Exhibit 10.21

 

 

 

 

FINANCING AGREEMENT

Dated as of December 1, 2009

By and Between

CLARK COUNTY, NEVADA

and

SOUTHWEST GAS CORPORATION

relating to

CLARK COUNTY, NEVADA

INDUSTRIAL DEVELOPMENT REVENUE BONDS

(SOUTHWEST GAS CORPORATION PROJECT)

SERIES 2009A

 

 

 

 

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TABLE OF CONTENTS

 

               Page

ARTICLE I          DEFINITIONS

   1   

SECTION 1.1

  

Definitions of Terms

   1   

SECTION 1.2

  

Number and Gender

   1   

SECTION 1.3

  

Articles, Sections

   1

ARTICLE II         REPRESENTATIONS

   2   

SECTION 2.1

  

Representations by the Issuer

   2   

SECTION 2.2

  

Representations by the Borrower

   2

ARTICLE III       THE PROJECT; ISSUANCE OF THE BONDS

   4   

SECTION 3.1

  

The Project

   4   

SECTION 3.2

  

Agreement to Issue Bonds; Application of Bond Proceeds

   4   

SECTION 3.3

  

Disbursements from the Construction Fund and the Costs of Issuance Fund

   4   

SECTION 3.4

  

Investment of Moneys

   5   

SECTION 3.5

  

Costs of Issuance

   6

ARTICLE IV        LOAN AND PROVISIONS FOR REPAYMENT

   6   

SECTION 4.1

  

Loan of Bond Proceeds

   6   

SECTION 4.2

  

Loan Repayments and Other Amounts Payable

   6   

SECTION 4.3

  

Unconditional Obligation

   8   

SECTION 4.4

  

Payments Pledged and Assigned

   9   

SECTION 4.5

  

Payment of the Bonds and Other Amounts

   9

ARTICLE V         SPECIAL COVENANTS AND AGREEMENTS

   9   

SECTION 5.1

  

Right of Access to the Project and Records

   9   

SECTION 5.2

  

Borrower’s Maintenance of Its Existence; Assignments

   10   

SECTION 5.3

  

Insurance

   11   

SECTION 5.4

  

Establishment of Completion Date; Obligation of Borrower to Complete

   12   

SECTION 5.5

  

Maintenance and Repair; Taxes; Utility and Other Charges

   12   

SECTION 5.6

  

Qualification in Nevada

   13   

SECTION 5.7

  

No Warranty by the Issuer

   13   

SECTION 5.8

  

Agreement as to Use of the Project

   13   

SECTION 5.9

  

Notices and Certificates Required to be Delivered to the Trustee

   13   

SECTION 5.10

  

Borrower to Furnish Notice of Adjustments of Interest Rate Periods

   13   

SECTION 5.11

  

Information Reporting

   13   

SECTION 5.12

  

Tax Covenants; Rebate

   14

 

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TABLE OF CONTENTS

(continued)

 

               Page   

SECTION 5.13

  

Continuing Disclosure

   14   

SECTION 5.14

  

Liquidity Facility

   15   

SECTION 5.15

  

Letter of Credit

   15   

SECTION 5.16

  

Requirement to Deliver Letter of Credit or Liquidity Facility Under Certain
Circumstances

   16   

SECTION 5.17

  

Bond Insurance

   16

ARTICLE VI        EVENTS OF DEFAULT AND REMEDIES

   16   

SECTION 6.1

  

Events of Default Defined

   16   

SECTION 6.2

  

Remedies on Default

   18   

SECTION 6.3

  

No Remedy Exclusive

   20   

SECTION 6.4

  

Agreement to Pay Fees and Expenses of Counsel

   20   

SECTION 6.5

  

No Additional Waiver Implied by One Waiver; Consents to Waivers

   21

ARTICLE VII      OPTION AND OBLIGATION OF BORROWER TO PREPAY

   21   

SECTION 7.1

  

Option to Prepay

   21   

SECTION 7.2

  

Obligation to Prepay

   21   

SECTION 7.3

  

Notice of Prepayment; Amount to be Prepaid

   21   

SECTION 7.4

  

Cancellation at Expiration of Term

   22

ARTICLE VIII     NON-LIABILITY OF ISSUER

   22   

SECTION 8.1

  

Non-Liability of the Issuer

   22

ARTICLE IX        MISCELLANEOUS

   23   

SECTION 9.1

  

Notices

   23   

SECTION 9.2

  

Assignments

   23   

SECTION 9.3

  

Severability

   23   

SECTION 9.4

  

Execution of Counterparts

   23   

SECTION 9.5

  

Amounts Remaining in Bond Fund

   23   

SECTION 9.6

  

Amendments, Changes and Modifications

   23   

SECTION 9.7

  

Governing Law

   23   

SECTION 9.8

  

Authorized Issuer and Borrower Representatives

   24   

SECTION 9.9

  

Term of the Agreement

   24   

SECTION 9.10

  

Binding Effect

   24   

SECTION 9.11

  

Trustee as a Party in Interest and Third Party Beneficiary

   24

 

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THIS FINANCING AGREEMENT made and entered into as of December 1, 2009 (this
“Agreement”), by and between CLARK COUNTY, NEVADA, a political subdivision of
the State of Nevada, party of the first part (hereinafter sometimes referred to
as the “Issuer”), and SOUTHWEST GAS CORPORATION, a California corporation, party
of the second part (hereinafter sometimes referred to as the “Borrower”),

W I T N E S S E T H:

WHEREAS, concurrently with the execution and delivery of this Agreement, the
Issuer is entering into an Indenture of Trust, dated as of December 1, 2009 (the
“Indenture”), with The Bank of New York Mellon Trust Company N.A., as trustee
(the “Trustee”) thereunder, pursuant to which $50,000,000 principal amount of
Clark County, Nevada Industrial Development Revenue Bonds (Southwest Gas
Corporation Project) Series 2009A (the “Bonds”), will be issued and secured; and

WHEREAS, the Issuer hereby confirms and the Borrower hereby acknowledges and
adopts the recitals to the Indenture as though fully set forth here;

NOW, THEREFORE, in consideration of the respective representations and
agreements hereinafter contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 Definitions of Terms. Except as defined below, for all purposes of
this Agreement, unless the context clearly requires otherwise, all terms defined
in Article I of the Indenture have the same meanings in this Agreement.

“Event of Default” under this Agreement is defined in Section 6.1.

SECTION 1.2 Number and Gender. The singular form of any word used herein,
including the terms defined in Section 1.02 of the Indenture, shall include the
plural, and vice versa. The use herein of a word of any gender shall include all
genders.

SECTION 1.3 Articles, Sections. Unless otherwise specified, references to
Articles, Sections and other subdivisions of this Agreement are to the
designated Articles, Sections and other subdivisions of this Agreement as
originally executed. The words “hereof,” “herein,” “hereunder” and words of
similar import refer to this Agreement as a whole. The headings or titles of the
several articles and sections, and the table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not affect the
meaning, construction or effect of the provisions hereof.

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ARTICLE II

REPRESENTATIONS

SECTION 2.1 Representations by the Issuer. The Issuer makes the following
representations as the basis for the undertakings on its part herein contained:

(a) The Issuer is a political subdivision of the State. Under the provisions of
the Act, the Issuer has the power to enter into the transactions contemplated by
this Agreement and to carry out its obligations hereunder. By proper action, the
Issuer has been duly authorized to execute, deliver and duly perform this
Agreement and the Indenture. To the extent the foregoing representation involves
a legal conclusion, such representation is made in reliance on the opinion of
Bond Counsel.

(b) To finance part of the Cost of the Project, the Issuer will issue the Bonds,
which will mature, bear interest and be subject to redemption as provided in the
Indenture.

(c) The Issuer’s interest in this Agreement (except certain rights of the Issuer
to payment of fees and expenses and indemnification, to rights of inspection and
to consents and rights to receive any notices, certificates, requests,
requisitions and other communications) will be pledged to the Trustee as
security for payment of the principal of, and premium, if any, and interest on
the Bonds.

(d) The Issuer has not pledged and will not pledge its interest in this
Agreement for any purpose other than to secure the Bonds under the Indenture.

(e) The Issuer is not in default under any of the provisions of the laws of the
State which default would affect its existence or its powers referred to in
subsection (a) of this Section 2.1.

(f) The Issuer has found and determined and hereby finds and determines that all
requirements of the Act with respect to the issuance of the Bonds and the
execution of this Agreement and the Indenture have been complied with and that
financing the Project by issuing the Bonds and entering into this Agreement and
the Indenture is in the public interest, serves the public purposes and meets
the requirements of the Act.

(g) On December 1, 2009, the Issuer adopted its resolution approving the
issuance of the Bonds.

