12
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Payment and Paying Agents................................. 12
Governing Law............................................. 13
Description of the Preferred Securities of the Trusts....... 13
General................................................... 13
Distributions............................................. 14
Mandatory Redemption...................................... 14
Trust Special Event Redemption or Distribution............ 15
Redemption Procedures..................................... 17
Liquidation Distribution Upon Dissolution................. 17
Subordination of the Common Securities.................... 18
Amendment of Declarations................................. 18
Voting Rights............................................. 19
Declaration Events of Default............................. 20
Merger, Consolidation or Amalgamation of the Trusts....... 21
Removal and Replacement of Trustees....................... 22
Registrar, Transfer Agent, and Paying Agent............... 22
Book-Entry Only Issuance--The Depository Trust Company.... 22
Description of the Global Certificates.................. 22
DTC Procedures.......................................... 22
Information Concerning the Property Trustee............... 24
Governing Law............................................. 25
Miscellaneous............................................. 25
Description of the Preferred Securities Guarantees.......... 25
General................................................... 25
Events of Default......................................... 26
Status of the Preferred Securities Guarantees;
Subordination........................................... 26
Amendments and Assignment................................. 27
Termination of the Preferred Securities Guarantees........ 27
Information Concerning the Guarantee Trustee.............. 27
Governing Law............................................. 27
The Expense Agreement..................................... 27
Relationship among Preferred Securities, Preferred
Securities Guarantees and Subordinated Debt Securities
held by the Trusts........................................ 28
Plan of Distribution........................................ 28
Where You Can Find More Information......................... 29
Incorporation of Information We File With the SEC........... 30
Legal Opinions.............................................. 30
Experts..................................................... 31
</TABLE>
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not, and the underwriters
have not, authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not, and the underwriters are not, making an offer to
sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus
supplement and the accompanying prospectus is accurate only as of the date on
the front cover of this prospectus supplement. Our business, financial
condition, results of operations and prospects may have changed since that date.
S-3
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information in this Prospectus Supplement, or in the accompanying
Prospectus or the documents incorporated by reference, includes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements relate to anticipated financial
performance, management's plans and objectives for future operations, business
prospects, outcome of regulatory proceedings, market conditions and other
matters. Words such as "anticipate," "believe," "estimate," "expect," "intend,"
"plan" and "objective" and other similar expressions identify those statements
that are forward-looking. These statements are based on management's beliefs and
assumptions and on information currently available to management. Actual results
could differ materially from those contemplated by the forward-looking
statements.
In addition to any assumptions and other factors referred to specifically in
connection with such statements, factors that could cause our actual results to
differ materially from those contemplated in any forward-looking statement
include the following:
- the pace and extent of the ongoing restructuring of the electric and gas
industries in Nevada and California;
- the outcome of regulatory and legislative proceedings and operational
changes related to industry restructuring;
- the amount our utility subsidiaries, Nevada Power Company and Sierra
Pacific Power Company, are allowed to recover from customers for certain
costs that prove to be uneconomic in the new competitive market;
- regulatory delays or conditions imposed by regulatory bodies in approving
the acquisition of Portland General Electric;
- the outcome of ongoing and future regulatory proceedings;
- management's ability to integrate the operations of Sierra Pacific
Resources, Nevada Power Company, Sierra Pacific Power Company, and (after
its acquisition) Portland General Electric and to implement and realize
anticipated cost savings from the merger of Sierra Pacific Resources and
Nevada Power Company and the acquisition of Portland General Electric;
- the results of the contemplated sales by Nevada Power Company and Sierra
Pacific Power Company of their Nevada-generating assets;
- industrial, commercial and residential growth in the service territories
of Nevada Power Company and Sierra Pacific Power Company;
- fluctuations in electric, gas and other commodity prices and the ability
to manage such fluctuations successfully;
- changes in the capital markets and interest rates affecting the ability to
finance capital requirements;
- the loss of any significant customers;
- the weather and other natural phenomena; and
- changes in the business of major customers which may result in changes in
the demand for services of Nevada Power Company, Sierra Pacific Power
Company or (after its acquisition) Portland General Electric.
Other factors and assumptions not identified above may also have been
involved in deriving these forward-looking statements, and the failure of those
other assumptions to be realized, as well as other factors, may also cause
actual results to differ materially from those projected. We assume no
obligation to update forward-looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting forward-looking
statements.
S-4
<PAGE>
THE OFFERING
The following is a brief summary of certain terms of this offering. For a
more complete description of the terms of the notes, see "Description of the
Notes" in this prospectus supplement.
<TABLE>
<S> <C>
Issuer................................. Sierra Pacific Resources.
Aggregate Principal Amount............. $ .
Interest Rate.......................... % per year.
Maturity Date.......................... May , .
Interest Payment Dates................. May 15 and November 15 of each year, beginning
November 15, 2000.
Interest Calculations.................. Based on a 360-day year of twelve 30-day months.
Ranking................................ The senior notes will rank equally with all of our other
unsecured and unsubordinated indebtedness.
Optional Redemption.................... The notes will be redeemable in whole or in part at our
option at any time, on at least 30 days' but not more than
60 days' prior written notice, at a price equal to the
greater of (a) 100% of the principal amount of the notes
being redeemed and (b) the sum of the present values of
the remaining scheduled payments of principal and interest
on the notes to be redeemed, discounted to the redemption
date semi-annually (assuming a 360-day year consisting of
twelve 30-day months) at a discount rate equal to the
applicable Treasury Rate (as defined under "Description of
the Notes--Optional Redemption") plus basis points,
plus accrued interest on the notes to the redemption date.
See "Description of the Notes--Optional Redemption."
Sinking Fund........................... None.
Form and Denominations................. The notes initially will be issued in a fully registered
book-entry form and will be represented by one or more
registered global securities deposited with or on behalf
of, and registered in the name of, a nominee of The
Depository Trust Company. The notes will be issued in
denominations of $1,000 and integral multiples thereof.
</TABLE>
S-5
<PAGE>
SELECTED INFORMATION ABOUT SIERRA PACIFIC RESOURCES
THE FOLLOWING SELECTED INFORMATION HIGHLIGHTS CERTAIN IMPORTANT FACTS
REGARDING SIERRA PACIFIC RESOURCES AND ITS SUBSIDIARIES AND MAY NOT CONTAIN ALL
OF THE INFORMATION THAT IS IMPORTANT TO YOU. WE ENCOURAGE YOU TO READ
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION" STARTING ON PAGE S-17 OF THIS PROSPECTUS SUPPLEMENT AS WELL AS THE
DOCUMENTS REFERRED TO ON PAGE S-49 UNDER "INCORPORATION OF INFORMATION WE FILE
WITH THE SEC" WHICH CONTAIN MORE COMPLETE DESCRIPTIONS OF OUR COMPANY AND ITS
BUSINESS.
GENERAL
Sierra Pacific Resources engages primarily in the energy business through
several subsidiaries. We completed a major merger with Nevada Power Company in
July 1999. Following the merger, our two largest subsidiaries are Nevada Power
Company and Sierra Pacific Power Company, both of which are regulated public
utilities. As discussed below, we have entered into an agreement to acquire
Portland General Electric Company. The diagram below shows the organizational
structure of our major companies after the Portland General Electric Company
acquisition is completed.
[Diagram]
Sierra Pacific Resources, through its public utility operating companies,
Sierra Pacific Power Company and Nevada Power Company, is engaged principally
in:
- the generation, transmission, distribution and sale of electric energy;
- the purchase, distribution, transportation and sale of natural gas; and
- water distribution in selected markets.
The principal markets of Sierra Pacific Resources utility operating
subsidiaries are currently located in Nevada and California and will include
Oregon upon successful completion of the Portland General Electric Company
acquisition. Sierra Pacific Resources is also involved in several non-regulated
and non-utility activities. The principal executive office of Sierra Pacific
Resources is P.O. Box 301500 (6100 Neil Road), Reno, Nevada 89520-3150, and the
telephone number is (775) 834-4011.
In this prospectus supplement and the accompanying prospectus, "Sierra
Pacific," "Sierra Pacific Resources," "we," "us" and "our" refer specifically to
Sierra Pacific Resources, the holding company.
NEVADA POWER COMPANY
Nevada Power Company is an operating public utility primarily engaged in the
distribution, transmission, generation, purchase and sale of electric energy in
Clark County in southern Nevada. The assets of Nevada Power Company represented
52% of the consolidated assets of Sierra Pacific Resources at December 31, 1999.
Nevada Power Company provides electricity to approximately 566,700 customers in
the communities of Las Vegas, North Las Vegas, Henderson, Searchlight, Laughlin
and adjoining areas. Service is also provided to Nellis Air Force Base and the
Department of Energy at Mercury and Jackass Flats at the Nevada Test Site.
MARKET AND DISTRIBUTION SYSTEM
All of Nevada Power Company's 1999 revenues, $977 million, were attributable
to its electricity operations. Nevada Power Company's total electric
megawatt-hour (MWh) sales have increased an average of 7.21% annually over the
past five years.
Customer and sales growth in Nevada Power Company's service territory
continues to be among the fastest in the nation, and a significant part of the
growth in Nevada Power Company's electric sales has resulted from new
residential, industrial and gaming customers.
S-6
<PAGE>
The Las Vegas Portion of Nevada Power Company's service territory has
undergone significant customer growth recently as Las Vegas has become one of
the top resort destinations in the world. Ten of the world's largest resorts are
located in Las Vegas and the total number of hotel rooms available is
approximately 128,000; 13,000 of those rooms were added in 1999. In order to
meet the increased demand, McCarran International Airport has added
international carriers and increased flights into Las Vegas.
In southern Nevada, summer peak loads are high relative to the winter peak,
as summer peak loads are driven by significant air conditioning demand. Nevada
Power Company's peak load increased an average of 8.14% annually over the past
five years, reaching 3,993 megawatts (MW) on July 1, 1999.
Although resort activity is important to the region, efforts to diversify
southern Nevada's economy are continuing. In 1999, Nevada Power Company
contributed to these efforts by focusing a part of its recruitment and
attraction efforts on the plastics/polymers and metals fabrication industries.
Nevada Power Company's electric customers grew at a compound annual growth
rate of 5.8% between 1994 and 1999 and contributed the following toward 1999 and
1998 megawatt-hour sales:
<TABLE>
<CAPTION>
MWH SALES
---------------------------------------------
1999 1998
--------------------- ---------------------
% OF % OF
CUSTOMERS MWH TOTAL MWH TOTAL
- --------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Residential........................ 6,138,436 37.9% 5,735,698 38.7%
Office............................. 875,716 5.4% 777,171 5.2%
Gaming, recreation, restaurants.... 3,009,526 18.6% 2,604,906 17.6%
Wholesale.......................... 829,551 5.1% 670,724 4.5%
Retail............................. 462,918 2.9% 405,833 2.7%
All other & unclassified........... 4,873,063 30.1% 4,638,646 31.3%
---------- ------ ---------- ------
Total........................ 16,189,210 100.0% 14,832,978 100.0%
</TABLE>
CONSTRUCTION PROGRAM
Of the $245.0 million allocated for construction in 1999, only
$224.0 million was actually spent. Internally generated funds provided 19.5% of
all of the funds for construction expenditures. Estimated construction
expenditures for 2000 are approximately $223.1 million.
FACILITIES AND OPERATIONS
Nevada Power Company committed to divest its generation facilities as a
condition of the PUCN's approval of its merger with Sierra Pacific Resources,
and Nevada Power Company has begun an auction process to sell these assets. The
auction process is anticipated to be completed by the first half of 2001,
however it may take longer to sell Nevada Power Company's interests in
jointly-owned power plants. Until such time, Nevada Power Company will continue
to provide energy through generation and purchased power to meet both summer and
winter peak loads.
During 1999, Nevada Power Company generated more than half of its total
electric energy requirements in its own plants, as shown below:
S-7
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GAS/OIL 23%
<S> <C>
Coal 34%
Purchased Power 43%
</TABLE>
- ------------------------
* Does not include net sales of 872,302 MWh.
SIERRA PACIFIC POWER COMPANY
Sierra Pacific Power Company is a public utility primarily engaged in the
distribution, transmission, generation, purchase and sale of electric energy. It
provides electricity to approximately 302,000 customers in a 50,000 square mile
service area including western, central and northeastern Nevada, including the
cities of Reno, Sparks, Carson City, Elko, and a portion of eastern California,
including the Lake Tahoe area.
Sierra Pacific Power Company also provides natural gas service in Nevada to
approximately 110,000 customers and supplies water service to about 70,600
customers in the Reno/Sparks area and environs.
In 1999, electric revenue accounted for 78.8% of Sierra Pacific Power
Company's total revenue, gas revenue accounted for 13.1% of total revenue and
water revenue accounted for 7.1% of total revenue.
MARKET AND ELECTRIC DISTRIBUTION SYSTEM
Sierra Pacific Power Company's 1999 electric revenues were $609 million. Its
total electric MWh sales have increased an average of 7.65% annually over the
past five years, reflecting the fact that its service area is among the fastest
growing in the nation. Sierra Pacific Power Company's growth in electric sales
has primarily resulted from new residential and mining and manufacturing
customers in northern Nevada.
Sierra Pacific Power Company's electric customers grew at a compound annual
growth rate of 2.8% between 1994 and 1999 and contributed the following toward
1999 and 1998 megawatt-hour sales:
<TABLE>
<CAPTION>
MWH SALES
--------------------------------------------
1999 1998
--------------------- --------------------
% OF % OF
CUSTOMERS MWH TOTAL MWH TOTAL
- --------- ---------- -------- --------- --------
<S> <C> <C> <C> <C>
Residential......................... 1,998,174 19.6% 1,987,562 20.4%
Commercial and Industrial:
Mining............................ 2,716,579 26.6% 2,648,957 27.1%
Offices/Schools/Government.......... 1,128,189 11.1% 1,048,553 10.7%
Resorts & Recreation.............. 768,750 7.5% 760,848 7.8%
Manufacturing/Warehouse........... 586,963 5.8% 738,972 7.6%
Wholesale......................... 1,695,420 16.7% 1,443,652 14.6%
All Other......................... 1,308,861 12.7% 1,134,675 11.8%
---------- ------ --------- ------
Total......................... 10,202,936 100.0% 9,763,219 100.0%
</TABLE>
S-8
<PAGE>
In Northern Nevada, electric system peaks typically occur in both the summer
and the winter. Summer peak loads result from air-conditioning, cooling
equipment and irrigation pumping, while winter peak loads are due to shorter
daylight hours, colder temperatures and ski resort demands. Sierra Pacific Power
Company's peak load increased an average of 5% annually over the past five
years, reaching 1,470 MW in July, 1999.
According to the Nevada Mining Association statistics, Nevada leads the
nation in gold production, accounting for approximately 74% of all U.S.
production and 10% of world production, ranking it the third largest gold
producer in the world behind South Africa and Australia. A majority of Nevada's
gold mines are customers of Sierra Pacific Power Company. These reserves are
believed to be sufficient to continue production at current rates for the next
decade.
Sierra Pacific Power Company's territory also has a variety of other mineral
producing mines, including silver, copper, lithium, mercury, barite, diatomite,
gypsum, and lime.
Sierra Pacific Power Company has long-term power sales agreements with most
of our major mining customers with terms of at least five years. These mining
agreements secure over 223 MW of present and future mining load, or
approximately $74 million in annual revenues, which is 12.2% of the 1999
electric operating revenues.
ELECTRIC FACILITIES AND OPERATIONS
Sierra Pacific Power Company committed to divest its generation facilities
as a condition of the PUCN's approval of the merger of Nevada Power Company with
Sierra Pacific Resources. Sierra Pacific Power Company has begun an auction
process to sell these generation assets. The auction process is anticipated to
be completed by the first half of 2001, however it may take longer to sell
Sierra Pacific Power Company's interests in jointly owned power plants. Until
such time, Sierra Pacific will continue to provide energy through generation and
purchased power to meet both summer and winter peak loads.
Sierra Pacific Power Company used diverse resources to meet its 1999
electric energy requirements, including gas and oil generation (28.4%), coal
generation (17.4%), hydro generation (0.4%), and purchased power (53.8%). The
company has no ownership interest in, nor does it operate, any nuclear
generating units. Sierra Pacific Power Company's decision to purchase spot
market energy is based on the economics of purchasing "as-available" energy when
it is less expensive than Sierra Pacific Power Company's own generation. At the
time of the 1999 system peak, Sierra Pacific Power Company had purchased firm
capacity under long-term contracts with other utilities and qualifying
facilities (QFs) equal to 17% of total peak hour capacity. In 1999, most of
Sierra Pacific Power Company's non-utility generation came from QFs, except for
14,951 MWh which came from two small power producers.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GAS/OIL 28.40%
<S> <C>
Coal 17.40%
Hydro 0.40%
Purchased Power 53.80%
</TABLE>
S-9
<PAGE>
NATURAL GAS BUSINESS
Sierra Pacific Power Company's natural gas business is a local distribution
company ("LDC") in the Reno/Sparks metropolitan area with 111,843 customers and
$100.2 million in 1999 operating revenues. The overall natural gas customer
growth rate was 4.3% for 1999. As of December 31, 1999, Sierra Pacific Power
Company owned and operated 1,439 miles of three-inch equivalent natural gas
distribution pipe.
WATER BUSINESS
Sierra Pacific Power Company's water distribution business, with 70,600
customers and $54.3 million in 1999 operating revenues, produced 24.97 billion
gallons in 1999. Sierra Pacific Power Company derives its water supply from both
surface and groundwater sources. Sierra Pacific Power Company's groundwater
comes from 25 supply wells located around the Reno/Sparks area, and its surface
water is drawn from the Truckee River which originates at Lake Tahoe.
CONSTRUCTION PROGRAM FOR ELECTRIC, GAS AND WATER BUSINESSES
Gross construction expenditures for Sierra Pacific Power Company's electric,
gas and water businesses, including AFUDC and contributions in aid of
construction, were $142.3 million in 1999 and $820.8 million for the period 1995
through 1999. Internally generated funds provided 35% of all construction
expenditures in 1999. Estimated construction expenditures are $137.7 million for
2000 and $679.8 million for the period 2001-2004.
The most significant of Sierra Pacific Power Company's current construction
projects is the Falcon Transmission Project, a 345kV transmission line within
Northern Nevada. Total project costs are estimated at $98.2 million. The
currently projected in-service date for the Falcon Transmission Project is
June 2003.
GENERAL REGULATION
Nevada Power Company and Sierra Pacific Power Company's electric businesses
are subject to regulation by the PUCN, the Federal Energy Regulatory Commission
(FERC) and by environmental authorities in the states in which they operate.
Sierra Pacific Power Company's electric business in California is subject to
regulation by the California Public Utility Commission. In addition, Sierra
Pacific Power Company's natural gas and water businesses are subject to
regulation by the PUCN. As a result of regulation, many of the fundamental
business decisions of Nevada Power Company and Sierra Pacific Power Company, as
well as the rate of return we are permitted to earn on our utility assets, are
subject to the approval of governmental agencies.
Following completion of the acquisition of PGE, Sierra Pacific Resources
will register as a public utility holding company under the federal Public
Utility Holding Company Act.
Sierra Pacific Power Company and Nevada Power Company continue to prepare
for a more competitive environment and have actively participated in regulatory
reform deliberations in Nevada. The Nevada Legislature mandated retail access to
alternative electric suppliers to commence March 1, 2000, a deadline which has
since been extended indefinitely by the Governor of Nevada. Once retail access
begins, Sierra Pacific Power Company and Nevada Power Company will retain the
responsibility to supply electricity to customers as the "provider of last
resort". We expect, assuming no regulatory relief, that Sierra Pacific Power
Company and Nevada Power Company will exit their positions as the providers of
last resort as quickly as possible. We also expect that, if current legislation
and regulation do not change, Sierra Pacific Power Company and Nevada Power
Company will exit other services, including metering, billing and customer
service functions. As discussed under "Recent Developments--Material
Litigation", our two utility subsidiaries have filed a lawsuit challenging the
constitutionality of
S-10
<PAGE>
the Nevada electric restructuring legislation. We cannot predict the outcome of
this litigation at this time.
NON-UTILITY SUBSIDIARIES
In addition to the two utility subsidiaries, we have several other
subsidiaries that are described below.
Tuscarora Gas Pipeline Company ("TGPC") is a partner in a joint venture with
TransCanada that developed, constructed and operates a natural gas pipeline
serving the gas market in the Reno area and (certain) northeastern California
markets. As an interstate pipeline, TGTC provides only transportation service.
Sierra Pacific Power Company was the largest customer of TGTC during 1999,
contributing 95% of revenues.
e.three provides energy-related services and other business solutions in
commercial and industrial markets (on a regional basis). In 1998, e.three and
Nevada Electric Investment Company (NEICO), a wholly-owned subsidiary of Nevada
Power Company, formed e.three Custom Energy Solutions, LLC to sell
energy-related performance contracts and similar energy services to commercial
and industrial customers in southern Nevada. In 1999, e.three Custom Energy
Solutions, LLC began developing a chilled water-cooling plant in the downtown
area of Las Vegas which will supply the indoor air-cooling requirements for a
number of businesses in its immediate vicinity. The plant is expected to be
operational in the third quarter of 2000.
Sierra Pacific Communications ("SPC") was created to examine and pursue
telecommunications opportunities that leverage existing skills in installing and
deploying pipe and wire infrastructure. SPC presently has fiber optic assets
deployed in the cities of Reno and Las Vegas. We believe that the expanding
telecommunications market in these areas should provide opportunities to expand
this fiber base and other profitable opportunities.
Sierra Pacific Energy ("SPE") was formed to market a package of technology
and energy-related products and services in Nevada. SPE filed an application
with the PUCN to be licensed as an Alternative Seller of Electricity in the
State of Nevada. Except for its interest in the Aladdin project discussed below,
SPE has withdrawn its application with the PUCN to be licensed as an Alternative
Seller of Electricity in the State of Nevada and is dissolving its retail energy
marketing efforts. SPE will retain its interest in the Northwind Aladdin LLC (a
limited liability company owned by NEICO & UTT Nevada, Inc., an affiliate of
Unicom Thermal Technologies, Inc.) to own, construct and maintain a chilled
water, hot water, and emergency electric power facility for the Aladdin project
in Las Vegas, Nevada.
Lands of Sierra ("LOS") was organized in 1964 to develop and manage Sierra
Pacific Power Company's non-utility property in Nevada and California. These
properties previously included retail, industrial, office and residential sites,
timberland, and other properties. Remaining properties include land in Nevada
and California. Because we have decided to focus on our core energy business,
LOS continues to sell its remaining properties.
Information regarding the financial performance of these subsidiaries can be
found in "Management's Discussion and Analysis of Results of Operations and
Financial Condition" starting on page S-17 of this prospectus supplement.
S-11
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
The following table shows our consolidated ratios of earnings to fixed
charges and preferred dividends. The ratios shown in the table are both the
historical ratios and the pro forma combined ratio showing the effect of the
merger between Sierra Pacific Resources and Nevada Power Company. As a result of
the merger between Sierra Pacific Resources and Nevada Power Company, which has
been treated for accounting purposes as a reverse acquisition with Nevada Power
Company being the acquiror, the historical ratios are those of Nevada Power
Company. The pro forma ratio assumes that the merger occurred at the beginning
of the applicable period.
<TABLE>
<CAPTION>
1999 YEAR ENDED DECEMBER 31,
(COMBINED ----------------------------------------------------
PRO FORMA) 1999 1998 1997 1996 1995
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings
to fixed charges and preferred
dividends................................ 1.68 1.62 2.48 2.70 2.64 2.60
</TABLE>
For the purpose of calculating the consolidated ratio of earnings to fixed
charges and preferred dividends, "fixed charges" represent the aggregate of
interest charges on short-term and long-term debt and distributions on preferred
securities of consolidated subsidiaries, allowance for borrowed funds used
during construction (AFUDC) and capitalized interest, the interest portion of
rental expense deemed to be attributable to interest, and the pre-tax preference
security dividend requirements of consolidated subsidiaries. "Earnings"
represent the aggregate of income before obligated mandatorily redeemable
preferred securities, income taxes, and fixed charges, less AFUDC and
capitalized interest, and pre-tax preference security dividend requirements of
consolidated subsidiaries.
SELECTED PRO FORMA CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN MILLIONS EXCEPT RATIOS AND PER SHARE DATA)
The following table shows pro forma unaudited financial information for
Sierra Pacific Resources on a consolidated basis, giving effect to the merger
between Sierra Pacific Resources and Nevada Power Company as if it had occurred
at the beginning of all periods. The pro forma information presented below is
not necessarily indicative of the results that would have occurred or that will
occur in the future.
You should read the following table along with our Consolidated Financial
Statements and Notes contained in our Annual Report on Form 10-K for the year
ended December 31, 1999, which is incorporated by reference into this prospectus
supplement. You should also refer to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" beginning on page S-17 of this
prospectus supplement.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
(DOLLARS AND SHARES IN THOUSANDS)
<S> <C> <C> <C>
Operating Revenue........................ $1,756,235 $1,615,523 $1,462,391
Operating Income......................... $ 253,785 $ 281,759 $ 266,185
Net Income............................... $ 82,449 $ 141,355 $ 138,022
Long-Term Debt and Redeemable Preferred
Securities............................. $1,793,999 $1,804,527 $1,709,772
Total Assets as of December 31........... $5,247,606 $4,979,631 $4,605,713
</TABLE>
S-13
<PAGE>
CAPITALIZATION
The following table shows the capitalization of Sierra Pacific Resources and
its consolidated subsidiaries as of December 31, 1999 and as adjusted to give
effect to the sale of $300 million of notes, as well as the sale on April 20,
2000 of $300 million of floating rate notes and the use of the proceeds from
those sales. The majority of the net proceeds from the sale of the notes will be
used to retire short-term debt. The following information should be read
together with the financial statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
beginning on page S-17 of this prospectus supplement.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-----------------------------------------------------------------------------------
ACTUAL % AS ADJUSTED %
---------- -------- -------------------------- ---------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SHORT-TERM DEBT (INCLUDING CURRENT
MATURITIES OF LONG-TERM DEBT AND
PREFERRED STOCK):..................... $ 957,688 22.4% $ 357,688 8.4%
LONG-TERM DEBT:
First Mortgage Bonds.................... 898,751 21.0% 898,751 21.0%
Industrial development revenue bonds.... 358,035 8.4% 358,035 8.4%
Pollution control revenue bonds......... 73,300 1.7% 73,300 1.7%
Unsecured Notes......................... 130,000 3.0% 430,000 10.0%
% Notes due ................. 300,000 7.0%
Obligation under capital leases......... 87,007 2.0% 87,007 2.0%
Current maturities and sinking fund
requirements.......................... (89,842) -2.1% (89,842) -2.1%
Variable rate note--Water facilities.... 80,000 1.9% 80,000 1.9%
Other, excluding current portion........ 19,376 0.5% 19,376 0.5%
---------- ----- -------------------------- ---------------------
Total Long-Term Debt................ 1,556,627 36.4% 2,156,627 50.4%
PREFERRED SECURITIES OF SUBSIDIARIES:
NVP obligated Mandatorily Redeemable
Preferred Securities of Company's
NVP's Subsidiary Trust, NVP Capital I,
holding solely $122.6 million
principal amount of 8.2% Junior
Subordinated Debentures of NVP, due
2037.................................. 118,872 2.8% 118,872 2.8%
NVP Capital III, holding solely $72.2
million principal amount of 7.75%
Junior Subordinated Debentures of NVP,
due 2038.............................. 70,000 1.6% 70,000 1.6%
SPPC obligated Mandatorily Redeemable
Preferred Securities of SPPC's
Subsidiary Trust, SPPC Capital I,
holding solely $50 million principal
amount of 8.60% Junior Subordinated
Debentures of SPPC, due 2036.......... 48,500 1.1% 48,500 1.1%
---------- ----- -------------------------- ---------------------
Total Preferred Securities.......... 237,372 5.5% 237,372 5.5%
SHAREHOLDERS' EQUITY:
Preferred Stock of Subsidiaries:
Class A Series 1; $1.95 dividend...... 50,000 1.2% 50,000 1.2%
Common Shareholders' Equity:............ 1,477,129 34.5% 1,477,129 34.5%
---------- ----- -------------------------- ---------------------
Total Shareholders' Equity.......... 1,527,129 35.7% 1,527,129 35.7%
---------- ----- -------------------------- ---------------------
Total Capitalization.............. $4,278,816 100% $ 4,278,816 100%
========== ===== ========================== =====================
</TABLE>
S-14
<PAGE>
USE OF PROCEEDS
We intend to use most of the net proceeds from the sale of the notes to
retire short-term debt which we borrowed to provide temporary funding for the
cash portion of the merger consideration in the merger between Sierra Pacific
Resources and Nevada Power Company. As of March 31, 2000, there was
$493.2 million of total short-term debt outstanding, $460 million of which
related to the merger, and the weighted average interest rate on short-term debt
during the first quarter of 2000 was 6.35%. We intend to use any remaining net
proceeds from the sale of the notes for general corporate purposes, which may
include financing the activities of our subsidiaries, refinancing our existing
borrowings and financing acquisitions. Until we use the remaining net proceeds
from the sale of the notes for general corporate purposes, we will invest the
net proceeds in temporary investments.
RECENT DEVELOPMENTS
AGREEMENT TO ACQUIRE PORTLAND GENERAL ELECTRIC COMPANY
On November 8, 1999, we announced that we had entered into a purchase and
sale agreement with Enron Corporation ("Enron") for Enron's wholly owned
electric utility subsidiary, Portland General Electric Company ("PGE"). PGE is
an electric utility serving more than 700,000 retail customers in northwest
Oregon. PGE will become a wholly-owned subsidiary of Sierra Pacific Resources.
Under terms of the agreement, Enron will sell PGE to us for $2.1 billion, which
will consist of $2.02 billion in cash and our assumption of Enron's
approximately $80 million merger payment obligation. In addition, $1.0 billion
in PGE debt and preferred stock will be reflected in our consolidated financial
statements. At closing, the transaction is expected to be financed primarily
through a bank loan or other form of debt. Ultimately, the transaction is
expected to be financed through approximately $750 million of proceeds from the
sale of generation assets of our two Nevada subsidiaries and the issuance by us
of debt and equity securities. Immediately after the acquisition of PGE, we
expect that our consolidated common equity will be approximately 23 percent of
total consolidated capitalization. During the two years following the
acquisition, however, we intend to increase consolidated common equity to
approximately 29 percent by paying down a portion of the acquisition debt with
proceeds from the sale of the electric generation assets of Nevada Power Company
and Sierra Pacific Power Company, the sale of additional common stock, and
increased retained earnings from the combined operations of the three utility
subsidiaries. Our ability to increase our common equity will depend upon, among
other things, market conditions and the results of operations of these
subsidiaries. See "Capitalization" on page S-14.
The proposed transaction is subject to customary closing conditions, such as
the receipt of all necessary governmental approvals, including from the Federal
Energy Regulatory Commission ("FERC"), the Securities and Exchange Commission
("SEC"), the Oregon Public Utility Commission ("OPUC") and the Nuclear
Regulatory Commission. Also, we intend to register with the SEC as a public
utility holding company under the Public Utility Holding Company Act. The Public
Utilities Commission of Nevada ("PUCN") has waived its jurisdiction over Sierra
Pacific Resources' registration as a public utility holding company. We have
completed our filings with the Federal Energy Regulatory Commission, the
Department of Justice, the OPUC and the SEC. Approvals are expected to be
received by the second half of 2000 with a closing to follow shortly thereafter.
RECENT DECISIONS IN NEVADA POWER COMPANY DEFERRED ENERGY CASE
In 1999, the Nevada Legislature passed Senate Bill 438 ("SB 438") which
amended earlier restructuring legislation and, with one exception, froze for
three years the rates for Nevada Power Company at levels in effect on July 1,
1999. The legislation, however, mandated that the Public Utilities Commission of
Nevada (the "PUCN") modify those rates to reflect the outcomes of deferred
accounting cases filed by Nevada Power Company prior to October 1, 1999. Nevada
Power filed its
S-15
<PAGE>
annual deferred energy case on July 15, 1999, covering the period from June 1,
1998 through May 31, 1999. This filing requested:
- an increase in ongoing charges for fuel and purchased power to reflect
increased costs during the applicable test period,
- an increase in ongoing charges for fuel and purchased power to reflect the
cost of purchased energy which was being imputed as "capacity" under a
previous PUCN order,
- an increase to recover accumulated deferred balances for fuel and
purchased power, and
- an increase to recover accumulated deferred "capacity" balances.
In accordance with SB 438, on September 30, 1999, Nevada Power filed an
amendment to its deferred energy filing covering charges through August 31,
1999. In the amended filing, Nevada Power updated the earlier calculations of
ongoing fuel and purchased power costs so as to reflect the most recent
12 months historical data and updated the two categories of deferred balances to
reflect deferrals through August 31, 1999.
On February 4, 2000 the PUCN issued an order that rejected the September 30
amendment. In addition, on March 28, 2000 the PUCN issued a decision on the
original deferred energy filing which:
- confirmed the dismissal of the September 30th filing,
- disallowed recovery of substantially all of the imputed capacity
previously deferred,
- stopped all purchased fuel and energy deferrals retroactive to May 31,
1999, and
- prohibited the recovery of any ongoing cost of imputed capacity deferrals.
The PUCN decision had both an immediate and an ongoing financial impact on
Nevada Power Company. The immediate impact was that Nevada Power Company
recognized a reserve for previously deferred energy and imputed capacity costs
of $80 million in 1999. The ongoing impact results from the fact the decision
reduced Nevada Power Company's request for ongoing rate increases by between 85
and 90 percent, just as the company is entering the three-year rate freeze
imposed by SB 438. We estimate that the resulting reduction in Nevada Power
Company's revenue will equal approximately $30 million over each of the next
three years. Nevada Power Company has appealed the decisions, as discussed below
under "Material Litigation".
MATERIAL LITIGATION
On March 28, 2000, Sierra Pacific Resources, Nevada Power Company and Sierra
Pacific Power Company filed a lawsuit in Federal District Court in Nevada asking
the court to declare certain aspects of the Nevada laws that created the
framework for a deregulated electric market in Nevada unconstitutional. These
laws, which are described in more detail later in this prospectus supplement
under "Management's Discussion and Analysis of Results of Operations and
Financial Condition" starting on page S-17, require that competitive services in
the electric power industry be available for Nevada customers beginning on
March 1, 2000, unless otherwise ordered by the Governor of Nevada. The Governor
has deferred the effective date of these laws, but only for so long as may be
necessary to make a transition to a deregulated market for electric services.
The lawsuit we filed alleges that the restructuring laws fail to provide an
adequate mechanism for the recovery by our utility subsidiaries of the
substantial costs incurred by them to assure reliable electric power supplies to
Nevada customers in the historically regulated market. Specifically, the lawsuit
states that the federal Public Utility Regulatory Policies Act requires the
utilities to purchase power from certain non-utility generators but that the
Nevada restructuring laws are being carried out so as to prevent the utilities
from recovering sufficient revenues from customers to compensate the companies
for all of these purchased power costs. Therefore, the lawsuit alleges that
Nevada's restructuring laws are preempted by the federal
S-16
<PAGE>
Public Utility Regulatory Policies Act and the Federal Power Act and that they
violate the Contract Clause and the Fifth and Fourteenth Amendments to the U.S.
Constitution. The lawsuit requests that the court stay the effectiveness of the
Nevada restructuring laws until the PUCN adopts implementing regulations that
protect the utilities' rights under federal law. We are not able at this time to
predict how long it will take for this lawsuit to be resolved and nor can we
predict its outcome.
In response to the PUCN decisions described above under "Recent Decisions in
Nevada Power Company Deferred Energy Case", Nevada Power Company filed a lawsuit
against the PUCN on March 30, 2000 in the First Judicial District of Nevada in
Carson City. The lawsuit alleges fourteen causes of action against the PUCN and
requests that the court:
- set aside the PUCN's March 28, 2000 order,
- reinstate Nevada Power Company's September 30th filing, and
- enter an order allowing Nevada Power Company to recover deferrals of
imputed capacity through March 28, 2000 and implement ongoing rates for
fuel and purchased power that reflect the costs of purchased energy.
We are not able at this time to predict how long it will take for this
lawsuit to be resolved nor can we predict its outcome.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The merger between Sierra Pacific Resources ("SPR") and Nevada Power Company
("NVP") was accounted for as a reverse purchase under generally accepted
accounting principles, with NVP considered the acquiring entity, even though SPR
survives and is the legal parent of NVP. For accounting purposes, the merger was
deemed to have occurred on August 1, 1999. As a result of this reverse purchase
accounting treatment: (i) the historical financial statements of SPR for periods
prior to the date of the merger are no longer the financial statements of SPR,
and therefore, are no longer presented; (ii) the historical financial statements
of SPR for periods prior to the date of the merger are those of NVP;
(iii) based on a merger date of August 1, 1999, the Consolidated Statements of
Income for the twelve months ended December 31, 1999 include five months (August
through December 1999) of operating activity for SPR and its subsidiaries other
than NVP. The same statements include the operating results of NVP for the
entire periods presented.
RESULTS OF OPERATIONS OF EACH SUBSIDIARY
SIERRA PACIFIC RESOURCES (HOLDING COMPANY)
The consolidated Statements of Income of Sierra Pacific Resources for the
year ended December 31, 1999 include the operating results of the holding
company for the five month period ended December 31, 1999, based on a merger
date of August 1, 1999. The holding company operating results included
approximately $11.5 million of interest costs that resulted from the merger
financing.
TUSCARORA GAS PIPELINE COMPANY
The Consolidated Statements of Income of Sierra Pacific Resources for the
year ended December 31, 1999 include the operating results of Tuscarora Gas
Pipeline Company ("TGPC"), a wholly-owned subsidiary of SPR, for the five month
period ended December 31, 1999 based on a merger date of August 1, 1999 for
accounting purposes. TGPC contributed $711 thousand in net income for the five
months ended December 31, 1999. TGPC contributed $1.8 million in net income for
the twelve months ended December 31, 1999.
S-17
<PAGE>
E.THREE
The Consolidated Statements of Income of Sierra Pacific Resources for the
year ended December 31, 1999 include the operating results of e.three, a
wholly-owned subsidiary of SPR, for the five month period ended December 31,
1999 based on a merger date of August 1, 1999 for accounting purposes. e.three
incurred net losses of $381 thousand for the five months ended December 31,
1999. e.three incurred net losses of $788 thousand for the twelve months ended
December 31, 1999.
SIERRA PACIFIC ENERGY COMPANY
The Consolidated Statements of Income of Sierra Pacific Resources for the
year ended December 31, 1999 include the operating results of Sierra Pacific
Energy Company ("SPE"), a wholly-owned subsidiary of the Company, for the five
month period ended December 31, 1999 based on a merger date of August 1, 1999
for accounting purposes. SPE incurred net losses of $2.2 million for the five
months ended December 31, 1999. SPE incurred net losses of $3.6 million for the
twelve months ended December 31, 1999.
SIERRA PACIFIC COMMUNICATIONS
The Consolidated Statements of Income of Sierra Pacific Resources for the
year ended December 31, 1999 include the operating results of Sierra Pacific
Communications ("SPC"), a wholly-owned subsidiary of SPR, for the five month
period ended December 31, 1999 based on a merger date of August 1, 1999 for
accounting purposes. SPC incurred net losses of $62 thousand for the five months
ended December 31, 1999. SPC incurred net losses of $75 thousand for the twelve
months ended December 31, 1999.