(h) No member, officer or other official of the Issuer has any interest
whatsoever in the Borrower or in the transactions contemplated by this
Agreement.

SECTION 2.2 Representations by the Borrower. The Borrower makes the following
representations as the basis for the undertakings on its part herein contained:

(a) The Borrower is a corporation duly incorporated and in good standing in the
State of California, is duly qualified to transact business and in good standing
in the State, has power to enter into and by proper corporate action has been
duly authorized to execute and

 

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deliver this Agreement and all other documents contemplated hereby to be
executed by the Borrower in connection with the issuance and sale of the Bonds.

(b) Neither the execution and delivery of this Agreement or any other documents
contemplated hereby to be executed by the Borrower in connection with the
issuance and sale of the Bonds, the consummation of the transactions
contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement, conflicts with or results in a breach of any of
the terms, conditions or provisions of the Borrower’s articles of incorporation
or by-laws or of any corporate actions or of any agreement or instrument to
which the Borrower is now a party or by which it is bound, or constitutes a
default (with due notice or the passage of time or both) under any of the
foregoing, or result in the creation or imposition of any prohibited lien,
charge or encumbrance whatsoever upon any of the property or assets of the
Borrower under the terms of any instrument or agreement to which the Borrower is
now a party or by which it is bound.

(c) The Cost of the Project is as set forth in the Tax Certificate and has been
determined in accordance with sound engineering/construction and accounting
principles. All the information provided by, and all the representations made
by, the Borrower in the Tax Certificate are true and correct as of the date
thereof.

(d) The Project consists of those facilities described in Exhibit A to this
Agreement and in the Southwest Gas Corporation Engineering Certificate dated the
date of issuance of the Bonds (the “Engineering Certificate”) which is
incorporated by reference herein, and the Borrower shall not make any changes to
the Project except as otherwise permitted hereunder or to the operation thereof
which would affect the qualification of the Project under the Act or impair the
Tax-Exempt status of the Bonds. In particular, the Borrower shall comply with
all requirements set forth in the Tax Certificate. The Borrower intends to cause
the Project to be used for the local furnishing of natural gas until the
principal of, the premium, if any, and the interest on the Bonds shall have been
paid.

(e) The Borrower has and will have title to and all necessary easements to
install the Project, sufficient to carry out the purposes of this Agreement.

(f) At the time of original submission of an application to the Issuer for
financial assistance in connection with the Project and on the dates on which
the Issuer took action on such application, permanent financing for the Project
had not otherwise been obtained or arranged.

(g) All certificates, approvals, permits and authorizations with respect to the
construction of the Project of agencies of applicable local governments, the
State and the federal government have been obtained or will be obtained in the
normal course of business.

(h) No event has occurred and no condition exists which would constitute an
Event of Default or which with the passing of time or with the giving of notice
or both would become such an Event of Default.

 

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(i) To the best of the knowledge of the Borrower, no member, officer, or other
official of the Issuer has any interest whatsoever in the Borrower or in the
transactions contemplated by this Agreement.

(j) The Borrower has reviewed the Indenture and hereby accepts the terms
thereof.

ARTICLE III

THE PROJECT; ISSUANCE OF THE BONDS

SECTION 3.1 The Project. The Borrower represents that it will acquire,
construct, equip and install or complete the acquisition, construction,
equipping or installation of the Project and all other facilities and real and
personal property necessary for the operation of the Project substantially in
accordance with the Plans and Specifications for the Project. The Borrower
further agrees that it at all times shall operate the Project as a “project”
within the meaning of the Act and so that the Project constitutes Exempt
Facilities.

SECTION 3.2 Agreement to Issue Bonds; Application of Bond Proceeds. In order to
provide funds to lend to the Borrower to finance part of the Cost of the Project
as provided in Section 4.1 hereof, the Issuer agrees that it will issue under
the Indenture and sell and cause to be delivered to the Initial Purchaser
thereof the Bonds in an aggregate principal amount not to exceed $50,000,000,
each bearing interest and maturing as set forth in the Indenture. The Issuer
will thereupon deposit the proceeds received from the sale of the Bonds as
provided in Section 2.02(e) of the Indenture.

SECTION 3.3 Disbursements from the Construction Fund and the Costs of Issuance
Fund. The Borrower will request pursuant to the terms of the Indenture,
authorize and direct the Trustee to disburse the moneys in the Construction Fund
to or on behalf of the Borrower, upon compliance with Section 6.07 of the
Indenture, for the following purposes (and, subject to the provisions of
Section 3.4 hereof, for no other purpose):

(a) Payment to the Borrower of such amounts, if any, as shall be necessary to
reimburse the Borrower, in full for all advances and payments made by it at any
time prior to or after the delivery of the Bonds for expenditures incurred in
connection with the preparation of plans and specifications for the Project
(including any preliminary study or planning of the Project or any aspect
thereof) and the acquisition, construction and installing of the Project.

(b) Payment for labor, services, materials and supplies used or furnished in
site improvement and in the acquisition, construction and installing of the
Project and miscellaneous expenditures incidental to any of the foregoing items.

(c) Payment of the fees, if any, for architectural, engineering, legal,
underwriting and supervisory services with respect to the Project and the Bonds.

 

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(d) Payment of the premiums on all insurance that was required to be acquired
and maintained in connection with the Project during the construction period
with respect to the Project.

(e) Payment of the taxes, assessments and other charges, if any, that may have
become payable during the construction period with respect to the Project.

(f) Payment of expenses incurred in seeking to enforce any remedy against any
contractor or subcontractor or any other third party in respect of any default
under a contract relating to the Project.

(g) Payment of any other costs which constitute a part of the Cost of the
Project in accordance with generally accepted accounting principles, which are
permitted by the Act and which will not adversely affect the Tax-Exempt status
of the Bonds.

Each of the payments referred to in Sections 3.3(a)-(g) shall be made upon
receipt by the Trustee of a written requisition in the form prescribed by
Section 6.07 of the Indenture, signed by the Authorized Borrower Representative.

The Borrower will authorize and direct the Trustee, upon compliance with
Section 6.08 of the Indenture, to disburse the moneys in the Costs of Issuance
Fund to or on behalf of the Borrower only for Costs of Issuance. Each of the
payments referred to in this paragraph shall be made upon receipt by the Trustee
of a written requisition in the form prescribed by Section 6.08 of the
Indenture.

The Borrower covenants and agrees that at all times at least 97% of the moneys
so disbursed out of the Construction Fund will be used to pay or reimburse the
Borrower for the payment of qualifying costs of Exempt Facilities as described
in the Tax Certificate. The Borrower further covenants and agrees that it will
not take any action or authorize or permit, any action to be taken which would
adversely affect the Tax-Exempt status of the Bonds.

The Borrower understands that the Tax Certificate may impose additional
restrictions on withdrawals from the Construction Fund and the Costs of Issuance
Fund, and the Borrower agrees to be bound by such restrictions, if any.

SECTION 3.4 Investment of Moneys. Any moneys held as a part of the Bond Fund,
the Construction Fund or the Costs of Issuance Fund shall be invested or
reinvested by the Trustee at the written direction of an Authorized Borrower
Representative as to specific investments, to the extent permitted by law, in
accordance with Section 7.01 of the Indenture. The Borrower shall not direct the
Trustee to make any investments or reinvestments other than those permitted by
the Indenture and as permitted by law. In making any such investments, the
Trustee may rely on directions delivered to it pursuant to this Section, and the
Trustee and the Issuer shall be relieved of all liability with respect to making
such investments in accordance with such directions. The Borrower agrees that to
the extent any moneys in the Bond Fund represent moneys held for the payment of
the principal of Bonds which have become due at maturity or on a redemption date
and the premium, if any, on such Bonds or interest due on Bonds in all cases
where Bonds have not been presented for payment and paid or such interest is

 

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unclaimed, or to the extent any moneys are held by the Trustee for the payment
of the purchase price of Bonds which have not been presented for payment, such
moneys shall not be invested.

SECTION 3.5 Costs of Issuance. The Borrower covenants and agrees to pay all
costs incurred in connection with the issuance of the Bonds, which may be
reimbursed or paid out of the proceeds of the Bonds to the extent permitted by
the Act, the Code and the Tax Certificate, and the Issuer shall have no
obligation with respect to such costs.

ARTICLE IV

LOAN AND PROVISIONS FOR REPAYMENT

SECTION 4.1 Loan of Bond Proceeds. (a) The Issuer agrees, upon the terms and
conditions in this Agreement, to lend to the Borrower the proceeds received by
the Issuer from the sale of the Bonds to finance a portion of the Cost of the
Project. The Issuer’s obligation herein shall be solely to deposit the proceeds
of the Bonds with the Trustee as provided in Section 3.2 hereof. Upon such
deposit, the Issuer will be deemed to have made a loan to the Borrower in an
amount equal to the principal amount of the Bonds.