LANDS OF SIERRA
The Consolidated Statements of Income of Sierra Pacific Resources for the
year ended December 31, 1999 include the operating results of Lands of Sierra
("LOS"), a wholly-owned subsidiary of SPR, for the five month period ended
December 31, 1999 based on a merger date of August 1, 1999 for accounting
purposes. LOS contributed $816 thousand in net income for the five months ended
December 31, 1999. LOS contributed $810 thousand in net income for the twelve
months ended December 31, 1999.
NEVADA POWER COMPANY
Based on a merger date of August 1, 1999, the Consolidated Statements of
Income for the twelve months ended December 31, 1999 include five months (August
through December 1999) operating activity for the Company and its subsidiaries
other than NVP. The same statements include the operating results of NVP for all
of 1999 and all prior year periods presented.
As a result, the following Consolidating Statements of Income illustrate the
operating results of SPR's principal subsidiaries (NVP and Sierra Pacific Power
Company ("SPPC")) and the combined results of all Other operations. The results
of operations discussion that follows is based on the NVP operating results
included in these statements. Following the discussion of NVP's operating
results is a discussion of SPPC's operating results. The operating results of
the other subsidiaries have already been discussed in this section.
S-18
<PAGE>
SIERRA PACIFIC RESOURCES CONSOLIDATING STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------- YEARS ENDED DECEMBER 31,
5 MONTHS -----------------------------
12 MONTHS SIERRA PACIFIC 5 MONTHS CONSOLIDATED 1998 1997
NEVADA POWER POWER OTHER TOTAL NEVADA POWER NEVADA POWER
------------- -------------- --------- ------------ ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Electric........................... $977,262 $259,440 $ -- 1,236,702 $873,682 $799,148
Gas................................ -- 38,958 -- 38,958 -- --
Water.............................. -- 24,339 -- 24,339 -- --
Other.............................. -- -- 9,132 9,132 -- --
-------- -------- -------- --------- -------- --------
977,262 322,737 9,132 1,309,131 873,682 799,148
-------- -------- -------- --------- -------- --------
OPERATING EXPENSES:
Operation:
Purchased power.................. 293,600 79,856 -- 373,456 283,838 277,644
Fuel for power generation........ 154,546 51,584 -- 206,130 149,804 138,956
Gas purchased for resale......... -- 27,262 -- 27,262 -- --
Deferral of energy costs-net..... 97,238 -- -- 97,238 (29,680) (60,400)
Other............................ 141,041 51,038 11,389 203,468 134,652 122,811
Maintenance........................ 50,805 9,579 -- 60,384 49,082 52,126
Depreciation and amortization...... 80,644 32,349 243 113,236 73,562 66,273
Taxes:............................. -- --
Income taxes..................... 19,943 11,390 (5,247) 26,086 42,949 43,478
Other than income................ 22,462 8,161 90 30,713 22,198 21,064
-------- -------- -------- --------- -------- --------
860,279 271,219 6,475 1,137,973 726,405 661,952
-------- -------- -------- --------- -------- --------
OPERATING INCOME..................... 116,983 51,518 2,657 171,158 147,277 137,196
-------- -------- -------- --------- -------- --------
OTHER INCOME:
Allowance for other funds used
during construction.............. 3,713 (1,339) -- 2,374 8,944 8,760
Other income--net.................. (1,824) (1,044) 352 (2,516) (4,602) (5,741)
-------- -------- -------- --------- -------- --------
1,889 (2,383) 352 (142) 4,342 3,019
-------- -------- -------- --------- -------- --------
Total Income................... 118,872 49,135 (5,391) 171,016 151,619 140,215
-------- -------- -------- --------- -------- --------
INTEREST CHARGES:
Long-term debt..................... 64,454 16,978 299 81,731 56,995 50,791
Other.............................. 8,815 6,012 11,529 26,356 6,018 1,531
Allowance for borrowed funds used
during construction and
capitalized interest............. (8,356) 229 -- (8,127) (6,080) (2,579)
-------- -------- -------- --------- -------- --------
64,913 23,219 11,828 99,960 56,933 49,743
-------- -------- -------- --------- -------- --------
INCOME BEFORE OBLIGATED MANDATORILY
REDEEMABLE PREFERRED SECURITIES.... 53,959 25,916 (8,819) 71,056 94,686 90,472
Preferred dividend requirements
of mandatorily redeemable
preferred securities........... (15,172) (1,738) -- (16,910) (11,013) (7,256)
INCOME BEFORE PREFERRED DIVIDENDS.... 38,787 24,178 (8,819) 54,146 83,673 83,216
Preferred dividend
requirements................... (95) (2,301) -- (2,396) (174) (1,125)
-------- -------- -------- --------- -------- --------
INCOME APPLICABLE TO COMMON STOCK.... $ 38,692 $ 21,877 $ (8,819) $ 51,750 $ 83,499 $ 82,091
======== ======== ======== ========= ======== ========
</TABLE>
S-19
<PAGE>
NEVADA POWER COMPANY OPERATING RESULTS
On February 4, 2000, the PUCN issued an order that rejected NVP's updated
September 30, 1999 deferred energy filing. In addition, on March 28, 2000 the
PUCN issued a decision that ordered a substantial reduction in NVP's requested
rate relief on the remaining $44 million included in the case. As a result of
these decisions, NVP operating results for 1999 include a pre-tax charge of
$80.0 million. NVP is appealing the PUCN decisions. If not for this charge,
NVP's net income would have been approximately $7 million higher than it was in
1998.
The causes for significant changes in specific lines comprising the results
of operations for NVP for the years ended are as provided (dollars in thousands
except MWh statistics):
<TABLE>
<CAPTION>
1999 1998
------------------------- ------------------------- 1997
CHANGE FROM CHANGE FROM -----------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ELECTRIC OPERATING REVENUES:
Residential............... $ 416,345 9.5% $ 380,299 6.0% $ 358,921
Commercial................ 200,186 13.9% 175,760 11.5% 157,694
Industrial................ 290,409 16.4% 249,390 11.9% 222,837
----------- ---- ----------- ---- -----------
Retail revenues........... 906,940 12.6% 805,449 8.9% 739,452
Other..................... 70,322 3.1% 68,233 14.3% 59,696
----------- ---- ----------- ---- -----------
TOTAL REVENUES.......... $ 977,262 11.9% $ 873,682 9.3% $ 799,148
=========== ==== =========== ==== ===========
Total retail sales
megawatt-hours (MWh).... 14,715,000 9.1% 13,491,000 3.7% 13,012,000
----------- ---- ----------- ---- -----------
Average retail revenue per
MWh..................... $ 61.63 3.2% $ 59.70 5.1% $ 56.83
</TABLE>
NVP's residential and commercial electric revenue increased in 1999
primarily due to 6% customer growth for both categories and an energy price
increase of 4% effective March 1999. Industrial electric revenues increased in
1999 primarily due to 7% customer growth and an energy price increase of 4%
effective March 1999. Other electric revenues increased in 1999 due to greater
wholesale electric revenue that was partially offset by lower emission credits
and water rights revenue in 1999.
Residential, commercial and industrial electric revenues increased in 1998
due to an approximate 6% growth in all customer categories and an energy price
increase of 6% during February 1998. The increase in 1998 revenues was partially
offset by milder weather during the summer of 1998. Other electric revenues
increased as a result of the sale of emission credits and water rights in 1998.
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------------ ----------
CHANGE FROM CHANGE FROM
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Total Purchased Power......... $ 338,972 19.4% $ 283,838 2.2 % $ 277,644
Less Imputed Capacity
Deferral.................... $ (45,372) -- $ -- -- $ --
---------- ---- ---------- ---- ----------
Purchased Power............... $ 293,600 3.4% $ 283,838 2.2 % $ 277,644
Purchased Power MWh........... 7,861,985 14.2% 6,886,920 (2.7)% 7,078,669
Average cost per MWh of
Purchased Power............. $ 43.12 4.6% $ 41.21 5.1 % $ 39.22
</TABLE>
NVP has historically used deferred accounting for energy costs.
S-20
<PAGE>
NVP's Purchased power costs were higher in 1999 resulting from a 14%
increase in the volume purchased related to customer growth and an increase in
the per unit cost of power. This increase in cost was partially offset by a
$45 million adjustment (shown separately above) in 1999 related to the deferral
of the portion of one-part firm power contracts deemed by regulators to be
related to capacity costs rather than energy costs. NVP began deferring these
costs in 1999 to comply with an order from the PUCN. For subsequent developments
regarding these deferred costs, see "Recent Developments--Recent Decisions in
Nevada Power Company Deferred Energy Case" in this prospectus supplement.
During 1999 the cost of energy continued to exceed the corresponding allowed
revenue component that resulted in a deferral of expense of $9.8 million. This
amount was offset by the recovery of energy costs related to prior years of
$27.3 million.
In 1998 purchased power costs increased 2.2% primarily due to higher average
unit prices paid for purchased power.
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------- ------------------------ ----------
CHANGE FROM CHANGE FROM
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
FUEL FOR POWER GENERATION.... $ 154,546 3.2 % $ 149,804 7.8% $ 138,956
MWhs generated............... 9,167,963 3.7 % 8,843,057 7.5% 8,228,100
Average fuel cost per MWH of
Generated Power............ $ 16.86 (0.5)% $ 16.94 0.3% $ 16.89
</TABLE>
In 1999, NVP's fuel expense increased 3.2%, primarily due to an increase in
volumes generated to accommodate customer growth described previously. In 1998,
fuel expense increased 7.8%, primarily due to increased generation to
accommodate customer growth.
<TABLE>
<CAPTION>
1999 1998
---------------------- ---------------------- 1997
CHANGE FROM CHANGE FROM --------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
-------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Deferral of energy costs--net....... $97,238 427.6% $(29,680) (50.9)% $(60,400)
</TABLE>
As a result of the PUCN decisions described in "Recent Developments--Recent
Decisions in Nevada Power Company Deferred Energy Case", a reserve was
recognized for previously deferred energy and imputed capacity costs with a
charge of $80 million to Deferral of energy costs--net. Also, Deferral of energy
costs--net were higher in 1999 because NVP was granted a price increase to cover
current fuel expense, which allowed NVP to recognize previously deferred costs
currently.
In 1998, NVP deferred $27.0 million of increased energy costs for collection
in a later period and recognized $2.7 million of energy cost deferrals that had
been deferred prior to 1998. In 1997, NVP deferred $27.8 million of increased
energy costs for collection in a later period and recognized $32.6 million of
energy cost decreases that had been previously deferred.
S-21
<PAGE>
Recovery of fuel expenses is administered under the state's deferred energy
cost accounting procedures. Under the deferred energy procedure, changes in the
costs of fuel and purchased power are reflected in customer rates through annual
rate adjustments and do not affect income.
<TABLE>
<CAPTION>
1999 1998
---------------------- ---------------------- 1997
CHANGE FROM CHANGE FROM --------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
-------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Allowance for other funds used during
construction....................... $ 3,713 (58.5)% $ 8,944 2.1% $ 8,760
Allowance for borrowed funds used
during construction................ 8,356 37.4 % 6,080 135.8% 2,579
------- ----- ------- ----- -------
$12,069 (19.7)% $15,024 32.5% $11,339
------- ----- ------- ----- -------
</TABLE>
NVP's AFUDC was lower in 1999 because of construction completed in May 1999
for the Crystal Transmission Project. In 1998, NVP expended approximately
$100 million more on construction activity than in 1997. The additional costs in
1998 resulted in higher AFUDC.
<TABLE>
<CAPTION>
1999 1998
---------------------- ---------------------- 1997
CHANGE FROM CHANGE FROM --------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
-------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Other operating expense........... $141,041 4.7 % $134,652 9.6 % $122,811
Maintenance expense............... 50,805 3.5 % 49,082 (5.8)% 52,126
Depreciation and amortization..... 80,644 9.6 % 73,562 11.0 % 66,273
Income taxes...................... 19,943 (53.6)% 42,949 (1.2)% 43,478
Interest charges on long-term
debt............................ 64,454 13.1 % 56,995 12.2 % 50,791
Interest charges--other........... 8,815 46.5 % 6,018 293.1 % 1,531
Other Income (expense)--net....... (1,824) (60.4)% (4,602) (19.8)% (5,741)
</TABLE>
NVP's other operating expense increased $6.4 million in 1999 primarily due
to growth related costs for distribution expenses and administrative and general
costs that included group insurance and short-term incentive costs. Other
operating expense increased in 1998 primarily due to increased costs for outside
services, computer software and maintenance, administrative and general salaries
and pension costs.
The level of NVP maintenance and repair expenses depends primarily upon the
scheduling, magnitude and number of generation unit overhauls at NVP's
generating stations. In 1999 maintenance expense increased by $1.7 million
primarily due to boiler maintenance at the Reid Gardner Generating Station. In
1998, maintenance expense decreased by $3.0 million due primarily to lower
maintenance expense at the Reid Gardner Generating Station.
NVP Depreciation expense was higher in 1999 because of the addition of
approximately $280 million in depreciable assets during the current year
including the completion of the Crystal Transmission Project in June 1999. Also,
depreciation expense increased $7.3 million in 1998 because of a growing
electric depreciable asset base.
NVP Income taxes were lower in 1999 due to lower operating income before
taxes. Income taxes for 1998 and 1997 were comparable.
Interest charges on NVP long-term debt were higher in 1999 due to interest
costs on $130.0 million of unsecured notes issued in March 1999. Interest on
long-term debt increased in 1998 primarily due to the issuance in November 1997
of the new Series 1997A $52.3 million Industrial Development Revenue Bonds
(IDBs) and Series 1997B $20 million Pollution Control Revenue Bonds (PCRBs) and
the remarketing at fixed rates in January 1998 of variable rate revenue bonds,
$76.8 million, Series 1995A, $44, million Series 1995C, $20.3 million,
Series 1995D and $13 million,
S-22
<PAGE>
Series 1995E. See Note 9 of "Notes to Consolidated Financial Statements" for
additional information regarding long-term debt.
NVP Interest charges--other was higher in 1999 because of interest costs
associated with higher short-term borrowings in 1999. Other interest expense was
also higher in 1998 compared to 1997 due to higher short-term borrowings.
NVP Other income (expense)--net was lower in 1999 because corporate and
short-term incentive costs were charged to operating expense rather than other
expense during 1999. Other expense was lower in 1998 because of higher costs in
1997 for cancellation fees, adjustments related to the PUCN decision and higher
short-term incentive costs.
SIERRA PACIFIC POWER COMPANY OPERATING RESULTS
Net income before preferred dividends in 1999 was $71.7 million, a decrease
of $14.3 million compared to 1998. Sierra Pacific Power Company ("SPPC") was
authorized to earn a return on equity of 12% in its Nevada electric operations
and 12% and 11.25%, respectively, in its Nevada gas and water operations. SPPC
earned in excess of its allowed regulated returns for its electric and gas
operations and therefore, under its currently effective rate settlement, SPPC
anticipates it will make refunds to customers reflecting one half of the excess
earnings. Appropriate reserves have been recorded to reflect the anticipated
refunds. California operations were authorized to earn a return on common equity
of 11.6% in 1999.
Nevada, SPPC's primary jurisdiction, uses a marginal cost method for setting
electric and gas rates by customer class. As a result, changes in sales mix can
result in variations in revenues, regardless of changes in total consumption.
The components of gross margin are set forth (Dollars in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Operating Revenues:
Electric.................................... $609,197 $585,657 $540,346
Gas......................................... 100,177 99,532 70,675
Water....................................... 54,348 49,143 46,519
-------- -------- --------
Total Revenues.......................... $763,722 $734,332 $657,540
-------- -------- --------
Energy Costs:
Electric.................................... 294,822 271,773 231,473
Gas......................................... 68,125 65,430 38,135
-------- -------- --------
Total Energy Costs...................... 362,947 337,203 269,608
-------- -------- --------
Gross Margin.......................... $400,775 $397,129 $387,932
======== ======== ========
Gross Margin by Segment:
Electric.................................... $314,375 $313,884 $308,873
Gas......................................... 32,052 34,102 32,540
Water....................................... 54,348 49,143 46,519
-------- -------- --------
Total................................... $400,775 $397,129 $387,932
======== ======== ========
</TABLE>
S-23
<PAGE>
The causes for significant changes in specific lines comprising the results
of operations for the years ended are provided below (Dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
------------------------ ------------------------ 1997
CHANGE FROM CHANGE FROM ----------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ELECTRIC OPERATING REVENUES:
Residential................ $ 171,533 1.4 % $ 169,109 3.7 % $ 163,003
Commercial................. 188,348 5.4 % 178,752 1.9 % 175,386
Industrial................. 185,771 0.5 % 184,820 4.7 % 176,463
---------- ---- ---------- ----- ----------
Retail revenues............ 545,652 2.4 % 532,681 3.5 % 514,852
Other...................... 63,545 20.0 % 52,976 107.8 % 25,494
---------- ---- ---------- ----- ----------
TOTAL REVENUES........... $ 609,197 4.0 % $ 585,657 8.4 % $ 540,346
========== ==== ========== ===== ==========
Retail sales in
megawatt-hours (MWh)..... 8,412,853 4.5 % 8,047,650 3.9 % 7,743,799
---------- ---- ---------- ----- ----------
Average retail revenue per
MWh...................... $ 64.86 (2.0)% $ 66.19 (0.4)% $ 66.49
</TABLE>
In 1999, residential, commercial and industrial electric revenues increased
due to a 3% increase in both residential and commercial customers and a 7.8%
increase in industrial customers. The increase in residential and industrial
revenues was partially offset by lower use per customer. Residential use per
customer was lower due to milder weather in 1999. Industrial use per customer
was lower primarily because of reduced production by several of SPPC's gold
mining customers as a result of lower gold prices in 1999. The average retail
revenue per MWh was lower for 1999 because of higher revenues from customers
that are charged lower rates per MWh. Other electric revenues were higher due to
a $19.4 million increase in wholesale electric sales. This increase was
partially offset by a $4.3 million reclassification from operating expense to a
contra-revenue in order to reflect a refund resulting from the 1997 earnings
sharing decision by the PUCN. Also, the increase in 1999 revenues was partially
offset by a higher provision for customer refunds and also losses from SPPC's
Pinon Pine subsidiaries.
In 1998, residential and commercial revenues increased due to 2% and 3%
increases in customers, respectively. Industrial revenues were higher in 1998
because of higher use per customer, primarily in the mining industry where
several of SPPC's customers expanded operations during 1998. The increases in
revenues for residential, commercial and industrial were all partially offset by
a rate reduction that went into effect March 1997. The increase in other
revenues primarily resulted from higher wholesale electric sales and a smaller
charge for customer refunds. Higher wholesale sales in 1998, $33.1 million
compared to $13.3 in 1997, reflect an increased focus on this business
opportunity.
S-24
<PAGE>
<TABLE>
<CAPTION>
1999 1998
------------------------- ------------------------- 1997
CHANGE FROM CHANGE FROM -----------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
GAS OPERATING REVENUES:
Residential............. $ 42,888 (2.2)% $ 43,833 14.1 % $ 38,410
Commercial.............. 21,259 (3.5)% 22,022 12.3 % 19,606
Industrial.............. 11,252 (9.0)% 12,368 6.8 % 11,580
Miscellaneous........... 1,305 281.3 % (720) (6.2)% (678)
----------- ----- ----------- ------ -----------
Total retail revenue.... 76,704 (1.0)% 77,503 12.5 % 68,918
Wholesale revenue....... 23,473 6.6 % 22,029 1153.8 % 1,757
----------- ----- ----------- ------ -----------
TOTAL REVENUES.......... $ 100,177 0.6 % $ 99,532 40.8 % $ 70,675
=========== ===== =========== ====== ===========
Sales (Decatherms):
Retail.................. 13,387,819 (5.3)% 14,142,782 13.3 % 12,487,087
Wholesale............... 10,424,212 (11.2)% 11,738,372 1278.6 % 851,459
----------- ----- ----------- ------ -----------
Total................... 23,812,031 (8.0)% 25,881,154 94.0 % 13,338,546
----------- ----- ----------- ------ -----------
Average revenues per
decatherm
Retail.................. $ 5.73 4.6 % $ 5.48 (0.7)% $ 5.52
Wholesale............... $ 2.25 19.8 % $ 1.88 (8.7)% $ 2.06
</TABLE>
Residential, commercial and industrial gas revenues were lower in 1999
because of lower per customer use resulting from milder weather in 1999. Lower
gas revenues in 1999 were partially offset by additional customers in all
categories. Wholesale gas revenues were higher due to several large gas sales
contracts in the first quarter of 1999.
Residential, commercial and industrial gas revenues increased in 1998
because of a 4% increase in customers and colder than normal weather during the
year. The increase in wholesale revenues reflected the Company's increased focus
on this business opportunity.
<TABLE>
<CAPTION>
1999 1998
---------------------- ---------------------- 1997
CHANGE FROM CHANGE FROM --------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
-------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
WATER OPERATING REVENUES.............. $54,348 10.6% $49,143 5.6% $46,519
======= ==== ======= === =======
</TABLE>
Water revenues increased during 1999 due to a 5% increase in total customers
and higher use per customer as a result of less precipitation in 1999.
Water revenues were higher in 1998 because of a 3% increase in customers and
an April 1998 price increase.
<TABLE>
<CAPTION>
1999 1998
------------------------ ------------------------ 1997
CHANGE FROM CHANGE FROM ----------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
PURCHASED POWER.............. $ 179,781 14.5 % $ 156,970 20.2 % $ 130,612
Purchased Power MWh.......... 5,797,903 25.4 % 4,623,959 20.5 % 3,836,975
Average cost per MWh of
Purchased Power.............. $ 31.01 (8.7)% $ 33.95 (0.3)% $ 34.04
</TABLE>
Purchased power costs were higher in 1999 primarily because SPPC fulfilled
more of its total energy requirements with less expensive purchased power and
reduced its own generation. Purchased power costs were also higher during 1999
due to increased wholesale sales. The higher costs were partially offset by
lower average unit prices for purchased power.
S-25
<PAGE>
Purchased power costs were significantly higher in 1998 due mostly to the
costs associated with higher wholesale electric sales as discussed previously.
To a lesser extent system load growth also contributed to higher purchased power
costs.
<TABLE>
<CAPTION>
1999 1998
------------------------ ------------------------ 1997
CHANGE FROM CHANGE FROM ----------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
FUEL FOR POWER GENERATION.... $ 115,065 0.2 % $ 114,803 13.8% $ 100,861
MWhs generated............... 4,998,140 (9.5)% 5,524,262 13.7% 4,859,203
Average fuel cost per MWh
of Generated Power........... $ 23.02 10.8 % $ 20.78 0.1% $ 20.76
</TABLE>
Fuel for generation costs were comparable with the prior year despite a 9.5%
reduction in the volume of electric generation. Higher gas prices and the
absence of Department of Energy co-funding of fuel costs at the Pinon Pine
project contributed to the higher average cost per MWh of generated power.
The costs of fuel for generation increased in 1998 because of higher
generation requirements needed to meet continued customer growth and greater use
per customer.
<TABLE>
<CAPTION>
1999 1998
------------------------- ------------------------- 1997
CHANGE FROM CHANGE FROM -----------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
GAS PURCHASED FOR RESALE
Retail.................. $ 47,696 7.2 % $ 44,473 21.2% $ 36,703
Wholesale............... 20,429 (2.5)% 20,957 1371.7% 1,424
----------- ----- ----------- ------ -----------
Total................... $ 68,125 4.1 % $ 65,430 71.6% $ 38,127
=========== ===== =========== ====== ===========
GAS PURCHASED FOR RESALE
(DECATHERMS)
Retail.................. 13,501,728 (6.6)% 14,462,505 13.6% 12,727,950
Wholesale............... 10,424,212 (11.2)% 11,738,372 1278.6% 851,459
----------- ----- ----------- ------ -----------
Total................... 23,925,940 (8.7)% 26,200,877 92.9% 13,579,409
=========== ===== =========== ====== ===========
AVERAGE COST PER DECATHERM
Retail.................. $ 3.53 14.6 % $ 3.08 6.9% $ 2.88
Wholesale............... $ 1.96 9.5 % $ 1.79 7.2% $ 1.67
</TABLE>
The cost of gas purchased for retail sales increased in 1999 because of
higher unit prices. The increase in gas unit prices is attributable to increased
demand for gas in the Pacific Northwest and additional transportation fees.
S-26
<PAGE>
Consistent with the increase in retail gas revenues from customer growth and
colder weather in 1998, retail gas purchases (decatherms) were higher in 1998.
The average cost per decatherm for all purchases was also higher because of an
increase in the unit cost of firm and spot purchases.
<TABLE>
<CAPTION>
1999 1998
---------------------- ---------------------- 1997
CHANGE FROM CHANGE FROM --------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
-------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Allowance for other funds used during
construction....................... $(1,341) (135.3)% $ 3,797 (33.7)% $ 5,723
Allowance for borrowed funds used
during construction.................. 308 (95.2)% 6,414 34.0 % 4,785
------- ------ ------- ----- -------
$(1,033) (110.1)% $10,211 (2.8)% $10,508
------- ------ ------- ----- -------
</TABLE>
The total allowance for funds used during construction (AFUDC) was lower in
1999 because of construction completed in June and December 1998 for the Pinon
and Alturas projects, respectively. Also, the 1999 amounts reflect an adjustment
to reverse amounts previously charged to AFUDC of $2.3 million. This adjustment
resulted from a refinement of amounts assigned to specific components of
facilities that were completed at various times and that used differing AFUDC
rates.
AFUDC was slightly lower in 1998 than 1997. The 1998 amount was lower due to
the completion of the Pinon Pine power project in June 1998.
<TABLE>
<CAPTION>
1999 1998
---------------------- ---------------------- 1997
CHANGE FROM CHANGE FROM --------
AMOUNT PRIOR YEAR AMOUNT PRIOR YEAR AMOUNT
-------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Other operating expense........... $115,453 (0.5)% $116,076 (3.8)% $120,600
Maintenance expense............... 22,520 1.1 % 22,266 (4.8)% 23,387
Depreciation and amortization..... 77,373 11.4 % 69,435 8.3 % 64,117
Income taxes...................... 36,042 (17.2)% 43,550 7.8 % 40,387
Interest charges on long-term
debt............................ 40,263 3.5 % 38,890 (1.8)% 39,609
Interest charges--other........... 11,615 51.7 % 7,659 67.1 % 4,583
</TABLE>
Other operating expense for 1999 include a $4.5 million adjustment, which
increased expense and reduced revenue related to a rate reserve established in
1998. This was offset by other reductions. Other operating expense was lower in
1998 due to lower costs for stock compensation, post-retirement benefits, fuel
buyouts, lower accruals for delays in the construction of Pinon, and no flood
damage costs.
Maintenance expense for 1999 was comparable to the prior year. Maintenance
expense was lower in 1998 because of additional electric plant maintenance
performed during the previous year.
Depreciation and amortization expense increased for 1999 due to the
completion of the Alturas intertie in December 1998 and the Pinon
post-gasification facilities in June 1998. Depreciation expense increased in
1998 because of the Pinon Pine facilities completed in 1998. Also, 1998
depreciation was higher due to water division additions and other customer
improvements added to plant in service late in 1997.
Operating income taxes were less in 1999 due to lower operating income
before income taxes and a lower effective tax rate for the year. Operating
income taxes increased in 1998 due to increases in pre-tax income and the
effective tax rate.
Interest on long term debt was slightly higher in 1999 due to higher average
long-term debt balances over the prior year. Interest on long-term debt was
lower in 1998 because of the redemption of $5 million of 8.65% medium-term notes
on June 18, 1998.
S-27
<PAGE>
Interest charges--other were higher for 1999 because of a Public Utilities
Commission of Nevada's decision to assess partial interest on amounts payable in
the 1997 earnings sharing case and higher average short-term borrowing in 1999.
Interest charges--other increased in 1998 because of higher short-term debt
balances utilized to partially finance the Alturas transmission project.
LIQUIDITY AND CAPITAL RESOURCES
Overall net cash flows increased slightly during1999, as compared to 1998.
Net cash flows were greater in 1999 due to more cash provided from operating and
financing activities. The increase in cash provided from operating and financing
activities was partially offset by more cash used in investing activities. The
increase in cash flows from operating activities was primarily due to the
collection of revenues related to previously deferred energy costs. Increased
cash from financing activities resulted from the issuance of $456.2 million of
commercial paper by SPR to provide funding of the cash portion of the merger
consideration. Also, NVP issued long-term debt of $130 million senior unsecured
notes, due 2004 and both SPPC and NVP each issued $100 million floating rate
notes in September and October 1999, respectively. Cash utilized for Investing
activities increased primarily as a result of the merger cash requirements. See
Note 2 to the consolidated financial statements included in this report for more
information about the merger cash requirements.
Overall net cash flows increased during 1998, as compared to 1997, due to
higher net cash from operating and financing activities which were partially
offset by more cash used in investing activities. The increase in cash from
operating activities was mainly due to an energy rate increase effective
February 1, 1998, offset by the deferral of energy cost recovery. The increase
in cash used in investing activities was primarily due to increased construction
expenditures. The increase in net cash used in financing activities was mainly
due to increased short-term borrowing.
CONSTRUCTION EXPENDITURES AND FINANCING
NEVADA POWER COMPANY
The table below provides SPR's consolidated cash construction expenditures
and internally generated cash net 1999. The historical information for 1998 and
1997 is NVP information. (Dollars in thousands):
<TABLE>
<CAPTION>
1999 1998 1997 TOTAL
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Cash construction expenditures*..................... $729,794 $302,041 204,795 $1,236,630
======== ======== ======= ==========
Net cash flow from operating activities............. 211,089 148,281 107,792 467,162
Less common & preferred cash dividends.............. 115,833 73,962 81,216 271,011
-------- -------- ------- ----------
Internally generated cash........................... 95,256 74,319 26,576 196,151
======== ======== ======= ==========
Internally generated cash as a percentage of cash
construction expenditures......................... 13% 25% 13% 16%
</TABLE>
- ------------------------
* 1999 cash construction expenditures include $448.3 million of merger related
costs.
S-28
<PAGE>
SIERRA PACIFIC POWER COMPANY
The table below provides cash construction expenditures and net internally
generated cash for 1997 through 1999 (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998 1997 TOTAL
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash Construction Expenditures...................... $116,131 $139,098 $110,878 $366,107
======== ======== ======== ========
Net cash flow from operating activities............. 122,329 153,191 145,455 420,975
Less common & preferred cash dividends.............. 81,746 80,459 75,459 237,664
-------- -------- -------- --------
Internally generated cash........................... 40,583 72,732 69,996 183,311
Add equity contribution from parent................. 22,000 17,250 27,000 66,250
-------- -------- -------- --------
Total cash available............................ $ 62,583 $ 89,982 $ 96,996 $249,561
======== ======== ======== ========
Internally generated cash as a percentage of cash
construction expenditures......................... 35% 52% 63% 50%
Total cash available as a percentage of cash
construction expenditures......................... 54% 64% 87% 68%
</TABLE>
ESTIMATED COMBINED CONSTRUCTION EXPENDITURES
SPR's estimated cash construction expenditures for 2000 through 2004 are
$1.6 billion. SPR estimates that 90% of its 2000 cash expenditures of
approximately $308 million will be provided by internally generated funds, with
the remainder being provided by the issuance of long-term debt and short-term
debt.
The estimated level of internally generated cash utilized for construction
of 90% anticipates that NVP and SPPC will pay all of their net income in
dividends to Sierra Pacific Resources. SPR anticipates subsequently reinvesting
a portion of those dividends in the form of capital contributions of
$44 million of common equity to NVP and $28 million to SPPC in 2000.
CAPITAL STRUCTURE
On July 28, 1999, immediately following the consummation of the merger with
NVP, SPR put into place a $500 million unsecured revolving credit facility. This
facility may be used for working capital and general corporate purposes,
including for commercial paper backup, and replaced SPR's existing credit
facility. At the same time, SPPC and NVP each put into place a $150 million
unsecured revolving credit facility, which replaced all existing credit
facilities. These two facilities may also be used for working capital and
general corporate purposes, including for commercial paper backup. In addition,
immediately following the merger, SPR and NVP established new commercial paper
programs, SPPC revised its existing commercial paper program, and SPR issued
$456.2 million of commercial paper to provide temporary funding of the cash
portion of the merger consideration.
As of December 31, 1999, SPR had $463 million of commercial paper issued and
outstanding, NVP had $82 million of commercial paper issued and outstanding and
SPPC had $110 million of commercial paper issued and outstanding. SPR's, NVP's
and SPPC's commercial paper programs are rated A2 and P2 by Standard and Poor's
and Moody's, respectively.
S-29
<PAGE>
SPR's actual consolidated capital structure at December 31, 1999 and 1998
was as follows. The 1998 capital structure presented is NVP information.
(Dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C> <C> <C>
Short-Term Debt (1)................................... $ 957,688 22% $ 155,380 7%
Long-Term Debt........................................ 1,556,627 36% 900,227 43%
Preferred Stock....................................... 50,000 1% 3,265 --
Preferred Securities.................................. 237,372 6% 188,872 9%
Common Equity......................................... 1,477,129 35% 864,036 41%
---------- ---- ---------- ----
TOTAL............................................... $4,278,816 100% $2,111,780 100%
========== ==== ========== ====
</TABLE>
- ------------------------
(1) Including current maturities of long-term debt and preferred stock.
As of December 31, 1999, under tests required by NVP's first mortgage, NVP
could issue up to $785 million of additional first mortgage bonds at an assumed
interest rate of 8.0%.
The indenture under which SPPC's first mortgage bonds are issued, prescribes
certain coverage ratios that must be met before additional bonds may be issued.
At December 31, 1999, these coverage provisions would allow for the issuance of
approximately $511 million in additional first mortgage bonds at an assumed
interest rate of 8.0%. The indenture also limits the amount of first mortgage
bonds that SPPC may issue to 60 percent of unfunded property plus the amount of
any previously issued bonds that have since been retired. Based on
certifications to the trustee as of December 31, 1999, these indenture
provisions would have allowed for the issuance of approximately $845 million in
additional first mortgage bonds.
NVP's secured long-term debt is rated A and Baa1 by Standard & Poor's and
Moody's, respectively. NVP's pre-tax interest coverages for 1999, 1998 and 1997
were 2.35%, 3.22% and 3.59%, respectively.
SPPC's secured long-term debt is rated A- and A3 by Standard & Poor's and
Moody's, respectively. SPPC's pre-tax interest coverages for 1999, 1998 and 1997
were 3.15%, 3.87% and 3.86%, respectively.
SPR currently does not have a secured long-term debt rating by Standard &
Poor's or Moody's.
REGULATORY EVENTS
INDUSTRY RESTRUCTURING
ELECTRIC RESTRUCTURING ACTIVITIES
In 1997, the Governor of Nevada signed into law Assembly Bill 366 (AB366)
that provided for competition to be implemented in the electric utility
industry.
In 1999, the Governor signed into law Senate Bill 438 (SB438) that amended
AB366. SB438 contains the following major provisions:
- In addition to generation, metering and billing are declared to be
potentially competitive services.
- The start date for competition is March 1, 2000, or such other start date
determined to be in the public interest by the Governor.
- The electric distribution utility is the provider of last resort (PLR)
until alternate methods go into effect, no sooner than July 1, 2001. PLR
rates are capped until March 1, 2003 at the rates
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in effect as of July 1, 1999, as adjusted for any deferred energy cases
filed with the PUCN prior to October 1, 1999.
- Allows the use of the net proceeds of generation divestiture to pay for
certain reductions in PLR revenues until March 1, 2003 arising from the
departure of customers who select new energy.
- Repeals deferred energy charges for electric utilities on October 1, 1999.
- Permits alternative sellers to submit bids to provide PLR service after
July 1, 2001, subject to a PUCN public interest finding and a PUCN-held
auction.
- Provides for the recovery of Past Costs, often referred to as stranded
costs, including specific criteria for recovery of purchase power costs.
The PUCN has conducted a number of hearings associated with AB366 and SB438.
In February 2000 the Governor of Nevada delayed the start date of competition
indefinitely. Electric competition may begin later in 2000 or 2001. Generally,
restructuring regulations have proceeded slowly. Currently, many important
regulations, including the affiliate regulations and the PLR, are not complete.
In their present form several of the proposed regulations could have potentially
significant negative financial ramifications. These regulations and the
potential risks are described below.
AFFILIATE TRANSACTION RULES AND AFFILIATE APPLICATIONS TO PROVIDE
POTENTIALLY COMPETITIVE SERVICES
While SB438 allows the use of name and logo by affiliates, the affiliate
regulation has not yet been modified to reflect this change. The companies have
requested that the PUCN modify the rule related to sharing services, sharing
officers and directors, and transfer pricing. To date the PUCN has not acted on
this request. On March 30, 1999, NVP and SPPC filed with the District Court a
"Complaint and Petition for Declaratory and Injunctive Relief and for Judicial
Review" relating, among other things, to the Affiliate Transaction Rules. SPPC
and NVP asked that the court find that the rules "violate plaintiff's federal
and state constitutional guarantees, are unlawful and invalid because they were
enacted in violation of the procedural and substantive provisions of the
Administrative Procedures Act, and are unlawful and invalid because they exceed
the authority of the PUCN and are unsupported by the evidence." SPC and NVP
asked that the court order the PUCN not to enforce the regulations.
PAST COSTS
Past costs, commonly referred to as stranded costs in other jurisdictions,
were the subject of several hearings in 1999. AB366/SB438 permit the recovery of
costs associated with potentially competitive services such as generation and
purchased power pursuant to specified legal criteria. In the hearings various
topics were discussed, including the characteristics that define recoverable
past costs, criteria for evaluating the effectiveness of mitigation efforts,
options for cost recovery mechanisms and applicable tax and accounting issues.
On December 29, 1999 the PUCN adopted the past cost regulation. This
regulation requires the utility to file for past costs 45 days after the
adoption of the regulation or issuance of the final order in the compliance plan
filing. The regulation requires estimates of book values and market values as of
the opening date of competition. In addition, NVP and SPPC must provide
documentation relative to criteria in the law such as mitigation efforts,
conduct relative to other states, and efforts to minimize taxes. The PUCN will
take these criteria into consideration in determining allowable past costs.
During comments related to this rule, NVP and SPPC raised a number of legal
issues including treatment of purchase power agreements, ability to true up
initial estimates of past costs to actual results, and ability to recover costs
to implement restructuring. NVP and SPPC have not completed an estimate of their
past costs, since such a calculation is dependent on a variety of issues related
to restructuring which are
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not resolved at this time. However based upon the current regulation and the
positions taken by other parties to the rulemaking, several risk areas have been
identified including:
- SB438 criteria provides latitude for the PUCN to reduce each company's
stranded cost claim.
- Purchased power agreements are the largest category of past costs. Federal
and state laws provide protection to federally mandated power purchase
contracts. NVP and SPPC believe that the regulation provides less security
to recover purchased power costs than provided by federal and state law.
- Because the regulation does not provide a guaranteed true up to actual
results, it is possible that stranded cost recovery could be set too low
to recover all stranded costs.
- The stranded cost proceeding will establish the gain or loss on sale of
divestiture of generation; the regulation provides that any gain on
divestiture would be utilized to reduce stranded costs. Some elements of
the calculation may be controversial. In addition the regulation does not
address other claims to generation gain, such as recovery of certain
revenue shortfalls as allowed by SB438 which arise as customers leave the
PLR.
As indicated in "Recent Developments", NVP and SPPC have filed a lawsuit in
United States District Court in Nevada challenging the constitutionality of the
Nevada electric restructuring legislation and regulations.
PROVIDER OF LAST RESORT
The provider of last resort (PLR) will provide electric service to customers
who do not select an electricity provider and to customers who are not able to
obtain service from an alternative seller after the date competition begins.
SB438 provides for the electric distribution utility (EDU) to provide PLR
services until July 1, 2001. The PUCN has conducted several workshops and
hearings on the PLR regulations. This rule is not expected to be finalized until
mid-2000. The current draft proposed regulation includes standards of conduct
relative to distribution and provider of last resort functions, which require
segregation of operating functions and constraints on sharing of common
services. As part of their comments during development of the proposed
regulation, NVP raised concerns regarding the financial impacts of the proposed
regulations that place into question the financial viability of the PLR. For
instance the current regulations restrict the PLR from relying on distribution
assets or revenues to obtain credit. Second, the current regulations provide no
financial reward potential for the significant fuel price risks that the PLR may
face during the PLR rate cap period which ends March 1, 2003. Third, the
proposed standards of conduct for the EDU and PLR will increase costs as a
result of the loss of economies of scale and scope.
In addition to these impacts, the proposed regulation does not address two
important areas associated with the PLR. Regulations have yet to be developed
that fairly compensate the utilities for recovery of revenue shortfalls allowed
under SB438 which arise as customers leave the PLR for new suppliers.
Regulations also do not address how NVP and SPPC will be able to collect the
costs, allowed by SB438, which will be incurred to serve customers who leave the
PLR and later return.
In the ongoing rulemaking process NVP and SPPC are working to address these
serious concerns and modify the PLR regulation. If the proposed regulations are
adopted in their current form, NVP and SPPC will seek to transition out of the
PLR function. In addition, if necessary, NVP and SPPC are prepared to pursue
legal remedies to mitigate any significant financial exposures associated with
the final PLR regulation.
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INDEPENDENT SCHEDULING ADMINISTRATOR
NVP and SPPC have participated in interim Independent Scheduling
Administrator (iISA) working groups which are developing iISA standards,
protocols and procedures. The PUCN has held hearings regarding entities
interested in performing the iISA function, the timeline, the functions to be
performed, the costs and how these entities will adhere to the PUCN iISA
principles.
To date, NVP and SPPC have not agreed to provide funding for the iISA
because the PUCN has not provided a mechanism for NVP and SPPC to recover costs
associated with the ISA. However, in February 2000 the PUCN opened an
investigatory docket to consider the funding and other transmission access
issues. See FERC Matters for further discussion.
GAS RESTRUCTURING
To comply with Nevada AB366 for natural gas deregulation, the PUCN has
developed some new natural gas rules. In 1999, little gas restructuring activity
occurred. Two new regulations with respect to gas licensing and gas licensing
fees were adopted by the PUCN in 1999.
NEVADA MATTERS
NON-PRICE TERMS AND CONDITIONS FOR DISTRIBUTION SERVICE
On February 2, 1999, NVP filed its non-price terms and conditions for
unbundled distribution service. A stipulation resolving most issues and agreeing
to further filings on unresolved issues was filed with the PUCN and subsequently
approved by the PUCN on April 22, 1999. Settlements regarding the unresolved
issues were subsequently filed and approved by the PUCN.
On February 1, 1999, SPPC filed its non-price terms and conditions for
unbundled distribution service pursuant to the PUCN regulations. A stipulation
resolving most issues and agreeing to further filings on unresolved issues was
filed with the PUCN on April 9, 1999, and subsequently approved by the PUCN on
April 22, 1999. Settlements regarding the unresolved issues were subsequently
filed and approved by the PUCN.
UNBUNDLING OF UTILITY SERVICES
On April 1, 1999, NVP filed the revenue requirements and unbundling study
portions of the Compliance Filing with the PUCN. The filing included the
development of an electric revenue requirement for the test period 1998. The
compliance filing rule requires the revenue requirement development to be in the
same form used for rate cases. In the unbundling study, the revenue requirement
was assigned and allocated to a number of service components including
generation, aggregation, transmission, distribution, metering, billing, and
customer services. On September 23, 1999, the PUCN issued an interim order on
NVP's April 1 compliance filing. The order contained the PUCN's decision on
revenue requirements, return on equity, depreciation, and the unbundling study.
NVP did not utilize the orders revenue requirement, return on equity or
depreciation rates from Phase II of the case because SB438 legally mandated that
NVP use its July 1, 1999 revenue requirement.
On April 1, 1999, SPPC filed the revenue requirements and unbundling study
portions of the Compliance Filing with the PUCN. The filing included the
development of an electric revenue requirement for the test period 1998. The
compliance filing regulation requires the revenue requirement development to be
in the form used for rate cases. In the unbundling study, the revenue
requirement was assigned and allocated to a number of service components
including generation, aggregation, transmission, distribution, metering,
billing, and customer services. On September 23, 1999, the PUCN issued an
interim order on SPPC's April 1 compliance filing. The order contained the
PUCN's decision on revenue requirements, return on equity, depreciation, and the
unbundling study.
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SPPC did not utilize the order's revenue requirement, return on equity or
depreciation rates from Phase II of the case because SB438 legally mandated that
SPPC use its July 1, 1999 revenue requirement.
PRICING OF DISTRIBUTION SERVICE
On October 12, 1999, NVP filed final versions of the approved non-price
terms and conditions and rates reflecting a revenue requirement thought by NVP
to be correct and in accordance with SB 438. Hearings were held in
January 2000.
On October 8, 1999, SPPC filed final versions of the approved non-price
terms and conditions and rates reflecting a revenue requirement thought by SPPC
to be correct and in accordance with SB 438. Hearings were held in early
November. A decision is expected in 2000.
MERGER OF SIERRA PACIFIC RESOURCES AND NEVADA POWER
On April 8, 1998, NVP and SPPC filed a joint application with the PUCN for
approval of their proposed merger. On January 4, 1999, the PUCN issued the final
order in the merger case. On December 31, 1998, the PUCN voted 3-0 to approve
the merger, with conditions. The conditions include, among others, requirements
to divest generation, file the divestiture plan with the Commission for
approval, file an ISA proposal with the FERC, file a generation tariff with the
FERC, file a rate case and unbundle costs in 1999, file a subsequent rate case
three years after retail competition, and submit application to recover stranded
costs.
DEFERRED ENERGY FILING
Senate Bill 438 froze the rates for NVP at the level that was in effect on
July 1, 1999, except that the PUCN was authorized to modify those rates in
decisions related to deferred energy cases filed by NVP prior to October 1,
1999. Accordingly, NVP filed a deferred energy case on July 15, 1999, covering
the period from June 1, 1998 through May 31, 1999. On September 30, 1999, NVP
filed an amendment to its deferred energy case, covering the additional period
through August 31, 1999. On February 4, 2000, the PUCN issued an order that
rejected NVP's September 30, 1999 amendment to its deferred energy filing. In
addition, on March 28, 2000, the PUCN issued a decision that ordered a
substantial reduction in NVP's requested rate relief on the remaining
$44 million included in the case. See "Recent Developments--Recent Decisions in
Nevada Power Deferred Energy Cases".
As a result of these decisions, NVP recognized a reserve for previously
deferred energy and imputed capacity costs of $80 million. $56 million of the
reserve is associated with the February 4 decision and $24 million is associated
with the March 21 decision. NVP has appealed the PUCN decisions.
EARNINGS SHARING
On April 30, 1999, SPPC filed its second compliance filings related to the
1997 rate stipulation The filings provide a calculation of SPPC's electric and
gas earnings in excess of a 12% return on equity (ROE). Any earnings in excess
of 12% ROE are shared 50/50 between shareholders and customers. On August 19,
1999, the PUCN approved a stipulation between SPPC, Staff, and the UCA that
rebated $7.37 million and $1.98 million to electric and gas customers,
respectively, in 1999. Based on 1999 operating results, SPPC anticipates it may
make refunds to customers. Appropriate reserves have been recorded to reflect
any anticipated refunds.
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GENERATION DIVESTITURE
SPPC and NVP filed with the PUCN a request for approval to sell their
respective generation plants on October 12, 1999. On February 18, 2000, the PUCN
approved an application to sell the generation plants of both SPPC and NVP. The
revised divestiture plan was approved unanimously by the Commission. Under the
terms of the approved plan, both utilities will sell all of their power plants
through an auction process.
CALIFORNIA MATTERS
RATE REDUCTION BONDS
California's electricity restructuring statute (Assembly Bill 1890, Chapter
854, California Statutes of 1996, as amended), permits California investor-owned
utilities, including SPPC, to finance the recovery of a reduction in electricity
rates for residential and small commercial customers through the issuance of
rate reduction certificates. Transition costs consist of the costs of
generation-related assets and obligations that may become uneconomic as a result
of a competitive generation market, together with certain other costs associated
therewith.
In order for SPPC to recover transition and associated costs, the California
Public Utilities Commission (CPUC) authorized the establishment of
non-bypassable, usage-based, per kilowatt hour charges (FTA Charges), to be
included in the regular utility bills of residential and small commercial
consumers located in the historical service territory of SPPC in California. The
right to receive payments made in respect of the FTA Charges is referred to as
Transition Property.
On April 9, 1999, SPPC sold the Transition Property to SPPC Funding LLC, a
Delaware special purpose limited liability company whose sole member is the
Company, in exchange for the proceeds of the SPPC Funding LLC Notes,
Series 1999-1 (Underlying Notes). SPPC Funding LLC then issued and sold the
Underlying Notes to the California Infrastructure and Economic Development Bank
Special Purpose Trust SPPC-1 (Trust) in exchange for the proceeds of the sale of
the Trust's $24.0 million 6.4% Rate Reduction Certificates, Series 1999-1
(Certificates). The Trust, which had been established by the California
Infrastructure and Economic Development Bank, issued and sold the Certificates
in a private placement pursuant to Rule 144A under the Securities Act of 1933,
as amended. The Certificates are one of a series of rate reduction certificates
that may be issued from time to time by the Trust and sold to investors upon
terms determined at the time of sale.
On January 10, 2000, the CPUC approved SPPC's annual true-up of the FTA
charges effective January 1, 2000.
REVENUE CYCLE UNBUNDLING
On February 18, 1999, the CPUC approved SPPC's proposed Revenue Cycle
Services Credits (RCSC) application filed February 2, 1998. The RCSC addresses
meter ownership, meter services, meter reading, and billing and applies to
customers who select their own provider of a revenue cycle service. On April 9,
1999, SPPC made a compliance tariff filing which reflects the approved credits.
DIRECT ACCESS TARIFFS
On April 5, 1999, the CPUC approved SPPC's compliance filing, effective back
to March 18, 1998, which proposed tariff changes to implement direct access.
RATE UNBUNDLING
On April 5, 1999, the CPUC approved SPPC's proposed unbundled rates
effective back to June 1, 1998.
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DISTRIBUTION COMPETITION
The CPUC has opened a docket item to solicit comments and proposals on
distributed generation and competition in electric distribution service. SPPC is
actively participating in the on-going workshops. It is too early to determine
how this proceeding may affect SPPC.
GENERATION DIVESTITURE
SPPC has filed with the CPUC its request for approval to sell its generation
plants. SPPC plans to file a revised application during the first half of 2000.
DISTRIBUTION PERFORMANCE-BASED RATE-MAKING (PBR)
On January 3, 2000, SPPC filed a distribution PBR proposal to become
effective January 1, 2001 through 2003. The proposal includes rate indexing and
earnings sharing mechanisms as well as performance indicators for employee
safety, customer satisfaction and system reliability. SPPC will submit a 2001
Cost of Capital filing in May 2000 and a Distribution PBR 2001 Cost of Service
filing in June 2000.
FERC MATTERS
ALTURAS
On April 15, 1999, the FERC approved the settlement in the Import Limit Case
which had previously been certified by the Administrative Law Judge in
June 1998. The settlement provides that, until February 28, 2001, Truckee Donner
Public Utility District (TDPUD) will receive 30 MW of import capability. After
February 28, 2001, allocation of import capacity will be determined by the FERC
based on the results of SPPC's 1998 Resource Plan and a subsequent filing with
the FERC in 1999.
REGIONAL TRANSMISSION ORGANIZATIONS
On May 13, 1999, the FERC issued a Notice of Proposed Rulemaking on Regional
Transmission Organizations (RTOs). The FERC proposed characteristics of an RTO
and also the requirement for utilities to form or join RTOs.
On August 23, 1999, SPPC filed comments on the proposed rule along with
numerous other parties. On December 15, 1999, the FERC approved the final rule
on RTOs.
MERGER
On April 14, 1999, the FERC voted to approve the merger of SPR and NVP, as
proposed. In approving the merger the FERC required the companies to divest
their generation facilities (as proposed by the companies) and required NVP to
file an update of its transmission rates (also proposed by the companies).
On May 17th, TDPUD filed a Petition for Rehearing of the FERC's order
approving the merger. TDPUD claims the FERC violated its own policy by allowing
the merger to be consummated prior to divestiture of generation assets. NVP and
SPCC filed an answer to TDPUD's Petition for Rehearing in May. On July 14, 1999,
the FERC denied all aspects of TDPUD's petition.
TRANSMISSION RATE CASES
On May 29, 1999, NVP filed an application with the FERC to increase its Open
Access Transmission rates. On November 24, 1999, an unopposed motion to suspend
the procedural schedule
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to allow consummation of a settlement was filed with the FERC. The Settlement
was filed on February 8, 2000 and the rates became effective on March 1, 2000.
On March 30, 1999, SPPC filed with the FERC to increase its Open Access
Transmission rates. SPPC requested an increase of $16 million in the annual
revenue requirement for network service. The point-to-point rate would increase
from $2.80 /kW-mo. to $3.21 /kW-mo. This filing incorporates the Alturas
intertie, completed in December 1998, and the reclassification of transmission
and distribution facilities approved by the PUCN last summer.
On May 28, 1999, as expected, the FERC issued an order setting the rate case
for hearing. The proposed rates are accepted subject to refund and suspended
until November 1, 1999. On June 14, 1999, as required by the May 28 order, SPPC
filed additional information on the proposed transmission and distribution (T&D)
reclassification. SPPC also requested that the FERC accept the filing and
approve the T&D split. On July 29, 1999 the FERC accepted the Company's proposed
T&D reclassification.
On October 12, 1999, SPPC filed an Offer of Partial Settlement which
resolved all issues but pricing to the Mines and to the City of Fallon. On
November 3, the Partial Settlement was certified to the FERC. A status report on
the two remaining issues was filed on January 11, 2000. On January 31, 2000, the
FERC approved the Partial Settlement.
GENERATION TARIFFS
On March 31, 1999, NVP filed with the FERC for approval of generation
tariffs which contain the rates, terms and conditions under which the new owners
of NVP's generation would operate after divestiture. The FERC approved the
tariffs on November 1, 1999. In compliance with the FERC's November 1 order, NVP
filed pro forma service agreements for the approved tariffs which were
subsequently approved on December 16, 1999.
On March 31, 1999, SPPC filed Docket No. ER99-2332 with the FERC for
approval of generation tariffs that contain the rates, terms and conditions
under which the new owners of SPPC's generation would operate after divestiture.
The tariffs permit market-based rates after the offering of capacity under a
cost-based recourse approach.
Motions to intervene and protest in SPPC's generation tariffs rate case were
due on April 20, 1999. Newmont, City of Fallon, and TDPUD filed motions to
intervene and protest. Barrick (a mining company) filed a motion to intervene
with comments. Several other parties also filed interventions. The PUCN filed
motion to intervene and protest one day after the date established by the FERC.
The PUCN requested the FERC to hold the proceedings in abeyance to allow the
PUCN more time to review Sierra's divestiture plan filing.
SPPC filed an Answer to the protests filed on the tariff on May 5, 1999. In
response to the PUCN request, SPPC requested that the FERC rule on SPPC's tariff
by November 30, 1999 (rather than September 30, 1999) to allow the PUCN more
time. SPPC also provided clarification in response to other protests.
On July 20, 1999, SPPC filed a motion to expedite the FERC's consideration
of the tariff. The motion requested that the FERC approve the tariff by
September 30, 1999 since the PUCN issues were resolved.
On November 1, the FERC dismissed the tariffs, apparently misinterpreting
the agreement reached with the PUCN on the tariffs. On November 22, 1999, SPPC
filed a request for rehearing of the FERC's November 1 order dismissing the
tariffs. The rehearing request explains how the FERC erred in dismissing the
tariff. On December 17, 1999, the Commission issued an Order Granting Rehearing
for Further Consideration. A decision is expected in 2000.
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INDEPENDENT SCHEDULING ADMINISTRATOR (ISA)
On July 23, 1999, SPPC and NVP submitted a filing to establish the Mountain
West ISA (Docket ER97-3719). The proposal centers on the formation of an interim
ISA called Mountain West ISA, which will ensure the non-discriminatory treatment
of transmission customers in two wholesale electricity markets; one in northern
Nevada and one in southern Nevada. The formation of the ISA is viewed as an
interim step in the move to broader regional restructuring of the electric
service industry in the western United States.
Fifteen parties filed to intervene in the ISA filing. On September 17, 1999,
SPPC, Nevada Power and the Mountain West ISA filed answers to the protests filed
on the ISA filing. The California ISO filed an answer to SPPC's and Nevada
Power's response to their protest on September 28, 1999.
On January 27, 2000, the FERC issued an order approving with modifications
the Mountain West ISA proposal. The PUCN is continuing to review aspects of the
filing, including funding for the Mountain West ISA.
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DESCRIPTION OF THE NOTES
The following description of the terms of the notes supplements the
description of the general terms and provisions of Debt Securities contained in
the accompanying prospectus. To the extent the following description is
inconsistent with any part of the description of Debt Securities contained in
the prospectus, then the following description replaces the description in the
prospectus.
The notes will be issued under an indenture (we refer to the indenture, as
supplemented from time to time, as the "Indenture") between Sierra Pacific
Resources and The Bank of New York as Trustee.
The following summary of certain provisions of the notes and the Indenture
is not complete and is subject to the detailed provisions of the Indenture. We
have filed a copy of the Indenture as an exhibit to the registration statement
we have filed with the SEC. Whenever particular provisions or defined terms in
the Indenture are referred to in this prospectus supplement, those provisions or
defined terms are incorporated by reference in this prospectus supplement.
TERMS
The notes issued under the Indenture will mature on May 15, . The notes
due will be unsecured obligations of Sierra Pacific Resources and will rank
equally with all of our other unsecured and unsubordinated indebtedness. The
notes will initially be issued in an aggregate principal amount of
$ million, although we may "reopen" the note series and issue additional
notes.
The notes will bear interest at the rate shown on the front cover of this
prospectus supplement from May , 2000, payable semi-annually on each May 15
and November 15 to the persons in whose name they are registered at the close of
business on May 1 or November 1 preceding the interest payment date. Interest on
the notes will be calculated on the basis of a 360-day year of twelve 30-day
months.
The first interest payment on the notes will be made on November 15, 2000.
The notes may be redeemed before their maturity as described below, but are
not entitled to the benefit of any sinking fund. They will be issued in
book-entry form only. See "Book-Entry System."
If any Interest Payment Date, redemption date or Maturity Date would
otherwise be a day that is not a Business Day, the related payment of principal
and interest will be made on the next succeeding Business Day as if it were made
on the date such payment was due, and no interest will accrue on the amounts so
payable for the period from and after such date to the next succeeding Business
Day.
The notes will rank equally with all of our unsecured and unsubordinated
debt. As a holding company, our cash flows and our ability to service our debt
are dependent on the cash flows of our subsidiaries. Our subsidiaries are
separate and distinct legal entities and will have no obligation to pay any
amounts due under the debt securities. In addition, our two largest
subsidiaries, Nevada Power Company and Sierra Pacific Power Company, are subject
to regulation by state utility commissions which may impose limitations on the
rate of return on equity or otherwise impact the amount of dividends which may
be paid by those companies. Moreover, the articles of incorporation of Sierra
Pacific Power Company contain restrictions on the payment of dividends on that
subsidiary's common stock if there is currently a default in the payment of
dividends on that company's preferred stock. Similarly, the terms of certain
outstanding series of first mortgage bonds of both Nevada Power Company and
Sierra Pacific Power Company contain quantitative limits on the amount of
dividends that may be paid on that company's common stock. Finally, the bank
credit facilities of Nevada Power Company and Sierra Pacific Power Company
prohibit the payment of dividends on each company's common stock if that company
is in default under its credit facility. As a result of these factors, the notes
will be effectively subordinated to all indebtedness and other liabilities of
our subsidiaries.
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OPTIONAL REDEMPTION
The notes will be redeemable, as a whole or in part, at our option, at any
time or from time to time, at a redemption price equal to the greater of:
(1) 100% of the principal amount of the applicable series of notes to be
redeemed, and
(2) the sum of the present values of the remaining scheduled payments of
principal and interest on the applicable series of notes to be redeemed
discounted to the date of redemption on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the applicable
Treasury Rate, plus basis points.
In the case of each of clause (1) and (2), accrued interest will be payable to
the redemption date.
Holders of notes to be redeemed will receive a redemption notice by
first-class mail at least 30 days but not more than 60 days before the date
fixed for redemption. If fewer than all of the notes are to be redeemed, then
not more than 60 days before the redemption date the Trustee will select the
particular notes or portions of notes for redemption from the outstanding notes
not previously called, using a method that the Trustee deems fair and
appropriate.
On and after the redemption date, interest will no longer accrue on the
notes or any portion of the notes called for redemption unless we default in the
payment of the redemption price and accrued interest. On or before the
redemption date, we will deposit with a paying agent (or the Trustee) money
sufficient to pay the redemption price of and accrued interest on the notes to
be redeemed on that date. If less than all of the notes are to be redeemed, the
notes to be redeemed shall be selected by the Trustee by such method as the
Trustee shall deem fair and appropriate.
CERTAIN DEFINITIONS
The following are defined terms relating to the notes.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York City are authorized or
obligated by law to close.
"Comparable Treasury Issue" means the U.S. Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining
term of the notes to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with us.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Credit Suisse First Boston, Salomon Smith Barney and at
least two other entities chosen by Sierra Pacific, or their affiliates which are
primary U.S. government securities dealers, and their respective successors;
provided, however, that if that company ceases to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), we will
substitute another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted
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in writing to the Trustee at 3:30 p.m., New York City time, on the third
Business Day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
BOOK ENTRY SYSTEM
The notes initially will be represented by one or more global securities
deposited with The Depository Trust Company ("DTC") and registered in the name
of DTC's nominee. DTC will credit on its book-entry registration and transfer
system the accounts of persons designated by the underwriters with the
respective principal amounts of the notes represented by the global security.
Ownership of beneficial interests in a global security is limited to persons
that have accounts with DTC or its nominee ("participants") or persons that may
hold interests through participants. Ownership of beneficial interests in a
global security will be shown on, and the transfer of that ownership may be
effected only through, records maintained by DTC or its nominee (for interests
of persons who are participants) and records maintained by participants (for
interests of persons who are not participants). The laws of some states require
that certain purchasers of securities take physical delivery of the securities
in definitive form. Those limits and laws may impair a purchaser's ability to
transfer beneficial interests in a global security.
DTC or its nominee will be considered the sole owner or holder of the notes
represented by a global security for all purposes under the Indenture. Except as
provided below, owners of beneficial interests in a global security will not be
entitled to have notes represented by the global security registered in their
names, will not receive or be entitled to receive physical delivery of notes,
and will not be considered the owners of record or holders of notes under the
Indenture.
We will make principal and interest payments on notes registered in the name
of DTC or its nominee to DTC or its nominee as the registered holder of the
relevant global security. None of us, the Trustee, any paying agent nor the
registrar for the notes will have any responsibility or liability for any aspect
of the records relating to, or payment made on account of, beneficial interests
in a global security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the relevant global security as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in a global security held through such participants will be governed
by standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participants.
If DTC at any time is unwilling or unable to continue as a depository and we
do not appoint a successor depository within 90 days, we will issue notes in
definitive form in exchange for the entire global security. In addition, we may
at any time and in our sole discretion determine not to have notes represented
by a global security and, in such event, we will issue notes in definitive form
in exchange for the entire global security. If any such instance, an owner of a
beneficial interest in a global security
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will be entitled to physical delivery in definitive form of notes represented by
such global security equal in principal amount to such beneficial interest and
to have such notes registered in the owner's name. Notes so issued in definitive
form will be issued as registered notes in denominations of $1,000 and integral
multiples thereof, unless we specify otherwise.
The information in this section concerning DTC and its book-entry system has
been obtained from sources that we believe to be reliable, but we do not take
responsibility for its accuracy.
CONCERNING THE TRUSTEE
The Bank of New York, Trustee under the Indenture, is a member of the
syndicate of lenders for our credit facility.
UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of material U.S. federal income tax consequences
and material U.S. federal estate tax consequences of the acquisition, ownership
and disposition of the notes by investors. The "issue price" is generally the
first price at which a substantial amount of the notes is sold from their
original issuance other than to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers. Because the amount payable at maturity will not exceed the issue
price by more than a DE MINIMIS amount, as those amounts and issue price are
determined under the Internal Revenue Code and Treasury Regulations thereunder,
the following discussion assumes the notes will not be issued with original
issue discount for federal income tax purposes.
This summary does not discuss all of the aspects of U.S. federal income and
estate taxation that may be relevant to investors in light of their particular
investment or other circumstances. In addition, this summary does not discuss
any U.S. state or local income or foreign income or other tax consequences. This
summary is based upon the provisions of the Internal Revenue Code of 1986, as
amended, the Treasury Regulations and administrative and judicial
interpretations of the Internal Revenue Code, all as in effect as of the date of
this prospectus supplement and all of which are subject to change or differing
interpretation, possibly with retroactive effect. The discussion below deals
only with the notes held as capital assets as defined in Section 1221 of the
Internal Revenue Code, which is generally property held for investment, and does
not address purchasers of the notes that may be subject to special rules,
including, without limitation, certain U.S. expatriates, financial institutions,
insurance companies, tax-exempt entities, dealers in securities or currencies,
traders in securities, persons who have a functional currency other than the
U.S. dollar, and persons that hold the notes as part of a straddle, hedge,
conversion or other integrated transaction. Prospective investors should consult
their own tax advisors regarding the particular U.S. federal, state and local
and foreign income and other tax consequences of acquiring, owning and disposing
of the notes that may be applicable to them.
For purposes of the following discussion, a U.S. holder is a beneficial
owner of a note that is, for U.S. federal income tax purposes:
- an individual citizen or resident of the United States;
- a corporation or partnership, unless the Internal Revenue Service provides
otherwise by Treasury Regulation, created or organized in or under the
laws of the United States or any of its political subdivisions;
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
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- a trust if, in general, the trust is subject to the supervision of a court
within the United States and the control of one or more United States
persons as described in section 7701(a)(30) of the Internal Revenue Code.
THE FOLLOWING DISCUSSION OF CERTAIN FEDERAL TAX CONSEQUENCES IS FOR GENERAL
INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, INVESTORS CONSIDERING THE
PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
APPLICATION OF THE UNITED STATES FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR
PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF
ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX
TREATY.
UNITED STATES FEDERAL INCOME TAXATION OF U.S. HOLDERS.
PAYMENT OF INTEREST.
Stated interest on a note generally will be includable in the income of the
U.S. holder of such note as ordinary income at the time such interest is
received or accrued, in accordance with such holder's method of accounting for
United States federal income tax purposes.
AMORTIZABLE BOND PREMIUM.
If a U.S. holder purchases a note for an amount in excess of the principal
amount, the holder will be considered to have purchased the note at a "premium."
A U.S. holder generally may elect to amortize the premium over the remaining
term of the note on a constant yield method. However, if the note is purchased
at a time when the note may be optionally redeemed for an amount that is in
excess of its principal amount, special rules would apply that could result in a
smaller premium eligible for amortization during the call period and a deferral
of the amortization of bond premium until later in the term of the note. The
amount amortized in any year will be treated as a reduction of the U.S. holder's
interest income from the note. Bond premium on a note held by a U.S. holder that
does not make such an election will decrease the gain or increase the loss
otherwise recognized on disposition of the note. The election to amortize
premium on a constant yield method, once made, applies to all debt obligations
held or subsequently acquired by an electing U.S. holder on or after the first
day of the first taxable year to which the election applies and may not be
revoked without the consent of the Internal Revenue Service.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES.
Upon the sale, exchange or redemption of a note, a U.S. holder generally
will recognize capital gain or loss equal to the difference between:
(1) the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption (except to the extent such
amount is attributable to accrued interest income not previously included
in income, which is taxable as ordinary income); and
(2) such holder's adjusted tax basis in the note. A holder's adjusted tax
basis in a note generally will equal the cost of the note to the U.S.
holder, increased by any market discount previously included in the
income of the U.S. holder with respect to the note, and decreased by any
bond premium therefor amortized by the U.S. holder with respect to the
note. Such capital gain or loss will be long-term capital gain or loss if
the note was held by the U.S. holder for more than 12 months. The net
capital gain of an individual derived in respect of the notes generally
will be taxed at a maximum rate of 20% if it is long-term capital gain.
MARKET DISCOUNT.
If a U.S. holder, other than a holder who purchases the notes from the
initial purchasers, purchases a note for an amount that is less than its
principal amount, the amount of the difference will
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be treated as "market discount" for United States federal income tax purposes,
unless such difference is less than a specified DE MINIMIS amount. Under the
market discount rules, a U.S. holder will be required to treat any partial
principal payment on, or any gain on the sale, exchange, retirement or other
disposition of, a note as ordinary income to the extent of the market discount
which has not previously been included in income and is treated as having
accrued on such note at the time of such payment or disposition. In addition,
the U.S. holder may be required to defer, until the maturity of the note or its
earlier disposition in a taxable transaction, the deduction of all or a portion
of the interest expense on any indebtedness incurred or continued to purchase or
carry such note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the note, unless the U.S.
holder elects to accrue on a constant interest method. A U.S. holder may elect
to include market discount in income currently as it accrues (on either a
ratable or constant interest method), in which case the rule described above
regarding deferral of interest deductions will not apply. This election to
include market discount in income currently, once made, applies to all market
discount obligations acquired on or after the first taxable year to which the
election applies and may not be revoked without the consent of the Internal
Revenue Service (IRS).
INFORMATION REPORTING AND BACKUP WITHHOLDING.
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest of a note and payments of the proceeds
of the sale of a note to certain noncorporate holders, and a 31% backup
withholding tax may apply to such payments if the U.S. holder:
(1) fails to furnish or certify his correct taxpayer identification number
to the payer in the manner required;
(2) is notified by the IRS that he has failed to report payments of interest
and dividends properly;
(3) under certain circumstances, fails to certify that he has not been
notified by the IRS that he is subject to backup withholding for failure
to report interest and dividend payments; or
(4) the IRS notifies us or our paying agent that the taxpayer identification
number furnished by the U.S. holder is incorrect.
Any amounts withheld under the backup withholding rules from a payment to a
U.S. holder will be allowed as a credit against such holder's U.S. federal
income tax and may entitle the holder to a refund, provided that the required
information is furnished to the IRS.
MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS
For purposes of the following discussion, a non-U.S. holder is a beneficial
owner of a note that is not, for U.S. federal income tax purposes, a U.S.
holder. An individual may, subject to exceptions, be deemed to be a resident
alien, as opposed to a non-resident alien, by virtue of being present in the
United States on at least 31 days in the calendar year and for an aggregate of
at least 183 days during a three year period ending in the current calendar
year. For this purpose the number of days an individual is present in the U.S.
includes all of the days present in the current year, one-third of the days
present in the immediately preceding year, and one-sixth of the days present in
the second preceding year. A holder of a note who is treated as a resident alien
under this rule is a U.S. holder for purposes of this summary.
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<PAGE>
Under present U.S. federal income and estate tax law and subject to the
discussion of backup withholding below:
(1) payments of principal, premium, if any, and interest on a note by us or
any of our agents to any non-U.S. holder will not be subject to
withholding of U.S. federal income tax, provided that in the case of
interest:
- the non-U.S. holder does not directly or indirectly, actually or
constructively, own 10% or more of the total combined voting power of
all classes of our stock entitled to vote;
- the non-U.S. holder is not a controlled foreign corporation that is
related to us through sufficient stock ownership, or a bank receiving
interest described in Section 881(c)(3)(A) of the Internal Revenue
Code; and
- either the beneficial owner of the note certifies to us or our agent,
under penalties of perjury, that it is not a "United States person"
under the meaning of the Internal Revenue Code and provides its name
and address, or a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary
course of its trade or business that holds the note on behalf of the
beneficial owner certifies to us or our agent under penalties of
perjury that it, or the financial institution between it and the
beneficial owner, has received from the beneficial owner a statement,
under penalties of perjury, that it is not a "United States person" and
provides the payor with a copy of this statement;
(2) a non-U.S. holder will not be subject to U.S. federal income tax on any
gain or income realized on the sale, exchange, redemption, retirement at
maturity or other disposition of a note, (except in the case of proceeds
representing accrued interest, for which the conditions described in
paragraph (1) above must be met), unless:
- the non-U.S. holder is an individual who is present in the United
States for 183 days or more during the taxable year and some other
conditions are met; or
- the gain is effectively connected with the conduct of a U.S. trade or
business by the non-U.S. holder, or if an income tax treaty applies, is
generally attributable to a U.S. "permanent establishment" maintained
by the non-U.S. holder; and
(3) a note held by an individual who at the time of death is not a citizen
or resident of the United States will not be subject to U.S. federal
estate tax as a result of the individual's death if, at the time of the
individual's death:
- the individual did not directly or indirectly, actually or
constructively, own 10% or more of the total combined voting power of
all classes of our stock entitled to vote; and
- the income on the note would not have been effectively connected with
the conduct of a trade or business by the individual in the United
States.
If a non-U.S. holder is engaged in a trade or business in the United States
and interest on the note is effectively connected with the conduct of this trade
or business, or if an income tax treaty applies and the non-U.S. holder
maintains a U.S. "permanent establishment" to which the interest is generally
attributable, although the non-U.S. holder is exempt from the withholding tax
discussed in the preceding paragraph (1) provided that the holder furnishes a
properly executed IRS Form W-8ECI or successor form on or before any payment
date to claim the exemption, the holder may be subject to U.S. federal income
tax on such interest on a net basis in the same manner as if it were a U.S.
holder.
In addition, a foreign corporation that is a holder of a note may be subject
to a branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to some adjustments, unless it qualifies
for a lower rate under an applicable income tax treaty. For this purpose,
interest on a note or gain recognized on the disposition of a note will be
included in earnings and
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profits if the interest or gain is effectively connected with the conduct by the
foreign corporation of a trade or business in the United States.
We will, where required, report to the holder of notes and the Internal
Revenue Service the amount of any interest paid on the notes in each calendar
year and the amounts of tax withheld, if any, with respect to such payments.
Copies of these information returns may also be made available under the
provisions of a specific treaty agreement to the tax authorities of the country
in which the non-U.S. holder resides.
Recently finalized Treasury Regulations generally effective for payments
made after December 31, 2000 provide alternative methods for satisfying the
certification requirement described in the third bullet point of paragraph (1)
above, and require a non-U.S. holder that provides an IRS Form W-8ECI or
successor form as discussed above, as well as a non-U.S. holder claiming the
benefit of an income tax treaty, to also provide its U.S. taxpayer
identification number. The finalized Treasury Regulation generally also require,
in the case of a note held by a foreign partnership, that the certification
described in the third bullet point of paragraph (1) above be provided by the
partners and that the partnership provide certain information, including a U.S.
taxpayer identification number. A look-through rule will apply in the case of
tiered partnerships.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by us or any of our agents, in their
capacities as agents, to a non-U.S. holder of a note if the holder has provided
the required certification that it is not a United States person as set forth in
paragraph (1) above, provided that neither we nor our agent has actual knowledge
that the holder is a United States person. Payments of the proceeds from a
disposition by a non-U.S. holder of a note made to or through a foreign office
of a broker will not be subject to information reporting or backup withholding,
except that information reporting may apply to those payments if the broker is
- a United States person,
- a controlled foreign corporation for U.S. federal income tax purposes,
- a foreign person 50% or more of whose gross income is effectively
connected with a U.S. trade or business for a specified three year period,
or
- with respect to payments made after December 31, 2000, a foreign
partnership, if at any time during its tax year, one or more of its
partners are U.S. persons, as defined in Treasury Regulations, who in the
aggregate hold more than 50% of the income or capital interest in the
partnership or if, at any time during its tax year, the foreign
partnership is engaged in a U.S. trade or business.
Payments of the proceeds from a disposition by a non-U.S. holder of a note
made to or through the U.S. office of a broker are subject to information
reporting and backup withholding unless the holder or beneficial owner certifies
as to its taxpayer identification number or otherwise establishes an exemption
from information reporting and backup withholding.
Any amounts withheld under the backup withholding rules from a payment to a
non-U.S. holder will be allowed as a refund or a credit against the holder's
U.S. federal income tax liability, provided the required information is
furnished to the Internal Revenue Service.
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<PAGE>
UNDERWRITING
GENERAL
Subject to the terms and conditions set forth in an underwriting agreement
among our company and each of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Credit Suisse First Boston Corporation and Salomon Smith Barney
Inc., we have agreed to sell to the underwriters, and each of the underwriters
severally and not jointly has agreed to purchase from us, the aggregate
principal amount of the notes shown below opposite its name.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT OF NOTES
- ------------ ---------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................... $
Credit Suisse First Boston Corporation......................
Salomon Smith Barney Inc....................................
----------
Total............................................. $
==========
</TABLE>
The several underwriters have agreed, subject to the terms and conditions
included in the underwriting agreement, to purchase all of the notes being sold
under the agreement, if any of the notes being sold under the agreement are
purchased. In the event of a default by an underwriter, the underwriting
agreement provides that, in certain circumstances, the purchase commitments of
the nondefaulting underwriters may be increased or the underwriting agreement
may be terminated.
We have agreed to indemnify the underwriters against some liabilities,
including some liabilities under the Securities Act, or to contribute to
payments the underwriters may be required to make in respect of those
liabilities.
The notes are being offered by the several underwriters, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
legal matters by counsel for the underwriters and other conditions. The
underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part.
CONCESSIONS AND DISCOUNTS
The underwriters have advised us that they propose initially to offer the
notes to the public at the initial public offering price set forth on the cover
page of this prospectus supplement, and to dealers at that price less the
concession not in excess of % of the principal amount of the notes. The
underwriters may allow, and such dealers may reallow, a discount not in excess
of % of the principal amount of the notes to other dealers. After the initial
public offerings, the public offering price, concessions and discounts may be
changed.
The expenses of the offering, exclusive of the underwriting discount, are
estimated at approximately $ million and are payable by us.
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<PAGE>
NEW ISSUE OF NOTES
The notes are a new issue of securities with no established trading market.
We do not intend to apply for listing of the notes on any national securities
exchange or for quotation of the notes on any automated dealer quotation system.
We have been advised by the underwriters that they presently intend to make a
market in the notes after the consummation of the offering contemplated hereby,
although they are under no obligation to do so and may discontinue any
market-making activities at any time without any notice. No assurance can be
given as to the liquidity of the trading market for the notes or that an active
public market for the notes will develop. If an active public trading market for
the notes does not develop, the market price and liquidity of the notes may be
adversely affected.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the offering, the underwriters are permitted to engage in
transactions that stabilize the market price of the notes. These transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the notes. If the underwriters create a short position in the notes
in connection with the offering, i.e., if they sell more notes than are set
forth on the cover page of this prospectus supplement, the underwriters may
reduce that short position by purchasing notes in the open market. In general,
purchases of a security for the purpose of stabilization or to reduce a short
position could cause the price of the security to be higher than it might be in
the absence of such purchases.
Neither our company nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither our
company nor any of the underwriters makes any representation that the
underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
OTHER RELATIONSHIPS
Some of the underwriters and their affiliates engage in transactions with,
and perform services for, our company in the ordinary course of business and
have engaged, and may in the future engage, in commercial banking and investment
banking transactions with our company, for which they have received customary
compensation. Merrill Lynch served as an advisor in connection with our merger
with Nevada Power Company and our acquisition of Portland General Electric
Company.