(b) The Issuer and the Borrower expressly reserve the right to enter into, to
the extent permitted by law, an agreement or agreements other than this
Agreement, with respect to the issuance by the Issuer, under an indenture or
indentures other than the Indenture, of obligations to provide additional funds
to pay costs of the Project or any other facilities for the Borrower or to
refund all or any principal amount of the Bonds (or any portions thereof), or
any combination thereof.

SECTION 4.2 Loan Repayments and Other Amounts Payable. (a) On each date provided
in or pursuant to the Indenture for the payment of principal (whether at
maturity or upon redemption or acceleration) of and/or premium, if any, and/or
interest on any Bonds, until the principal of and premium, if any, and interest
on the Bonds shall have been fully paid or provision for the payment thereof
shall have been made in accordance with the Indenture, the Borrower shall pay to
the Trustee in immediately available funds, for deposit in the Bond Fund, as a
repayment installment of the loan of the proceeds of the Bonds pursuant to
Section 4.1 hereof, a sum equal to the amount payable on such interest payment
or redemption or acceleration or maturity date as principal (whether at maturity
or upon redemption or acceleration) of and premium, if any, and interest on the
Bonds as provided in the Indenture. In the event the Borrower shall fail to make
any of the payments required in this subsection, the payment so in default shall
continue as an obligation of the Borrower until the amount in default shall have
been fully paid.

(b) The Borrower shall pay or cause to be paid to the Trustee amounts equal to
the amounts to be paid by the Trustee for the purchase of Bonds which have not
been remarketed pursuant to Article IV of the Indenture and the premium, if any,
on the Bonds which have been remarketed pursuant to Article IV of the Indenture,
in each case as and to the extent provided in the Indenture. Such amounts shall
be paid or caused to be paid by the Borrower to the Trustee, acting as Tender
Agent (or, for so long as the Bonds are Book-Entry Bonds, to the Securities
Depository), in immediately available funds on the dates and no later than the
times

 

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such payments pursuant to Section 4.05 of the Indenture are to be made. In the
event the Borrower shall fail to make (or cause to be made) any of the payments
required in this subsection, the payment so in default shall continue as an
obligation of the Borrower until the amount in default shall have been fully
paid. The obligation of the Borrower to make any payment under this subsection
shall be deemed to have been satisfied to the extent of any corresponding
payment made by a Bank or a Liquidity Provider to the Trustee under any Letter
of Credit or Liquidity Facility.

(c) The Borrower agrees to pay to the Trustee, (i) the reasonable fees, charges
and expenses of the Trustee, as Registrar, and as Paying Agent and Tender Agent,
as and when the same become due, and (ii) the reasonable fees, charges and
expenses of the Trustee, as and when the same become due under the Indenture,
including payments under Section 6.4 hereof, and including the annual fee of the
Trustee for the services rendered by it and the expenses incurred by it under
the Indenture. In the event the Borrower should fail to make any of the payments
required in this subsection, the item or installment so in default shall
continue as an obligation of the Borrower until the amount in default shall have
been fully paid; provided, however, that such failure of payment shall not be
deemed an event of default during the period in which the Borrower is in good
faith contesting, by appropriate proceedings promptly initiated and diligently
conducted, such payment required by this subsection. The provision of this
subsection shall survive the retirement of the Bonds and the termination of this
Agreement.

(d) The Borrower shall pay to the Issuer upon demand all Administrative
Expenses, including payments under Section 6.4 hereof. In the event the Borrower
should fail to make any of the payments required in this subsection, the item or
installment so in default shall continue as an obligation of the Borrower until
the amount in default shall have been fully paid.

(e) The Borrower releases the Issuer and the Trustee from, and covenants and
agrees that neither the Issuer nor the Trustee shall be liable for, and
covenants and agrees, to the extent permitted by law, to indemnify and hold
harmless the Issuer and the Trustee and their directors, officers, employees and
agents from and against, any and all losses, claims, damages, liabilities or
expenses, of every conceivable kind, character and nature whatsoever arising out
of, resulting from or in any way connected with (1) the Project, or the
conditions, occupancy, use, possession, conduct or management of, or work done
in or about, or from the planning, design, acquisition, installation or
construction of the Project or any part thereof (including without limitation
any of the foregoing relating to any federal, state or local environmental law,
rule or regulation); (2) the issuance of any Bonds or any certifications,
covenants or representations made in connection therewith and the carrying out
of any of the transactions contemplated by the Bonds and this Agreement; (3) the
Trustee’s acceptance or administration of the trusts under the Indenture, or the
exercise or performance of any of its powers or duties under the Indenture; or
(4) any untrue statement or alleged untrue statement of any material fact
necessary to make the statements made, in the light of the circumstances under
which they were made, not misleading, in any official statement or other
offering circular utilized by the Issuer or any underwriter or placement agent
in connection with the sale or remarketing of any Bonds; provided that such
indemnity shall not be required for damages that are determined to have been
caused by willful misconduct (or, as to the Trustee, negligence), including
willful misconduct (or, as to the Trustee, negligence) in the provision of any
statements or information, on the part of the party seeking such indemnity. The
Borrower further covenants and agrees, to the extent permitted by

 

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law, to pay or to reimburse the Issuer and the Trustee and their respective
officers, employees and agents for any and all costs, reasonable attorneys’
fees, liabilities or expenses incurred in connection with investigating,
defending against or otherwise in connection with any such losses, claims,
damages, liabilities, expenses or actions, except to the extent that the same
are determined to have been caused by the willful misconduct (or, as to the
Trustee, negligence) of the party claiming such payment or reimbursement. The
provisions of this Section shall survive the retirement of the Bonds and the
expiration of this Agreement.

The indemnified party shall promptly notify the Borrower in writing of any claim
or action (of which such indemnified party has received written notice) covered
by this indemnity and brought against the indemnified party, or in respect of
which indemnity may be sought against the Borrower, setting forth the
particulars of such claim or action, and the Borrower will assume the defense
thereof, including the employment of counsel satisfactory to the indemnified
party and the payment of all expenses. The indemnified party may employ separate
counsel in any such action and participate in the defense thereof, and the fees
and expenses of such counsel shall be payable by the Borrower.

(f) The Borrower agrees to pay to the Remarketing Agent and the Auction Agent
the reasonable fees, charges and expenses of such Remarketing Agent and Auction
Agent, and the Issuer shall have no obligation or liability with respect to the
payment of any such fees, charges or expenses.

(g) The Borrower agrees to pay any Rebate Requirement (as defined in the Tax
Certificate) to the Trustee for deposit in the Rebate Fund.

(h) The Borrower also agrees to pay, (i) as soon as practicable after receipt of
request for payment thereof, all expenses required to be paid by the Borrower
under the terms of any bond purchase agreement relating to the sale of the
Bonds; (ii) at the time of issuance of the Bonds, the Issuer’s administrative
fee in the amount of $50,000; and (iii) at the time of issuance of any Bonds,
all reasonable expenses of the Issuer related to such Bonds which are not
otherwise required to be paid by the Borrower under the terms of this Agreement.

SECTION 4.3 Unconditional Obligation. The obligation of the Borrower to make the
payments pursuant to this Agreement and to perform and observe the other
agreements on its part contained herein shall be absolute and unconditional,
irrespective of any defense or any rights of set-off, recoupment or counterclaim
it might otherwise have against the Issuer, and during the term of this
Agreement, the Borrower shall pay (or cause to be paid) absolutely the payments
to be made on account of the loan as prescribed in Section 4.2 and all other
payments as prescribed herein, free of any deductions and without abatement,
diminution or set-off. Until such time as the principal of and premium, if any,
and interest on the Bonds shall have been fully paid, or provisions for the
payment thereof shall have been made as required by the Indenture, the Borrower
(i) will not suspend or discontinue any payments required hereunder, including
payments provided for in Section 4.2 hereof; (ii) will perform and observe all
of its other covenants contained in this Agreement; and (iii) except as provided
in Article VII hereof, will not terminate this Agreement for any cause,
including, without limitation, the occurrence of any act or circumstance that
may constitute failure of consideration, destruction of or damage to the
Project, commercial frustration of purpose, any change in the tax or other laws
of the United

 

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States of America or of the State or any political subdivision of either of
them, or any failure of the Issuer or the Trustee to perform and observe any
covenant, whether express or implied, or any duty, liability or obligation
arising out of or connected with this Agreement or the Indenture, except to the
extent permitted by this Agreement.