LEGAL MATTERS
Legal matters regarding the validity of the notes offered under this
prospectus supplement will be passed upon on our behalf by Choate, Hall &
Stewart (a partnership including professional corporations), Boston,
Massachusetts. Legal matters relating to the offering will be passed upon for
the underwriters by Thelen Reid & Priest LLP. Choate, Hall & Stewart and Thelen
Reid & Priest LLP will rely on the opinion of Woodburn and Wedge, Reno, Nevada,
as to matters of Nevada law. Thelen Reid & Priest LLP represents Sierra Pacific
Resources and its utility subsidiaries in connection with certain federal tax
matters.
EXPERTS
The consolidated financial statements of Sierra Pacific Resources, the
financial statements of Nevada Power Company, the consolidated financial
statements of Sierra Pacific Power Company and the related financial statement
schedules incorporated in this prospectus supplement and accompanying prospectus
by reference from Sierra Pacific Resources', Nevada Power Company's and Sierra
Pacific Power Company's Annual Reports on Form 10-K for the year ended
December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports, which are
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incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. Our
SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. You may also inspect our SEC reports and other
information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement on Form S-3 with the SEC covering the
securities. For further information on our company and the notes, you should
refer to our registration statement and its exhibits. This prospectus supplement
and the accompanying prospectus summarize material provisions of contracts and
other documents that we refer you to. Because the prospectus supplement and
prospectus may not contain all the information that you may find important, you
should review the full text of these documents. We have included copies of these
documents as exhibits to our registration statement.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file with
them, which means:
- incorporated documents are considered part of this prospectus supplement
and the accompanying prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed with
the SEC under the Exchange Act:
- our annual report on Form 10-K for the year ended December 31, 1999, which
is combined with the annual report on Form 10-K for Nevada Power;
- Sierra Pacific Power's annual report on Form 10-K for the year ended
December 31, 1999;
- our current report on Form 8-K dated August 8, 1999 and the 8-K/A
amendment thereto dated September 20, 1999;
- our current report on Form 8-K dated April 14, 2000; and
- our current report on Form 8-K dated April 21, 2000.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus supplement until this
offering is completed:
- reports filed under Sections 13(a) and (c) of the Exchange Act;
- definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting; and
- any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by reference
in this prospectus supplement and accompanying prospectus. We have not
authorized any other person to provide you
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with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not making an offer
to sell these securities in any jurisdiction where the offer or sale is not
permitted.
You should assume that the information appearing in this prospectus
supplement is accurate as of the date of this supplement only. Our business,
financial condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Assistant
Treasurer, Sierra Pacific Resources, P.O. Box 30150 (6100 Neil Road), Reno
Nevada 89520-3150, Telephone: (775) 834-4358.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 1, 2000
P_R_O_S_P_E_C_T_U_S
[LOGO]
SIERRA PACIFIC RESOURCES CAPITAL TRUST I
SIERRA PACIFIC RESOURCES CAPITAL TRUST II
By this prospectus, we may offer from time to time up to $500,000,000 of
our:
DEBT SECURITIES
PREFERRED SECURITIES OF SIERRA PACIFIC RESOURCES CAPITAL TRUST I
PREFERRED SECURITIES OF SIERRA PACIFIC RESOURCES CAPITAL TRUST II
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Sierra Pacific Resources is a Nevada corporation. Sierra Pacific Resources
Capital Trust I and Sierra Pacific Resources Capital Trust II are Delaware
business trusts. Sierra Pacific Resources is the sponsor of Sierra Pacific
Resources Capital Trust I and Sierra Pacific Resources Capital Trust II.
When we offer securities, we will provide you with a prospectus supplement
or a term sheet describing the terms of the specific issue of securities
including the offering price of the securities.
You should read this prospectus and the prospectus supplement or the term
sheet relating to the specific issue of securities carefully before you invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is May , 2000.
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SIERRA PACIFIC RESOURCES
Sierra Pacific Resources engages primarily in the energy business through
several subsidiaries. Our two largest subsidiaries, Nevada Power Company and
Sierra Pacific Power Company, are regulated public utilities. Nevada Power
Company provides electricity to the City of Las Vegas and the surrounding area
in southern Nevada. Sierra Pacific Power Company provides electricity to
western, central and northeastern Nevada, including the cities of Reno, Sparks,
Carson City and Elko, and to the Lake Tahoe area of California. Sierra Pacific
Power Company also provides natural gas and water services to the cities of Reno
and Sparks and surrounding areas. Sierra Pacific Resources and Nevada Power
Company merged in June 1999 and Nevada Power Company became a subsidiary of
Sierra Pacific Resources. As part of the merger, Sierra Pacific Power Company
and Nevada Power Company agreed to sell their electric generating assets.
Additional information regarding the merger is contained in the documents
incorporated by reference into this prospectus. See "Incorporation of
Information We File With the SEC" on p. 30.
The principal executive office of Sierra Pacific Resources is P.O. Box
301500 (6100 Neil Road), Reno, Nevada 89520-3150, and the telephone number is
(775) 834-4011.
In this prospectus, "Sierra Pacific," "we," "us" and "our" refer
specifically to Sierra Pacific Resources, the holding company.
THE TRUSTS
Sierra Pacific Capital Trust I and Sierra Pacific Capital Trust II are
statutory business trusts created under Delaware law. They were created pursuant
to declarations of trust and by the filing of a Certificate of Trust with the
Secretary of State of the State of Delaware on June 7, 1999. Each declaration of
trust will be amended and restated in its entirety substantially in the forms
filed as an exhibit to the registration statement of which this prospectus is a
part. Each declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended. When the preferred securities of each trust
are issued, the purchasers of those securities will own all of the preferred
securities of each trust. See "Description of the Preferred Securities." We will
directly or indirectly acquire all of the trusts' issued and outstanding common
securities, which will be in an aggregate liquidation amount equal to at least
3% of the total capital of each trust. The trusts will use all of the proceeds
from the issuance of their preferred securities and common securities
(collectively, the "Trust Securities") to purchase subordinated debt securities
issued by Sierra Pacific. The only assets of each trust are subordinated debt
securities issued by Sierra Pacific. Each trust exists for the exclusive
purposes of
- issuing its Trust Securities representing undivided beneficial interests
in the assets of the trust;
- investing the gross proceeds of the sale of its Trust Securities in
subordinated debt securities issued by Sierra Pacific; and
- engaging in only those other activities necessary or incidental to the
foregoing purposes.
Each trust has a term of approximately 55 years, but may be dissolved
earlier as provided in its declaration.
Sierra Pacific has appointed the following four trustees to conduct each
trust's business and affairs:
- two officers of Sierra Pacific (the "administrative trustees");
- The Bank of New York (the "property trustee"); and
- The Bank of New York (Delaware) (the "Delaware trustee").
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The property trustee will hold title to the subordinated debt securities of
Sierra Pacific purchased by each trust for the benefit of each trust and the
holders of the Trust Securities. As long as the subordinated debt securities are
held by a trust, the property trustee will have the power to exercise all
rights, powers, and privileges of a holder of subordinated debt securities under
the indenture to be entered into by and between Sierra Pacific and The Bank of
New York, as indenture trustee. In addition, the property trustee will maintain
exclusive control of a segregated non-interest bearing bank account for each
trust (the "property trustee accounts") to hold all payments made in respect of
the subordinated debt securities for the benefit of the holders of the Trust
Securities of each trust.
Sierra Pacific, as the holder of all the common securities of each trust,
will have the right to appoint, remove or replace any trustee (subject to the
limitations shown in the declarations) and to increase or decrease the number of
trustees of each trust, provided that the number of trustees of each trust shall
be at least three. Sierra Pacific will pay all fees, expenses, debts and
obligations (other than with respect to the Trust Securities) related to each
trust and the offering of the Trust Securities by each trust.
The rights of the holders of the preferred securities of each trust,
including economic rights, rights to information and voting rights, are
contained in its declaration and in the Delaware Business Trust Act. See
"Description of the Preferred Securities of the Trusts." The declarations also
incorporate by reference the terms of the Trust Indenture Act.
The principal executive office of each trust is P.O. Box 30150 (6100 Neil
Road), Reno, Nevada 89520-3150. The telephone number of each trust is
(775) 834-4001.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of our debt securities for
general corporate purposes, unless otherwise specified in the prospectus
supplement relating to a specific issue of debt securities. General corporate
purposes may include financing the activities of Sierra Pacific's utility or
non-utility subsidiaries, financing our assets, refinancing our existing
borrowings, and financing acquisitions. Until we use the net proceeds from the
sale of any of our securities for general corporate purposes, we will use the
net proceeds to reduce our short-term indebtedness or for temporary investments.
We expect that we will, on a recurrent basis, engage in additional financings as
the need arises to finance our growth, through acquisitions or otherwise, or to
refinance our existing borrowings.
We currently intend to use the net proceeds from the sale of our debt
securities to cover a portion of the cash consideration required in connection
with our merger with Nevada Power Company and to repay bank indebtedness
incurred in connection with the Merger. The specific allocations of the proceeds
we receive from the sale of our securities will be described in the prospectus
supplement relating thereto.
Each trust will use all proceeds received from the sale of its Trust
Securities and common securities to purchase subordinated debt securities issued
by us.
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDEND
The following table shows our consolidated ratios of earnings to fixed
charges and preferred dividends. The ratios shown in the table are both the
historical ratios and the pro forma combined ratio showing the effect of the
merger between Sierra Pacific Resources and Nevada Power Company. As a result of
the merger between Sierra Pacific Resources and Nevada Power Company, which has
been treated for accounting purposes as a reverse acquisition with Nevada Power
Company being the acquiror, the historical ratios are those of Nevada Power
Company. The pro forma ratio assumes that the merger occurred at the beginning
of the applicable period.
<TABLE>
<CAPTION>
1999 YEAR ENDED DECEMBER 31,
(COMBINED ----------------------------------------------------
PRO FORMA) 1999 1998 1997 1996 1995
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings
to fixed charges and preferred
dividends................................ 1.68 1.62 2.48 2.70 2.64 2.60
</TABLE>
For the purpose of calculating the consolidated ratio of earnings to fixed
charges and preferred dividends, "fixed charges" represent the aggregate of
interest charges on short-term and long-term debt and distributions on preferred
securities of consolidated subsidiaries, allowance for borrowed funds used
during construction (AFUDC) and capitalized interest, the interest portion of
rental expense deemed to be attributable to interest, and the pre-tax preference
security dividend requirements of consolidated subsidiaries. "Earnings"
represent the aggregate of income before obligated mandatorily redeemable
preferred securities, income taxes, and fixed charges, less AFUDC and
capitalized interest, and pre-tax preference security dividend requirements of
consolidated subsidiaries.
DESCRIPTION OF THE DEBT SECURITIES
GENERAL
From time to time we may issue debt securities in one or more series as
either senior securities ("senior debt securities") or subordinated securities
("subordinated debt securities"). The term "debt securities" refers to both the
senior debt securities and the subordinated debt securities.
Senior debt securities will be issued under an indenture, as supplemented
from time to time (the "senior indenture"), between Sierra Pacific and The Bank
of New York, as trustee (the "senior indenture trustee"). Unless specified in a
prospectus supplement, subordinated debt securities will be issued under an
indenture, as supplemented from time to time (the "subordinated indenture"),
between Sierra Pacific and The Bank of New York, as trustee (the "subordinated
indenture trustee"). The term "indentures" refers to the senior indenture and
the subordinated indenture. Each of the indentures will be subject to and
governed by the Trust Indenture Act of 1939.
Below is a description of the general terms of the debt securities. The
particular terms of a series of debt securities will be described in a
prospectus supplement. The following summary of the material terms and
provisions of the debt securities is not complete and is subject to, and
qualified in its entirety by reference to, the relevant indentures, copies of
which are filed as exhibits to the registration statement of which this
prospectus is a part.
The indentures do not limit the amount of debt securities that we may issue,
nor do they limit us or our subsidiaries from issuing any other unsecured debt.
The senior debt securities will rank equally with all of our unsecured and
unsubordinated debt. The subordinated debt securities will be unsecured and will
be subordinate and junior in priority of payment to our other indebtedness to
the extent described in a prospectus supplement. As a holding company, our cash
flows and our ability to service our debt are dependent on the cash flows of our
subsidiaries. Our subsidiaries are separate and distinct legal entities and will
have no obligation to pay
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any amounts due under the debt securities. In addition, our two largest
subsidiaries, Nevada Power and Sierra Pacific Power, are subject to regulation
by state utility commissions which may impose limitations on the rate of return
on equity or otherwise impact the amount of dividends which may be paid by those
companies. Moreover, the articles of incorporation of Sierra Pacific Power
Company contain restrictions on the payment of dividends on that subsidiary's
common stock if there is currently a default in the payment of dividends on the
company's preferred stock. Similarly, the terms of certain outstanding series of
first mortgage bonds of both Nevada Power Company and Sierra Pacific Power
Company contain limits on the amount of dividends that may be paid on that
company's common stock. Finally, the terms of the bank credit facilities of
Nevada Power Company and Sierra Pacific Power Company prohibit the payment of
dividends on each company's common stock if that company is in default under its
credit facility. As a result, the debt securities will be effectively
subordinated to all indebtedness and other liabilities of our subsidiaries.
TERMS OF THE DEBT SECURITIES
Each prospectus supplement will describe the terms of a series of debt
securities, including:
- the title and series designation;
- the aggregate principal amount and authorized denominations of the debt
securities;
- the percentage of principal amount at which the debt securities will be
issued;
- the stated maturity date;
- any fixed or variable interest rate or rates per annum;
- the times at which any interest will be payable, the date or dates from
which interest will accrue and the regular record dates for interest
payments or the method for determining those dates, and any right to defer
interest payments on the debt securities of a series;
- the principal amount payable, whether at maturity or upon earlier
acceleration, and whether the principal amount will be determined with
reference to an index, formula or other method;
- whether the debt securities are denominated or payable in United States
dollars;
- any sinking fund requirements;
- any terms under which Sierra Pacific can redeem the debt securities;
- any terms for repayment of principal amount at the option of the holder;
- whether and under what circumstances Sierra Pacific will pay additional
amounts ("Additional Amounts") under any debt securities to a person who
is not a U.S. person for specified taxes, assessments or other
governmental charges and whether Sierra Pacific has the option to redeem
the affected debt securities rather than pay any Additional Amounts;
- the form in which Sierra Pacific will issue the debt securities, whether
registered, bearer or both, and any restrictions applicable to the
exchange of one form for another and to the offer, sale and delivery of
the debt securities in either form;
- whether the debt securities will be issued in global form, and any terms
and conditions under which interests the debt securities in global form
may be exchanged for individual debt securities;
- the minimum denominations;
- the defeasance provisions, if any, that apply to the debt securities
(other than those described herein);
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- the person to whom any interest on a registered security is payable, if
that person is not the registered owner of the debt securities, or the
manner in which any interest is payable on a bearer security if other than
upon presentation of the coupons pertaining thereto, as the case may be;
- the terms and conditions upon which the debt securities may be convertible
into shares of common stock or other securities of Sierra Pacific,
including conversion price, conversion period and other conversion
provisions;
- any events of default or covenants not contained in the applicable
indenture; and
- any other specific terms of the debt securities which are not inconsistent
with the provisions of the applicable indenture.
Prospective purchasers of debt securities should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to
instruments such as the debt securities. The prospectus supplement relating to
an issue of debt securities will describe these considerations, if applicable.
The provisions of the indentures permit Sierra Pacific, without the consent
of holders of any debt securities, to issue additional debt securities with
terms different from those of debt securities previously issued and to reopen a
previous issue of a series of debt securities and issue additional debt
securities of that series.
Sierra Pacific will pay or deliver principal and any premium, Additional
Amounts, and interest in the manner, at the places and subject to the
restrictions described in the applicable indenture, the debt securities and the
applicable prospectus supplement.
CONSOLIDATION, MERGER OR SALE
The indentures permit Sierra Pacific to merge or consolidate, sell, lease,
for a term extending beyond the last stated maturity of debt securities
outstanding under the indentures, or convey all or substantially all of its
assets, if the following conditions are satisfied:
- no event of default would occur under the indentures as a result of such
transaction;
- any successor or acquiror assumes all of the obligations of Sierra Pacific
under the indentures and the debt securities; and
- the successor or acquiror is organized and existing under the laws of the
United States of America or of any U.S. state.
The indentures do not prevent or restrict any of the following:
- consolidation or merger where after the consummation of which Sierra
Pacific would be the surviving entity, or any conveyance or transfer or
lease of any part of the properties of Sierra Pacific which does not
constitute the entirety or substantially the entirety of these properties;
or
- the approval by Sierra Pacific of or consent by Sierra Pacific to, any
consolidation or merger to which any "restricted subsidiary," or any other
subsidiary or affiliate of Sierra Pacific, may be a party, or any
conveyance, transfer or lease by any subsidiary or affiliate of Sierra
Pacific of any of its assets.
If a series of subordinated debt securities is held by a trust, any
transaction referred to above would also have to be permitted under and not
result in any breach of violation of the applicable trust agreement and
guarantee.
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MODIFICATION OF INDENTURES; WAIVER
Each indenture may be modified or amended by Sierra Pacific and the
applicable trustee without the consent of any holders with respect to matters
specified in the indenture, including but not limited to:
- to cure any ambiguity or correct any inconsistency in the indenture;
- to provide for uncertificated debt securities;
- to establish the form or terms of debt securities of any series; or
- to make any change that does not materially adversely affect the rights of
any holder of a debt security.
In addition, under each indenture, Sierra Pacific and the applicable trustee
may change the rights of holders of a series of debt securities with the written
consent of the holders of at least a majority in aggregate principal amount of
the outstanding debt securities of each affected series. However, the following
changes may be made only with the consent of each holder of any outstanding debt
securities affected:
- extension of the stated maturity of those debt securities;
- reduction of the principal amount, reduction of the rate or rates of or
extension of the time of payment of interest;
- change in the place or currency of any payment of principal or interest;
- impairment of the right to bring a suit for the enforcement of any payment
on or with respect to those debt securities;
- waiver of a default in the payment of the principal of or interest on
those debt securities;
- modification in any manner adverse to the holders of those debt securities
of the terms and conditions of the obligations of Sierra Pacific; and
- modification of any of the foregoing requirements or reduction of the
percentage of holders of debt securities required to consent to any
amendment or waiver of any covenant or past default.
If a series of subordinated debt securities is held by a trust, no
modification of the subordinated indenture may occur without the prior consent
of the holders of at least a majority of the aggregate liquidation preference of
the trust's preferred securities.
EVENTS OF DEFAULT
Each of the following will be an Event of Default with respect to each
series of debt securities issued under each indenture:
- default in the payment of any principal, when due (except when the failure
to make payment when due results from mistake, oversight or transfer
difficulties and does not continue for more than three business days);
- default in the payment of interest or Additional Amounts and the
continuance of that default for a period of 30 days;
- default with respect to any obligation to make payments to a sinking fund,
when due (except when the failure to make payment when due results from
mistake, oversight or transfer difficulties and does not continue for more
than three business days);
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- default in the performance or breach of any other covenant or warranty
contained in the applicable indenture or in the debt securities with
respect to that series and continuance of the default for a period of
60 days after written notice as provided in the applicable indenture;
- specified events of involuntary bankruptcy, insolvency or reorganization
of Sierra Pacific which remain in effect for a period of sixty consecutive
days;
- commencement by Sierra Pacific of a voluntary case in bankruptcy or any
general assignment to creditors; or
- any other Event of Default provided in the applicable prospectus
supplement.
If a series of subordinated debt securities is held by a trust, it would
also be an event of default if the trust dissolves, winds up or terminates,
except in connection with:
- the distribution of the subordinated debt securities to holders of
preferred and common securities of the trust;
- the redemption of all of the preferred and common securities of the trust;
or
- mergers, consolidations, conversions or amalgamations permitted by the
declaration of trust.
REMEDIES
ACCELERATION OF MATURITY
If an Event of Default with respect to debt securities of any series occurs
and is continuing, the applicable trustee or the holders of at least 25% in
principal amount of the outstanding debt securities of that series may declare
all amounts due and payable or deliverable immediately. Holders of a majority in
principal amount of the outstanding debt securities of an affected series may
rescind and annul a declaration of acceleration if Sierra Pacific deposits with
the trustee enough money to cover all overdue amounts on the outstanding debt
securities other than the amounts that would be due as a result of the
acceleration.
WAIVER OF DEFAULT
Holders of a majority in principal amount of the outstanding debt securities
of an affected series (or if subordinated debt securities of an affected series
are held by a trust, the holders of at least a majority in liquidation amount of
the trust's preferred securities) may waive any past default or event of default
of that series, except defaults or events of default regarding covenants that
cannot be modified or amended without the consent of each holder of any
outstanding debt securities affected (see "--Modification of Indentures; Waiver"
above).
RIGHT TO DIRECT PROCEEDINGS; LIMITATIONS
Holders of debt securities may not enforce the applicable indentures or the
relevant debt securities except as set forth in the applicable indenture. The
trustee under an indenture may refuse to enforce the indenture on the applicable
debt securities unless it receives indemnification satisfactory to it. Subject
to limitations contained in the indentures, holders of a majority in principal
amount of debt securities issued under an indenture may direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
under the applicable indenture or of exercising trust or power conferred on the
trustee; provided, however, that (a) such direction does not conflict with any
rule of law or with the applicable indenture, and could not involve the trustee
in personal liability in circumstances where indemnity would not, in the
trustee's sole discretion, be adequate, (b) the trustee determines that such
direction does not unduly prejudice the rights of the holders of all series of
debt
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securities not joining in the giving of the applicable direction and (c) the
trustee may take any other action deemed proper by the trustee which is not
inconsistent with such direction.
If the subordinated debt securities of any series are held by a trust, and a
"declaration event of default" (as defined under "Description of Preferred
Securities of the Trusts--Declaration Events of Default") has occurred and is
attributable to the failure of Sierra Pacific to pay principal, premium, if any,
or interest on, those subordinated debt securities, then each holder of the
preferred securities of that trust may sue Sierra Pacific, or seek other
remedies to force payment to that holder of an amount equal to the aggregate
liquidation amount of the preferred securities held by that holder.
NO IMPAIRMENT OF RIGHT TO RECEIVE PAYMENT
Notwithstanding any other provision in the indentures, (including remedies
which are subject to conditions precedent), each holder of debt securities will
have the right, which is absolute and unconditional, to receive payment of the
principal of and premium, if any, and interest, if any, on the holder's debt
securities, when due and to institute suit for the enforcement of payment. Such
rights may not be impaired or affected without the consent of such holder.
NOTICE OF DEFAULT
If any event of default occurs under an indenture and is continuing and if
it is known to the trustee, the trustee shall mail to each holder of debt
securities issued under that indenture notice of the event of default, within 90
days after it occurs. The Trust Indenture Act currently permits the trustee to
withold notices of default (except for certain payment defaults) if the trustee
in good faith determines that withholding the notice is in the interest of the
holders of the debt securities.
SPECIAL TERMS RELATING TO THE SUBORDINATED DEBT SECURITIES TO BE HELD BY TRUSTS
SUBORDINATION
If Sierra Pacific's assets are distributed upon dissolution, winding up,
liquidation or reorganization, payments on subordinated debt securities will be
subordinated, to the extent provided in the subordinated indenture, to the prior
payment in full of all senior indebtedness, including senior debt securities. If
the maturity of any subordinated debt securities is accelerated, the holders of
all senior indebtedness outstanding at the time of acceleration will be entitled
to receive payment in full of all amounts due on the senior indebtedness before
the holders of subordinated debt securities will be entitled to receive or
retain any payment on the subordinated debt securities. However, the obligation
of Sierra Pacific to make payments on the subordinated debt securities will not
be affected in any other manner. Sierra Pacific may not make any payment on
subordinated debt securities at any time when there is a default in the payment
or delivery of any amounts due on any senior indebtedness, including payment of
any sinking fund. If, while there is a default on senior indebtedness, any
payment is received by the subordinated indenture trustee under the subordinated
indenture or the holders of any subordinated debt securities before all senior
indebtedness has been paid in full, that payment or distribution must be paid
over to the holders of the unpaid senior indebtedness or applied to the
repayment of the unpaid senior indebtedness. Holders of subordinated debt
securities will be subrogated to the rights of the holders of senior
indebtedness to the extent of payments made on senior indebtedness upon any
distribution of assets in any proceeding in respect of subordinated debt
securities.
REDEMPTION
Unless otherwise indicated in the applicable prospectus supplement,
subordinated debt securities will not be subject to any sinking fund.
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Unless otherwise indicated in the applicable prospectus supplement, Sierra
Pacific may, at its option, redeem the subordinated debt securities of any
series in whole at any time or in part from time to time. Except as otherwise
specified in the applicable prospectus supplement, the redemption price will be
equal to the principal and any accrued and unpaid interest on the subordinated
debt securities to the redemption date.
Except as otherwise specified in the applicable prospectus supplement, if a
subordinated debt security tax event (as defined below) shall occur and be
continuing, Sierra Pacific may, at its option, redeem the subordinated debt
securities in whole at any time within 90 days of the occurrence of the
Subordinated Debt Security Tax Event, at a redemption price equal to 100% of the
principal amount of the subordinated debt securities then outstanding plus
accrued and unpaid interest to the date fixed for redemption.
"Subordinated Debt Security Tax Event" means the receipt by Sierra Pacific
of an opinion of counsel experienced in such matters to the effect that:
- as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or
- as a result of any official administrative pronouncement or judicial
decision interpreting or applying the laws or regulations, which amendment
or change is effective or which pronouncement or decision is announced on
or after the date of issuance of the applicable series of subordinated
debt securities, there is more than an insubstantial risk that interest
payable by Sierra Pacific on the series of subordinated debt securities is
not, or within 90 days of the date of the opinion will not be, deductible
by Sierra Pacific, in whole or in part, for United States Federal income
tax purposes.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of subordinated debt
securities to be redeemed at its registered address. Unless Sierra Pacific
defaults in payment of the redemption price, on and after the redemption date
interest ceases to accrue on the subordinated debt securities or portions
thereof called for redemption.
If this prospectus is being delivered with the offering of a series of
subordinated debt securities, the accompanying prospectus supplement will show
the approximate amount of senior indebtedness outstanding as of a recent date.
OPTION TO EXTEND INTEREST PAYMENT DATE
If provided in the applicable prospectus supplement, Sierra Pacific will
have the right at any time and from time to time during the term of any
subordinated debt securities to defer payment of interest for the number of
consecutive interest payment periods as may be specified in the applicable
prospective supplement. No extension period may extend beyond the stated
maturity date of subordinated debt securities. United States federal income tax
consequences and special considerations applicable to the extension of interest
payment dates will be described in the applicable prospectus supplement.
RESTRICTIONS ON CERTAIN PAYMENTS
Unless otherwise specified in the applicable Prospectus Supplement, Sierra
Pacific will covenant, as to each series of subordinated debt securities, that
it will not, and will not permit any of its subsidiaries to:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of Sierra
Pacific's capital stock, or
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- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of Sierra Pacific (including
other subordinated debt securities) that rank PARI PASSU with or junior in
interest to the subordinated debt securities of any subsidiary or any
guarantee payments with respect to any guarantee by Sierra Pacific of the
debt securities of any subsidiary, if such guarantee ranks PARI PASSU or
junior in interest to the subordinated debt securities;
if at that time:
- there shall have occurred any event which Sierra Pacific has actual
knowledge that with the giving of notice or the lapse of time, or both
would cause an Event of Default under the subordinated indenture;
- there is a default by Sierra Pacific relating to its payment of any
obligations under a preferred securities guarantee; or
- Sierra Pacific shall have given notice of its selection of an extension
period under the subordinated indenture and shall not have rescinded the
notice, or the extention period shall be continuing.
The above covenants do not restrict the payment of dividends by Sierra
Pacific Power Company or Nevada Power Company on their capital stock, nor do
they restrict Sierra Pacific from paying:
- dividends or distributions in common stock,
- redemptions or purchases of any rights pursuant to any rights plan adopted
by Sierra Pacific, or any successor to the rights plan, and the
declaration of a dividend of the rights or the issuance of stock under the
plan in the future,
- payments under any guarantee, and
- purchases of common stock related to the issuance of common stock under
any of Sierra Pacific's benefit plans for its directors, officers or
employees or under Sierra Pacific's Common Stock Investment Plan or any
successor plan.
OPTION TO CHANGE STATED MATURITY DATE
If provided in the applicable prospectus supplement, Sierra Pacific shall
have the right to:
- change the maturity date of a series of subordinated debt securities and
exchange those subordinated debt securities for preferred securities of
the trust upon liquidation of the trust; or
- extend the stated maturity of the subordinated debt securities;
provided that at the time of any change in the maturity date:
- Sierra Pacific is not in bankruptcy, insolvent or in liquidation;
- Sierra Pacific is not in default on the principal or interest on the
subordinated debt securities;
- the applicable trust is not in arrears on payments of distributions on its
preferred securities;
- the subordinated debt securities are rated not less than BBB--by
Standard & Poor's Rating Services on Baa3 by Moody's Investors
Service, Inc.; and
- the extended maturity date is no later than the 49th anniversary of the
initial issuance of the preferred securities of the applicable trust.
In addition, if Sierra Pacific exercises its right to liquidate the trust
and exchange subordinated debt securities for preferred securities of the trust,
any changed stated maturity date cannot be earlier than five years after the
issuance of the preferred securities and no later than thirty years after the
issuance of the preferred securities.
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SPECIAL TERMS RELATING TO THE SENIOR DEBT SECURITIES
LIMITATIONS UPON LIENS ON STOCK OF RESTRICTED SUBSIDIARIES
Sierra Pacific will not, nor will it permit any "restricted subsidiary" to,
create, issue, assume, guarantee or permit to exist any indebtedness for
borrowed money secured by a mortgage, security interest, pledge, lien or other
encumbrance upon any shares of stock of any restricted subsidiary without
effectively providing that the senior debt securities shall be secured equally
and ratably with the indebtedness.
The term "restricted subsidiary" is defined in the senior indenture as any
operating subsidiary of Sierra Pacific that accounts for 10% or more of the
consolidated revenues and/or assets of Sierra Pacific.
LIMITATIONS ON THE ISSUANCE OR DISPOSITION OF STOCK OF RESTRICTED
SUBSIDIARIES
Sierra Pacific will not, nor will it permit any restricted subsidiary to,
issue, sell, assign, transfer or otherwise dispose of, directly or indirectly,
any "capital stock" (other than nonvoting preferred stock) of any restricted
subsidiary, except for:
- the purpose of qualifying directors;
- sales or other dispositions to Sierra Pacific or one or more restricted
subsidiaries;
- the disposition of all or any part of the capital stock of any restricted
subsidiary for consideration which is at least equal to the fair value of
the capital stock as determined by Sierra Pacific's board of directors
(acting in good faith); or
- an issuance, sale, assignment, transfer or other disposition required to
comply with an order of a court or regulatory authority of competent
jurisdiction, other than an order issued at the request of Sierra Pacific
or any restricted subsidiary.
The term "capital stock" is defined in the senior indenture as any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in corporate stock.
DEFEASANCE
The indentures provide Sierra Pacific with the option to discharge itself
from (a) all obligations of the debt securities of a series (except for
administrative obligations) or (b) compliance with the covenants of the
indentures. To exercise either option Sierra Pacific must irrevocably deposit in
trust with the indenture trustee money or obligations of, or guaranteed by, the
United States sufficient to pay all of the principal of (including any mandatory
redemption payments), premium, additional amounts and interest on the debt
securities on the dates the payments are due. To exercise either option, Sierra
Pacific is required to deliver to the indenture trustee an opinion of tax
counsel that the deposit and related defeasance would not cause the holders of
the debt securities to recognize income, gain or loss for Federal income tax
purposes. To exercise the option described in clause (a) above, the tax opinion
must be based either on a ruling of the Internal Revenue Service or a change in
the applicable Federal income tax law.
FORM, REGISTRATION, TRANSFER AND EXCHANGE
Each series of debt securities will be issued in fully registered form
without coupons or in bearer form with or without coupon. Unless the applicable
prospectus supplement provides otherwise, registered senior debt securities will
be issued in denominations of $1,000 or integral multiples thereof and senior
debt securities issued in bearer form will be issued in the denomination of
$5,000. Unless the applicable prospectus supplement provides otherwise,
subordinated debt securities will be issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. Each
indenture provides that debt securities may be issued in global form. If any
series of debt securities is issuable in global form, the applicable prospectus
supplement will describe the
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circumstances, if any, under which beneficial owners of interests in any of
those global debt securities may exchange their interests for debt securities of
that series and of like tenor and principal amount in any authorized form and
denomination.
Holders may present debt securities for exchange, and registered debt
securities for registration of transfer, in the manner, at the places and
subject to the restrictions set forth in the applicable indenture, the debt
securities and the applicable prospectus supplement. Holders may transfer senior
debt securities in bearer form and the coupons, if any, appertaining to the
senior debt securities will be transferrable by delivery. There will be no
service charge for any registration of transfer of registered debt securities or
exchange of debt securities, but Sierra Pacific may require payment of a sum
sufficient to cover any tax or other governmental charges that may be imposed in
connection with any registration of transfer or exchange. Bearer securities will
not be issued in exchange for registered securities.
In the event of any redemption of debt securities of any series, Sierra
Pacific will not be required to
- register the transfer of or exchange debt securities of that series during
a period of 15 days next preceding the selection of securities of the
series to be redeemed;
- register the transfer of or exchange any registered debt security called
for redemption, except the unredeemed portion of any registered debt
security being redeemed in part; or
- exchange any bearer security called for redemption except, to the extent
provided with respect to any series of debt securities and referred to in
the applicable prospectus supplement, to exchange the bearer security for
a registered debt security of like tenor and principal amount that is
immediately surrendered for redemption.
GLOBAL SECURITIES
The debt securities of each series may be issued in whole or in part in
global form. A debt security in global form will be deposited with, or on behalf
of, a depositary, which will be named in an applicable prospectus supplement. A
global security may be issued in either registered or bearer form and in either
temporary or definitive form. A global debt security may not be transferred,
except as a whole, among the depositary for such debt security and/or its
nominees and/or successors. If any debt securities of a series are issuable as
global securities, the applicable prospectus supplement will describe any
circumstances when beneficial owners of interests in any global security may
exchange those interests for definitive debt securities of like tenor and
principal amount in any authorized form and denomination and the manner of
payment of principal and interest on any global debt security.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement, payment
of the interest on any debt securities (other than bearer securities) on any
interest payment date will be made to the person in whose name the debt
securities are registered.
Unless otherwise indicated in the applicable prospectus supplement,
principal of and any premium, additional amounts and interest on the debt
securities (other than bearer securities) of a particular series will be payable
at the office of the paying agents designated by Sierra Pacific. Unless
otherwise indicated in the prospectus supplement, the principal corporate trust
office of the applicable trustee in The City of New York will be designated as
sole paying agent for payments with respect to debt securities of each series.
All moneys paid by Sierra Pacific to a paying agent or the trustee for the
payment of the principal, premium additional amounts or interest on a debt
security which remains unclaimed at the end of one year will be repaid to Sierra
Pacific, and the holder of the debt security thereafter may look only to Sierra
Pacific for payment thereof.
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GOVERNING LAW
The indentures and debt securities will be governed by and construed under
the laws of the State of New York.
DESCRIPTION OF THE PREFERRED SECURITIES OF THE TRUSTS
GENERAL
The preferred securities of each trust will be issued under the terms of its
declaration. Each declaration will be qualified as an indenture under the Trust
Indenture Act. The property trustee of each trust, The Bank of New York, will
act as trustee for the preferred securities under each declaration for purposes
of compliance with the provisions of the Trust Indenture Act. The following
summary of the material terms and provisions of the preferred securities of each
trust is not complete and is subject to, and qualified in its entirety by
reference to, the declarations, copies of which are filed as an exhibit to the
registration statement of which this prospectus is a part, the Delaware Business
Trust Act and the Trust Indenture Act.
Each declaration authorizes the administrative trustees of each trust to
issue its Trust Securities, which represent undivided beneficial ownership
interests in the assets of the respective trusts. The proceeds from the sale of
Trust Securities will be used by a trust to purchase a series of subordinated
debt securities issued by Sierra Pacific. The subordinated debt securities
purchased by a trust will be held by the trust's property trustee for the
benefit of the holders of its Trust Securities.
The declarations do not permit the trusts to:
- acquire any assets other than subordinated debt securities issued by
Sierra Pacific;
- issue any securities other than Trust Securities; or
- incur any indebtedness.
The payment of distributions out of money held by the trusts, and payments
out of money held by the trusts upon redemption of preferred securities or
liquidation of the trusts, are guaranteed by Sierra Pacific to the extent
described under "Description of Preferred Securities Guarantee."
Each preferred securities guarantee will be held by The Bank of New York,
the guarantee trustee, for the benefit of the holders of preferred securities of
each trust. A preferred securities guarantee does not cover payment of
distributions when a trust does not have sufficient available funds to pay such
distributions.
The prospectus supplement relating to the preferred securities of a trust
will describe the specific terms of a trust's preferred securities, including:
- the name of the preferred securities;
- the dollar amount and number of securities issued;
- any provision relating to deferral of distribution payments;
- the annual distribution rate(s), the payment date(s) and the record dates
used to determine the holders who are to receive distributions;
- the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions for which the preferred securities
shall be purchased or redeemed, in whole or in part;
- the terms and conditions, if any, upon which the applicable series of
subordinated debt securities may be distributed to holders of the
preferred securities;
- the voting rights, if any, of holders of the preferred securities;
- any securities exchange on which the preferred securities will be listed;
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- whether the preferred securities are to be issued in book-entry form and
represented by one or more global certificates; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of such preferred securities.
Each prospectus supplement will describe United States Federal income tax
considerations applicable to the purchase, holding and disposition of the
preferred securities covered by that prospectus supplement.
DISTRIBUTIONS
Distributions on the preferred securities will be cumulative, will
accumulate from the date of original issuance unless otherwise specified in the
applicable prospectus supplement and will be payable on the dates specified in
the applicable prospectus supplement. In the event that any date on which
distributions are payable on the preferred securities is not a Business Day (as
defined below), payment of the distribution payable on that date will be made on
the next succeeding day that is a Business Day. If the next succeeding day that
is a Business Day is in the next succeeding calendar year, payment of a
distribution shall be made on the immediately preceding Business Day. A
"Business Day" means any day other than a Saturday or a Sunday, or a day on
which banking institutions in The City of New York are authorized or required by
law or executive order to remain closed or a day on which the corporate trust
office of the property trustee or the subordinated indenture trustee is closed
for business.
Distributions on the preferred securities of a trust will be made to the
extent that the trust has funds available for the payment of the distributions
in the property account. Amounts available to a trust for distribution to the
holders of its preferred securities will be limited to payments received by the
trust from Sierra Pacific with respect to subordinated debt securities from
Sierra Pacific on Sierra Pacific's guarantee on the preferred securities as
described in this prospectus.
If provided in the applicable prospectus supplement, Sierra Pacific has the
right under the subordinated indenture to defer the payment of interest at any
time or from time to time on any series of subordinated debt securities issued
to a trust for a period which will be specified in the prospectus supplement
(each an "extension period"). No extension period may extend beyond the stated
maturity of the subordinated debt securities. As a consequence of any extension,
distributions on the preferred securities would be deferred (but would continue
to accumulate additional distributions thereon at the rate per annum shown in
the prospectus supplement) during any extension period. During an extension
period Sierra Pacific may not, and may not permit any of its subsidiaries to:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock other than cash dividends paid by Sierra Pacific Power Company and
Nevada Power Company to Sierra Pacific,
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities that rank PARI PASSU with or
junior in interest to the subordinated debt securities, or
- make any guarantee payments with respect to any guarantee by Sierra
Pacific of debt securities of any subsidiary of Sierra Pacific if the
guarantee ranks PARI PASSU or junior in interest to the subordinated debt
securities.