SECTION 4.4 Payments Pledged and Assigned. It is understood and agreed that all
rights to the payment of moneys hereunder (except payments made to the Trustee
pursuant to Sections 4.2(c), 4.2(e) 4.2(g), 4.2(h) and 6.4 hereof and payments
to be made to the Remarketing Agent and the Auction Agent pursuant to
Section 4.2(f) hereof and the Reserved Rights of the Issuer) are pledged and
assigned to the Trustee by the Indenture. The Borrower consents to such pledge
and assignment. The Issuer hereby directs the Borrower and the Borrower hereby
agrees to pay or cause to be paid to the Trustee all said amounts required to be
paid by or for the account of the Borrower pursuant to Section 4.2 hereof
(except payments to be made directly to the Remarketing Agent and the Auction
Agent pursuant to Section 4.2(f) hereof and payments to be made directly to the
Issuer pursuant to Sections 4.2(d), 4.2(e), 4.2(h) and 6.4 hereof). The Project
will not constitute any part of the security for the Bonds.

SECTION 4.5 Payment of the Bonds and Other Amounts. The Bonds shall be payable
from payments made by the Borrower to the Trustee under Section 4.2(a) hereof
and/or from amounts received by the Trustee from a draw on a Letter of Credit.
Payments of principal of or premium, if any, or interest on the Bonds with
moneys in the Bond Fund or earnings on investments made under the provisions of
the Indenture shall be credited against the obligation to pay required by
Section 4.2(a) hereof. To the extent provided in the Indenture, whenever any
Bonds are redeemable in whole or in part at the option of the Borrower, the
Trustee, on behalf of the Issuer, shall redeem the same upon the request of the
Borrower and such redemption shall constitute payment of amounts required by
Section 4.2(a) hereof equal to the redemption price of such Bonds.

Whenever payment or provision therefor has been made in respect of the principal
of or premium, if any, or interest on all or any portion of the Bonds in
accordance with the Indenture (whether at maturity or upon redemption or
acceleration or upon provision for payment in accordance with Article VIII of
the Indenture), payments shall be deemed paid to the extent such payment or
provision therefor has been made and is considered to be a payment of principal
of or premium, if any, or interest on such Bonds. If, pursuant to the terms of
the Indenture, such Bonds are thereby deemed paid in full, the Trustee shall
notify the Borrower and the Issuer that such payment requirement has been
satisfied. Subject to the foregoing, or unless the Borrower is entitled to a
credit under this Agreement or the Indenture, all payments shall be in the full
amount required by Sections 4.2(a) and (b) hereof.

ARTICLE V

SPECIAL COVENANTS AND AGREEMENTS

SECTION 5.1 Right of Access to the Project and Records. The Borrower agrees that
during the term of this Agreement the Issuer, the Trustee and the duly
authorized agents of either of them shall have the right at all reasonable times
during normal business hours to examine the books and records of the Borrower
with respect to the Project and to enter upon the site of the

 

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Project to examine and inspect the Project; provided, however, that this right
is subject to federal and State laws and regulations applicable to the site of
the Project. The rights of access hereby reserved to the Issuer and the Trustee
may be exercised only after such agent shall have executed release of liability
and secrecy agreements if requested by the Borrower in the form then currently
used by the Borrower, and nothing contained in this Section or in any other
provision of this Agreement shall be construed to entitle the Issuer or the
Trustee to any information or inspection involving the confidential know-how of
the Borrower.

SECTION 5.2 Borrower’s Maintenance of Its Existence; Assignments.

(a) To the extent permitted by law and its articles of incorporation, the
Borrower agrees that during the term of this Agreement it will maintain its
corporate existence in good standing and its authorization to do business in the
State and will not dissolve or otherwise dispose of all or substantially all of
its assets and will not consolidate with or merge into another Person or permit
one or more other Persons to consolidate with or merge into it; provided,
however, that the Borrower may, without violating the covenants in this Section,
merge into or consolidate with or transfer all or substantially all of its
assets to a wholly-owned subsidiary of the Borrower; and provided further that
the Borrower may, without violating the covenants in this Section, combine,
consolidate with or merge into another Person qualified to do business in one of
the states of the United States, or permit one or more other Persons to combine,
consolidate with or merge into it, or sell to another Person all or
substantially all of its assets, if:

(i) the surviving, resulting or transferee Person, as the case may be
(A) assumes and agrees in writing to pay and perform all of the obligations of
the Borrower hereunder, unless such obligations are assumed by operation of law,
and (B) is qualified to do business in the State;

(ii) any existing Bond Insurance, Liquidity Facility or Letter of Credit will
remain in full force and effect or will be replaced as provided in Sections 5.14
or 5.15, or 5.16, or the Bonds secured by such Bond Insurance, Liquidity
Facility or Letter of Credit shall have been redeemed or have been converted to
a different Rate Period following a mandatory tender;

(iii) the long-term ratings on the outstanding Bonds, as applicable, shall be no
lower than the lower of (1) “Baa3” from Moody’s or “BBB-” from S&P, as
applicable, or (2) the long-term ratings on the outstanding Bonds immediately
prior to the transaction; and

(iv) the short-term ratings on the outstanding Bonds, as applicable, shall be no
lower than the lower of (1) “A-1” from Moody’s, “P-1” from S&P and “F-1” from
Fitch, as applicable, or (2) the short-term ratings on the outstanding Bonds
immediately prior to the transaction.

The Borrower agrees to provide the Issuer such information as the Issuer may
reasonably request in order to assure compliance with this Section 5.2(a).

Within ten (10) Business Days after the consummation of the merger or other
transaction described above, the Borrower shall (except as provided in the next
sentence) provide the Issuer, any Bond Insurer, any Bank, any Liquidity Provider
and the Trustee with counterpart

 

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copies of the merger instruments or other documents constituting the transaction
but only to the extent that such documents or instruments are available to the
public and not subject to any confidentiality agreement or restriction, and an
officer’s certificate satisfactory to the Issuer executed by an Authorized
Borrower Representative that all of the provisions of this Section 5.2(a) have
been complied with. In the case of a (i) merger or consolidation of the Borrower
and any wholly-owned subsidiary of the Borrower or (ii) the transfer to any
wholly-owned subsidiary of the Borrower of all or substantially all of the
assets of the Borrower, the Borrower shall send the Issuer, any Bond Insurer,
any Bank, any Liquidity Provider and the Trustee a notice of such merger within
ten (10) Business Days after its completion, together with the officer’s
certificate described in the preceding sentence.

Notwithstanding any other provision of this Section 5.2, the Borrower need not
comply with any of the provisions of Section 5.2(a) if, at the time of such
merger, combination, sale of assets, dissolution or reorganization, the Bonds
will be defeased as provided in Article VIII of the Indenture or redeemed in
full as provided in Article III of the Indenture.

(b) The rights and obligations of the Borrower under this Agreement may be
assigned and delegated, respectively, by the Borrower to any person in whole or
in part, subject, however, to each of the following conditions:

(i) No assignment other than pursuant to subsection (a) of this Section shall
relieve the Borrower from primary liability for any of its obligations
hereunder, and in the event of any assignment not pursuant to said subsection
(a) the Borrower shall continue to remain primarily liable for the payments
specified in Section 4.2 hereof and for performance and observance of the other
agreements on its part herein provided to be performed and observed by it.

(ii) Any assignment from the Borrower shall retain for the Borrower such rights
and interests as will permit it to perform its obligations under this Agreement,
and any assignee from the Borrower shall assume in writing the obligations of
the Borrower hereunder to the extent of the interest assigned, unless such
obligations are assumed by operation of law.

(iii) The Borrower shall, within thirty (30) days of each such assignment,
furnish or cause to be furnished to the Issuer and the Trustee a true and
complete copy of each such assignment together with an instrument of assumption,
if required, and an opinion of Counsel satisfactory to the Issuer that the
Borrower has complied with the provision of this Section 5.2(b).

(c) In the case of any consolidation, merger or transfer pursuant to subsection
(a) hereof or any assignment pursuant to subsection (b) hereof, the Borrower
shall cause to be delivered to the Issuer and the Trustee, not later than the
effective date of such consolidation, merger, transfer or assignment, an opinion
of Bond Counsel to the effect that such consolidation, merger, transfer or
assignment will not, in and of itself, adversely affect the Tax-Exempt status of
any Bonds.

SECTION 5.3 Insurance. The Borrower agrees that it will keep, or cause to be
kept, (i) the Project insured against such risks and in such amounts as are
consistent with its insurance

 

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practices for similar types of facilities (which may include self-insurance),
and (ii) insurance against all direct or contingent loss or liability for
personal injury, death or property damage occasioned by the operation of the
Project, which insurance may include self-insurance and may be a part of the
policy or policies of insurance customarily maintained by the Borrower in
connection with its general property and liability insurance upon all of the
plants and properties operated by it (including such deductibles as may be
provided in said policies).