MANDATORY REDEMPTION
Upon the repayment or redemption, in whole or in part, of any subordinated
debt securities issued to a trust, whether at maturity or upon earlier
redemption as provided in the subordinated indenture, the proceeds from the
repayment or redemption shall be applied by the property trustee to redeem a
like amount of the Trust Securities, upon not less than 30 nor more than
60 days notice, at a redemption price (the "redemption price") equal to the
aggregate liquidation amount of the Trust
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Securities plus accumulated but unpaid distributions to the date of redemption
and the related amount of the premium, if any, paid by Sierra Pacific upon the
concurrent redemption of the subordinated debt securities. See "Description of
Debt Securities--Redemption."
If less than all of any series of subordinated debt securities are to be
repaid or redeemed on a redemption date, then the proceeds from that repayment
or redemption shall be allocated to the redemption pro rata among the related
preferred securities and the common securities. The amount of premium, if any,
paid by Sierra Pacific upon the redemption of all or any part of any series of
subordinated debt securities to be repaid or redeemed on a redemption date shall
be allocated to the redemption pro rata among the related preferred securities
and the common securities.
Sierra Pacific will have the right to redeem any series of subordinated debt
securities:
- in whole at any time or in part from time to time, subject to the
conditions described under "Description of Debt Securities--Redemption,"
- at any time, in whole (but not in part), upon the occurrence of a Trust
Tax Event or an Trust Investment Company Event (each as defined below), or
- as may be otherwise specified in the applicable prospectus supplement.
TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a "Trust Tax Event" or a "Trust Investment Company Event"
(each as defined below, and each, a "Trust Special Event") shall occur and be
continuing, the administrative trustees of each trust shall, within 90 days
following the occurrence of the Trust Special Event elect to either:
- dissolve the trust upon not less than 30 nor more than 60 days notice with
the result that, after satisfaction of creditors of the trust, if any,
subordinated debt securities held by the trust would be distributed on a
pro rata basis to the holders of the Trust Securities in liquidation of
the holders' interests in the trust; PROVIDED, HOWEVER, that if at the
time there is available to the trust the opportunity to eliminate, within
the 90-day period, the Trust Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some
other similar reasonable measure which in the sole judgment of Sierra
Pacific has or will cause no adverse effect on the trust, Sierra Pacific
or the holders of the Trust Securities and will involve no material cost,
the trust will pursue that measure in lieu of dissolution; or
- cause the preferred securities of the trust to remain outstanding,
provided that, Sierra Pacific shall pay any and all expenses incurred by
or payable by the trust attributable to the Trust Special Event.
Furthermore, if in the case of the occurrence of a Trust Tax Event, the
administrative trustees have received an opinion of nationally recognized
independent tax counsel experienced in these matters that there is more than an
insubstantial risk that interest payable with respect to the subordinated debt
securities issued by Sierra Pacific is not, or will not be, deductible by Sierra
Pacific for United States Federal income tax purposes even if the subordinated
debt securities were distributed to the holders of Trust Securities as described
above, then Sierra Pacific shall have the right, within 90 days following the
occurrence of the Trust Tax Event, to redeem the subordinated debt securities in
whole, but not in part, for cash upon not less than 30 nor more than 60 days
notice and promptly following any redemption, the Trust Securities will be
redeemed by the trust at the redemption price.
"Trust Tax Event" means that Sierra Pacific shall have requested and
received and shall have delivered to the administrative trustees an opinion of
nationally recognized independent tax counsel experienced in these matters to
the effect that there has been:
- an amendment to, change in or announced proposed change in the laws, or
any regulations under those laws of the United States or any political
subdivision or taxing authority of that jurisdiction,
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- a judicial decision interpreting, applying, or clarifying these laws or
regulations,
- an administrative pronouncement or action that represents an official
position, including a clarification of an official position, of the
governmental authority or regulatory body making the administrative
pronouncement or taking any action, or
- a threatened challenge asserted in connection with an audit of Sierra
Pacific or the trusts, or a threatened challenge asserted in writing
against any other taxpayer that has raised capital through the issuance of
securities that are substantially similar to the subordinated debt
securities or the preferred securities, which amendment or change is
adopted or which proposed change, decision or pronouncement is announced
or which action, clarification or challenge occurs on or after the date of
this prospectus (collectively a "Tax Action"), which tax action relates to
any of the items described in (1) through (3) below, and that following
the occurrence of any Tax Action there is more than an insubstantial risk
that:
(1) the trusts are, or will be, subject to United States Federal income tax
with respect to income accrued or received on the subordinated debt
securities,
(2) the trusts are, or will be, subject to more than a minimal amount of
other taxes, duties or other governmental charges or
(3) interest payable by Sierra Pacific with respect to the subordinated debt
securities issued to the trusts is not, or will not be, deductible by
Sierra Pacific for United States Federal income tax purposes.
"Trust Investment Company Event" means that Sierra Pacific shall have
requested and received and shall have delivered to the administrative trustees
an opinion of nationally recognized independent legal counsel experienced in
these matters to the effect that as a result of the occurrence on or after the
date of this prospectus of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in Investment
Company Act Law"), the trusts are or will be considered investment companies
which are required to be registered under the Investment Company Act.
If subordinated debt securities are distributed to the holders of preferred
securities, Sierra Pacific will use its best efforts to cause the subordinated
debt securities to be listed on the NYSE or on any other national securities
exchange or similar organization as the preferred securities are then listed or
quoted.
On the date fixed for any distribution of subordinated debt securities, upon
dissolution of a trust,
- the Trust Securities of the trust will no longer be deemed to be
outstanding, and
- certificates representing the Trust Securities will be deemed to represent
the subordinated debt securities having a liquidation preference equal to
the stated liquidation amount of the Trust Securities until the
certificates are presented to Sierra Pacific or its agent for transfer or
reissuance.
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If a dissolution and liquidation of the trusts were to occur, subordinated
debt securities which an investor may subsequently receive on dissolution and
liquidation of the trusts may trade at a discount to the price of the preferred
securities exchanged.
REDEMPTION PROCEDURES
The trusts may not redeem fewer than all of their outstanding preferred
securities unless all accumulated and unpaid distributions have been paid on all
of their preferred securities for all quarterly distribution periods terminating
on or before the date of redemption.
If a trust gives a notice of redemption of its preferred securities, which
notice will be irrevocable, and if Sierra Pacific has paid to the property
trustee a sufficient amount of cash in connection with the related redemption of
the subordinated debt securities held by the trust, then, by 12:00 noon, New
York City time, on the redemption date, the trust will irrevocably deposit with
DTC funds sufficient to pay the amount payable on redemption of all book entry
certificates and will give DTC irrevocable instructions and authority to pay the
redemption amount to holders of the preferred securities. See "Book-Entry Only
Issuance--The Depository Trust Company." If notice of redemption shall have been
given and funds are deposited as required, then upon the date of deposit, all
rights of holders of any preferred securities called for redemption in this
manner will cease, except the right of the holders of those preferred securities
to receive the redemption price, without interest. In the event that any date
fixed for redemption of the preferred securities is not a Business Day, then
payment of the amount payable on that date will be made on the next succeeding
day which is a Business Day, without any interest or other payment in respect of
the amount payable subject to delay, except that, if the next succeeding day
that is a Business Day falls in the next calendar year, the payment will be made
on the immediately preceding Business Day. In the event that payment of the
redemption price in respect of the preferred securities is improperly withheld
or refused and not paid either by the trust or by Sierra Pacific under the
applicable trust guarantee described under "Description of the Preferred
Securities Guarantee," distributions on the preferred securities will continue
to accumulate from the original redemption date to the date of payment.
In the event that fewer than all of the outstanding preferred securities are
to be redeemed, the preferred securities will be redeemed in accordance with the
procedures of DTC. See "--Book-Entry Only Issuance--The Depository Trust
Company". In the event that the Preferred Securities do not remain in book-entry
only form and fewer than all of the outstanding preferred securities are to be
redeemed, the preferred securities shall be redeemed on a pro rata basis or
pursuant to the rules of any securities exchange on which the preferred
securities are listed.
Subject to the foregoing and applicable law, including United States Federal
securities laws, Sierra Pacific or its subsidiaries may at any time and from
time to time purchase outstanding preferred securities by tender, in the open
market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
If there is a voluntary or involuntary liquidation, dissolution, winding-up
or termination of a trust, the holders of the preferred securities of that trust
will be entitled to receive out of the assets of the trust, after satisfaction
of liabilities to creditors, distributions in cash or other immediately
available funds in an amount equal to the aggregate of the stated liquidation
amount per preferred security plus accumulated and unpaid distributions to the
date of payment, unless, in connection with the trust's liquidation,
subordinated debt securities have been distributed on a pro rata basis to the
holders of its Trust Securities.
If, upon any trust's liquidation, the liquidation distribution can be paid
only in part because the trust has insufficient assets available to pay in full
the aggregate liquidation distribution, then the amounts payable directly by the
trust on its preferred securities shall be paid on a pro rata basis. The
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holders of the common securities of the trust will be entitled to receive
distributions upon liquidation pro rata with the holders of the preferred
securities, except in the limited circumstances described below under
"--Subordination of the Common Securities".
Each trust shall dissolve:
- upon the bankruptcy of Sierra Pacific,
- upon the filing of a certificate of dissolution or the equivalent with
respect to Sierra Pacific, dissolution of the trust after having obtained
the consent of at least a majority in liquidation amount of the trust's
securities, voting together as a single class, or the revocation of Sierra
Pacific's certificate of incorporation, and the expiration of 90 days
after the date of revocation without reinstatement,
- upon the distribution of all of the subordinated debt securities upon the
occurrence of a Trust Special Event,
- upon the entry of a decree of a judicial dissolution of Sierra Pacific or
the applicable trust, or
- upon the redemption of all the applicable Trust Securities.
SUBORDINATION OF THE COMMON SECURITIES
Payment of amounts upon liquidation of a trust's Trust Securities shall be
made pro rata based on the liquidation amount of the Trust Securities; provided,
however, that upon:
- the occurrence of an event of default by Sierra Pacific in respect of
subordinated debt securities, or
- default by Sierra Pacific on any of its obligations under any guarantee
described in this prospectus,
the holders of the affected trust's preferred securities will have a preference
over the holders of the trust's common securities with respect to payments upon
liquidation of the trust.
In the case of any event of default by Sierra Pacific in respect of
subordinated debt securities, the holder of the common securities will be deemed
to have waived any right in connection with the event of default until the event
of default with respect to the preferred securities have been cured, waived or
otherwise eliminated. Until all events of default with respect to the preferred
securities have been cured in this manner, waived or otherwise eliminated, the
property trustee of the trust shall act solely on behalf of the holders of the
trust's preferred securities and not on behalf of the holder of the common
securities, and only the holders of the preferred securities will have the right
to direct the property trustee to act on their behalf.
AMENDMENT OF DECLARATIONS
Each declaration may be modified and amended if approved and executed by the
administrative trustees of a trust, except that:
- no amendment shall be made, and any purported amendment shall be void and
ineffective, to the extent the result thereof would be to:
(1) cause a trust to fail to be classified for the purposes of United
States Federal income taxation as a grantor trust;
(2) affect the powers or the rights of the property trustee or the Delaware
trustee of a trust without their written consent; or
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(3) cause a trust to be deemed an "investment company" which is required to
be registered under the Investment Company Act;
- at the time after a trust has issued any securities which remain
outstanding, any amendment which would materially adversely affect the
rights, privileges or preferences of any holder of the securities may be
effected only with the additional requirements as may be set forth in the
terms of the securities of a trust;
- provisions in the declarations regarding the transferability of the common
securities of a trust and regarding the amendment of the declarations
cannot be amended without the consent of all of the holders of the
securities of a trust;
- provisions in the declarations regarding Sierra Pacific cannot be amended
without Sierra Pacific's consent; and
- Sierra Pacific's rights to increase or decrease the number of, and appoint
and remove, trustees of a trust shall not be amended without Sierra
Pacific's consent.
Notwithstanding the foregoing, each declaration may be amended from time to
time by the holders of a majority in liquidation amount of the common securities
of the trust and its property trustee, without the consent of the holders of the
preferred securities, to:
- cure any ambiguity;
- correct or supplement any provision in a declaration that may be defective
or inconsistent with any other provision in that declaration or to make
any other provisions with respect to matters or questions arising under a
declaration, which shall not be inconsistent with the other provisions of
the declaration;
- add to the covenants, restrictions or obligations of Sierra Pacific;
- ensure the applicable trust's classification as a grantor trust for United
States Federal income tax purposes and conform to any change in the
Investment Company Act, the Trust Indenture Act or the rules or
regulations under either law; and
- to modify, eliminate or add to any provisions of a declaration to the
extent necessary to ensure that the applicable trust will not be required
to register as an "investment company" under the Investment Company Act.
VOTING RIGHTS
Except as provided below and under "Description of Preferred Securities
Guarantee--Amendments and Assignment" and as otherwise required by law and the
declarations, the holders of the preferred securities of the trusts will have no
voting rights.
The holders of a majority in aggregate liquidation amount of the preferred
securities of each trust have the right to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the property trustee of the trust; or
- direct the exercise of the power conferred upon the property trustee under
the trust's declaration, including the right to direct the property
trustee, as the holder of a series of subordinated debt securities, to
(a) exercise the remedies available under the subordinated indenture with
respect to the subordinated debt securities;
(b) waive any event of default under the subordinated indenture that is
waivable;
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(c) cancel an acceleration of the principal of the subordinated debt
securities; or
(d) consent to any amendment, modification or termination of the
subordinated indenture or the subordinated debt securities where consent shall
be required.
However, if the subordinated indenture requires the consent of the holders of
more than a majority in aggregate principal amount of a series of subordinated
debt securities with respect to any waiver or consent, then the property trustee
for the series must get approval of the holders of the super-majority in
liquidation amount of the series of preferred securities.
In addition, before taking any of the foregoing actions, the property
trustee must obtain an opinion of counsel stating that, as a result of the
action, the trust will continue to be classified as a grantor trust for United
States Federal income tax purposes.
The property trustee of a trust will notify all preferred securities holders
of any notice received from the subordinated indenture trustee with respect to
the subordinated debt securities held by the trust.
Any required approval or direction of holders of preferred securities of a
trust may be given at a separate meeting of holders of the preferred securities
of the trust convened for that purpose, at a meeting of all of the holders of
Trust Securities or through written consent.
If a vote of preferred securities holders is taken or a consent is obtained,
any preferred securities that are owned by Sierra Pacific or any of its
affiliates will, for purposes of the vote or consent, be treated as if they were
not outstanding. This means:
- Sierra Pacific and any of its affiliates will not be able to vote on or
consent to matters requiring the vote or consent of holders of preferred
securities; and
- any preferred securities owned by Sierra Pacific or any of its affiliates
will not be counted in determining whether the required percentage of
votes or consents has been obtained.
DECLARATION EVENTS OF DEFAULT
Any one of the following events constitutes an "event of default" under the
declarations with respect to the preferred securities issued thereunder:
- the occurrence of an event of default under the subordinated indenture
(see "Description of Debt Securities--Events of Default");
- a default by the property trustee in the payment of any distribution when
it becomes due and payable, and continuation of the default for a period
of 30 days;
- a default by the property trustee in the payment of the redemption price
of any Trust Security when it becomes due and payable;
- default in the performance or breach, in any material respect, of any
covenant or warranty of the administrative trustees, and continuation of
the default or breach for a period of 60 days after appropriate written
notice under the declaration; or
- the occurrence of events of bankruptcy or insolvency with respect to the
property trustee and the failure by Sierra Pacific to appoint a successor
property trustee within 60 days thereof.
Sierra Pacific and the administrative trustees of each trust must file
annually with the property trustee of each trust a certificate stating whether
or not they are in compliance with all the applicable conditions and covenants
under the applicable declaration.
Upon the occurrence of an event of default under a declaration, the property
trustee, as the sole holder of the subordinated debt securities held by the
applicable trust, will have the right under the
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subordinated indenture to declare the principal of, premium, if any, and
interest on the subordinated debt securities to be immediately due and payable.
If the property trustee fails to enforce its rights under the terms of the
applicable subordinated debt securities after a holder of preferred securities
has made a written request, the holder may, to the extent permitted by
applicable law, sue Sierra Pacific, or seek other remedies, to enforce the
property trustee's rights under the subordinated indenture without first
instituting a legal proceeding against the property trustee, the trust or any
other person or entity.
If Sierra Pacific fails to pay principal, premium, if any, or interest on a
series of subordinated debt securities when payable, then a holder of the
related preferred securities issued by the affected trust may directly sue
Sierra Pacific or seek other remedies, to collect its pro rata share of payments
owed.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUSTS
Neither trust may consolidate, amalgamate, convert into, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other entity, except as
described below or as described in "Liquidation Distribution Upon Dissolution".
Each trust may, with the consent of a majority of the administrative trustees of
the trust and without the consent of the holders of the Trust Securities, the
property trustee or the Delaware trustee consolidate, amalgamate, convert into,
merge with or into, or be replaced by a new trust organized under the laws of
any State of the United States; provided, that:
- if the trust is not the surviving entity, the successor entity either:
- substitutes for the preferred securities other securities having
substantially the same terms as the preferred securities (the "successor
securities"), so long as the successor securities rank the same as the
trust securities with respect to distributions, assets and payments; or
- expressly assumes all of the obligations of the trust under the Trust
Securities, and
- Sierra Pacific expressly acknowledges a trustee of the successor entity
possessing the same powers and duties as the property trustee;
- the preferred securities or any successor securities are listed, or any
successor securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the
preferred securities are then listed or quoted;
- any merger, consolidation, amalgamation, conversion or replacement does
not cause the preferred securities, including any successor securities, to
be downgraded by any nationally recognized statistical rating
organization;
- any merger, consolidation, amalgamation, conversion or replacement does
not adversely affect the rights, preferences and privileges of the holders
of the preferred securities, including any successor securities, in any
material respect;
- the successor entity has a purpose substantially identical to that of the
trust;
- Sierra Pacific guarantees the obligations of the successor entity under
the successor securities to the same extent as provided by the trust
guarantee; and
- before any merger, consolidation, amalgamations, conversion or
replacement, Sierra Pacific has received an opinion of a nationally
recognized independent counsel to the trust experienced in these matters
to the effect that:
- any merger, consolidation, amalgamations, conversion or replacement will
not adversely affect the rights, preferences and privileges of the
holders of the preferred securities, including any
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successor securities, in any material respect, other than with respect
to any dilution of the holders' interest in the new entity;
- following any merger, consolidation, amalgamations, conversion or
replacement, neither the trust nor the successor entity will be required
to register as an investment company under the Investment Company Act;
and
- following any merger, consolidation, amalgamations, conversion or
replacement, the trust, or any successor trust, will not be classified
as an association or a publicly traded partnership taxable as a
corporation for United States Federal income tax purposes.
Notwithstanding the foregoing, each trust shall not, except with the consent of
holders of 100% in liquidation amount of the preferred securities of the trust,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, conversion, merge with or
into, or replace it, if any consolidation, amalgamation, conversion, merger or
replacement would cause the trust or the successor entity to be classified as an
association or a publicly traded partnership taxable as a corporation for United
States Federal income tax purposes.
REMOVAL AND REPLACEMENT OF TRUSTEES
Only the holder of a trust's common securities has the right to remove or
replace the trustees of the applicable trust. The resignation or removal of any
trustee and the appointment of a successor trustee shall be effective only on
the acceptance of appointment by the successor trustee under the provisions of
the applicable declaration.
REGISTRAR, TRANSFER AGENT, AND PAYING AGENT
Unless otherwise specified in the applicable prospectus supplement, the
property trustee of a trust will act as registrar, transfer agent and paying
agent for the preferred securities of the trust.
Registration of transfers of the preferred securities of a trust will be
effected without charge by or on behalf of the trust, but upon payment and with
the giving of any indemnity as the trust or Sierra Pacific may require, in
respect of any tax or other government charges which may be imposed in relation
to it.
The trusts will not be required to register or cause to be registered the
transfer of their preferred securities after the preferred securities have been
called for redemption.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
DESCRIPTION OF THE GLOBAL CERTIFICATES
DTC will act as securities depository for the preferred securities and, to
the extent distributed to the holders of the preferred securities, the
subordinated debt securities held by a trust. The preferred securities will be
issued only as fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global certificates, representing
the total aggregate number of preferred securities, will be issued and will be
deposited with DTC.
DTC PROCEDURES
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its participants deposit with
DTC. DTC also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited
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securities through electronic computerized book-entry changes in participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Participants in DTC include securities brokers and dealers, banks,
trust companies, clearing corporations and other organizations. DTC is owned by
a number of its participants and by the New York Stock Exchange, the American
Stock Exchange and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others, including securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. The rules
applicable to DTC and its participants are on file with the SEC.
Purchases of preferred securities within the DTC system must be made by or
through participants, which will receive a credit for the preferred securities
on DTC's records. The ownership interest of each beneficial owner of preferred
securities is in turn to be recorded on the participants' and indirect
participants' records. Beneficial owners will not receive written confirmation
from DTC of their purchases, but beneficial owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the participants or indirect participants
through which the beneficial owners purchased preferred securities. Transfers of
ownership interests in preferred securities are to be accomplished by entries
made on the books of participants and indirect participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their ownership interests in the preferred securities, except in the event that
use of the book-entry system for the preferred securities is discontinued.
DTC has no knowledge of the actual beneficial owners of preferred
securities; DTC's records reflect only the identity of the participants to whose
accounts the preferred securities are credited, which may or may not be the
beneficial owners. The participants and indirect participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
global certificate, DTC or the nominee, as the case may be, will be considered
the sole owner or holder of the preferred securities being represented for all
purposes under the declarations. No beneficial owner of an interest in a global
certificate will be able to transfer that interest except in accordance with
DTC's applicable procedures, in addition to those provided for under the
declarations.
DTC has advised Sierra Pacific that it will take any action permitted to be
taken by a holder of preferred securities, including the presentation of
preferred securities for exchange as described below, only at the direction of
one or more participants to whose account the DTC interests in the global
certificates are credited and only in respect of the portion of the aggregate
liquidation amount of the preferred securities as to which the participant or
participants has or have given the direction. Also, if there is an event of
default under the declarations, DTC will exchange the global certificates for
certificated securities, which it will distribute to its participants in
accordance with its customary procedures.
Delivery of notices and other communications by DTC to participants, by
participants to indirect participants, and by participants and indirect
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of preferred securities held in book-entry
form will be sent to Cede & Co. If less than all of the preferred securities are
being redeemed, DTC will determine the amount of the interest of each
participant to be redeemed in accordance with its procedures.
Although voting with respect to preferred securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to the preferred securities. Under its usual procedures,
DTC would mail an omnibus proxy to the issuing trust as soon as possible after
the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting
rights
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to those participants to whose accounts the preferred securities are allocated
on the record date identified in a listing attached to the omnibus proxy.
Distributions on the preferred securities held in book-entry form will be
made to DTC in immediately available funds. DTC's practice is to credit
participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on the payment date. Payments by participants and
indirect participants to beneficial owners will be governed by standing
instructions and customary practices and will be the responsibility of the
participants and indirect participants and not of DTC, the trusts or Sierra
Pacific, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of any distributions to DTC is the responsibility of
the trusts, disbursement of those payments to participants is the responsibility
of DTC, and disbursement of those payments to the beneficial owners is the
responsibility of participants and indirect participants.
Except as described in the applicable prospectus supplement, a beneficial
owner of an interest in a global certificate will not be entitled to receive
physical delivery of the preferred securities. Accordingly, each beneficial
owner must rely on the procedures of DTC to exercise any rights under the
preferred securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global certificates among participants of DTC, DTC
is under no obligation to perform or continue to perform the procedures, and the
procedures may be discontinued at any time. Neither Sierra Pacific nor the
trusts, nor any underwriter, dealer or agent participating in the offering will
have any responsibility or liability for the performance by DTC or its
participants or indirect participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depository with
respect to the preferred securities at any time by giving notice to the issuing
trusts. If a successor securities depository is not obtained, preferred
securities certificates are required to be printed and delivered to the property
trustee. Additionally, each trust, with the consent of Sierra Pacific, may
decide to discontinue use of the system of book-entry transfers through DTC or
any successor depository. In that event, certificates for preferred securities
will be printed and delivered to the property trustee. In each of the above
circumstances, Sierra Pacific will appoint a paying agent with respect to the
preferred securities.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. These laws may impair
the ability to transfer beneficial interests in the global preferred securities
as represented by a global certificate.
The information in this section concerning DTC and DTC's system has been
obtained from sources that Sierra Pacific believes to be reliable, but Sierra
Pacific takes no responsibility for the accuracy of the information.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee of each trust, before the occurrence of a default with
respect to a trust's securities, undertakes to perform only the duties as are
specifically set forth in the trust' declaration and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Otherwise, the property trustee is under no
obligation to exercise any of the powers vested in it by a trust's declaration
at the request of any holder of the trust's preferred securities, unless offered
reasonable indemnity satisfactory to the property trustee by the holder against
the costs, expenses and liabilities which might be incurred in connection with
the exercise of any powers.
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GOVERNING LAW
The declarations and the preferred securities issued by the trusts will be
governed by, and construed in accordance with, the internal laws of the State of
Delaware.
MISCELLANEOUS
The administrative trustees of a trust are authorized and directed to
conduct the affairs of and to operate the trust in a way that the trust will not
be deemed to be an investment company required to be registered under the
Investment Company Act or characterized as other than a grantor trust for United
States Federal income tax purposes. In this connection, the administrative
trustees of a trust are authorized to take any action, not inconsistent with
applicable law, the trust's certificate of trust or its declaration that the
administrative trustees determine in their discretion to be necessary or
desirable for those purposes as long as the action does not adversely affect the
interests of the holders of the preferred securities.
Holders of the preferred securities of the trust will have no preemptive or
similar rights.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the preferred
securities guarantees which will be executed and delivered by Sierra Pacific for
the benefit of the holders of the preferred securities of a trust. The summary
is not complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the preferred securities guarantees,
which are filed as an exhibit to the registration statement of which this
prospectus is a part. Each preferred securities guarantee incorporates by
reference the terms of, and will be qualified as an indenture under, the Trust
Indenture Act. The Bank of New York will act as the trustee under each preferred
securities guarantee ("guarantee trustee") and will hold the preferred
securities guarantees for the respective benefit of the holders of the preferred
securities.
GENERAL
Under each preferred securities guarantee, Sierra Pacific will irrevocably
agree, on a subordinated basis and to the extent set forth in each preferred
securities guarantee, to pay in full to the holders of the preferred securities
of the trust, except to the extent paid by the trusts, as and when due,
regardless of any defense, right of set off or counterclaim which a trust may
have or assert, the following payments (the "guarantee payments"), without
duplication:
- any accumulated and unpaid distributions on the preferred securities of a
trust to the extent the trust has funds available for distribution;
- the redemption price with respect to any preferred securities called for
redemption by the trust, to the extent the trust has funds available for
payment; and
- upon a voluntary or involuntary dissolution, winding-up or termination of
the trust, other than in connection with the distribution of subordinated
debt securities to the holders of the preferred securities or the
redemption of all of the preferred securities, the lesser of:
- the aggregate of the liquidation amount and all accumulated and unpaid
distributions on the preferred securities, and
- the amount of assets of the trust remaining available for distribution
to holders of the preferred securities upon the liquidation of the
trust.
Sierra Pacific's obligation to make a guarantee payment may be satisfied by
direct payment of the required amounts by Sierra Pacific to the holders of the
preferred securities or by causing the trust to pay these amounts to holders.
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Each preferred securities guarantee will be a guarantee on a subordinated
basis with respect to the preferred securities of a trust but will only apply to
any payment of distributions or the redemption price, or to payments upon the
dissolution, winding-up or termination of a trust, to the extent the trust shall
have funds available. If Sierra Pacific fails to make payments on the
subordinated debt securities held by a trust, the trust would lack available
funds for the payment of distributions or amounts payable on redemption of its
preferred securities, and in that event holders of the preferred securities
would not be able to rely upon the preferred securities guarantee for payment of
these amounts. Instead, holders of the preferred securities will have the
remedies described under "Description of the Preferred Securities--Declaration
Events of Default", including the right to direct the guarantee trustee to
enforce the restriction of payments by Sierra Pacific and its subsidiaries on
its capital stock. See "--Events of Default" below.
The preferred securities guarantees, when taken together with Sierra
Pacific's obligations under the declarations of trust, the subordinated
indenture, subordinated debt securities, and the expense agreement (see below),
constitute a guarantee to the extent set forth in this prospectus by Sierra
Pacific of the distribution, redemption and liquidation payments payable to the
holders of the preferred securities of the trusts. No single document executed
by Sierra Pacific in connection with the issuance of any series of preferred
securities will provide for its full, irrevocable and unconditional guarantee of
the preferred securities.
EVENTS OF DEFAULT
It shall be an event of default under a preferred securities guarantees if
Sierra Pacific fails to perform any of its payment or other obligations set
forth in the preferred securities guarantee.
The holders of a majority in liquidation amount of the preferred securities
of a trust have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee or to direct the
exercise of any power conferred upon the guarantee trustee under the preferred
securities guarantee applicable to the trust. If the guarantee trustee fails to
enforce its rights under a preferred securities guarantee after a holder of the
preferred securities has made a written request, the holder may institute a
legal proceeding directly against Sierra Pacific to enforce the guarantee
trustee's rights under that preferred securities guarantee, without first
instituting a legal proceeding against the applicable trust, the guarantee
trustee or any other person or entity. If Sierra Pacific has failed to make a
guarantee payment under a preferred securities guarantee, a holder of the
preferred securities may directly institute a proceeding in the holder's own
name against Sierra Pacific for enforcement of the preferred securities
guarantee for payment.
STATUS OF THE PREFERRED SECURITIES GUARANTEES; SUBORDINATION
The preferred securities guarantees will constitute an unsecured obligation
of Sierra Pacific and will rank subordinate and junior in right of payment to
all senior indebtedness of Sierra Pacific. Sierra Pacific is a non-operating
holding company and substantially all of its operating assets are owned by its
subsidiaries. Sierra Pacific relies primarily on dividends from its subsidiaries
to meet its obligations for payment of principal and interest on its outstanding
debt and corporate expenses. Accordingly, the guarantees will be effectively
subordinated to all existing and future liabilities of Sierra Pacific's
subsidiaries. Except as otherwise provided in the applicable prospectus
supplement, there is no limit on the incurrence or issuance of other secured or
unsecured debt by Sierra Pacific or its subsidiaries. Holders of guarantees
should look only to the assets of Sierra Pacific for payments of principal,
interest and premium, if any.
The preferred securities guarantees will rank PARI PASSU with all other
guarantees issued by Sierra Pacific.
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of preferred securities, in which case no vote will be
required, a preferred securities guarantee may be amended only with the prior
approval of the holders of at least a majority in liquidation amount of all the
outstanding preferred securities of the affected trust. The manner of obtaining
any approval of holders of the preferred securities will be as set forth under
"Description of the Preferred Securities of the Trusts--Voting Rights." All
guarantees and agreements contained in a preferred securities guarantee shall
bind the successors, assigns, receivers, trustees and representatives of Sierra
Pacific and shall inure to the benefit of the holders of the preferred
securities of the applicable trust then outstanding. Except in connection with
the permitted merger or consolidation of Sierra Pacific with or into another
entity or permitted sale, transfer or lease of Sierra Pacific's assets to
another entity in which the surviving corporation, if other than Sierra Pacific,
assumes Sierra Pacific's obligations under the preferred securities guarantees,
Sierra Pacific may not assign its rights or delegate its obligations under the
preferred securities guarantees without the prior approval of the holders of at
least a majority of the aggregate stated liquidation amount of the preferred
securities then outstanding.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEES
A preferred securities guarantee will terminate as to each holder of the
preferred securities of the applicable trust upon:
- full payment of the redemption price of all the preferred securities,
- distribution of the subordinated debt securities held by the trust to the
holders of the preferred securities, or
- full payment of the amounts payable under the declaration upon liquidation
of the trust.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee of each trust, before the occurrence of a default with
respect to a preferred securities guarantee, undertakes to perform only those
duties as are specifically set forth in a preferred securities guarantee and,
after default with respect to the preferred securities guarantee, shall exercise
the same degree of care as a prudent man would exercise in the conduct of his
own affairs. The guarantee trustee is under no obligation to exercise any of the
powers vested in it by a preferred securities guarantee at the request of any
holder of preferred securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred in connection with
the exercise of those powers.
GOVERNING LAW
The preferred securities guarantees will be governed by, and construed
under, the internal laws of the State of New York.
THE EXPENSE AGREEMENT
Under an expense agreement entered into by Sierra Pacific under each trust
agreement, Sierra Pacific will irrevocably and unconditionally guarantee to each
person or entity to whom a trust becomes indebted or liable, the full payment of
any costs, expenses or liabilities of the trust, other than obligations of the
trust to pay to the holders of the trust's preferred securities the amounts due
pursuant to the terms of the preferred securities.
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RELATIONSHIP AMONG PREFERRED SECURITIES, PREFERRED SECURITIES GUARANTEES
AND SUBORDINATED DEBT SECURITIES HELD BY THE TRUSTS
Payments of distributions and redemption and liquidation payments due on
each series of preferred securities (to the extent the applicable trust has
funds available for the payments) will be guaranteed by Sierra Pacific to the
extent described under "Description of Preferred Securities Guarantees." No
single document executed by Sierra Pacific in connection with the issuance of
any series of preferred securities will provide for its full, irrevocable and
unconditional guarantee of the preferred securities. It is only the combined
operation of Sierra Pacific's obligations under a preferred securities
guarantees, the declaration, subordinated indenture and subordinated debt
securities that has the effect of providing a full, irrevocable and
unconditional guarantee of a trust's obligations with respect to its preferred
securities.
As long as Sierra Pacific makes payments of interest and other payments when
due on the subordinated debt securities held by a trust, the payments will be
sufficient to cover the payment of distributions and redemption and liquidation
payments due on the preferred securities issued by the trust, primarily because:
- the aggregate principal amount of the subordinated debt securities will be
equal to the sum of the aggregate liquidation amount of the preferred and
common securities of the trust;
- the interest rate and interest and other payment dates on the subordinated
debt securities will match the distribution rate and any distribution and
other payment dates for the preferred securities;
- Sierra Pacific will pay for any and all costs, expenses and liabilities of
the trust except for the trust's obligations under its preferred
securities (and Sierra Pacific has agreed to guarantee the payments); and
- the declaration provides that the trust will not engage in any activity
that is not consistent with the limited purposes of the trust.
If and to the extent that Sierra Pacific does not make payments on
subordinated debt securities held by a trust, the trust will not have funds
available to make payments of distributions or other amounts due on its
preferred securities. In those circumstances, holders of the preferred
securities will not be able to rely upon the preferred securities guarantee for
payment of these amounts. Instead, holders of the preferred securities may
directly sue Sierra Pacific or seek other remedies to collect their pro rata
share of payments owed. If a holder of preferred securities sues Sierra Pacific
to collect payment, then Sierra Pacific will assume the holders rights as a
holder of preferred securities under the applicable trust's declaration to the
extent Sierra Pacific makes a payment to the holder of preferred securities in
any legal action.
A holder of any preferred security may sue Sierra Pacific, or seek other
remedies, to enforce its rights under a preferred securities guarantee without
first suing the guarantee trustee, the applicable trust or any other person or
entity.
PLAN OF DISTRIBUTION
Sierra Pacific may sell the senior debt securities or subordinated debt
securities and the trusts may sell their preferred securities being offered
hereby in one or more of the following ways from time to time:
- to underwriters for resale to the public or to institutional investors;
- directly to institutional investors;
- directly to agents;
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- through agents to the public or to institutional investors; or
- if indicated in the prospectus supplement, pursuant to delayed delivery
contracts, by remarketing firms or by other means.
The prospectus supplements will set forth the terms of the offering of each
series of securities, including the name or names of any underwriters or agents,
the purchase price of the securities and the proceeds to Sierra Pacific or the
trusts, as the case may be, from the sale, any underwriting discounts or agency
fees and other items constituting underwriters' or agents' compensation, any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which the securities may be listed.
If underwriters are utilized in the sale, the securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or prices, which may be changed, or at market or varying prices
determined at the time of sale.
Unless otherwise set forth in a prospectus supplement, the obligations of
the underwriters to purchase any series of securities will be subject to
conditions precedent and the underwriters will be obligated to purchase all of
the series of securities, if any are purchased.
If a dealer is utilized in the sale of securities, Sierra Pacific or the
trusts will sell the securities to the dealer, as principal. The dealer may then
resell the securities to the public at varying prices to be determined by the
dealer at the time of resale.
Securities may also be offered and sold, if so indicated in the prospectus
supplement, in connection with a remarketing agreement upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms") acting as principals for their own
accounts or as agents for Sierra Pacific. Any remarketing firm will be
identified and the terms of its agreement, if any, with Sierra Pacific and its
compensation will be described in the prospectus supplement.
Underwriters, agents, dealers and remarketing firms may be entitled under
agreements entered into with Sierra Pacific and/or the trusts to indemnification
by Sierra Pacific and/or the trusts against civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect to
payments which the underwriters or agents may be required to make in respect
thereof. Underwriters, agents, dealers and remarketing firms may be customers
of, engage in transactions with, or perform services for Sierra Pacific and its
subsidiaries and affiliates in the ordinary course of business.
Each series of securities will be a new issue of securities and will have no
established trading market. Any underwriters to whom securities are sold by
Sierra Pacific or by the trusts for public offering and sale may make a market
in the securities, but the underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The securities may or
may not be listed on a national securities exchange or a foreign securities
exchange.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. Our
SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. You may also inspect our SEC reports and other
information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement on Form S-3 with the SEC covering the
securities. For further information on Sierra Pacific, the trust and the
securities, you should refer to our registration statement and its exhibits.
This prospectus summarizes material provisions of contracts and other documents
that we refer you to. Because the prospectus may not contain all the information
that you may find important, you should review the full text of these documents.
We have included copies of these documents as exhibits to our registration
statement.
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INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file with
them, which means:
- incorporated documents are considered part of the prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed with
the SEC under the Exchange Act:
- our annual report on Form 10-K for the year ended December 31, 1999, which
is combined with the annual report on Form 10-K for Nevada Power;
- Sierra Pacific Power Company's annual report on Form 10-K for the year
ended December 31, 1999;
- our current report on Form 8-K dated August 9, 1999 and the 8-K/A
amendment thereto dated September 20, 1999;
- our current report on Form 8-K dated April 14, 2000; and
- our current report on Form 8-K dated April 21, 2000.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus until this offering is
completed or after the date of this initial registration statement and before
effectiveness of the registration statement:
- reports filed under Sections 13(a) and (c) of the Exchange Act;
- definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting; and
- any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by reference
in this prospectus. We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Assistant
Treasurer, Sierra Pacific Resources, P.O. Box 30150 (6100 Neil Road), Reno
Nevada 89520-3150, Telephone: (775) 834-4358.
LEGAL OPINIONS
Unless otherwise indicated in the applicable prospectus supplement, certain
legal matters will be passed upon for Sierra Pacific and the trusts by Choate,
Hall & Stewart (a partnership including professional corporations), Boston,
Massachusetts, counsel to Sierra Pacific, and for the trusts and Sierra Pacific
by Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to the trusts and Sierra Pacific. Matters of local law will be passed
upon as to the State of Nevada by Woodburn and Wedge, Reno, Nevada. Legal
matters in connection with the offered securities will be passed upon for the
underwriter(s), dealer(s) or agent(s) by Thelen Reid & Priest LLP. Choate, Hall
& Stewart and Thelen Reid & Priest LLP will rely on the opinion of Woodburn and
Wedge, Reno, Nevada, as to matters of Nevada law. Thelen Reid & Priest LLP
represents Sierra Pacific Resources and its utility subsidiaries in connection
with certain federal tax matters.