SECTION 5.4 Establishment of Completion Date; Obligation of Borrower to
Complete. As soon as the Project is completed, the Authorized Borrower
Representative, on behalf of the Borrower, shall evidence the Completion Date by
providing a certificate to the Trustee and the Issuer stating the Cost of the
Project and further stating that (i) the acquisition, equipping and construction
of the Project has been completed substantially in accordance with the plans,
specifications and work orders therefor, and all labor, services, materials and
supplies used in the acquisition, equipping, rehabilitation and construction
have been paid or provided for, and (ii) all other facilities necessary in
connection with the Project have been acquired, constructed and installed
substantially in accordance with the plans and specifications and work orders
therefor and all costs and expenses incurred in connection therewith have been
paid or provided for. Notwithstanding the foregoing, such certificate may state
that it is given without prejudice to any rights of the Borrower against third
parties for any claims or for the payment of any amount not then due and payable
which exists at the date of such certificate or which may subsequently exist. At
the time such certificate is delivered to the Trustee, moneys remaining in the
Construction Fund, including any earnings resulting from the investment of such
moneys, shall be used as provided in Section 6.07 of the Indenture.

SECTION 5.5 Maintenance and Repair; Taxes; Utility and Other Charges. The
Borrower agrees to maintain, to the extent permitted by applicable law and
regulation, the Project, or cause the Project to be so maintained, during the
term of this Agreement (i) in as reasonably safe condition as its operations
shall permit and (ii) in good repair and in good operating condition, ordinary
wear and tear excepted, making from time to time all necessary repairs thereto
and renewals and replacements thereof.

The Borrower agrees to pay or cause to be paid during the term of this Agreement
all taxes, governmental charges of any kind lawfully assessed or levied upon the
Project or any part thereof, all utility and other charges incurred in the
operation, maintenance, use, occupancy and upkeep of the Project and all
assessments and charges lawfully made by any governmental body for public
improvements that may be secured by a lien on the Project, provided that with
respect to special assessments or other governmental charges that may lawfully
be paid in installments over a period of years, the Borrower shall be obligated
to pay only such installments as are required to be paid during the term of this
Agreement. The Borrower may, at the Borrower’s expense and in the Borrower’s
name, in good faith, contest any such taxes, assessments and other charges and,
in the event of any such contest, may permit the taxes, assessments or other
charges so contested to remain unpaid during that period of such contest and any
appeal therefrom unless by such nonpayment the Project or any part thereof will
be subject to loss or forfeiture.

 

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SECTION 5.6 Qualification in Nevada. The Borrower agrees that throughout the
term of this Agreement it, or any successor or assignee as permitted by
Section 5.2 hereof, will be qualified to do business in the State.

SECTION 5.7 No Warranty by the Issuer. The Issuer makes no warranty, either
express or implied, as to the Project or that it will be suitable for the
purposes of the Borrower or needs of the Borrower.

SECTION 5.8 Agreement as to Use of the Project. The Issuer and the Borrower
agree that the Issuer shall have no interest in the Project.

SECTION 5.9 Notices and Certificates Required to be Delivered to the Trustee.
The Borrower hereby agrees to provide the Trustee with the following:

(a) Within one hundred twenty (120) days of the end of the fiscal year of the
Borrower, a certificate of an Authorized Borrower Representative to the effect
that (i) all payments have been made under this Agreement and that, to the best
of such Authorized Borrower Representative’s knowledge, no Event of Default or
event or condition which with the passage of time or giving of notice or both
would constitute an Event of Default has occurred and is continuing and
(ii) audited financial statements of the Borrower for such fiscal year;

(b) Upon knowledge of an Event of Default under this Agreement or the Indenture,
notice of such Event of Default, such notice to include a description of the
nature of such event and what steps are being taken to remedy such Event of
Default;

(c) Prompt written disclosure of any significant change known to the Borrower
that occurs which would adversely impact the Trustee’s ability to perform its
duties under the Indenture, or of any conflicts which may result because of
other business dealings between the Trustee and the Borrower (including, without
limitation, removal or replacement of the Remarketing Agent, if any).

SECTION 5.10 Borrower to Furnish Notice of Adjustments of Interest Rate Periods.
The Borrower is hereby granted the option to designate from time to time changes
in Rate Periods (and to rescind such changes) in the manner and to the extent
set forth in Section 2.03 of the Indenture. In the event the Borrower elects to
exercise any such option, the Borrower agrees that it shall cause notices of
adjustments of Rate Periods (or rescissions thereof) to be given to the Issuer,
the Trustee, the Liquidity Provider, the Bank, the Remarketing Agent and the
Auction Agent in accordance with Section 2.03 of the Indenture. The exercise of
any such option, and all actions in connection therewith, may be taken by the
Borrower through agents acting on its behalf, as provided in the Indenture,
including without limitation, the Remarketing Agent. In connection with any
change in Rate Periods, if the Indenture requires an opinion of Bond Counsel as
a condition thereto, the Borrower shall, at its sole expense, cause such opinion
to be delivered to the Issuer and the Trustee in accordance with the Indenture.

SECTION 5.11 Information Reporting. The Issuer covenants and agrees that, upon
the direction of the Borrower or Bond Counsel, it will mail or cause to be
mailed to the Secretary of the Treasury (or his designee as prescribed by
regulation, currently the Internal Revenue Service Center, Ogden, UT 84201) a
statement setting forth the information required by Section 149(e)

 

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of the Code, which statement shall be in the form of the Information Reporting
Statement (Form 8038) of the Internal Revenue Service (or any successor form as
may be necessary from time to time with respect to any Bonds).

SECTION 5.12 Tax Covenants; Rebate.

(a) The Borrower covenants that it will not take any action which would
adversely affect the Tax-Exempt status of any of the Bonds, and will take, or
require to be taken, such acts as may be reasonably within its ability and as
may from time to time be required under applicable law or regulation to continue
such Tax-Exempt status of such Bonds; and, in furtherance of such covenants, the
Borrower agrees to comply with the Tax Certificate and the Engineering
Certificate.

(b) The Borrower covenants that it will not take any action or fail to take any
action with respect to the Bonds which would cause any of the Bonds to be
“arbitrage bonds” within the meaning of Section 148 of the Code.

(c) The Borrower covenants that it will not use or permit the use of any
property financed with the proceeds of any of the Bonds by any person in such
manner or to such extent as would result in loss of the Tax-Exempt status of any
of the Bonds.

(d) The Borrower shall calculate, or cause to be calculated, its rebate
liability at such times as are required by Section 148(f) of the Code and any
temporary, proposed or final Regulations as may be applicable to such Bonds from
time to time. The Borrower shall provide to the Trustee a copy of each
calculation of rebate liability prepared by or on behalf of the Borrower, which
documentation shall be made available to the Issuer upon request. The Borrower
shall make any and all payments to the Trustee for deposit in the Rebate Fund,
or as otherwise required to be made to the United States Department of the
Treasury in connection with any of the Bonds pursuant to Section 148(f) of the
Code.

(e) Notwithstanding any other provisions of this Agreement to the contrary, so
long as necessary in order to maintain the Tax-Exempt status of any of the
Bonds, the covenants in this Section 5.11 shall survive the payment for such
Bonds and the interest thereon, including any payment or defeasance thereof
pursuant to Section 8.01 of the Indenture.

SECTION 5.13 Continuing Disclosure. The Borrower shall undertake the continuing
disclosure requirements promulgated under S.E.C. Rule 15c2-12, as it may from
time to time hereafter be amended or supplemented, if applicable, and the Issuer
shall have no liability to the holders of the Bonds or any other person with
respect to such disclosure matters. Notwithstanding any other provision of the
Indenture, failure of the Borrower to comply with the requirements of S.E.C.
Rule 15c2-12, as it may from time to time hereafter be amended or supplemented,
shall not be considered an Event of Default; however, the Trustee, subject to
Article X of the Indenture, may (and, at the request of the Remarketing Agent or
the holders of at least 25% in aggregate principal amount of Outstanding Bonds,
shall) or any Bondholder or beneficial owner of any Bonds may take such actions
as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Borrower to comply with its obligations
under this Section 5.13.

 

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SECTION 5.14 Liquidity Facility. At the time of initial issuance and delivery of
the Bonds, there is no Liquidity Facility in effect with respect to the Bonds.
The Borrower may at any time, upon notice to the Issuer, deliver to the Trustee
a Liquidity Facility effective at the start of a Rate Period, or at another time
consistent with the Indenture, subject to the conditions set forth in this
Section 5.14 and in Section 5.15 and to the requirements of the Indenture.

Not less than thirty (30) days prior to the delivery of a Liquidity Facility,
the Borrower shall (i) deliver to the Trustee and the Remarketing Agent a
written commitment for the delivery of such Liquidity Facility, (ii) inform the
Trustee and the Remarketing Agent of the date on which the Liquidity Facility
will become effective and (iii) inform the Trustee of the rating expected to
apply to the Bonds after the Liquidity Facility is delivered. On or prior to the
date of the delivery of a Liquidity Facility to the Trustee, the Borrower shall
cause to be furnished to the Trustee and the Issuer (i) an opinion of Bond
Counsel to the effect that the delivery of such Liquidity Facility to the
Trustee is authorized under the Indenture and complies with the terms hereof and
thereof and will not adversely affect the Tax-Exempt status of the Bonds and
(ii) an opinion to the effect that the Liquidity Facility is exempt from
registration under the Securities Act of 1933, as amended, and is enforceable in
accordance with its terms, except to the extent that enforceability thereof may
be limited by bankruptcy, reorganization or similar laws limiting the
enforceability of creditors’ rights generally and except that no opinion need be
expressed as to the availability of any discretionary equitable rights.

SECTION 5.15 Letter of Credit. At the time of their initial issuance and
delivery, the Bonds will be secured by an Initial Letter of Credit. Thereafter,
the Borrower may at any time, upon notice to the Issuer, deliver a Letter of
Credit at the start of a Rate Period, or at another time consistent with the
Indenture, subject to the conditions set forth in this Section 5.15 and in
Section 5.16 and to the requirements of the Indenture.

Not less than thirty (30) days prior to the delivery of a Letter of Credit, the
Borrower shall (i) deliver to the Trustee and the Remarketing Agent a written
commitment for the delivery of such Letter of Credit, (ii) inform the Trustee
and the Remarketing Agent of the date on which the Letter of Credit will become
effective and (iii) inform the Trustee of the rating expected to apply to the
Bonds after the Letter of Credit is delivered. On or prior to the date of the
delivery of a Letter of Credit to the Trustee, the Borrower shall cause to be
furnished to the Trustee and the Issuer (i) an opinion of Bond Counsel to the
effect that the delivery of such Letter of Credit to the Trustee is authorized
under the Indenture and complies with the terms hereof and thereof and will not
adversely affect the Tax-Exempt status the Bonds and (ii) an opinion of counsel
to the Bank to the effect that the Letter of Credit is exempt from registration
under the Securities Act of 1933, as amended, and is enforceable in accordance
with its terms, except to the extent that enforceability thereof may be limited
by bankruptcy, reorganization or similar laws limiting the enforceability of
creditors’ rights generally and except that no opinion need be expressed as to
the availability of any discretionary equitable rights.

If a Letter of Credit is already in effect, upon delivery of a new Letter of
Credit pursuant to this Section 5.15, the provider of the new Letter of Credit
shall refund to the provider of the existing Letter of Credit the purchase price
of all Outstanding Bank Bonds, including any accrued and unpaid interest on such
Bank Bonds, calculated as set forth in the Reimbursement

 

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Agreement relating to the existing Letter of Credit, unless the Borrower pays
such purchase price and interest directly to the Bank.

SECTION 5.16 Requirement to Deliver Letter of Credit or Liquidity Facility Under
Certain Circumstances. The Borrower must, upon (i) any Expiration Date, if the
Bonds will, immediately after such Expiration Date, bear interest at a Daily
Rate, a Weekly Rate or a Flexible Rate or (ii) any change in Rate Period to a
Daily Rate Period, Weekly Rate Period or Flexible Rate Period, other than a
change from a Weekly Rate Period to a Daily Rate Period or from a Daily Rate
Period to a Weekly Rate Period, deliver a Letter of Credit or Liquidity Facility
conforming with the requirements of Section 5.14 or 5.15, as applicable,
together with written evidence from each Rating Agency then rating the Bonds
that, following the delivery of such Letter of Credit or Liquidity Facility, the
rating on the Bonds shall not be lower than A-1, P-1 or F-1, as applicable, or
the current short-term rating from such Rating Agency will not be reduced or
withdrawn.

SECTION 5.17 Bond Insurance. At the time of initial issuance and delivery of the
Bonds, there is no Bond Insurance in effect with respect to the Bonds. The
Borrower may at any time, upon notice to the Issuer, deliver to the Trustee Bond
Insurance effective at the start of a Rate Period, or at another time consistent
with the Indenture, subject to the conditions set forth in this Section 5.17 and
to the requirements of the Indenture.

Not less than thirty (30) days prior to the delivery of any Bond Insurance, the
Borrower shall (i) deliver to the Trustee, the Remarketing Agent and the Auction
Agent a written commitment for the delivery of such Bond Insurance, (ii) inform
the Trustee, the Remarketing Agent and the Auction Agent of the date on which
the Bond Insurance will become effective and (iii) inform the Trustee of the
rating expected to apply to the Bonds after the Bond Insurance is delivered. On
or prior to the date of the delivery of any Bond Insurance to the Trustee, the
Borrower shall cause to be furnished to the Trustee and the Issuer (i) an
opinion of Bond Counsel to the effect that the delivery of such Bond Insurance
to the Trustee is authorized under the Indenture and complies with the terms
hereof and thereof and will not adversely affect the Tax-Exempt status of the
Bonds and (ii) an opinion of counsel to the Bond Insurer to the effect that the
Bond Insurance is exempt from registration under the Securities Act of 1933, as
amended, and is enforceable in accordance with its terms, except to the extent
that enforceability thereof may be limited by bankruptcy, reorganization or
similar laws limiting the enforceability of creditors’ rights generally and
except that no opinion need be expressed as to the availability of any
discretionary equitable rights.

ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES

SECTION 6.1 Events of Default Defined. The following events shall be Events of
Default under this Agreement, and the terms “Event of Default” or “Events of
Default” shall mean, whenever they are used in this Agreement, any one or more
of the following events:

(a) Failure by the Borrower to pay when due any amounts required to be paid
under Section 4.2(a) or 4.2(b) hereof; or

 

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(b) Failure by the Borrower to observe and perform any covenant, condition or
agreement on its part to be observed or performed in this Agreement, other than
as referred to in (a) above, for a period of ninety (90) days after written
notice, specifying such failure and requesting that it be remedied and stating
that such notice is a “Notice of Default” hereunder, given to the Borrower by
the Trustee or to the Borrower and the Trustee by the Issuer, unless the Issuer
and the Trustee shall agree in writing to an extension of such time prior to its
expiration; provided, however, if the failure stated in the notice cannot be
corrected within the applicable period, the Issuer and the Trustee will not
unreasonably withhold their consent to an extension of such time if corrective
action is instituted within the applicable period and diligently pursued until
the failure is corrected and the fact of such non-correction, corrective action
or diligent pursuit is evidenced to the Trustee by a certificate of an
Authorized Borrower Representative; or

(c) A proceeding or case shall be commenced, without the application or consent
of the Borrower, in any court of competent jurisdiction seeking (i) liquidation,
reorganization, dissolution, winding-up or composition or adjustment of debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator or the like
of the Borrower or of all or any substantial part of its assets, or
(iii) similar relief under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, and such
proceeding or cause shall continue undismissed, or an order, judgment, or decree
approving or ordering any of the foregoing shall be entered and shall continue
in effect for a period of ninety (90) days; or an order for relief against the
Borrower shall be entered against the Borrower in an involuntary case under the
United States Bankruptcy Code (as now or hereafter in effect) or other
applicable law; or

(d) The Borrower shall admit in writing its inability to pay its debts generally
as they become due or shall file a petition in voluntary bankruptcy or shall
make any general assignment for the benefit of its creditors, or shall consent
to the appointment of a receiver or trustee of all or substantially all of its
property, or shall commence a voluntary case under the United States Bankruptcy
Code (as now or hereafter in effect), or shall file in any court of competent
jurisdiction a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts, or shall fail to controvert in a timely or appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary case
under such United States Bankruptcy Code or other applicable law; or

(e) Dissolution or liquidation of the Borrower; provided that the term
“dissolution or liquidation of the Borrower” shall not be construed to include
the cessation of the corporate existence of the Borrower resulting either from a
merger or consolidation of the Borrower into or with another corporation or a
dissolution or liquidation of the Borrower following a transfer of all or
substantially all of its assets as an entirety, under the conditions permitting
such actions contained in Section 5.2 hereof; or

(f) The occurrence of an “Event of Default” under the Indenture (other than an
Event of Default described in Section 9.01(e) thereof); or

 

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(g) Receipt by the Trustee from any Bond Insurer, Bank or Liquidity Provider of
notice of the occurrence of an “event of default” relating to the Bond Insurance
or under the Reimbursement Agreement or Liquidity Facility.