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EXPERTS
The consolidated financial statements of Sierra Pacific Resources, the
financial statements of Nevada Power Company, the consolidated financial
statements of Sierra Pacific Power Company and the related financial statement
schedules incorporated in this prospectus supplement and accompanying prospectus
by reference from Sierra Pacific Resources', Nevada Power Company's and Sierra
Pacific Power Company's Annual Reports on Form 10-K for the year ended
December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports, which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
31
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$
[LOGO]
% NOTES DUE
----------------------------
PROSPECTUS SUPPLEMENT
----------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
SALOMON SMITH BARNEY
, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection with the
Offering described in this Registration Statement.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 139,000
Blue sky fees and expenses (including legal fees)........... 10,000*
Legal fees and expenses..................................... 150,000*
Indenture trustee's fee and expense......................... 20,000*
Accounting fees and expenses................................ 25,000
Printing and engraving expenses............................. 75,000*
Miscellaneous............................................... 31,000*
------------------
Total Expenses........................................ $ 450,000*
==================
</TABLE>
- ------------------------
* Estimated
ITEM 16. EXHIBITS
See Index to Exhibits immediately preceding the Exhibits included as part of
this Registration Statement.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Reno, State of Nevada, on the
1(st) day of May, 2000.
<TABLE>
<S> <C> <C>
SIERRA PACIFIC POWER COMPANY
BY /S/ MICHAEL R. NIGGLI
-----------------------------------------
Michael R. Niggli, CHAIRMAN,
CHIEF EXECUTIVE OFFICER AND DIRECTOR
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints William E. Peterson, Mark A. Ruelle and
Richard K. Atkinson and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MARK A. RUELLE Senior Vice President,
------------------------------------------- Chief Financial Officer May 1, 2000
Mark A. Ruelle and Treasurer
/s/ MARY O. SIMMONS Controller (Principal
------------------------------------------- Accounting Officer) May 1, 2000
Mary O. Simmons
/s/ EDWARD P. BLISS Director
------------------------------------------- May 1, 2000
Edward P. Bliss
/s/ KRESTINE M. CORBIN Director
------------------------------------------- May 1, 2000
Krestine M. Corbin
/s/ JAMES L. MURPHY Director
------------------------------------------- May 1, 2000
James L. Murphy
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES R. DONNELLEY Director
------------------------------------------- May 1, 2000
James R. Donnelley
/s/ DENNIS E. WHEELER Director
------------------------------------------- May 1, 2000
Dennis E. Wheeler
/s/ MARY LEE COLEMAN Director
------------------------------------------- May 1, 2000
Mary Lee Coleman
/s/ THEODORE J. DAY Director
------------------------------------------- May 1, 2000
Theodore J. Day
/s/ JOHN L. GOOLSBY Director
------------------------------------------- May 1, 2000
John L. Goolsby
/s/ JOHN F. O'REILLY Director
------------------------------------------- May 1, 2000
John F. O'Reilly
/s/ JERRY E. HERBST Director
------------------------------------------- May 1, 2000
Jerry E. Herbst
/s/ FRED D. GIBSON, JR. Director
------------------------------------------- May 1, 2000
Fred D. Gibson, Jr.
</TABLE>
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Sierra Pacific
Capital Trust I and Sierra Pacific Capital Trust II each certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-3 and has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Reno, State of Nevada on May 1, 2000.
<TABLE>
<S> <C> <C>
SIERRA PACIFIC CAPITAL TRUST I
By Sierra Pacific Resources,
as Depositor
By: /s/ RICHARD K. ATKINSON
-----------------------------------------
Name: Richard K. Atkinson
----------------------------------------
Title: Assistant Treasurer
-----------------------------------------
SIERRA PACIFIC CAPITAL TRUST II
By Sierra Pacific Resources, as Depositor
By: /s/ RICHARD K. ATKINSON
-----------------------------------------
Name: Richard K. Atkinson
----------------------------------------
Title: Assistant Treasurer
-----------------------------------------
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
DESCRIPTION
-----------
<S> <C>
1.1 Form of Purchase Agreement (Debt Securities)
1.2 + Form of Underwriting Agreement (Preferred Securities)
3.1 Restated Articles of Incorporation of the Sierra Pacific
Resources dated July 28, 1999 (filed with 1999 Form 10-K)
3.2 By-laws of Sierra Pacific Resources, as amended to November
13, 1996 (filed with 1996 Form 10-K)
4.1 Rights Agreement dated as of September 21, 1999 between
Sierra Pacific Resources and Hacus Trust and Savings Bank
(filed as Exhibit No. 99.1 to Sierra Pacific Resources Form
8-K dated December 7, 1999).
4.2* Form of Indenture between the Company and The Bank of New
York, as Trustee
4.3* Form of Senior Note
4.4* Form of Junior Subordinated Indenture
4.5 + Form of Junior Subordinated Debenture
4.6* Form of Guarantee Agreement for Sierra Pacific Resources
Capital Trust I
4.7* Form of Guarantee Agreement for Sierra Pacific Resources
Capital Trust II
4.8* Certificate of Trust of Sierra Pacific Resources Capital
Trust I
4.9* Trust Agreement of Sierra Pacific Resources Capital Trust I
4.10* Form of Amended and Restated Trust Agreement for Sierra
Pacific Resources Capital Trust I (including form of
Preferred Security)
4.11* Certificate of Trust of Sierra Pacific Resources Capital
Trust II
4.12* Trust Agreement of Sierra Pacific Resources Capital Trust II
4.13* Form of Amended and Restated Trust Agreement for Sierra
Pacific Resources Capital Trust II (including form of
Preferred Security)
5.1 Opinion of Choate, Hall & Stewart
5.2 Opinion of Woodburn and Wedge
5.3 + Opinion of Richards, Layton & Finger, P.A. as to legality of
the Preferred Securities to be issued by Sierra Pacific
Resources Capital Trust I
5.4 + Opinion of Richards, Layton & Finger, P.A. as to legality of
the Preferred Securities to be issued by Sierra Pacific
Resources Capital Trust II
8 + Opinion of counsel as to certain federal income tax matters
12 Statement re: computation of ratios
23.1 Consents of Deloitte & Touche LLP
23.2 Consent of Choate, Hall & Stewart (to be included in Exhibit
5.1)
23.3 Consent of Woodburn and Wedge (to be included in Exhibit
5.2)
23.4 + Consent of Richards, Layton & Finger, P.A. (to be included
in Exhibits 5.3 and 5.4)
23.5 + Consent of tax counsel (to be included in Exhibit 8)
24.1 Powers of Attorney (included on signature page)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION
-----------
<S> <C>
25.1* Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Indenture
25.2 + Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Junior Subordinated Indenture
25.3* Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Amended and Restated Trust
Agreement for Sierra Pacific Resources Capital Trust I
25.4* Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Amended and Restated Trust
Agreement for Sierra Pacific Resources Capital Trust II
25.5* Form T-1 Statement of Eligibility of The Bank of New York
under the Guarantee for the benefit of the holders of
Preferred Securities of Sierra Pacific Resources Capital
Trust I
25.6* Form T-1 Statement of Eligibility of The Bank of New York
under the Guarantee for the benefit of the holders of
Preferred Securities of Sierra Pacific Resources Capital
Trust II
99.1 Fiscal and Paying Agency Agreement dated as of April 17,
2000 between Sierra Pacific Resources and Bankers Trust
Company, relating to Sierra Pacific Resources' floating rate
notes due April 20, 2002
99.2 Form of Global Floating Rate Note due April 20, 2002
99.3 Fiscal and Paying Agency Agreement dated as of April 17,
2000 between Sierra Pacific Resources and Bankers Trust
Company, relating to Sierra Pacific Resources' floating rate
notes due April 20, 2003
99.4 Form of Global Floating Rate Note due April 20, 2003
</TABLE>
- ------------------------
* Previously Filed
+ To be filed by amendment or under subsequent Form 8-K.
<PAGE>
EXHIBIT 1.1
================================================================================
SIERRA PACIFIC RESOURCES
(a Nevada corporation)
NOTES DUE 2010
PURCHASE AGREEMENT
Dated: May __, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
1. REPRESENTATIONS AND WARRANTIES...........................................................................2
REPRESENTATIONS AND WARRANTIES BY THE COMPANY............................................................2
Compliance with Registration Requirements.......................................................2
Incorporated Documents..........................................................................3
Independent Accountants.........................................................................3
Financial Statements............................................................................4
No Material Adverse Change in Business..........................................................4
Good Standing of the Company....................................................................4
Good Standing of Subsidiaries...................................................................5
Capitalization..................................................................................5
Authorization of Agreement......................................................................5
Authorization of the Indenture..................................................................5
Authorization of the Securities.................................................................5
Description of the Securities and the Indenture.................................................6
Absence of Defaults and Conflicts...............................................................6
Absence of Proceedings..........................................................................6
Accuracy of Exhibits............................................................................7
Governmental Approvals..........................................................................7
Possession of Licenses and Permits..............................................................7
Title to Property, etc..........................................................................7
Investment Company Act..........................................................................8
Holding Company Act.............................................................................8
OFFICER'S CERTIFICATES...................................................................................8
i
<PAGE>
2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING...............................................................8
SECURITIES...............................................................................................8
PAYMENT..................................................................................................8
DENOMINATIONS; REGISTRATION..............................................................................8
3. COVENANTS OF THE COMPANY.................................................................................9
COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS...........................................9
FILING OF AMENDMENTS.....................................................................................9
DELIVERY OF REGISTRATION STATEMENTS......................................................................9
DELIVERY OF PROSPECTUSES................................................................................10
CONTINUED COMPLIANCE WITH SECURITIES LAWS...............................................................10
BLUE SKY QUALIFICATIONS.................................................................................10
RULE 158................................................................................................11
USE OF PROCEEDS.........................................................................................11
RESTRICTION ON SALE OF SECURITIES.......................................................................11
REPORTING REQUIREMENTS..................................................................................11
4. PAYMENT OF EXPENSES.....................................................................................11
EXPENSES................................................................................................11
TERMINATION OF AGREEMENT................................................................................11
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.................................................................12
EFFECTIVENESS OF REGISTRATION STATEMENT.................................................................12
OPINION OF COUNSEL FOR COMPANY..........................................................................12
OPINION OF COUNSEL FOR UNDERWRITERS.....................................................................12
OFFICERS' CERTIFICATE...................................................................................12
ACCOUNTANT'S COMFORT LETTER.............................................................................13
BRING-DOWN COMFORT LETTER...............................................................................13
ii
<PAGE>
MAINTENANCE OF RATING...................................................................................13
ADDITIONAL DOCUMENTS....................................................................................13
TERMINATION OF AGREEMENT................................................................................13
6. INDEMNIFICATION.........................................................................................14
INDEMNIFICATION OF UNDERWRITERS.........................................................................14
INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS......................................................14
ACTIONS AGAINST PARTIES; NOTIFICATION...................................................................15
SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE......................................................15
7. CONTRIBUTION............................................................................................15
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY..........................................17
9. TERMINATION OF AGREEMENT................................................................................17
TERMINATION; GENERAL....................................................................................17
LIABILITIES.............................................................................................17
10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS..............................................................17
11. NOTICES.................................................................................................18
12 PARTIES.................................................................................................18
13. GOVERNING LAW AND TIME..................................................................................19
14. EFFECT OF HEADINGS......................................................................................19
</TABLE>
<TABLE>
<S> <C>
SCHEDULES
Schedule A - List of Underwriters.......................................................Sch A-1
Schedule B - Pricing Information........................................................Sch B-1
EXHIBITS
Exhibit A - Form of Opinion of Woodburn and Wedge.............................................A-1
Exhibit B - Form of Opinion of Choate, Hall & Stewart ........................................A-2
Exhibit C - Contents of Letter of Deloitte & Touche LLP......................................A-3
</TABLE>
iii
<PAGE>
SIERRA PACIFIC RESOURCES
(a Nevada Corporation)
$500,000,000
Notes due 2010
PURCHASE AGREEMENT
March ___, 2000
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
[NAME(S) OF CO-REPRESENTATIVE(S)]
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
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 Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch and ______ are acting as representatives (in
such capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Underwriters, acting severally and not jointly,
of the respective principal amounts set forth in said Schedule A of $500,000,000
aggregate principal amount of the Company's Notes due 2010 (the "Securities").
The Securities are to be issued pursuant to an indenture, dated as of _____ ,
2000 (the "Indenture"), between the Company and The Bank of New York, as trustee
(the "Trustee"). The term "Indenture," as used herein, includes the Board
Resolution and Officer's Certificate (each as defined in the Indenture)
establishing the form and terms of the Securities pursuant to Sections 2.1 and
3.1 of the Indenture.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed
<PAGE>
and delivered and the Indenture has been qualified under the Trust Indenture Act
of 1939, as amended (the "1939 Act").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-80149) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus and supplement
thereto. Promptly after the execution and delivery of this Agreement, the
Company will prepare and file a final prospectus and supplement thereto in
accordance with the provisions of Rule 424(b) of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations") specifying the
interest rate(s) on, the maturity date(s) of, the initial public offering
price(s) of, the underwriting discounts and commissions in respect of, the
redemption terms and prices, if any, of and any other terms of the Securities.
Each prospectus (including any supplement thereto) used before such registration
statement became effective, and any prospectus that was used after such
effectiveness and prior to the execution and delivery of this Agreement, is
herein called a "preliminary prospectus." Such registration statement, including
the exhibits thereto, schedules thereto, if any, and the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time it became effective is herein called the "Registration Statement." The
final prospectus, including the supplement thereto and further including the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the form first furnished to the Underwriters on or after
the date hereof for use in connection with the offering of the Securities is
herein called the "Prospectus." For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the Prospectus and
any amendment or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus 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 Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each Underwriter as of the date hereof and as of the
Closing Time referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company
meets the requirements for use of Form S-3 under the 1933 Act. The
Registration Statement was filed under Rule 415 of the 1933 Act
Regulations and, when so filed and at the date hereof, meets the
requirements set forth in clause (ix) and/or (x) of Rule 415(a)(1) and
complies in all
2
<PAGE>
other material respects with Rule 415. The Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or
are pending or, to the knowledge of the Company, are contemplated by
the Commission, and any request on the part of the Commission for
additional information has been complied with.
At the time the Registration Statement became effective and at
the Closing Time, the Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
the 1939 Act and the rules and regulations of the Commission under the
1939 Act (the "1939 Act Regulations"), and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment
or supplement was issued and at the Closing Time, included or will
include an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter
through Merrill Lynch expressly for use in the Registration Statement
or Prospectus.
Each preliminary prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
3
<PAGE>
(iv) FINANCIAL STATEMENTS. The financial statements included
in the Registration Statement and the Prospectus, 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 results 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
Registration Statement 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 Prospectus
present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited financial statements
included in the Registration Statement. The pro forma financial
statements and the related notes thereto included in the Registration
Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and have
been properly compiled on the bases described therein; and the
assumptions used in the preparation thereof are reasonable, and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(v) NO MATERIAL ADVERSE CHANGE. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects 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 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 regular quarterly
dividends on the common stock, par value $1.00 per share, of the
Company (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 Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
4
<PAGE>
(vii) GOOD STANDING OF 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 Prospectus 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 Registration Statement, 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 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 any
Significant Subsidiary 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 Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus). The shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; 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.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) AUTHORIZATION OF THE INDENTURE. The Indenture has been
duly authorized by the Company and duly qualified under the 1939 Act
and, when duly executed and delivered by the Company and the Trustee,
will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its 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, by the Trustee in the manner
provided for in the Indenture and issued and delivered by the Company
against payment of the purchase price therefor as provided in this
Agreement, will constitute valid and binding obligations of the
Company, enforceable
5
<PAGE>
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 AND THE INDENTURE. The
Securities and the Indenture will conform in all material respects to
the respective statements relating thereto contained in the Prospectus
and will be in substantially the respective forms filed as exhibits to
the Registration Statement.
(xiii) ABSENCE OF DEFAULTS AND CONFLICTS. The execution,
delivery and performance of this Agreement, the Indenture and the
Securities and the consummation of the transactions contemplated herein
and in the Registration Statement and compliance by the Company with
its obligations hereunder and under the Indenture and 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
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, any
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other contract, agreement or instrument to which the Company
or any of its 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 of its subsidiaries may be subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that 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 subsidiary.
(xiv) ABSENCE OF PROCEEDINGS. Except as disclosed in the
Prospectus, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration
Statement or 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 this Agreement or the
performance by the Company of its obligations hereunder.
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(xv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xvi) GOVERNMENTAL APPROVALS. 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, the performance by the Company of its obligations under, or
the consummation by the Company of the transactions contemplated by,
this Agreement, the Indenture or the Securities, except such as have
been already made or obtained or as may be required under the 1933 Act,
the 1934 Act, the 1939 Act or any applicable state securities laws or
any regulations promulgated under any of the foregoing.
(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 to the extent that the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of such
Governmental Licenses are valid and in full force and effect, except to
the extent that 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 one or
more of such Governmental Licenses to the extent that the revocation or
modification thereof, singly or in the aggregate, would result in a
Material Adverse Effect.
(xviii) TITLE TO PROPERTY, ETC. The Company and its
Significant Subsidiaries have good and marketable title to all real
property owned by them 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 or referred to in the Prospectus or
(b) do not, singly or in the aggregate, affect the value of such
property or interfere with the use made and proposed to be made of such
property to such extent as might reasonably be expected to result in a
Material Adverse Effect; and all of the leases and subleases material
to the business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its Significant
Subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any Significant
Subsidiary has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary
to the continued possession of the leased or subleased premises under
any such lease or sublease, to the extent that such claim might
reasonably be expected to result in a Material Adverse Effect.
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(xix) 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
Prospectus 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").
(xx) 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 such Act except Section 9(a)(2) thereof.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) 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 Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price set forth in Schedule B, the aggregate principal amount of Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional principal amount of Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of [Thelen Reid &
Priest LLP, 40 West 57th Street, New York, New York], or at such other place as
shall be agreed upon by the Representatives and the Company, at 9:00 A.M.
(Eastern time) on the THIRD business day after the date hereof (unless postponed
in accordance with the provisions of Section 10), or such other time not later
than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time").
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 Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. Merrill Lynch, individually and not
as representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Time, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(c) DENOMINATIONS; REGISTRATION. Certificates for the Securities shall
be in such denominations ($1,000 or integral multiples thereof) and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time. The
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Securities will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time.
3. COVENANTS OF THE COMPANY.
The Company covenants with each Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will notify the
Representatives immediately, and confirm the notice in writing, (i)
when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect
the filings necessary pursuant to Rule 424(b) and will take such steps
as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) FILING OF AMENDMENTS. The Company will give the
Representatives notice of its intention to file or prepare any
amendment to the Registration Statement or any amendment, supplement or
revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether
pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the
Representatives with copies of any such documents a reasonable amount
of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or
counsel for the Underwriters shall reasonably object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference
therein) and signed copies of all consents and certificates of experts,
and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of
each amendment thereto (without exhibits) for each of the Underwriters.
The copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
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(d) DELIVERY OF PROSPECTUSES. The Company has delivered to
each Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company
will comply with the 1933 Act and the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations and the 1939 Act and the 1939 Act
Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. If
at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in
the opinion of counsel for the Underwriters or for the Company, to
amend the Registration Statement or amend or supplement the Prospectus
in order that the Prospectus will not include any untrue statements of
a material fact or omit to state a material fact necessary in order to
make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or
if it shall be necessary, in the opinion of such counsel, at any such
time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or
the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectus comply with such
requirements, and the Company will furnish to the Underwriters such
number of copies of such amendment or supplement as the Underwriters
may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions as the Representatives may
designate and to maintain such qualifications in effect for a period of
not less than one year from the later of the effective date of the
Registration Statement; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration
Statement. The Company will also supply the Underwriters with such
information as is necessary for the determination of the legality of
the Securities for investment under the laws of such jurisdictions as
the Underwriters may request.
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(g) RULE 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earning
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) 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 Prospectus under "Use of Proceeds".
(i) RESTRICTION ON SALE OF DEBT SECURITIES. During a period of
_____ days from the date of the Prospectus, the Company will not,
without the prior written consent of Merrill Lynch, directly or
indirectly, issue, sell, offer or contract to sell, grant any option
for the sale of, or otherwise transfer or dispose of, any debt
securities of the Company.
(j) REPORTING REQUIREMENTS. The Company, during the period
when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations.
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 and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any agreement among Underwriters, 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 Underwriters, (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(f) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, and of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) 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 and (ix) any fees
payable in connection with the rating of the Securities.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
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The obligations of the several Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A
prospectus shall have been filed with the Commission in accordance with
Rule 424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Woodburn and Wedge and of Choate, Hall & Stewart,
counsel for the Company, in substantially the form set forth in
Exhibits A and B hereto, respectively.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Thelen Reid & Priest LLP, counsel for the
Underwriters, together with signed or reproduced copies of such letter
for each of the other Underwriters with respect to such matters as the
Representatives may reasonably request. In giving such opinion such
counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the
federal law of the United States, upon the opinions of counsel
satisfactory to the Representatives. 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.
(d) NO MATERIAL ADVERSE CHANGE; OFFICERS' CERTIFICATE. At
Closing Time, there shall not have been, since the date hereof or since
the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii)
the representations and warranties in Section 1(a) hereof are true and
correct with the same force and effect as though expressly made at and
as of Closing Time, (iii) the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
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(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution
of this Agreement, the Representatives shall have received from
Deloitte & Touche LLP a letter dated such date, in form and substance
satisfactory to the Representatives, together with signed or reproduced
copies of such letter for each of the other Underwriters containing
statements and information of the type set forth or referred to in
Exhibit C hereto.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the
Representatives shall have received from Deloitte & Touche LLP a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of
this Section, except that the specified date referred to shall be a
date not more than three business days prior to Closing Time.
(g) MAINTENANCE OF RATING. At Closing Time, the Securities
shall be rated at least _____ by Moody's Investor's Service Inc. and
_____ by Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc., and the Company shall have delivered to the Representatives a
letter dated the Closing Time, from each such rating agency, or other
evidence satisfactory to the Representatives, confirming that the
Securities have such ratings; and 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 organization shall have publicly announced that it has
under surveillance or review its rating of the Securities or any of the
Company's other debt securities (unless such announcement indicates
that any change in such rating, if made, would be positive).
(h) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the
Underwriters 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 Representatives and counsel for the
Underwriters.
(i) TERMINATION OF AGREEMENT. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement may be terminated by the Representatives by
notice to the Company at any time at or prior to Closing Time, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
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(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus
(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 6(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
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Merrill Lynch expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it
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in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve such indemnifying party from any
liability hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability which it may
have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 6(a) above, counsel to the indemnified
parties shall be selected by Merrill Lynch, and, in the case of parties
indemnified pursuant to Section 6(b) above, counsel to the indemnified parties
shall be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
7. CONTRIBUTION.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters 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 Underwriters 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.
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The relative benefits received by the Company on the one hand and the
Underwriters 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 Underwriters, in each case
as set forth on the cover of the Prospectus bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters
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 Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter 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 Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
16
<PAGE>
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
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives 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 Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects 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 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
Representatives, impracticable 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 (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 except that Sections 1, 6, 7
and 8 shall survive such termination and remain in full force and effect.
10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
If one or more of the Underwriters shall fail at Closing Time to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, 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 Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the aggregate principal amount of the Securities to be purchased
hereunder, each of the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount
17
<PAGE>
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number 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 Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter 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 Representatives 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 Registration Statement or Prospectus
or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
11. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives at North Tower, World Financial Center, New York, New York
10281-1201, attention of Russell D. Robertson; and notices to the Company shall
be directed to it at 6100 Neil Road, P.O. Box 30150, Reno, Nevada 89520,
attention of Mr. Richard K. Atkinson; or at such other address or to such other
person as either party may designate from time to time by notice given in
accordance with this Section 11.
12. PARTIES.
This Agreement shall each inure to the benefit of and be binding upon
the Underwriters 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 Underwriters and the
Company and their respective successors and the controlling persons and officers
and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters 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 Underwriter shall be deemed to
be a successor by reason merely of such purchase.
13. GOVERNING LAW.
This agreement shall be governed by and construed in accordance with
the laws of the state of New York.
14. EFFECT OF HEADINGS.
18
<PAGE>
The Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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 Underwriters 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
[NAME(S) OF CO-REPRESENTATIVE(S)]
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
--------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
19
<PAGE>
DRAFT
SCHEDULE A
<TABLE>
<CAPTION>
Name of Underwriter Principal
Amount of
Securities
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................................
Total....................................................................................... $500,000,000
</TABLE>
Sch A - 1
<PAGE>
DRAFT
SCHEDULE B
SIERRA PACIFIC RESOURCES
$500,000,000
Notes due 2010
1. The initial public offering price of the Securities shall be __% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the Securities
shall be __% of the principal amount thereof.
3. The interest rate on the Securities shall be __% per annum.
4. [INCLUDE THE TERMS OF ANY OPTIONAL OR MANDATORY REDEMPTION AND OTHER
PRICE-RELATED TERMS.]
IMPORTANT NOTE: UNLESS OTHERWISE INSTRUCTED BY MERRILL LYNCH, THE
PURCHASE PRICE TO BE PAID BY THE UNDERWRITERS SHOULD NOT INCLUDE ACCRUED
INTEREST. (TO ACCOMPLISH THIS RESULT, THE RESPONSIBLE ATTORNEY SHOULD CONFIRM
THAT INTEREST ON THE DEBT SECURITIES DOES NOT BEGIN TO ACCRUE UNTIL THE DATE OF
ISSUANCE (I.E., THE CLOSING DATE).) BY CONTRAST, BECAUSE DEBT SECURITIES MAY BE
RESOLD BY THE UNDERWRITERS FROM TIME TO TIME AFTER THE CLOSING DATE, THE PRICE
TO PUBLIC SHOULD INCLUDE ACCRUED INTEREST FROM THE CLOSING DATE.
Sch B - 2
<PAGE>
EXHIBIT C
[CONTENTS OF LETTER OF DELOITTE & TOUCHE LLP]
The letter of Deloitte & Touche LLP will state in effect that:
(1) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the 1933 Act
and the 1933 Act Regulations.
(2) In their opinion, the consolidated financial statements of
each of Sierra Pacific Resources, Nevada Power Company and Sierra Pacific Power
Company audited by them and incorporated by reference in the Registration
Statement and the Prospectus comply as to form in all material respects with the
accounting requirements of each of the 1933 Act, the 1933 Act Regulations, the
1934 Act and the 1934 Act Regulations which are applicable to the Registration
Statement and the Prospectus and to the documents incorporated therein by
reference (all of such requirements being hereinafter called, collectively, the
"Accounting Requirements").
(3) They performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial Information, on any
unaudited condensed consolidated financial statements included in the Company's
Quarterly Reports on Form 10-Q and incorporated by reference in the Registration
Statement and the Prospectus.
(4) On the basis of procedures referred to in such letter,
including a reading of the latest available minutes of the Board of Directors of
the Company and a reading of the latest available interim financial statements
of the Company and inquiries of officials of the Company responsible for
financial and accounting matters, nothing caused them to believe that:
(a) the unaudited consolidated income statement and balance
sheet amounts of the Company, if any, for periods commencing, or as of
dates, after December 31, 1999 included in the Prospectus were not
determined on a basis substantially consistent with that of the
corresponding amounts in the audited financial statements incorporated
by reference in the Prospectus;
(b) the unaudited condensed consolidated financial statements
included in the Company's Quarterly Reports on Form 10-Q, if any,
incorporated by reference in the Prospectus do not comply as to form in
all material respects with the applicable Accounting Requirements or
are not in conformity with generally accepted accounting principles on
a basis substantially consistent with that of the audited financial
statements incorporated by reference in the Prospectus;
(c) at the date of the latest available internal consolidated
balance sheet of the Company, there was any change in the capital stock
or long-term debt or any decrease in the consolidated net current
assets or stockholders' equity of the Company and subsidiary companies,
or, at a subsequent specified date not more than five days prior to the
date of such letter, there was a change in the capital stock or
long-term debt or decrease in consolidated net current assets or
stockholders' equity of the Company and subsidiary
<PAGE>
companies, in each case as compared with the amounts shown in the most
recent consolidated balance sheet of the Company incorporated by
reference in the Prospectus, except for (1) increases (specified in
such letter) in capital stock resulting from the issuance of shares
pursuant to employee benefit plans and dividend reinvestment and stock
purchase plans, (2) decreases (specified in such letter) in long-term
debt resulting from amortization of debt premium or increases in
long-term debt premium or increases (specified in such letter) in
long-term debt resulting from draw-downs of funds held in trust, (3)
decreases (specified in such letter) in net current assets resulting
from the declaration of dividends and (4) other changes or decreases
(specified in such letter) which the Registration Statement or the
Prospectus discloses have occurred or may occur; or
(d) for the period from the date of the latest available
internal consolidated balance sheet of the Company to a specified date
not more than five days prior to the date of such letter, there was any
decrease, as compared with the corresponding period in the preceding
year in consolidated operating revenues, consolidated net income and
consolidated net income applicable to common stock, except in all cases
for changes or decreases which the Prospectus discloses have occurred
or may occur.
(5) In their opinion, the Accounting Requirements do not
require the inclusion or incorporation by reference in the Registration
Statement of any pro forma financial information or data other than the
information and data which were so incorporated therein; and, on the basis of
procedures referred to in such letter, nothing caused them to believe that the
unaudited pro forma financial information or data incorporated by reference in
the Registration Statement does not comply as to form in all material respects
with the applicable accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such financial information or data.
(6) In addition to their examination referred to in their
report in the Registration Statement and Prospectus and the procedures referred
to in (3) above, they have carried out certain other specified procedures, not
constituting an audit, with respect to the dollar amounts, percentages and other
financial information, (in each case to the extent that such dollar amounts,
percentages and other financial information, either directly or by analysis or
computation, are derived from the general accounting records of the Company)
which appear in the Company's annual report on Form 10-K for its most recent
fiscal year in Item 1, "Business", Item 6, "Selected Financial Data" and Item 7
"Management's Discussion and Analysis" and the Company's subsequent quarterly
reports on Form 10-Q under "Management's Discussion and Analysis" and have found
such dollar amounts, percentages and financial information to be in agreement
with the accounting records of the Company.
2
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF CHOATE, HALL & STEWART]
May 1, 2000
Sierra Pacific Resources
6100 Neil Road
Reno, Nevada 89520-0400
Re: Sierra Pacific Resources
Gentlemen:
This opinion is delivered in connection with a Registration
Statement on Form S-3, File No. 333- 80141, as amended (the "Registration
Statement"), of Sierra Pacific Resources (the "Company") relating to the
proposed issuance and sale from time to time of up to $500,000,000 of senior
debt securities (the "Notes") in one or more separate series. The Notes are
to be issued pursuant to an Indenture dated as of May 1, 2000 (the
"Indenture"), between the Company and Bank of New York, as Trustee (the
"Indenture Trustee").
In connection with rendering this opinion, we have examined such
corporate records, certificates and other documents as we have considered
necessary for the purposes of this opinion. In such examination, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to the original documents of all documents
submitted to us as copies and the authenticity of the originals of such latter
documents. As to any facts material to our opinion, we have, when relevant facts
were not independently established, relied upon the aforesaid records,
certificates and documents.
As counsel for the Company, we advise you as follows:
The Company is a corporation duly organized and legally existing under
the laws of the State of Nevada.
When the following steps shall have been taken, the Notes will be
valid, legal and binding obligations of the Company:
(a) Execution and delivery of the Indenture.
<PAGE>
(b) Compliance with the Securities Act of 1933, as amended, and the
Trust Indenture Act of 1939, as amended, and action of the Securities and
Exchange Commission permitting the Registration Statement to become effective.
(c) Execution and filing with the Indenture Trustee of the proper
papers with respect to the Notes of each particular series.
(d) Issuance and sale of the Notes in accordance with the corporate
authorizations and in accordance with the terms and provisions of the Indenture.
Insofar as this opinion relates to matters of law and legal conclusions
governed by the laws of the State of Nevada, we base it on the opinion of
Messrs. Woodburn and Wedge of Reno, Nevada, as evidenced by the opinion of such
firm to be filed with the Registration Statement and the consent contained in
such opinion to the statements made in the Registration Statement in regard to
such firm.
We hereby consent to be named in the Registration Statement and in any
amendments thereto as counsel for the Company, to the statements with reference
to our firm made in the Registration Statement under the headings "LEGAL
OPINIONS", and to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
CHOATE, HALL & STEWART
<PAGE>
[LETTERHEAD OF WOODBURN AND WEDGE]
Exhibit 5.2
May 1, 2000
Sierra Pacific Resources
6100 Neil Road
P.O. Box 3015000
Reno, Nevada 89520-3150
Re: SIERRA PACIFIC RESOURCES, A NEVADA CORPORATION (THE "COMPANY")
Ladies and Gentlemen:
We have acted as Nevada counsel to the Company in connection with the
Registration Statement on Form S-3 (No. 333-80149) as filed with the Securities
and Exchange Commission on June 8, 1999 (the "Registration Statement"), relating
to the proposed issuance and sale from time to time of up to $500,000,000 of
senior debt securities (the "Notes") in one or more separate series. The Notes
are to be issued pursuant to an Indenture dated as of May 1, 2000 (the
"Indenture"), between the Company and Bank of New York, as Trustee (the
"Indenture Trustee").
In connection with rendering this opinion, we have examined such
corporate records, certificates and other documents as we have considered
necessary for the purposes of this opinion. In such examination, we have assumed
the genuineness of all signatures (other than officers of the Company), the
authenticity of all documents submitted to us as originals, the conformity to
the original documents of all documents submitted to us as copies and the
authenticity of the originals of such latter documents. As to any facts material
to our opinion, we have, when relevant facts were not independently established,
relied upon the aforesaid records, certificates and documents.
We have reviewed the following documents for purposes of this opinion:
(i) the Registration Statement;
(ii) the Preliminary Prospectus dated May 1, 2000 (the
"Prospectus"), and the Preliminary Prospectus Supplement
dated May 1, 2000 (the "Prospectus Supplement");
(iii) the Indenture;
<PAGE>
Sierra Pacific Resources
May 1, 2000
Page 2
(iv) the form of Note;
(v) the Company's Restated Articles of Incorporation, and all
amendments thereto;
(vi) the Company's By-laws as now in effect;
(vii) Resolutions adopted by the Board of Directors of the Company
on July 13, 1999; and
(viii) a Certificate of Existence for the Company, dated April 19,
2000, issued by the Secretary of State of Nevada confirming
the corporate existence and good standing of the Company as a
Nevada corporation.
Based upon the foregoing and the examination of such legal authorities
as we have deemed relevant, and subject to the qualifications and further
assumptions set forth below, we are of the opinion that:
1. The Company (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and (b) has
the corporate power and authority to own or lease and operate its properties and
to carry on its business as presently conducted and as described in the
Prospectus and Prospectus Supplement.
2. The Company has the corporate power and authority to
authorize, execute and deliver the Indenture.
3. The Company has the corporate power and authority to
authorize, issue and sell the Notes on the terms and conditions set forth in the
Prospectus and Prospectus Supplement, the Notes have been duly authorized by the
Company and, when issued and sold as provided in the Indenture, Registration
Statement, Prospectus and Prospectus Supplement, the Notes shall constitute the
legal, valid and binding obligations of the Company subject to bankruptcy,
insolvency, reorganization and similar laws of general application affecting the
rights of remedies of creditors and with respect to specific performance or
injunctive relief to the discretion of the court before which any proceedings
therefor may be brought.
We hereby consent:
1. To being named in the Registration Statement and in any
amendments thereto as counsel for the Company;
2. To the statements with reference to our firm made in the
Registration Statement; and
<PAGE>
Sierra Pacific Resources
May 1, 2000
Page 3
3. To the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
WOODBURN AND WEDGE
By: /s/ Gregg P. Barnard
----------------------------
Gregg P. Barnard
<PAGE>
Exhibit 12
SIERRA PACIFIC RESOURCES
Ratio of Earnings to Fixed Charges and Preferred Dividends
(Dollars in Thousands)
<TABLE>
<CAPTION>
Combined Proforma(1)
SPR (a) SPR (b) Combined (c)
Twelve Seven Twelve
Months Months Months
Ended Ended Ended
12/31/99 7/31/99 Adjust 12/31/99
-------- -------- ------ -----------
<S> <C> <C> <C> <C>
Interest
long term debt 81,732 23,851 17,500 123,083
other interest 34,483 6,411 -- 40,894
one third rentals 1,665 1,492 -- 3,157
-------- -------- ------ -----------
total fixed charges 117,880 31,754 17,500 167,134
-------- -------- ------ -----------
Preferred dividends
requirements 20,596 7,332 -- 27,928
-------- -------- ------ -----------
Total fixed charges
and preferred
dividends 138,476 39,086 17,500 195,062
-------- -------- ------ -----------
-------- -------- ------ -----------
EARNINGS
Net income (before
preferred dividend
requirements) 59,243 42,292 (11,497) 90,037
Add
fixed charges
(from above) 138,476 39,086 17,500 195,063
taxes on income 26,086 23,429 (6,125) 43,390
-------- -------- ------ -----------
Total earnings for
purpose of ratio 223,805 104,807 (122) 328,490
-------- -------- ------ -----------
-------- -------- ------ -----------
Ratio of earnings
to fixed charges and
preferred dividends
1.62 1.68
-------- -----------
-------- -----------
</TABLE>
Notes:
1. The combined pro forma ratio of earning to fixed charges is presented as
if the merger had occurred on January 1, 1999. Combined pro forma fixed
charges reflect the recognition of an additional seven months of interest
expense as if the debt
34
<PAGE>
for financing the merger had been incurred on January 1, 1999. The
interest expense, as presented, is calculated using annual rate of
approximately 6.5%. Combined pro forma earnings include the effect of an
additional seven months of interest expense and an additional seven months
of goodwill amortization expense for unregulated subsidiaries. Combined
pro forma earnings also reflect an adjustment to reduce income taxes
because of the higher expenses previously described.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-80141 of Sierra Pacific Resources (the
"Company") on Form S-3 of our reports dated March 21, 2000, appearing in the
Annual Report on Form 10-K of the Company and Nevada Power Company for the
year ended December 31, 1999, and of our reports dated February 29, 2000,
appearing in the Annual Report on Form 10-K of Sierra Pacific Power Company
for the year ended December 31, 1999, and to the reference to us under the
heading "Experts" in the Prospectus and Prospectus Supplement.
DELOITTE & TOUCHE LLP
Reno, Nevada
April 26, 2000
<PAGE>
EXHIBIT 99.1
FISCAL AND PAYING AGENCY AGREEMENT
THIS AGREEMENT dated as of April 17, 2000 between Sierra Pacific Resources,
a corporation organized under the laws of the State of Nevada (the "Company"),
and Bankers Trust Company, a New York banking corporation as fiscal and paying
agent (the "Agent").
Section 1. APPOINTMENT OF AGENT. The Company proposes to issue from time to
time its unsecured, unsubordinated Notes (the "Notes"). The Company hereby
appoints the Agent to act, on the terms and conditions specified herein, as
fiscal and paying agent for the Notes.
Section 2. AMOUNT UNLIMITED; EXECUTION.
(a) The Notes shall be issuable in series. The aggregate principal amount
of Notes which may be issued hereunder is unlimited.
(b) Each Note shall be executed on behalf of the Company by the manual or
facsimile signature of an Authorized Representative (as defined in Section 3
hereof) of the Company.
Section 3. AUTHORIZED REPRESENTATIVES. From time to time the Company will
furnish the Agent with a certificate or similar form of evidence of the Company
demonstrating the incumbency of officers authorized to execute Notes and
Authentication Orders (as defined in Section 4 hereof) on behalf of the Company
(an "Authorized Representative"). Until the Agent receives a subsequent
incumbency certificate or similar form of evidence of the Company, the Agent
shall be entitled to rely on the last such certificate or similar form of
evidence delivered to it for purposes of determining the Authorized
Representatives. Any Note bearing the manual or facsimile signature of a person
who is an Authorized Representative on the date such signature is affixed shall
bind the Company after the completion and registration thereof by the Agent,
notwithstanding that such person shall have ceased to hold office on the date
such Note is authenticated and delivered by the Agent.
Section 4. AUTHENTICATION ORDERS; COMPLETION, AUTHENTICATION AND DELIVERY
OF NOTES.
(a) The Notes shall be issued by the Agent only upon receipt from the
Company of an order (an "Authentication Order") with respect to a series of
Notes, which shall be accompanied by the proposed form of the Notes of such
series and, to the extent not set forth in such proposed form of Note, shall
include:
<PAGE>
(i) the designation of the Notes of the series (which may be part of a
series of Notes previously issued);
(ii) any limit on the aggregate principal amount of the Notes of the
series that may be authenticated and delivered hereunder (except for
Notes authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Notes of the series);
(iii) any date or dates on which the principal of the Notes of the
series is payable;
(iv) the method by which the rate or rates at which the Notes shall
bear interest shall be determined; the date or dates from which such
interest shall be payable (each an "Interest Payment Date") and the
record dates for the determination of holders to whom interest is
payable; and the basis on which interest is to be calculated;
(v) the place or places where the principal of and any interest on the
Notes shall be payable;
(vi) the price or prices at which, the period or periods within which
and the terms and conditions upon which Notes of the series may be
redeemed, in whole or in part;
(vii) the obligation, if any, of the Company to redeem, purchase or
repay Notes of the series pursuant to any mandatory redemption,
sinking fund or analogous provisions or at the option of a holder
thereof and the price or prices at which and the period or periods
within which and the terms and conditions upon which Notes shall be
redeemed, purchased or repaid, in whole or in part, pursuant to such
obligation;
(viii) the denominations in which Notes shall be issuable;
(ix) if other than the principal amount thereof, the portion of the
principal amount of Notes which shall be payable upon declaration of
acceleration of the maturity thereof;
(x) any restrictions on sale, resale, pledge or any other transfer of
the Notes; and
(xi) whether the Notes will be in the form of a global security.
2
<PAGE>
(b) Upon receipt of such Authentication Order with respect to the Notes,
the Agent shall prepare or cause to be prepared, the necessary Notes in the form
attached hereto as EXHIBIT A and, in accordance with the Authentication Order,
shall:
(i) complete each Note as to its Registered Holder and principal
amount;
(ii) record each Note in a Note Register to be maintained by the Agent
hereunder;
(iii) cause each Note to be manually authenticated by any one of the
officers or employees of the Agent duly authorized and designated by
it for such purpose; and
(iv) deliver each Note.
Section 5. RELIANCE ON AN AUTHENTICATION ORDER. The Agent shall incur no
liability to the Company in acting hereunder on instructions which the recipient
believed in good faith to have been given by an Authorized Representative.
Section 6. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Authentication
Order given to the Agent in accordance with Section 4 hereof shall constitute a
continuing representation and warranty to the Agent by the Company that the
issuance and delivery of the Notes which are the subject thereof have been duly
and validly authorized by the Company and that the Notes, when completed,
authenticated and delivered pursuant hereto, will constitute the legal, valid
and binding obligations of the Company.
Section 7. PAYMENT OF NOTE INTEREST; INTEREST PAYMENT DATES; RECORD DATES.
All interest payments in respect of the Notes will be made by the Agent to the
Registered Holders in whose names Notes are registered at the close of business
on the record date specified in the Notes of such series (whether or not a New
York City Business Day) next preceding each Interest Payment Date (each a
"Record Date"). Notwithstanding the foregoing, if so specified in the Notes of
such series, if the original issue date or date of transfer of any Note occurs
either on an Interest Payment Date or between a Record Date and the next
succeeding Interest Payment Date, the first payment of interest on any such Note
will be made on the Interest Payment Date following the next succeeding Record
Date. Unless otherwise specified in an Authentication Order with respect to a
particular series of Notes or in the proposed form of Notes of that series, all
interest payments on the Notes will be made at the office of the Agent located
at Four Albany Street, New York, New York 10006-1515, or, at the option of the
Agent may be made by check of the Agent mailed to the Registered Holders, as
such Registered Holders appear on the Record Date in the Note Register referred
to in Section 12 hereof, or to such other address in the United States as any
Registered Holder shall designate to the Agent in writing not later than the
relevant Record Date; PROVIDED, HOWEVER, that in the case of Notes held by a
depository or its nominee,
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payments of principal and interest shall be made by wire transfer of immediately
available funds to an account designated by such depository.
Section 8. PAYMENT OF NOTE PRINCIPAL. The Agent will pay the principal
amount of each Note at maturity, together with accrued interest due at maturity
(unless the maturity date is an Interest Payment Date), if any, only upon
presentation and surrender of such Note on or after the maturity date thereof.
The Agent will forthwith cancel and destroy each such Note. If the maturity date
is an Interest Payment Date, interest will be paid in the usual manner.
Section 9. INFORMATION REGARDING AMOUNTS DUE. Promptly following each
Record Date, the Agent will advise the Company of the amount of interest due on
the following Interest Payment Date. The Agent will advise the Company by the
fifteenth day prior to each payment date of the principal of and accrued
interest to be paid on Notes maturing on the next succeeding payment date.
Section 10. AVAILABILITY OF FUNDS. The Company shall assure that funds are
available to the Agent not later than 11:00 a.m. New York City time on each
Interest Payment Date and on each maturity date of any Note, in immediately
available funds sufficient to pay all accrued interest on, and/or the principal
of any such Note, as the case may be.
Section 11. AMENDMENTS AND WAIVERS. This Agreement and the provisions of
Notes of one or more series issued pursuant hereto may be amended or waived in
the manner and with the effect as may be specified in the terms of Notes of such
series.
Section 12. REGISTRATION, TRANSFER, EXCHANGE, PERSONS DEEMED OWNERS.
(a) The term "Note Register" shall mean the definitive record maintained by
the Agent in which shall be recorded the names, addresses and taxpayer
identifying numbers of Registered Holders of the Notes, the Note numbers and
original issue dates thereof and details with respect to the transfers and
exchange of Notes.
(b) The Agent shall register the transfer of any Note and/or effect the
exchange of any Note or Notes for Notes of other authorized denominations only
in accordance with the terms and conditions of such Note.
Section 13. APPLICATION OF FUNDS; RETURN OF UNCLAIMED FUNDS. Until used or
applied as herein provided and except as otherwise provided in the terms of the
Notes, all funds made available to the Agent hereunder shall be held for the
purposes for which they were received but need not be segregated from other
funds except to the extent required by law.
Section 14. LIABILITY. Neither the Agent nor its officers or employees
shall be liable for any act or omission hereunder except in the case of gross
negligence or willful
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misconduct. The duties and obligations of the Agent, its officers and employees
shall be determined by the express provisions of this Agreement and they shall
not be liable except for the performance of such duties and obligations as are
specifically set forth herein and no implied covenants shall be read into this
Agreement against them. The Agent may consult with counsel and shall be fully
protected in any action taken in good faith in accordance with the advice of
counsel. Neither the Agent nor its officers or employees shall be required to
ascertain whether any issuance or sale of Notes (or any amendment or termination
of this Agreement) has been duly authorized or is in compliance with any other
agreement to which the Company is a party (whether or not the Agent is also a
party of such other agreement). In acting under this Agreement or in connection
with the Notes, the Agent is acting solely as agent of the Company and shall not
assume any relationship of agency of trust for or with any Noteholder, except
that all funds held by the Agent for payment of principal of or interest on the
Notes shall be held in trust by it and applied to payments or the Notes subject
to the limitations set forth herein and in the terms of the Note.
Section 15. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Agent, its directors, officers, employees and agents from and
against any and all liabilities (including liability for penalties), losses,
claims, damages, actions, suits, judgments, demands, costs and expenses
(including reasonable legal fees and expenses) relating to or arising out of or
in connection with its or their performance under this Agreement, except to the
extent that they are caused by the gross negligence or willful misconduct of the
Agent. The foregoing indemnity includes, but is not limited to, any action taken
or omitted in good faith within the scope of this Agreement upon telephone,
telecopier or other electronically transmitted instructions, if authorized
herein, received from or believed by the Agent in good faith to have been given
by, an Authorized Representative. This indemnity shall survive the resignation
of removal of the Agent and the satisfaction or termination of this Agreement.
Section 16. COMPENSATION OF THE AGENT. The Company agrees to pay the
compensation of the Agent at such rates as shall be agreed upon from time to
time and to reimburse the Agent for its out-of-pocket expenses (including costs
of preparation of the Notes and reasonable legal fees and expenses),
disbursements and advances incurred or made in accordance with any provisions of
this Agreement. The obligations of the Company to the Agent pursuant to this
Section shall survive the resignation or removal of the Agent and the
satisfaction or termination of the Agreement.
Section 17. NOTICES.
(a) All communications by or on behalf of the Company relating to the
issuance, transfer, exchange or payment of Notes or interest thereon shall be
directed to the Agent at its address set forth in subsection (b)(ii) hereof (or
such other address as the Agent shall specify in writing to the Company).
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(b) Notices and other communications hereunder shall except to the extent
otherwise expressly provided, be in writing and shall be addressed as follows,
or to such other addresses as the parties hereto shall specify from time to
time:
(i) if to the Company:
Sierra Pacific Resources
6100 Neil Road
Reno, Nevada 89520-0024
Attention: Director of Finance/Assistant Treasurer
(ii) if to the Agent in connection with the issuance, transfer,
exchange or payment of Notes or interest thereon:
Bankers Trust Company
Corporate Trust and Agency Services
Four Albany Street
New York, New York 10006-1515
Section 18. RESIGNATION OR REMOVAL OF AGENT. The Agent may at any time
resign as such agent by giving written notice to the Company of such intention
on its part, specifying the date on which its desired resignation shall become
effective; PROVIDED, HOWEVER, that such date shall be not less than three months
after the giving of such notice by the Agent to the Company. The Agent may be
removed at any time by the filing with it of any instrument in writing signed by
a duly authorized officer of the Company and specifying such removal and the
date upon which it is intended to become effective. Such resignation or removal
shall take effect on the date of the appointment by the Company of a successor
agent and the acceptance of such appointment by such successor Agent. In the
event of resignation by the Agent, if a successor Agent has not been appointed
by the Company within three months after the giving of notice by the Agent of
its intention to resign, the Agent may, at the expense of the Company, petition
any court of competent jurisdiction for appointment of a successor Agent.
Section 19. BENEFIT OF AGREEMENT. This Agreement is solely for the benefit
of the parties hereto, their successors and assigns, and no other person shall
acquire or have any right under or by virtue hereof.
Section 20. NOTES HELD BY THE AGENT. The Agent, in its individual or other
capacity, may become the owner or pledgee of the Notes with the same rights it
would have if it were not acting as fiscal and paying agent hereunder.
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Section 21. GOVERNING LAW. This Agreement is to be delivered and performed
in, and shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of New York.
Section 22. COUNTERPARTS. This Agreement may be executed by the parties
hereto in any number of counterparts, and by each of the parties hereto in
separate counterparts, each such counterpart, when so executed and delivered,
shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized, all as of
the date and year first above written.
SIERRA PACIFIC RESOURCES
By: /s/ Richard K. Atkinson
Assistant Treasurer
BANKERS TRUST COMPANY
By: /s/ Tara Netherton
Associate
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EXHIBIT 99.2
NOTE NO. R-1 CUSIP N0. ____________
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO SIERRA PACIFIC
RESOURCES (THE "COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE,
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS A BOOK-ENTRY SECURITY AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS NOTE IS EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED HEREIN, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(1) INSIDE THE U.S. TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
U.S. IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
<PAGE>
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
SIERRA PACIFIC RESOURCES
FLOATING RATE NOTES
DUE APRIL 20, 2002 (THE "NOTES")
Sierra Pacific Resources, a corporation duly organized and existing
under the laws of the State of Nevada (the "Company"), for value received,
hereby promises to pay to Cede & Co., as the nominee of The Depository Trust
Company, or registered assigns, the principal amount of $100,000,000 on April
20, 2002 (the "Maturity Date"), and to pay interest as set forth below on the
outstanding principal amount hereof from time to time from ________, 2000 or
from the most recent Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, quarterly in arrears on January 20, April
20, July 20, and October 20 of each year and on the Maturity Date (each, an
"Interest Payment Date"), commencing July 20, 2000, until the principal hereof
is paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date shall, as provided
herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day preceding each Interest Payment Date (each, a "Regular Record
Date"); PROVIDED, HOWEVER, that interest payable on the Maturity Date shall be
payable to the person to whom the principal amount of this Note is payable. Any
interest payable on any Interest Payment Date other than the Maturity Date and
not so punctually paid or duly provided for shall forthwith cease to be payable
to the person in whose name this Note is registered at the close of business on
such Regular Record Date and shall instead be payable to the Person in whose
name this Note (or one or more predecessor Notes) is registered at the close of
business on a special record date for the payment of such interest to be fixed
by the Company, notice whereof shall be given to the registered holder of this
Note (or one or more predecessor Notes) not less than 10 days prior to such
special record date. Principal of this Note shall be payable against surrender
hereof at the corporate trust office of the Fiscal Agent or at such other office
or agency of the Company as may be designated by it for such purpose in the
Borough of Manhattan, The City of New York.
Payment of the principal of and interest on this Note shall be made at
the corporate trust office of the Fiscal Agent or at such other office or agency
of the Company as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts; PROVIDED, HOWEVER, that, at the option of the Company,
payments of interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the Note Register (as defined
in Section 3 hereof); and PROVIDED
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FURTHER, HOWEVER, that in the case of Notes held by a depository (as defined in
Section 3 hereof) or its nominee, payments of principal and interest shall be
made by wire transfer of immediately available funds to an account designated by
such depository.
If any Interest Payment Date for this Note (other than an Interest
Payment Date at the Maturity Date) would otherwise be a day that is not a
Business Day (as defined in Section 1 hereof), such Interest Payment Date shall
be postponed until the next succeeding Business Day unless such Business Day
falls in the next calendar month, in which case such Interest Payment Date shall
be the next preceding Business Day. If the Maturity Date of this Note falls on a
day that is not a Business Day, the payment of principal and interest will be
made on the next succeeding Business Day, and no interest on such payment shall
accrue for the period from and after such Maturity Date, except as otherwise
expressly provided for herein.
This Note is one of a duly authorized series of securities of the
Company, limited in aggregate principal amount of $100,000,000, issued under a
Fiscal and Paying Agency Agreement, dated as of April 17, 2000, (the "Fiscal
Agency Agreement"), duly executed and delivered by the Company to Bankers Trust
Company, as Fiscal and Paying Agent (the "Fiscal Agent"). All terms that are
used but not defined in this Note and that are defined in the Fiscal Agency
Agreement shall have the meanings set forth therein.
This Note may be redeemed at the option of the Company, in whole,
beginning on April 20, 2001, and on each Interest Payment Date thereafter, at a
redemption price equal to 100% of the unpaid principal amount plus accrued and
unpaid interest on this Note to the date of redemption. Any such redemption may
be made by the Company upon not less than 15 Business Days prior notice mailed
to the holder of this Note at its registered address by first-class mail. On and
after the redemption date, interest shall cease to accrue on this Note unless
the Company defaults in the payment of any principal then due and payable.
1. CALCULATION OF INTEREST. The period beginning on, and including,
________, 2000 and ending on, but excluding, the first Interest Payment Date and
each successive period beginning on, and including, an Interest Payment Date and
ending on, but excluding, the next succeeding Interest Payment Date is herein
called an "Interest Period". "Business Day" shall mean any day on which
commercial banks and foreign exchange markets are open for business, including
dealings in deposits in U.S. dollars in New York.
The rate of interest payable from time to time in respect of this Note
(the "Rate of Interest") will be a floating rate determined by reference to
LIBOR, determined as described below, plus a margin of 0.65% per annum. All
percentages resulting from any calculation on this Note will be rounded to the
nearest one hundredth-thousandth of a percentage point, with five one millionths
of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be
rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting
from such calculation on the Notes will be rounded to the nearest cent (with
one-half cent being rounded upward).
(a) At approximately 11:00 a.m. (London time) on the second day on
which commercial banks are open for business (including dealings in U.S.
Dollar deposits) in
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London (or, for purposes of paragraph (c) (ii) below, New York) prior to
the commencement of the Interest Period for which such rate will apply
(each such day an "Interest Determination Date"), Bankers Trust Company,
London Branch, or its successor in this capacity (the "Calculation Agent"),
will calculate the rate of interest (the "Rate of Interest") for such
Interest Period as, subject to the provisions described below, the rate per
annum equal to 0.65% above the rate appearing on the Dow Jones Telerate
Page 3750 (or such other page as may replace that page on the Dow Jones
Telerate Service) for three-month U.S. dollar deposits in the London
inter-bank market on such Interest Determination Date.
(b) If on any Interest Determination Date an appropriate rate cannot
be determined from the Dow Jones Telerate Service, the Rate of Interest for
the next Interest Period shall, subject to the provisions described below,
be the rate per annum that the Calculation Agent certifies to be 0.65% per
annum above the arithmetic mean of the offered quotations, as communicated
to and at the request of the Calculation Agent by not less than two major
banks in London selected by the Calculation Agent (the "Reference Banks,"
which expression shall include any successors nominated by the Calculation
Agent), to leading banks in London by the principal London offices of the
Reference Banks for three-month U.S. dollar deposits in the London
inter-bank market as at 11:00 a.m. (London time) on such Interest
Determination Date.
(c) If on any Interest Determination Date fewer than two of such
offered rates are available, the Rate of Interest for the next Interest
Period shall be whichever is the higher of:
(i) the Rate of interest in effect for the last preceding
Interest Period to which (a) or (b) above shall have applied; and
(ii) the Reserve Interest Rate. The "Reserve Interest Rate" shall
be the rate per annum which the Calculation Agent determines to be
0.65% per annum above either (1) the arithmetic mean of the U.S.
dollar offered rates which New York City banks selected by the
Calculation Agent are or were quoting, on the relevant Interest
Determination Date, for three-month deposits to the Reference Banks or
those of them (being at least two in number) to which such quotations
are or were, in the opinion of the Calculation Agent, being so made,
or (2) in the event that the Calculation Agent can determine no such
arithmetic mean, the arithmetic mean of the U.S. dollar offered rates
which at least two New York City banks selected by the Calculation
Agent are or were quoting on such Interest Determination Date to
leading European banks for a period of three months; PROVIDED,
HOWEVER, that if the banks selected as aforesaid by the Calculation
Agent are not quoting as mentioned above, the Rate of Interest shall
be the Rate of Interest specified in (i) above.
The Calculation Agent shall, as soon as practicable after 11:00 a.m.
(London time) on each Interest Determination Date, determine the Rate of
Interest and calculate the amount of interest payable in respect of the
following Interest Period (the "Interest Amount"). The Interest
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Amount shall be calculated by applying the Rate of Interest to the principal
amount of each Note outstanding at the commencement of the Interest Period,
multiplying each such amount by the actual number of days in the Interest Period
concerned (which actual number of days shall include the first day but exclude
the last day of such Interest Period) divided by 360 and rounding the resultant
figure upwards to the nearest cent (half a cent being rounded upwards). The
determination of the Rate of Interest and the Interest Amount by the Calculation
Agent shall (in the absence of willful default, bad faith or manifest error) be
final and binding on all parties.
Notwithstanding anything herein to the contrary, the interest rate on
the Notes shall in no event be higher than the maximum rate permitted by New
York law, as the same may be modified by United States law of general
application.
Interest shall cease to accrue on this Note on the Maturity Date
unless, upon presentation of this Note, payment of principal is improperly
withheld or refused, in which case, interest shall continue to accrue.
2. CALCULATION AGENT. So long as any of this Note remains outstanding,
the Company shall maintain under appointment a Calculation Agent, which shall
initially be the Fiscal Agent, to calculate the Rate of Interest payable on this
Note in respect of each Interest Period. If the Calculation Agent shall fail to
establish the Rate of Interest for any Interest Period, or if the Company shall
remove the Calculation Agent, the Company shall appoint another commercial or
investment bank to act as the Calculation Agent. The Company may change the
Calculation Agent without notice.
All certificates, communications, opinions, determinations,
calculations, quotations and decisions given, expressed, made or obtained for
the purposes of the provisions hereof relating to the payment and calculation of
interest on this Note by the Calculation Agent shall (in the absence of willful
default, bad faith or manifest error) be binding on the Company, the Calculation
Agent and all of the holders and owners of beneficial interests in this Note,
and no liability shall (in the absence of willful default, bad faith or manifest
error) attach to the Calculation Agent in connection with the exercise or
non-exercise by it of its powers, duties and discretions.
3. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The Company
shall cause to be kept at an office or agency to be maintained by the Company a
register (the register maintained in such office being herein referred to as the
"Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Notes and of
transfers of Notes. The Fiscal Agent is hereby appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided. The
Company may appoint co-registrars and may change any Note Registrar or
co-registrar without notice.
Notes shall be exchangeable pursuant to this Section 3 for Notes
registered in the name of, and a transfer of a Note may be registered to, any
person other than DTC or its successor depository (DTC or such successor being
referred to as a "depository") for such Note or its nominee only if (i) such
depository notifies the Company that it is unwilling or unable to continue as
depository for such Note or if at any time such depository ceases to be a
clearing
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agency registered under the Securities Exchange Act of 1934, as amended, and a
successor depository is not appointed by the Company within 90 days, (ii) there
shall have occurred and be continuing an Event of Default (as defined below)
with respect to the Notes or (iii) the Company, in its sole discretion, elects
to terminate the book-entry system. Upon the occurrence of any one or more of
the conditions specified in clauses (i), (ii) or (iii) of the preceding
sentence, such Note shall be exchanged for Notes registered in the names of, and
the transfer of such Note shall be registered to, such persons (including
persons other than the depository with respect to such Notes and its nominee) as
such depository shall direct, in each case subject to Section 5 hereof.
Subject to the restrictions on transfer and delivery set forth in this
Note, Notes may be presented for exchange or for registration of transfer (duly
endorsed or with the form of transfer endorsed thereon duly executed) at the
office of the Fiscal Agent or at the office of any other transfer agent
designated by the Company for such purpose. Such transfer or exchange shall be
effected upon the Fiscal Agent's or such other transfer agent's, as the case may
be, being satisfied with the documents of title and identity of the person
making the request. The Company may at any time designate additional transfer
agents or rescind the designation of any transfer agent or approve a change in
the office through which any transfer agent acts; PROVIDED, HOWEVER, that there
shall at all times be a transfer agent in the Borough of Manhattan, The City of
New York.
The Notes and any certificates for Notes issued in exchange for Notes
or a beneficial interest therein will bear the third legend set forth in this
Note. The holder of a certificated Note may transfer such Note, subject to
compliance with the provisions of such legend, as provided in the preceding
paragraph. Upon the transfer, exchange or replacement of Notes bearing such
legend, or upon specific request for removal of such legend on a Note, the
Company will deliver only Notes bearing such legend, or will refuse to remove
such legend, as the case may be, unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel, as may
reasonably be required by the Company that neither such legend nor the
restrictions on transfer set forth therein are required to ensure compliance
with the provisions of the Securities Act.
4. ACTS BY HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by the Notes or the Fiscal
Agency Agreement to be given or taken by holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor
signed by such holders in person or by an agent duly appointed in
writing; and, except as otherwise expressly provided in the Notes or
the Fiscal Agency Agreement, such action shall become effective when
such instrument or instruments are delivered to the Fiscal Agent and,
where it is hereby expressly required, to the Company. Such instrument
or instruments (and the action embodied therein and evidenced thereby)
are herein sometimes referred to as the "Act" of the holders signing
such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of the Notes and the Fiscal Agency Agreement
and conclusive in favor of the Fiscal Agent and the Company, if made in
the manner provided in this Section.
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(b) The fact and date of the execution by any person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him the execution thereof. Where such execution is by a signer acting
in a capacity other than his or her individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the person executing the
same, may also be proved in any other manner which the Fiscal Agent
deems sufficient.
(c) The Company may set any day as the record date for the
purpose of determining the holders of outstanding Notes entitled to
make any request or demand or give any authorization, direction,
notice, consent or waiver or take other action, provided or permitted
by the Notes and the Fiscal Agency Agreement to be made, given or taken
by holders of the Notes.
With regard to any record date set pursuant to the immediately
preceding paragraph, the holders of outstanding Notes on such record
date (or their duly appointed agents), and only such persons, shall be
entitled to take relevant action, whether or not such holders remain
holders after such record date. With regard to any action that may be
taken hereunder only by holders of a requisite principal amount of
outstanding Notes (or their duly appointed agents) and for which a
record date is set pursuant to the immediately preceding paragraph, the
Company, may at its option, set an expiration date after which no such
action purported to be taken by any holder shall be effective unless
taken on or prior to such expiration date by holders of the requisite
principal amount of outstanding Notes on such record date (or their
duly appointed agents). On or prior to any expiration date set pursuant
to this paragraph, the Company may, on one or more occasions at its
option, extend such expiration date to any later date. Nothing in this
paragraph shall prevent any holder (or any duly appointed agent
thereof) from taking, at any time, any action contrary to or different
from, any action previously taken, or purported to have been taken
hereunder by such holder, in which event the Company may set a record
date in respect thereof pursuant to this paragraph. Notwithstanding the
foregoing, the Company shall not set a record date for, and the
provisions to this paragraph shall not apply with respect to, any
action to be taken by holders pursuant to Section 8 hereof.
Upon receipt by the Fiscal Agent of notice of any default, any
declaration of acceleration, or any rescission and annulment of any
such declaration, or of any direction in accordance with Section 8
hereof, a record date shall automatically and without any other action
by any person be set for the purpose of determining the holders of
outstanding Notes entitled to join in such notice, declaration, or
rescission and annulment, or direction, as the case may be, which
record date shall be the close of business on the date the Fiscal Agent
receives such notice, declaration, rescission and annulment or
direction, as the case may be. The holders of outstanding Notes on such
record date (or their duly appointed agent), and only such persons,
shall be entitled to join
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in such notice, declaration, rescission and annulment, or direction,
as the case may be, whether or not such holders remain holders after
such record date; PROVIDED that, unless such notice, declaration,
rescission and annulment, or direction, as the case may be, shall have
become effective by virtue of holders of the requisite principal
amount of outstanding Notes on such record date (or their duly
appointed agents) having joined therein on or prior to the 90th day
after such record date, such notice of default, declaration, or
rescission and annulment or direction given or made by the holders, as
the case may be, shall automatically and without any action by any
person be canceled and of no further effect. Nothing in this paragraph
shall prevent a holder (or a duly appointed agent thereof) from
giving, before or after the expiration of such 90-day period, a notice
of default, a declaration of acceleration, a rescission and annulment
of a declaration of acceleration or a direction, contrary to or
different from, or, after the expiration of such period, identical to,
a previously given notice, declaration, rescission and annulment, or
direction, as the case may be, that has been canceled pursuant to the
proviso to the preceding sentence, in which event a new record date in
respect thereof shall be set pursuant to this paragraph.
(d) The ownership of the Notes shall be proved by the Note
Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver, or other Act of the holder of any Note shall bind
every future holder of the same Note and the holder of every Note
issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Fiscal Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such
Note.
5. DENOMINATIONS. The Notes are issuable only in registered form
without coupons in denominations of $100,000 and integral multiples of $1,000 in
excess thereof.
6. PERSONS DEEMED OWNERS. The Company, the Fiscal Agent and any agent
of the Company or the Fiscal Agent may treat the person in whose name this Note
is registered as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes whatsoever, whether or not this Note shall
be overdue, and neither the Company, the Fiscal Agent nor any such agent shall
be affected by notice to the contrary.
7. AMENDMENTS AND WAIVERS. Without the consent of any holders of the
Notes, the Company, when authorized by a resolution duly adopted by the Board of
Directors of the Company, and the Fiscal Agent, at any time and from time to
time, may amend the terms of the Notes and enter into one or more agreements
supplemental to the Fiscal Agency Agreement, in form satisfactory to the Fiscal
Agent, for any of the following purposes:
(a) to evidence the succession of another person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Fiscal Agency Agreement; or
(b) to add to the covenants of the Company for the benefit of the
holders of the Notes; or
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(e) to add any additional Events of Default; or
(d) to secure the Notes; or
(e) to evidence and provide for the acceptance of appointment by a
successor Fiscal Agent with respect to the Notes; or
(f) to amend the restrictions on transfer applicable to the Notes as
set forth on this Note; or
(g) to cure any ambiguity or to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
correct or supplement any defective provision contained herein or in the
Fiscal Agency Agreement, PROVIDED that such action pursuant to this clause
(g) shall not adversely affect the interests of the holders of the Notes.
With the consent of the holders of not less than 66 and 2/3% in principal
amount of the outstanding Notes, by act of said holders delivered to the Company
and the Fiscal Agent, the Company, when authorized by a resolution duly adopted
by the Board of Directors of the Company, and the Fiscal Agent, at any time and
from time to time, may amend the terms of the Notes and enter into an agreement
supplemental to the Fiscal Agency Agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Notes, or the Fiscal Agency Agreement as the same pertains to the Notes, or
of modifying in any manner the rights of the holders of the Notes: PROVIDED,
HOWEVER, that no such amendment or supplemental agreement shall, without the
consent of the holder of each outstanding Note affected thereby,
(1) change the stated maturity of the principal of, or any installment
of interest on, any Note, or reduce the principal amount thereof or the
rate of interest thereon, or change any place of payment where, or the coin
or currency in which, any Note or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or
after the stated maturity thereof, or
(2) reduce the percentage in principal amount of the outstanding
Notes, the consent of whose holders is required for any such amendment or
supplemental agreement or the consent of whose holders is required for any
waiver provided for herein or in the Fiscal Agency Agreement, or
(3) modify any of the provisions of this Section or Section 9, except
to increase any such percentage or to provide that certain other provisions
of the Notes cannot be modified or waived without the consent of the holder
of each outstanding Note affected thereby.
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It shall not be necessary for any act of holders under this Section 7 to
approve the particular form of any proposed amendment or supplemental agreement,
but it shall be sufficient if such act shall approve the substance thereof.
Upon the execution of any agreement supplement to the Fiscal Agency
Agreement as permitted by this Section 7, the Notes and the Fiscal Agency
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of the Notes and the Fiscal Agency Agreement, as the
same pertains to the Notes, for all purposes; and every holder of the Notes
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
8. DEFAULTS AND REMEDIES. The occurrence of any of the following events
shall constitute an Event of Default with respect to the Notes:
(a) default in the payment of the principal of any of the Notes when
the same becomes due and payable; or
(b) default in the payment of any installment of interest upon any of
the Notes when the same becomes due and payable, and continuance of such
default for a period of 30 days; or
(c) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Notes for a period of 90 days after the date on which written notice of
such failure, requiring the Company to remedy the same, shall have been
given to the Company by the Fiscal Agent by registered or certified mail or
to the Company and the Fiscal Agent by the holders of at least 25% in
aggregate principal amount of the Notes, or
(d) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Company bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the
Company under the Federal Bankruptcy Code or any other similar applicable
Federal or State law, and such decree or order shall have continued
undischarged and unstayed for a period of 60 days; or a decree or order of
a court having jurisdiction in the premises for the appointment of a
receiver or liquidator or trustee or assignee in the bankruptcy or
insolvency of the Company or of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and such decree or
order shall have continued undischarged and unstayed for a period of 60
days; or
(e) the Company shall institute proceedings to be adjudicated
bankrupt, or shall consent to the filing of a bankruptcy proceeding against
it, or shall file a petition or answer or consent seeking reorganization
under the Federal Bankruptcy Code or any other similar Federal or State
law, or shall consent to the filing of any such petition or shall consent
to the appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of it or of its property, or shall make an
assignment for the benefit of creditors or shall admit in writing its
inability to pay its debts generally as they become due.
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If an Event of Default occurs and is continuing, the holders of at least
25% in principal amount of the Notes then outstanding may declare all the Notes
to be due and payable immediately. Holders of a majority in principal amount of
the Notes may waive an Event of Default and rescind any related declaration
except as provided in Section 9(a) hereof. The Fiscal Agent may withhold from
holders of Notes notice of any continuing Event of Default, except in respect of
a default in the payment of principal of or interest on the Notes, if it
determines that withholding such notice is in their interest.
9. WAIVERS.
(a) The holders of not less than a majority in principal amount of the
outstanding Notes may on behalf of the holders of the Notes waive any past
default hereunder with respect to the Notes and its consequences, except a
default
(1) in the payment of the principal of or interest on any Note,
or
(2) In respect of a covenant or provision hereof which under
Section 7 cannot be modified or amended without the consent
of the holder of each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of the Notes; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
(b) The Company may omit in any particular instance to comply
with any term, provision or condition set forth in the Notes
or the Fiscal Agency Agreement with respect to the Notes if
before the time for such compliance the holders of at least
66 and 2/3% in principal amount of the outstanding Notes
shall, by act of such holders, either waive such compliance
in such instance or generally waive compliance with such
term, provision or condition, but (i) without the consent of
the holder of each Note affected thereby, no such waiver
shall extend to or affect any term, provision or condition
which under Section 7 cannot be modified or amended without
the consent of the holder of each outstanding Note affected,
and (ii) no such waiver shall extend to or affect any term,
provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the
obligations of the Company and any duties of the Fiscal
Agent in respect of any such term, provision or condition
shall remain in full force and effect.
10. RESTRICTED SUBSIDIARIES. The Company will not, and will not permit any
Restricted Subsidiary (as defined below) to create, issue, assume or guarantee
any debt for money borrowed (hereafter in this Section referred to as "Debt")
secured by a mortgage, security interest, pledge, lien or other encumbrance upon
any shares of stock of any Restricted Subsidiary
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(whether such shares of stock are now owned or hereafter acquired) without in
any such case effectively providing concurrently with the issuance, assumption
or guarantee of any such Debt that the Notes (together with, if the Company
shall so determine, any other indebtedness of or guarantee by the Company
ranking equally with the Notes and then existing or thereafter created) shall be
secured equally and ratably with such Debt. As used herein, the term Restricted
Securities shall mean any consolidated operating subsidiary of the Company that
accounts for 10% or more of the consolidated revenues and/or assets of Company.
The Company will not, and will not permit any Restricted Subsidiary to,
issue, sell, assign transfer or otherwise dispose of, directly or indirectly,
any of the capital stock (which is defined as any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock) (other than nonvoting
preferred stock) of any Restricted Subsidiary (except to the Company or to one
or more Restricted Subsidiaries or for the purpose of qualifying directors);
provided, however, that this covenant shall not apply if:
(1) all or any part of such capital stock is sold, assigned, transferred
or otherwise disposed of in a transaction for consideration which is
at least equal to the fair value of such capital stock, as determined
by the Board of Directors (acting in good faith); or
(2) the issuance, sale, assignment, transfer or other disposition is
required to comply with the order of a court or regulatory authority
of competent jurisdiction, other than an order issued at the request
of the Company or of one of its Restricted Subsidiaries.
11. COMPANY MAY CONSOLIDATE ETC., ONLY ON CERTAIN TERMS. The Company
covenants that it will not merge or consolidate with any other corporation or
sell or convey all or substantially all of its assets to any person, firm or
corporation, except that the Company may merge or consolidate with, or sell or
convey all or substantially all of its assets to, any other corporation,
PROVIDED that (i) either the Company shall be the continuing corporation, or the
successor corporation (if other than the Company) shall be a corporation
organized and existing under the laws of the United States of America or a State
thereof and such corporation shall expressly assume the due and punctual payment
of the principal of and interest on all the Notes, according to their tenor, and
the due and punctual performance and observance of all of the covenants and
conditions of this Note and the Fiscal Agency Agreement to be performed by the
Company, by supplemental agreement in form satisfactory to the Fiscal Agent,
executed and delivered to the Fiscal Agent by such corporation, and (ii) the
Company or such successor corporation, as the case may be, shall not,
immediately after such merger, consolidation, sale or conveyance, be in default
in the performance of any such covenant or condition.
Upon any consolidation of the Company with, or merger of the Company into,
any other person or any sale or conveyance of all or substantially all of the
assets of the Company in accordance with this Section 11, the successor person
formed by such consolidation or into which the Company is merged or to which
such sale or conveyance is made shall succeed to, and be substituted for, and
may exercise every right and power of the Company under this Note and
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the Fiscal Agency Agreement with the same effect as if such successor person had
been named as the Company herein, and thereafter, except in the case of a lease,
the predecessor person shall be relieved of all obligations and covenants under
the Notes and the Fiscal Agency Agreement.
12. UNCLAIMED AMOUNTS. Any money deposited with the Fiscal Agent in trust
for the payment of the principal of or interest on any Note and remaining
unclaimed for twelve months after such principal or interest has become due and
payable shall be paid to the Company upon its request; and the holder of such
Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Fiscal Agent with respect
to such money shall thereupon cease.
13. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If any Note becomes
mutilated or defaced or is apparently destroyed, lost or stolen, the Fiscal
Agent shall, subject to the provisions of this Section 13, authenticate and
deliver a new Note in exchange and substitution for the mutilated or defaced
Note or in lieu of or in substitution for the apparently destroyed, lost or
stolen Note.
Application for the authentication and delivery of a substitute Note
pursuant to this Section 13 may be made at the office of the Fiscal Agent. If
the applicant for any substitute Note shall furnish to the Company and the
Fiscal Agent (i) in the case of any such request in case of loss or theft, such
security or indemnity as may be required by the Company and the Fiscal Agent in
their sole discretion to indemnify and defend and to save each of them and any
agent of either of them harmless, and (ii) in the case of any request for a
substitute Note in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Fiscal Agent of the apparent destruction,
loss or theft of such Note and of the ownership thereof, then, in the absence of
notice to the Company or the Fiscal Agent that such Note has been acquired by a
bona fide purchaser, the Company shall execute and the Fiscal Agent shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any substitute Note under this Section 13, the Company
may require the payment of a sum sufficient to cover any tax assessment or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Fiscal Agent) connected
therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of the Fiscal Agency Agreement equally and proportionately with any and
all other Notes.
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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Fiscal Agency Agreement, or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each holder (and each beneficial owner) of a Note by accepting such
Note (or acquisition of a beneficial interest therein) waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
THIS NOTE SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
This Note shall not be valid or obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Fiscal Agent
under the Fiscal Agency Agreement.
[The remainder of this page is left blank intentionally.]
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IN WITNESS WHEREOF, the Company has caused this instrument to be signed in
its corporate name, manually or by facsimile, by an Authorized Representative
and a facsimile of its corporate seal to be affixed hereunto or imprinted
hereon, attested by the manual or facsimile signature of its Secretary or one of
its Assistant Secretaries.
SIERRA PACIFIC RESOURCES
Attest: _________________________ By: ___________________________
Name:
Title:
Dated: _________, 2000
FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Fiscal Agency
Agreement.