The foregoing provisions of Section 6.1(b) are subject to the following
limitations: If by reason of Force Majeure the Borrower is unable in whole or in
part to carry out its agreements on its part herein contained other than the
obligations on the part of the Borrower contained in Article IV and Section 6.4
hereof the Borrower shall not be deemed in default during the continuance of
such inability. The Borrower agrees, however, to remedy with all reasonable
dispatch the cause or causes preventing the Borrower from carrying out its
agreements; provided that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion of the Borrower
and the Borrower shall not be required to make settlement of strikes, lockouts
and other industrial disturbances by acceding to the demands of the opposing
party or parties when such course is in the sole judgment of the Borrower
unfavorable to the Borrower.

SECTION 6.2 Remedies on Default. Subject to the rights of any Bond Insurer or
Bank (except in the event of an Insurer Default or Bank Default, respectively),
whenever any Event of Default referred to in Section 6.1 hereof shall have
occurred and be continuing,

(a) The Trustee may, to the extent and in the manner set forth in Section 9.02
of the Indenture, by notice in writing to the Borrower declare the unpaid
indebtedness under Section 4.2(a) hereof to be due and payable immediately, if
concurrently with or prior to such notice the unpaid principal amount of the
Bonds shall have been declared to be due and payable, and upon any such
declaration the same (being an amount sufficient, together with other moneys
available therefor in the Bond Fund, to pay the unpaid principal of and premium,
if any, and interest accrued on the Bonds) shall become and shall be immediately
due and payable as liquidated damages.

(b) The Issuer or the Trustee may take whatever action at law or in equity may
appear necessary or desirable to collect the payments and other amounts then due
and thereafter to become due hereunder or to enforce performance and observance
of any obligation, agreement or covenant of the Borrower hereunder; provided,
however, that nothing in Section 4.4 hereof shall be deemed to limit the rights
of the Issuer under this Section 6.2(b); provided, nevertheless, that the Issuer
will not exercise any remedies, with respect to any of the Issuer’s rights
assigned to the Trustee pursuant to Section 4.4 hereof unless, in the Issuer’s
reasonable judgment and after written request to a Responsible Officer of the
Trustee, the Trustee has failed to enforce such rights. The Issuer has no
obligation to take any action under this Section.

(c) Upon the occurrence of an Event of Default described in Section 6.1(a)
hereof, the Trustee shall immediately draw upon any Bond Insurance, Liquidity
Facility or Letter of Credit, if permitted by the terms thereof and required by
the terms of the Indenture, and apply the amount so drawn in accordance with the
Indenture and may exercise any remedy available to it thereunder.

The provisions of clause (a) of the preceding paragraph are subject to the
condition that if, at any time after the unpaid indebtedness under
Section 4.2(a) hereof shall have

 

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been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, there shall have been deposited with the Trustee a sum sufficient to
pay all the principal of the Bonds matured prior to such declaration and all
matured installments of interest (if any) upon all the Bonds, with interest on
such overdue installments of principal as provided herein, and the reasonable
expenses of the Trustee and the Issuer, and any and all other defaults known to
the Trustee (other than in the payment of principal of and interest on the Bonds
due and payable solely by reason of such declaration) shall have been made good
or cured to the satisfaction of the Trustee or provision deemed by the Trustee
to be adequate shall have been made therefor, then, and in every such case, the
Trustee shall, on behalf of the Owners of all the Bonds, with the consent of the
Bank or the Bond Insurer, if any (except in the event of a Bank Default or
Insurer Default), rescind and annul such declaration and its consequences and
waive such default; provided that no such rescission and annulment shall extend
to or shall affect any subsequent default, or shall impair or exhaust any right
or power consequent thereon.

In case the Trustee or the Issuer, as the case may be, shall have proceeded to
enforce its rights under this Agreement, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Trustee or the Issuer, then, and in every such case, the Borrower, the
Trustee and the Issuer shall be restored respectively to their several positions
and rights hereunder, and all rights, remedies and powers of the Borrower, the
Trustee and the Issuer shall continue as though no such action had been taken.

Any amounts collected pursuant to action taken under this Section 6.2 shall be
paid into the Bond Fund (unless otherwise provided in this Agreement) and
applied in accordance with the provisions of the Indenture. No action taken
pursuant to this Section 6.2 shall relieve the Borrower from the Borrower’s
obligations pursuant to Section 4.2 hereof.

No recourse shall be had for any claim based on this Agreement against any
officer, director or shareholder, past, present or future, of the Borrower as
such, either directly or through the Borrower, under any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or by
any legal or equitable proceeding or otherwise.

Nothing herein contained, including, without limitation, the last two paragraphs
of this Section 6.2, shall be construed to prevent the Issuer from enforcing
directly any of its rights under Section 5.1 hereof and its Reserved Rights.

In case proceedings shall be pending for the bankruptcy or for the
reorganization of the Borrower under the federal bankruptcy laws or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the property of the Borrower or in the case of any other similar judicial
proceedings relative to the Borrower, or the creditors or property of the
Borrower, then the Trustee shall be entitled and empowered, by intervention in
such proceedings or otherwise, to file and prove a claim or claims for the whole
amount owing and unpaid pursuant to this Agreement and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee allowed in
such judicial proceedings relative to the Borrower, its creditors or its
property, and to collect and receive any moneys or other property payable or
deliverable on any

 

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such claims, and to distribute such amounts as provided in the Indenture after
the deduction of its reasonable charges and expenses. Any receiver, assignee or
trustee in bankruptcy or reorganization is hereby authorized to make such
payments to the Trustee, and to pay to the Trustee any amount due if for
reasonable compensation and expenses, including reasonable expenses and fees of
counsel incurred by it up to the date of such distribution.

Anything in this Agreement to the contrary notwithstanding, upon the occurrence
and continuance of an Event of Default while Bond Insurance is in effect, except
in the event of an Insurer Default, the Bond Insurer shall be entitled to
control and direct the enforcement of all rights and remedies granted to the
Issuer, the Bondholders or the Trustee for the benefit of the Bondholders
hereunder, including, without limitation: (i) the right to accelerate the
payment, in the manner described in subsection (a) of this Section 6.2, of the
Borrower’s indebtedness hereunder and (ii) the right to annul any declaration of
acceleration relating to the Borrower’s indebtedness hereunder, and the Bond
Insurer shall also be entitled to approve all waivers of Events of Default
hereunder.

Anything in this Agreement to the contrary notwithstanding, upon the occurrence
and continuance of an Event of Default while a Letter of Credit is in effect,
except in the event of a Bank Default, the Bank shall be entitled to control and
direct the enforcement of all rights and remedies granted to the Issuer, the
Bondholders or the Trustee for the benefit of the Bondholders, including,
without limitation: (i) the right to accelerate the payment, in the manner
described in subsection (a) of this Section 6.2, of the Borrower’s indebtedness
hereunder and (ii) the right to annul any declaration of acceleration relating
to the Borrower’s indebtedness hereunder, and the Bank shall also be entitled to
approve all waivers of Events of Default hereunder.

SECTION 6.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Issuer or the Trustee is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Issuer or the Trustee to exercise any remedy
reserved to it in this Article, it shall not be necessary to give any notice,
other than such notice as may be herein expressly required. Such rights and
remedies as are given the Issuer hereunder shall also extend to the Trustee and
the Owners of the Bonds, subject to the provisions of the Indenture, and the
Trustee and Owners of the Bonds shall be entitled to the benefit of all
covenants and agreements herein contained.

SECTION 6.4 Agreement to Pay Fees and Expenses of Counsel. In the event the
Borrower should default under any of the provisions of this Agreement and the
Issuer or the Trustee should employ Counsel or incur other expenses for the
collection of the indebtedness hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Borrower herein
contained, the Borrower agrees that it will on demand therefor pay to the
Trustee, the Issuer or, if so directed by the Issuer, to the Counsel for the
Issuer, the reasonable fees of such Counsel and such other reasonable expenses
so incurred by or on behalf of the Issuer or the Trustee. If the circumstances
set forth in this Section 6.4 shall occur with the result that the Borrower is
obligated to make payments to the Trustee under this Section 6.4, and

 

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so long as such obligation shall be continuing, in order to secure such
obligation of the Borrower to the Trustee, the Trustee shall have a lien prior
to the Bonds on all moneys held by the Trustee under the Indenture except those
moneys held in trust to pay the principal of and premium, if any, and interest
on, or the purchase price of, particular Bonds and except for moneys, if any, in
the Rebate Fund. If the Trustee incurs fees and expenses in connection with a
default specified in Section 6.1(c), 6.1(d) or 6.1(e) of this Agreement, such
fees and expenses are understood to include expenses of administration under any
bankruptcy law.