BANKERS TRUST COMPANY, as
Fiscal Agent
By: __________________________
Authorized Signer
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EXHIBIT 99.3
FISCAL AND PAYING AGENCY AGREEMENT
THIS AGREEMENT dated as of April 17, 2000 between Sierra Pacific Resources,
a corporation organized under the laws of the State of Nevada (the "Company"),
and Bankers Trust Company, a New York banking corporation as fiscal and paying
agent (the "Agent").
Section 1. APPOINTMENT OF AGENT. The Company proposes to issue from time to
time its unsecured, unsubordinated Notes (the "Notes"). The Company hereby
appoints the Agent to act, on the terms and conditions specified herein, as
fiscal and paying agent for the Notes.
Section 2. AMOUNT UNLIMITED; EXECUTION.
(a) The Notes shall be issuable in series. The aggregate principal amount
of Notes which may be issued hereunder is unlimited.
(b) Each Note shall be executed on behalf of the Company by the manual or
facsimile signature of an Authorized Representative (as defined in Section 3
hereof) of the Company.
Section 3. AUTHORIZED REPRESENTATIVES. From time to time the Company will
furnish the Agent with a certificate or similar form of evidence of the Company
demonstrating the incumbency of officers authorized to execute Notes and
Authentication Orders (as defined in Section 4 hereof) on behalf of the Company
(an "Authorized Representative"). Until the Agent receives a subsequent
incumbency certificate or similar form of evidence of the Company, the Agent
shall be entitled to rely on the last such certificate or similar form of
evidence delivered to it for purposes of determining the Authorized
Representatives. Any Note bearing the manual or facsimile signature of a person
who is an Authorized Representative on the date such signature is affixed shall
bind the Company after the completion and registration thereof by the Agent,
notwithstanding that such person shall have ceased to hold office on the date
such Note is authenticated and delivered by the Agent.
Section 4. AUTHENTICATION ORDERS; COMPLETION, AUTHENTICATION AND DELIVERY
OF NOTES.
(a) The Notes shall be issued by the Agent only upon receipt from the
Company of an order (an "Authentication Order") with respect to a series of
Notes, which shall be accompanied by the proposed form of the Notes of such
series and, to the extent not set forth in such proposed form of Note, shall
include:
<PAGE>
(i) the designation of the Notes of the series (which may be part
of a series of Notes previously issued);
(ii) any limit on the aggregate principal amount of the Notes of
the series that may be authenticated and delivered hereunder
(except for Notes authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Notes of
the series);
(iii) any date or dates on which the principal of the Notes of
the series is payable;
(iv) the method by which the rate or rates at which the Notes
shall bear interest shall be determined; the date or dates from
which such interest shall be payable (each an "Interest Payment
Date") and the record dates for the determination of holders to
whom interest is payable; and the basis on which interest is to
be calculated;
(v) the place or places where the principal of and any interest
on the Notes shall be payable;
(vi) the price or prices at which, the period or periods within
which and the terms and conditions upon which Notes of the series
may be redeemed, in whole or in part;
(vii) the obligation, if any, of the Company to redeem, purchase
or repay Notes of the series pursuant to any mandatory
redemption, sinking fund or analogous provisions or at the option
of a holder thereof and the price or prices at which and the
period or periods within which and the terms and conditions upon
which Notes shall be redeemed, purchased or repaid, in whole or
in part, pursuant to such obligation;
(viii) the denominations in which Notes shall be issuable;
(ix) if other than the principal amount thereof, the portion of
the principal amount of Notes which shall be payable upon
declaration of acceleration of the maturity thereof;
(x) any restrictions on sale, resale, pledge or any other
transfer of the Notes; and
(xi) whether the Notes will be in the form of a global security.
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(b) Upon receipt of such Authentication Order with respect to the Notes,
the Agent shall prepare or cause to be prepared, the necessary Notes in the form
attached hereto as EXHIBIT A and, in accordance with the Authentication Order,
shall:
(i) complete each Note as to its Registered Holder and principal
amount;
(ii) record each Note in a Note Register to be maintained by the
Agent hereunder;
(iii) cause each Note to be manually authenticated by any one of
the officers or employees of the Agent duly authorized and
designated by it for such purpose; and
(iv) deliver each Note.
Section 5. RELIANCE ON AN AUTHENTICATION ORDER. The Agent shall incur no
liability to the Company in acting hereunder on instructions which the recipient
believed in good faith to have been given by an Authorized Representative.
Section 6. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Authentication
Order given to the Agent in accordance with Section 4 hereof shall constitute a
continuing representation and warranty to the Agent by the Company that the
issuance and delivery of the Notes which are the subject thereof have been duly
and validly authorized by the Company and that the Notes, when completed,
authenticated and delivered pursuant hereto, will constitute the legal, valid
and binding obligations of the Company.
Section 7. PAYMENT OF NOTE INTEREST; INTEREST PAYMENT DATES; RECORD DATES.
All interest payments in respect of the Notes will be made by the Agent to the
Registered Holders in whose names Notes are registered at the close of business
on the record date specified in the Notes of such series (whether or not a New
York City Business Day) next preceding each Interest Payment Date (each a
"Record Date"). Notwithstanding the foregoing, if so specified in the Notes of
such series, if the original issue date or date of transfer of any Note occurs
either on an Interest Payment Date or between a Record Date and the next
succeeding Interest Payment Date, the first payment of interest on any such Note
will be made on the Interest Payment Date following the next succeeding Record
Date. Unless otherwise specified in an Authentication Order with respect to a
particular series of Notes or in the proposed form of Notes of that series, all
interest payments on the Notes will be made at the office of the Agent located
at Four Albany Street, New York, New York 10006-1515, or, at the option of the
Agent may be made by check of the Agent mailed to the Registered Holders, as
such Registered Holders appear on the Record Date in the Note Register referred
to in Section 12 hereof, or to such other address in the United States as any
Registered Holder shall designate to the Agent in writing not later than the
relevant Record Date; PROVIDED, HOWEVER, that in the case of Notes held by a
depository or its nominee,
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payments of principal and interest shall be made by wire transfer of immediately
available funds to an account designated by such depository.
Section 8. PAYMENT OF NOTE PRINCIPAL. The Agent will pay the principal
amount of each Note at maturity, together with accrued interest due at maturity
(unless the maturity date is an Interest Payment Date), if any, only upon
presentation and surrender of such Note on or after the maturity date thereof.
The Agent will forthwith cancel and destroy each such Note. If the maturity date
is an Interest Payment Date, interest will be paid in the usual manner.
Section 9. INFORMATION REGARDING AMOUNTS DUE. Promptly following each
Record Date, the Agent will advise the Company of the amount of interest due on
the following Interest Payment Date. The Agent will advise the Company by the
fifteenth day prior to each payment date of the principal of and accrued
interest to be paid on Notes maturing on the next succeeding payment date.
Section 10. AVAILABILITY OF FUNDS. The Company shall assure that funds are
available to the Agent not later than 11:00 a.m. New York City time on each
Interest Payment Date and on each maturity date of any Note, in immediately
available funds sufficient to pay all accrued interest on, and/or the principal
of any such Note, as the case may be.
Section 11. AMENDMENTS AND WAIVERS. This Agreement and the provisions of
Notes of one or more series issued pursuant hereto may be amended or waived in
the manner and with the effect as may be specified in the terms of Notes of such
series.
Section 12. REGISTRATION, TRANSFER, EXCHANGE, PERSONS DEEMED OWNERS.
(a) The term "Note Register" shall mean the definitive record maintained by
the Agent in which shall be recorded the names, addresses and taxpayer
identifying numbers of Registered Holders of the Notes, the Note numbers and
original issue dates thereof and details with respect to the transfers and
exchange of Notes.
(b) The Agent shall register the transfer of any Note and/or effect the
exchange of any Note or Notes for Notes of other authorized denominations only
in accordance with the terms and conditions of such Note.
Section 13. APPLICATION OF FUNDS; RETURN OF UNCLAIMED FUNDS. Until used or
applied as herein provided and except as otherwise provided in the terms of the
Notes, all funds made available to the Agent hereunder shall be held for the
purposes for which they were received but need not be segregated from other
funds except to the extent required by law.
Section 14. LIABILITY. Neither the Agent nor its officers or employees
shall be liable for any act or omission hereunder except in the case of gross
negligence or willful
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misconduct. The duties and obligations of the Agent, its officers and employees
shall be determined by the express provisions of this Agreement and they shall
not be liable except for the performance of such duties and obligations as are
specifically set forth herein and no implied covenants shall be read into this
Agreement against them. The Agent may consult with counsel and shall be fully
protected in any action taken in good faith in accordance with the advice of
counsel. Neither the Agent nor its officers or employees shall be required to
ascertain whether any issuance or sale of Notes (or any amendment or termination
of this Agreement) has been duly authorized or is in compliance with any other
agreement to which the Company is a party (whether or not the Agent is also a
party of such other agreement). In acting under this Agreement or in connection
with the Notes, the Agent is acting solely as agent of the Company and shall not
assume any relationship of agency of trust for or with any Noteholder, except
that all funds held by the Agent for payment of principal of or interest on the
Notes shall be held in trust by it and applied to payments or the Notes subject
to the limitations set forth herein and in the terms of the Note.
Section 15. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Agent, its directors, officers, employees and agents from and
against any and all liabilities (including liability for penalties), losses,
claims, damages, actions, suits, judgments, demands, costs and expenses
(including reasonable legal fees and expenses) relating to or arising out of or
in connection with its or their performance under this Agreement, except to the
extent that they are caused by the gross negligence or willful misconduct of the
Agent. The foregoing indemnity includes, but is not limited to, any action taken
or omitted in good faith within the scope of this Agreement upon telephone,
telecopier or other electronically transmitted instructions, if authorized
herein, received from or believed by the Agent in good faith to have been given
by, an Authorized Representative. This indemnity shall survive the resignation
of removal of the Agent and the satisfaction or termination of this Agreement.
Section 16. COMPENSATION OF THE AGENT. The Company agrees to pay the
compensation of the Agent at such rates as shall be agreed upon from time to
time and to reimburse the Agent for its out-of-pocket expenses (including costs
of preparation of the Notes and reasonable legal fees and expenses),
disbursements and advances incurred or made in accordance with any provisions of
this Agreement. The obligations of the Company to the Agent pursuant to this
Section shall survive the resignation or removal of the Agent and the
satisfaction or termination of the Agreement.
Section 17. NOTICES.
(a) All communications by or on behalf of the Company relating to the
issuance, transfer, exchange or payment of Notes or interest thereon shall be
directed to the Agent at its address set forth in subsection (b)(ii) hereof (or
such other address as the Agent shall specify in writing to the Company).
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(b) Notices and other communications hereunder shall except to the extent
otherwise expressly provided, be in writing and shall be addressed as follows,
or to such other addresses as the parties hereto shall specify from time to
time:
(i) if to the Company:
Sierra Pacific Resources
6100 Neil Road
Reno, Nevada 89520-0024
Attention: Director of Finance/Assistant Treasurer
(ii) if to the Agent in connection with the issuance, transfer,
exchange or payment of Notes or interest thereon:
Bankers Trust Company
Corporate Trust and Agency Services
Four Albany Street
New York, New York 10006-1515
Section 18. RESIGNATION OR REMOVAL OF AGENT. The Agent may at any time
resign as such agent by giving written notice to the Company of such intention
on its part, specifying the date on which its desired resignation shall become
effective; PROVIDED, HOWEVER, that such date shall be not less than three months
after the giving of such notice by the Agent to the Company. The Agent may be
removed at any time by the filing with it of any instrument in writing signed by
a duly authorized officer of the Company and specifying such removal and the
date upon which it is intended to become effective. Such resignation or removal
shall take effect on the date of the appointment by the Company of a successor
agent and the acceptance of such appointment by such successor Agent. In the
event of resignation by the Agent, if a successor Agent has not been appointed
by the Company within three months after the giving of notice by the Agent of
its intention to resign, the Agent may, at the expense of the Company, petition
any court of competent jurisdiction for appointment of a successor Agent.
Section 19. BENEFIT OF AGREEMENT. This Agreement is solely for the benefit
of the parties hereto, their successors and assigns, and no other person shall
acquire or have any right under or by virtue hereof.
Section 20. NOTES HELD BY THE AGENT. The Agent, in its individual or other
capacity, may become the owner or pledgee of the Notes with the same rights it
would have if it were not acting as fiscal and paying agent hereunder.
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Section 21. GOVERNING LAW. This Agreement is to be delivered and performed
in, and shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of New York.
Section 22. COUNTERPARTS. This Agreement may be executed by the parties
hereto in any number of counterparts, and by each of the parties hereto in
separate counterparts, each such counterpart, when so executed and delivered,
shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized, all as of
the date and year first above written.
SIERRA PACIFIC RESOURCES
By: /s/ Richard K. Atkinson
Assistant Treasurer
BANKERS TRUST COMPANY
By: /s/ Tara Netherton
Associate
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EXHIBIT 99.4
NOTE NO. R-1 CUSIP N0. ___________
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO SIERRA PACIFIC
RESOURCES (THE "COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE,
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS A BOOK-ENTRY SECURITY AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS NOTE IS EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED HEREIN, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)
INSIDE THE U.S. TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE
<PAGE>
THE U.S. IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
SIERRA PACIFIC RESOURCES
FLOATING RATE NOTES
DUE APRIL 20, 2003 (THE "NOTES")
Sierra Pacific Resources, a corporation duly organized and existing under
the laws of the State of Nevada (the "Company"), for value received, hereby
promises to pay to Cede & Co., as the nominee of The Depository Trust Company,
or registered assigns, the principal amount of $200,000,000 on April 20, 2003
(the "Maturity Date"), and to pay interest as set forth below on the outstanding
principal amount hereof from time to time from ________, 2000 or from the most
recent Interest Payment Date (as defined below) to which interest has been paid
or duly provided for, quarterly in arrears on January 20, April 20, July 20, and
October 20 of each year and on the Maturity Date (each, an "Interest Payment
Date"), commencing July 20, 2000, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date shall, as provided herein, be paid to
the person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the fifteenth calendar day preceding each
Interest Payment Date (each, a "Regular Record Date"); PROVIDED, HOWEVER, that
interest payable on the Maturity Date shall be payable to the person to whom the
principal amount of this Note is payable. Any interest payable on any Interest
Payment Date other than the Maturity Date and not so punctually paid or duly
provided for shall forthwith cease to be payable to the person in whose name
this Note is registered at the close of business on such Regular Record Date and
shall instead be payable to the Person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on a special record
date for the payment of such interest to be fixed by the Company, notice whereof
shall be given to the registered holder of this Note (or one or more predecessor
Notes) not less than 10 days prior to such special record date. Principal of
this Note shall be payable against surrender hereof at the corporate trust
office of the Fiscal Agent or at such other office or agency of the Company as
may be designated by it for such purpose in the Borough of Manhattan, The City
of New York.
Payment of the principal of and interest on this Note shall be made at the
corporate trust office of the Fiscal Agent or at such other office or agency of
the Company as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts; PROVIDED, HOWEVER, that, at the option of the Company,
payments of interest may be made by check mailed to the address of the person
entitled thereto
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as such address shall appear in the Note Register (as defined in Section 3
hereof); and PROVIDED FURTHER, HOWEVER, that in the case of Notes held by a
depository (as defined in Section 3 hereof) or its nominee, payments of
principal and interest shall be made by wire transfer of immediately available
funds to an account designated by such depository.
If any Interest Payment Date for this Note (other than an Interest Payment
Date at the Maturity Date) would otherwise be a day that is not a Business Day
(as defined in Section 1 hereof), such Interest Payment Date shall be postponed
until the next succeeding Business Day unless such Business Day falls in the
next calendar month, in which case such Interest Payment Date shall be the next
preceding Business Day. If the Maturity Date of this Note falls on a day that is
not a Business Day, the payment of principal and interest will be made on the
next succeeding Business Day, and no interest on such payment shall accrue for
the period from and after such Maturity Date, except as otherwise expressly
provided for herein.
This Note is one of a duly authorized series of securities of the Company,
limited in aggregate principal amount of $200,000,000, issued under a Fiscal and
Paying Agency Agreement, dated as of April 17, 2000, (the "Fiscal Agency
Agreement"), duly executed and delivered by the Company to Bankers Trust
Company, as Fiscal and Paying Agent (the "Fiscal Agent"). All terms that are
used but not defined in this Note and that are defined in the Fiscal Agency
Agreement shall have the meanings set forth therein.
1. CALCULATION OF INTEREST. The period beginning on, and including,
________, 2000 and ending on, but excluding, the first Interest Payment Date and
each successive period beginning on, and including, an Interest Payment Date and
ending on, but excluding, the next succeeding Interest Payment Date is herein
called an "Interest Period". "Business Day" shall mean any day on which
commercial banks and foreign exchange markets are open for business, including
dealings in deposits in U.S. dollars in New York and London.
The rate of interest payable from time to time in respect of this Note (the
"Rate of Interest") will be a floating rate determined by reference to LIBOR,
determined as described below, plus a margin of 0.60% per annum. All percentages
resulting from any calculation on this Note will be rounded to the nearest one
hundredth-thousandth of a percentage point, with five one millionths of a
percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be
rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting
from such calculation on the Notes will be rounded to the nearest cent (with
one-half cent being rounded upward).
(a) At approximately 11:00 a.m. (London time) on the second day on
which commercial banks are open for business (including dealings in U.S.
Dollar deposits) in London (or, for purposes of paragraph (c) (ii) below,
New York) prior to the commencement of the Interest Period for which such
rate will apply (each such day an "Interest Determination Date"), Bankers
Trust Company, London Branch, or its successor in this capacity (the
"Calculation Agent"), will calculate the rate of interest (the "Rate of
Interest") for such Interest Period as, subject to the provisions described
below, the rate per annum equal to 0.60% above the rate appearing on the
Dow Jones Telerate Page 3750 (or such other page as may replace that page
on the Dow Jones Telerate Service) for
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three-month U.S. dollar deposits in the London inter-bank market on such
Interest Determination Date.
(b) If on any Interest Determination Date an appropriate rate cannot
be determined from the Dow Jones Telerate Service, the Rate of Interest for
the next Interest Period shall, subject to the provisions described below,
be the rate per annum that the Calculation Agent certifies to be 0.60% per
annum above the arithmetic mean of the offered quotations, as communicated
to and at the request of the Calculation Agent by not less than two major
banks in London selected by the Calculation Agent (the "Reference Banks,"
which expression shall include any successors nominated by the Calculation
Agent), to leading banks in London by the principal London offices of the
Reference Banks for three-month U.S. dollar deposits in the London
inter-bank market as at 11:00 a.m. (London time) on such Interest
Determination Date.
(c) If on any Interest Determination Date fewer than two of such
offered rates are available, the Rate of Interest for the next Interest
Period shall be whichever is the higher of:
(i) the Rate of interest in effect for the last preceding
Interest Period to which (a) or (b) above shall have applied; and
(ii) the Reserve Interest Rate. The "Reserve Interest Rate" shall
be the rate per annum which the Calculation Agent determines to be
0.60% per annum above either (1) the arithmetic mean of the U.S.
dollar offered rates which New York City banks selected by the
Calculation Agent are or were quoting, on the relevant Interest
Determination Date, for three-month deposits to the Reference Banks or
those of them (being at least two in number) to which such quotations
are or were, in the opinion of the Calculation Agent, being so made,
or (2) in the event that the Calculation Agent can determine no such
arithmetic mean, the arithmetic mean of the U.S. dollar offered rates
which at least two New York City banks selected by the Calculation
Agent are or were quoting on such Interest Determination Date to
leading European banks for a period of three monthS; PROVIDED,
HOWEVER, that if the banks selected as aforesaid by the Calculation
Agent are not quoting as mentioned above, the Rate of Interest shall
be the Rate of Interest specified in (i) above.
The Calculation Agent shall, as soon as practicable after 11:00 a.m.
(London time) on each Interest Determination Date, determine the Rate of
Interest and calculate the amount of interest payable in respect of the
following Interest Period (the "Interest Amount"). The Interest Amount shall be
calculated by applying the Rate of Interest to the principal amount of each Note
outstanding at the commencement of the Interest Period, multiplying each such
amount by the actual number of days in the Interest Period concerned (which
actual number of days shall include the first day but exclude the last day of
such Interest Period) divided by 360 and rounding the resultant figure upwards
to the nearest cent (half a cent being rounded upwards). The determination of
the Rate of Interest and the Interest Amount by the Calculation Agent shall (in
the absence of willful default, bad faith or manifest error) be final and
binding on all parties.
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Notwithstanding anything herein to the contrary, the interest rate on the
Notes shall in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States law of general application.
Interest shall cease to accrue on this Note on the Maturity Date unless,
upon presentation of this Note, payment of principal is improperly withheld or
refused, in which case, interest shall continue to accrue.
2. CALCULATION AGENT. So long as any of this Note remains outstanding, the
Company shall maintain under appointment a Calculation Agent, which shall
initially be the Fiscal Agent, to calculate the Rate of Interest payable on this
Note in respect of each Interest Period. If the Calculation Agent shall fail to
establish the Rate of Interest for any Interest Period, or if the Company shall
remove the Calculation Agent, the Company shall appoint another commercial or
investment bank to act as the Calculation Agent. The Company may change the
Calculation Agent without notice.
All certificates, communications, opinions, determinations, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
the provisions hereof relating to the payment and calculation of interest on
this Note by the Calculation Agent shall (in the absence of willful default, bad
faith or manifest error) be binding on the Company, the Calculation Agent and
all of the holders and owners of beneficial interests in this Note, and no
liability shall (in the absence of willful default, bad faith or manifest error)
attach to the Calculation Agent in connection with the exercise or non-exercise
by it of its powers, duties and discretions.
3. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The Company shall
cause to be kept at an office or agency to be maintained by the Company a
register (the register maintained in such office being herein referred to as the
"Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Notes and of
transfers of Notes. The Fiscal Agent is hereby appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided. The
Company may appoint co-registrars and may change any Note Registrar or
co-registrar without notice.
Notes shall be exchangeable pursuant to this Section 3 for Notes registered
in the name of, and a transfer of a Note may be registered to, any person other
than DTC or its successor depository (DTC or such successor being referred to as
a "depository") for such Note or its nominee only if (i) such depository
notifies the Company that it is unwilling or unable to continue as depository
for such Note or if at any time such depository ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, and a
successor depository is not appointed by the Company within 90 days, (ii) there
shall have occurred and be continuing an Event of Default (as defined below)
with respect to the Notes or (iii) the Company, in its sole discretion, elects
to terminate the book-entry system. Upon the occurrence of any one or more of
the conditions specified in clauses (i), (ii) or (iii) of the preceding
sentence, such Note shall be exchanged for Notes registered in the names of, and
the transfer of such Note shall be
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<PAGE>
registered to, such persons (including persons other than the depository with
respect to such Notes and its nominee) as such depository shall direct, in each
case subject to Section 5 hereof.
Subject to the restrictions on transfer and delivery set forth in this
Note, Notes may be presented for exchange or for registration of transfer (duly
endorsed or with the form of transfer endorsed thereon duly executed) at the
office of the Fiscal Agent or at the office of any other transfer agent
designated by the Company for such purpose. Such transfer or exchange shall be
effected upon the Fiscal Agent's or such other transfer agent's, as the case may
be, being satisfied with the documents of title and identity of the person
making the request. The Company may at any time designate additional transfer
agents or rescind the designation of any transfer agent or approve a change in
the office through which any transfer agent acts; PROVIDED, HOWEVER, that there
shall at all times be a transfer agent in the Borough of Manhattan, The City of
New York.
The Notes and any certificates for Notes issued in exchange for Notes or a
beneficial interest therein will bear the third legend set forth in this Note.
The holder of a certificated Note may transfer such Note, subject to compliance
with the provisions of such legend, as provided in the preceding paragraph. Upon
the transfer, exchange or replacement of Notes bearing such legend, or upon
specific request for removal of such legend on a Note, the Company will deliver
only Notes bearing such legend, or will refuse to remove such legend, as the
case may be, unless there is delivered to the Company such satisfactory
evidence, which may include an opinion of counsel, as may reasonably be required
by the Company that neither such legend nor the restrictions on transfer set
forth therein are required to ensure compliance with the provisions of the
Securities Act.
4. ACTS BY HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by the Notes or the Fiscal Agency Agreement
to be given or taken by holders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such holders in
person or by an agent duly appointed in writing; and, except as otherwise
expressly provided in the Notes or the Fiscal Agency Agreement, such action
shall become effective when such instrument or instruments are delivered to
the Fiscal Agent and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of the Notes and the Fiscal Agency Agreement and
conclusive in favor of the Fiscal Agent and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his
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or her individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his or her authority. The fact and date of
the execution of any such instrument or writing, or the authority of the
person executing the same, may also be proved in any other manner which the
Fiscal Agent deems sufficient.
(c) The Company may set any day as the record date for the purpose of
determining the holders of outstanding Notes entitled to make any request
or demand or give any authorization, direction, notice, consent or waiver
or take other action, provided or permitted by the Notes and the Fiscal
Agency Agreement to be made, given or taken by holders of the Notes.
With regard to any record date set pursuant to the immediately
preceding paragraph, the holders of outstanding Notes on such record date
(or their duly appointed agents), and only such persons, shall be entitled
to take relevant action, whether or not such holders remain holders after
such record date. With regard to any action that may be taken hereunder
only by holders of a requisite principal amount of outstanding Notes (or
their duly appointed agents) and for which a record date is set pursuant to
the immediately preceding paragraph, the Company, may at its option, set an
expiration date after which no such action purported to be taken by any
holder shall be effective unless taken on or prior to such expiration date
by holders of the requisite principal amount of outstanding Notes on such
record date (or their duly appointed agents). On or prior to any expiration
date set pursuant to this paragraph, the Company may, on one or more
occasions at its option, extend such expiration date to any later date.
Nothing in this paragraph shall prevent any holder (or any duly appointed
agent thereof) from taking, at any time, any action contrary to or
different from, any action previously taken, or purported to have been
taken hereunder by such holder, in which event the Company may set a record
date in respect thereof pursuant to this paragraph. Notwithstanding the
foregoing, the Company shall not set a record date for, and the provisions
to this paragraph shall not apply with respect to, any action to be taken
by holders pursuant to Section 8 hereof.
Upon receipt by the Fiscal Agent of notice of any default, any
declaration of acceleration, or any rescission and annulment of any such
declaration, or of any direction in accordance with Section 8 hereof, a
record date shall automatically and without any other action by any person
be set for the purpose of determining the holders of outstanding Notes
entitled to join in such notice, declaration, or rescission and annulment,
or direction, as the case may be, which record date shall be the close of
business on the date the Fiscal Agent receives such notice, declaration,
rescission and annulment or direction, as the case may be. The holders of
outstanding Notes on such record date (or their duly appointed agent), and
only such persons, shall be entitled to join in such notice, declaration,
rescission and annulment, or direction, as the case may be, whether or not
such holders remain holders after such record date; PROVIDED that, unless
such notice, declaration, rescission and annulment, or direction, as the
case may be, shall have become effective by virtue of holders of the
requisite principal amount of outstanding Notes on such record date (or
their duly appointed agents) having joined therein on or prior to the 90th
day after such record date, such notice of default,
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declaration, or rescission and annulment or direction given or made by the
holders, as the case may be, shall automatically and without any action by
any person be canceled and of no further effect. Nothing in this paragraph
shall prevent a holder (or a duly appointed agent thereof) from giving,
before or after the expiration of such 90-day period, a notice of default,
a declaration of acceleration, a rescission and annulment of a declaration
of acceleration or a direction, contrary to or different from, or, after
the expiration of such period, identical to, a previously given notice,
declaration, rescission and annulment, or direction, as the case may be,
that has been canceled pursuant to the proviso to the preceding sentence,
in which event a new record date in respect thereof shall be set pursuant
to this paragraph.
(d) The ownership of the Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver, or other Act of the holder of any Note shall bind every future
holder of the same Note and the holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Fiscal
Agent or the Company in reliance thereon, whether or not notation of such
action is made upon such Note.
5. DENOMINATIONS. The Notes are issuable only in registered form without
coupons in denominations of $100,000 and integral multiples of $1,000 in excess
thereof.
6. PERSONS DEEMED OWNERS. The Company, the Fiscal Agent and any agent of
the Company or the Fiscal Agent may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes whatsoever, whether or not this Note shall
be overdue, and neither the Company, the Fiscal Agent nor any such agent shall
be affected by notice to the contrary.
7. AMENDMENTS AND WAIVERS. Without the consent of any holders of the Notes,
the Company, when authorized by a resolution duly adopted by the Board of
Directors of the Company, and the Fiscal Agent, at any time and from time to
time, may amend the terms of the Notes and enter into one or more agreements
supplemental to the Fiscal Agency Agreement, in form satisfactory to the Fiscal
Agent, for any of the following purposes:
(a) to evidence the succession of another person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Fiscal Agency Agreement; or
(b) to add to the covenants of the Company for the benefit of the
holders of the Notes; or
(e) to add any additional Events of Default; or
(d) to secure the Notes; or
(e) to evidence and provide for the acceptance of appointment by a
successor
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Fiscal Agent with respect to the Notes; or
(f) to amend the restrictions on transfer applicable to the Notes as
set forth on this Note; or
(g) to cure any ambiguity or to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
correct or supplement any defective provision contained herein or in the
Fiscal Agency Agreement, PROVIDED that such action pursuant to this clause
(g) shall not adversely affect the interests of the holders of the Notes.
With the consent of the holders of not less than 66-2/3% in principal
amount of the outstanding Notes, by act of said holders delivered to the Company
and the Fiscal Agent, the Company, when authorized by a resolution duly adopted
by the Board of Directors of the Company, and the Fiscal Agent, at any time and
from time to time, may amend the terms of the Notes and enter into an agreement
supplemental to the Fiscal Agency Agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Notes, or the Fiscal Agency Agreement as the same pertains to the Notes, or
of modifying in any manner the rights of the holders of the Notes: PROVIDED,
HOWEVER, that no such amendment or supplemental agreement shall, without the
consent of the holder of each outstanding Note affected thereby,
(1) change the stated maturity of the principal of, or any installment
of interest on, any Note, or reduce the principal amount thereof or the
rate of interest thereon, or change any place of payment where, or the coin
or currency in which, any Note or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or
after the stated maturity thereof, or
(2) reduce the percentage in principal amount of the outstanding
Notes, the consent of whose holders is required for any such amendment or
supplemental agreement or the consent of whose holders is required for any
waiver provided for herein or in the Fiscal Agency Agreement, or
(3) modify any of the provisions of this Section or Section 9, except
to increase any such percentage or to provide that certain other provisions
of the Notes cannot be modified or waived without the consent of the holder
of each outstanding Note affected thereby.
It shall not be necessary for any act of holders under this Section 7 to
approve the particular form of any proposed amendment or supplemental agreement,
but it shall be sufficient if such act shall approve the substance thereof.
Upon the execution of any agreement supplement to the Fiscal Agency
Agreement as permitted by this Section 7, the Notes and the Fiscal Agency
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of the Notes and the Fiscal Agency Agreement, as the
same pertains to the Notes, for all purposes; and every holder
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of the Notes theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
8. DEFAULTS AND REMEDIES. The occurrence of any of the following events
shall constitute an Event of Default with respect to the Notes:
(a) default in the payment of the principal of any of the Notes when
the same becomes due and payable; or
(b) default in the payment of any installment of interest upon any of
the Notes when the same becomes due and payable, and continuance of such
default for a period of 30 days; or
(c) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Notes for a period of 90 days after the date on which written notice of
such failure, requiring the Company to remedy the same, shall have been
given to the Company by the Fiscal Agent by registered or certified mail or
to the Company and the Fiscal Agent by the holders of at least 25% in
aggregate principal amount of the Notes, or
(d) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Company bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the
Company under the Federal Bankruptcy Code or any other similar applicable
Federal or State law, and such decree or order shall have continued
undischarged and unstayed for a period of 60 days; or a decree or order of
a court having jurisdiction in the premises for the appointment of a
receiver or liquidator or trustee or assignee in the bankruptcy or
insolvency of the Company or of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and such decree or
order shall have continued undischarged and unstayed for a period of 60
days; or
(e) the Company shall institute proceedings to be adjudicated
bankrupt, or shall consent to the filing of a bankruptcy proceeding against
it, or shall file a petition or answer or consent seeking reorganization
under the Federal Bankruptcy Code or any other similar Federal or State
law, or shall consent to the filing of any such petition or shall consent
to the appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of it or of its property, or shall make an
assignment for the benefit of creditors or shall admit in writing its
inability to pay its debts generally as they become due.
If an Event of Default occurs and is continuing, the holders of at least
25% in principal amount of the Notes then outstanding may declare all the Notes
to be due and payable immediately. Holders of a majority in principal amount of
the Notes may waive an Event of Default and rescind any related declaration
except as provided in Section 9(a) hereof. The Fiscal Agent may withhold from
holders of Notes notice of any continuing Event of Default, except in respect of
a default in the payment of principal of or interest on the Notes, if it
determines that withholding such notice is in their interest.
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9. WAIVERS.
(a) The holders of not less than a majority in principal amount of the
outstanding Notes may on behalf of the holders of the Notes waive any past
default hereunder with respect to the Notes and its consequences, except a
default
(1) in the payment of the principal of or interest on any Note,
or
(2) In respect of a covenant or provision hereof which under
Section 7 cannot be modified or amended without the consent
of the holder of each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of the Notes; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
(b) The Company may omit in any particular instance to comply
with any term, provision or condition set forth in the Notes
or the Fiscal Agency Agreement with respect to the Notes if
before the time for such compliance the holders of at least
66-2/3% in principal amount of the outstanding Notes shall,
by act of such holders, either waive such compliance in such
instance or generally waive compliance with such term,
provision or condition, but (i) without the consent of the
holder of each Note affected thereby, no such waiver shall
extend to or affect any term, provision or condition which
under Section 7 cannot be modified or amended without the
consent of the holder of each outstanding Note affected, and
(ii) no such waiver shall extend to or affect any term,
provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the
obligations of the Company and any duties of the Fiscal
Agent in respect of any such term, provision or condition
shall remain in full force and effect.
10. RESTRICTED SUBSIDIARIES. The Company will not, and will not permit any
Restricted Subsidiary (as defined below) to create, issue, assume or guarantee
any debt for money borrowed (hereafter in this Section referred to as "Debt")
secured by a mortgage, security interest, pledge, lien or other encumbrance upon
any shares of stock of any Restricted Subsidiary (whether such shares of stock
are now owned or hereafter acquired) without in any such case effectively
providing concurrently with the issuance, assumption or guarantee of any such
Debt that the Notes (together with, if the Company shall so determine, any other
indebtedness of or guarantee by the Company ranking equally with the Notes and
then existing or thereafter created) shall be secured equally and ratably with
such Debt. As used herein, the term Restricted Securities shall mean any
consolidated operating subsidiary of the Company that accounts for 10% or more
of the consolidated revenues and/or assets of Company.
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The Company will not, and will not permit any Restricted Subsidiary to,
issue, sell, assign transfer or otherwise dispose of, directly or indirectly,
any of the capital stock (which is defined herein as any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate stock) (other than
nonvoting preferred stock) of any Restricted Subsidiary (except to the Company
or to one or more Restricted Subsidiaries or for the purpose of qualifying
directors); provided, however, that this covenant shall not apply if:
(1) all or any part of such Capital Stock is sold, assigned, transferred
or otherwise disposed of in a transaction for consideration which is
at least equal to the fair value of such capital stock, as determined
by the Board of Directors (acting in good faith); or
(2) the issuance, sale, assignment, transfer or other disposition is
required to comply with the order of a court or regulatory authority
of competent jurisdiction, other than an order issued at the request
of the Company or of one of its Restricted Subsidiaries.
11. COMPANY MAY CONSOLIDATE ETC., ONLY ON CERTAIN TERMS. The Company
covenants that it will not merge or consolidate with any other corporation or
sell or convey all or substantially all of its assets to any person, firm or
corporation, except that the Company may merge or consolidate with, or sell or
convey all or substantially all of its assets to, any other corporation,
PROVIDED that (i) either the Company shall be the continuing corporation, or the
successor corporation (if other than the Company) shall be a corporation
organized and existing under the laws of the United States of America or a State
thereof and such corporation shall expressly assume the due and punctual payment
of the principal of and interest on all the Notes, according to their tenor, and
the due and punctual performance and observance of all of the covenants and
conditions of this Note and the Fiscal Agency Agreement to be performed by the
Company, by supplemental agreement in form satisfactory to the Fiscal Agent,
executed and delivered to the Fiscal Agent by such corporation, and (ii) the
Company or such successor corporation, as the case may be, shall not,
immediately after such merger, consolidation, sale or conveyance, be in default
in the performance of any such covenant or condition.
Upon any consolidation of the Company with, or merger of the Company into,
any other person or any sale or conveyance of all or substantially all of the
assets of the Company in accordance with this Section 11, the successor person
formed by such consolidation or into which the Company is merged or to which
such sale or conveyance is made shall succeed to, and be substituted for, and
may exercise every right and power of the Company under this Note and the Fiscal
Agency Agreement with the same effect as if such successor person had been named
as the Company herein, and thereafter, except in the case of a lease, the
predecessor person shall be relieved of all obligations and covenants under the
Notes and the Fiscal Agency Agreement.
12. UNCLAIMED AMOUNTS. Any money deposited with the Fiscal Agent in trust
for the payment of the principal of or interest on any Note and remaining
unclaimed for twelve months after such principal or interest has become due and
payable shall be paid to the Company upon its request; and the holder of such
Note shall thereafter, as an unsecured general creditor,
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look only to the Company for payment thereof, and all liability of the Fiscal
Agent with respect to such money shall thereupon cease.
13. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If any Note becomes
mutilated or defaced or is apparently destroyed, lost or stolen, the Fiscal
Agent shall, subject to the provisions of this Section 13, authenticate and
deliver a new Note in exchange and substitution for the mutilated or defaced
Note or in lieu of or in substitution for the apparently destroyed, lost or
stolen Note.
Application for the authentication and delivery of a substitute Note
pursuant to this Section 13 may be made at the office of the Fiscal Agent. If
the applicant for any substitute Note shall furnish to the Company and the
Fiscal Agent (i) in the case of any such request in case of loss or theft, such
security or indemnity as may be required by the Company and the Fiscal Agent in
their sole discretion to indemnify and defend and to save each of them and any
agent of either of them harmless, and (ii) in the case of any request for a
substitute Note in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Fiscal Agent of the apparent destruction,
loss or theft of such Note and of the ownership thereof, then, in the absence of
notice to the Company or the Fiscal Agent that such Note has been acquired by a
bona fide purchaser, the Company shall execute and the Fiscal Agent shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any substitute Note under this Section 13, the Company
may require the payment of a sum sufficient to cover any tax assessment or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Fiscal Agent) connected
therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of the Fiscal Agency Agreement equally and proportionately with any and
all other Notes.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Fiscal Agency Agreement, or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each holder (and each beneficial owner) of a Note by
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accepting such Note (or acquisition of a beneficial interest therein) waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
THIS NOTE SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
This Note shall not be valid or obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Fiscal Agent
under the Fiscal Agency Agreement.
[The remainder of this page is left blank intentionally.]
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IN WITNESS WHEREOF, the Company has caused this instrument to be signed in
its corporate name, manually or by facsimile, by an Authorized Representative
and a facsimile of its corporate seal to be affixed hereunto or imprinted
hereon, attested by the manual or facsimile signature of its Secretary or one of
its Assistant Secretaries.
SIERRA PACIFIC RESOURCES
Attest: _________________________ By: ___________________________
Name:
Title:
Dated: ________, 2000
FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Fiscal Agency
Agreement.
BANKERS TRUST COMPANY, as
Fiscal Agent
By: __________________________
Authorized Signer
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