SECTION 6.5 No Additional Waiver Implied by One Waiver; Consents to Waivers. In
the event any agreement contained in this Agreement should be breached by either
party and thereafter waived by the other party, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other
breach hereunder. No waiver shall be effective unless in writing and signed by
the party making the waiver. The Issuer shall have no power to waive any default
hereunder by the Borrower without the consent of the Trustee. The Trustee shall
have power to waive any default by the Borrower hereunder, except a default
under Sections 4.2(d), 4.2(e), 4.2(h) or 6.4, without the prior written
concurrence of the Issuer.

ARTICLE VII

OPTION AND OBLIGATION OF BORROWER TO PREPAY

SECTION 7.1 Option to Prepay. The Borrower shall have, and is hereby granted,
the option to prepay the payments due hereunder in whole or in part at any time
or from time to time (a) to provide for the redemption of the Bonds pursuant to
the provisions of Section 3.01(A) of the Indenture or (b) to provide for the
defeasance of the Bonds pursuant to Article VIII of the Indenture. In the event
the Borrower elects to provide for the redemption of Bonds as permitted by this
Section, the Borrower shall notify and instruct the Trustee in accordance with
Section 7.3 hereof to redeem all or any portion of the Bonds in advance of
maturity.

SECTION 7.2 Obligation to Prepay. The Borrower shall be obligated to prepay
amounts due hereunder, in whole or in part, to provide for the redemption of
Bonds in whole or in part pursuant to the provisions of Section 3.01(B) of the
Indenture. In the case of any of the events stated in Section 3.01(B) of the
Indenture, the Borrower must satisfy its obligation by prepaying within 180 days
after such event.

SECTION 7.3 Notice of Prepayment; Amount to be Prepaid. (a) In order to exercise
the option granted to the Borrower in Section 7.1 hereof, or fulfill an
obligation described in Section 7.2 hereof, the Borrower shall give at least 30
days written notice of such prepayment to the Issuer, the Trustee, the Auction
Agent and the Remarketing Agent. On the date fixed for redemption of the Bonds
or portions thereof, there shall be deposited with the Trustee from payments by
the Borrower as required by Section 7.l or 7.2, as appropriate, for payment into
the Bond Fund the amount required in subsection (b) of this Section. The notice
shall provide for the date of the application of the prepayment made by the
Borrower hereunder to the redemption of the Bonds or portions thereof in whole
or in part pursuant to call for redemption, shall specify the redemption date
and shall be given to the Trustee, the Issuer, the Auction Agent and the
Remarketing Agent in accordance with the provisions of the Indenture for the
redemption of Bonds or portions thereof.

 

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(b) The prepayment payable by the Borrower hereunder upon either (i) the
exercise of the option granted to the Borrower in Section 7.1 hereof, or
(ii) the fulfillment of an obligation specified in Section 7.2 shall be, to the
extent applicable and except as otherwise provided in Article VIII of the
Indenture, the sum of the following:

(1) the amount of money which, when added to the amount on deposit in the Bond
Fund prior to the prepayment being made and available for such purpose, will be
sufficient to provide all funds necessary to redeem the Bonds or portions
thereof designated in the notice specified in subsection (a) of this Section to
be redeemed on the date set forth in the notice, including, without limitation,
principal, premium, if any, and all interest to accrue to said redemption date
and redemption expenses; plus

(2) in the event all of the Bonds are to be redeemed, an amount of money equal
to all Administrative Expenses and the Trustee’s, Auction Agent’s and
Remarketing Agent’s fees and expenses under the Indenture accrued and to accrue
until the final payment and redemption of the Bonds.

(c) Any prepayment made pursuant to Section 7.1 or 7.2 hereof shall be deposited
into the Bond Fund. No prepayment or investment of the proceeds thereof shall be
made which shall cause any Bonds to be “arbitrage bonds” within the meaning of
Section 148(a) of the Code.

SECTION 7.4 Cancellation at Expiration of Term. At the acceleration, termination
or expiration of the term of this Agreement and following full payment of the
Bonds or provision for payment thereof and of all other fees and charges having
been made in accordance with the provisions of this Agreement and the Indenture,
the Issuer shall deliver to the Borrower any documents and take or cause the
Trustee to take such actions as may be necessary to effectuate the cancellation
and evidence the termination of this Agreement.

ARTICLE VIII

NON-LIABILITY OF ISSUER

SECTION 8.1 Non-Liability of the Issuer. The Issuer shall not be obligated to
pay the principal of, or premium, if any, or interest on the Bonds, except from
Revenues or the proceeds of Bond Insurance, and shall not be obligated to pay
the purchase price of any Bonds, except from the proceeds of the remarketing of
the Bonds or from moneys paid or caused to be paid by the Borrower pursuant to
Section 4.2(b) hereof. The Borrower hereby acknowledges that the Issuer’s sole
source of moneys to repay the Bonds will be provided by the payments made or
caused to be made by the Borrower pursuant to this Agreement, together with
other Revenues and the proceeds of Bond Insurance, including investment income
on certain funds and accounts held by the Trustee under the Indenture, and
hereby agrees that if the payments to be made hereunder shall ever prove
insufficient to pay all principal of, and premium, if any, and interest on the
Bonds as the same shall become due (whether by maturity, redemption,
acceleration or otherwise), then upon notice from the Trustee, the Borrower
shall pay such amounts as are required from time to time to prevent any
deficiency or default in the payment of such principal, premium or interest.

 

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ARTICLE IX

MISCELLANEOUS

SECTION 9.1 Notices. All notices, certificates or other communications shall be
sufficiently given in writing and shall be deemed given on the day on which the
same have been mailed by certified mail, postage prepaid, or by qualified
overnight courier service, courier charges prepaid, addressed as set forth in
Section 13.06 of the Indenture. A duplicate copy of each notice, certificate or
other communication given hereunder by either the Issuer or the Borrower to the
other shall also be given to the Trustee. The Issuer, the Borrower, the Trustee,
the Bond Insurer, the Liquidity Provider, the Bank, the Remarketing Agent and
the Auction Agent may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent.

SECTION 9.2 Assignments. This Agreement may not be assigned by either party
without consent of the other, except that (i) the Issuer shall assign to the
Trustee its rights under this Agreement (except its Reserved Rights) as provided
by Section 4.4 hereof, and (ii) the Borrower may assign its rights under this
Agreement as provided by Section 5.2 hereof.

SECTION 9.3 Severability. If any provision of this Agreement shall be held or
deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the
same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative, or unenforceable to any extent whatever.

SECTION 9.4 Execution of Counterparts. This Agreement may be simultaneously
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument; provided, however, that
for purposes of perfecting a security interest in this Agreement by the Trustee,
only the counterpart delivered, pledged and assigned to the Trustee shall be
deemed the original.

SECTION 9.5 Amounts Remaining in Bond Fund. It is agreed by the parties hereto
that after payment in full of (i) the Bonds (or provision for payment thereof
having been made in accordance with the provisions of the Indenture), (ii) the
fees, charges and expenses of the Trustee in accordance with the Indenture,
(iii) the Administrative Expenses of the Issuer, (iv) the fees and expenses of
the Auction Agent and the Remarketing Agent, and (v) all other amounts required
to be paid under this Agreement and the Indenture, any amounts remaining in the
Bond Fund shall belong to and be paid to the Borrower by the Trustee.
Notwithstanding any other provision of this Agreement or the Indenture, under no
circumstances shall proceeds of Bond Insurance, a Liquidity Facility or a Letter
of Credit be paid to the Issuer or the Borrower.

SECTION 9.6 Amendments, Changes and Modifications. This Agreement may be
amended, changed, modified, altered or terminated only by written instrument
executed by the Issuer and the Borrower and in accordance with Article XII of
the Indenture.

SECTION 9.7 Governing Law. This Agreement shall be governed exclusively by and
construed in accordance with the applicable laws of the State.

 

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SECTION 9.8 Authorized Issuer and Borrower Representatives. Whenever under the
provisions of this Agreement the approval of the Issuer or the Borrower is
required to take some action at the request of the other, such approval or such
request shall be given for the Issuer by the Authorized Issuer Representative
and for the Borrower by the Authorized Borrower Representative, and the other
party hereto and the Trustee shall be authorized to act on any such approval or
request and neither party hereto shall have any complaint against the other or
against the Trustee as a result of any such action taken.

SECTION 9.9 Term of the Agreement. This Agreement shall be in full force and
effect from its date to and including such date as all of the Bonds issued under
the Indenture shall have been fully paid or retired (or provision for such
payment shall have been made as provided in the Indenture) and all other fees
and expenses shall have been paid pursuant to this Agreement or the Indenture,
provided that all representations and certifications by the Borrower as to all
matters affecting the Tax-Exempt status of interest on any Bonds and the
covenants of the Borrower in Sections 4.2(c), 4.2(d), 4.2(e), 4.2(h), 5.11 and
6.4 hereof shall survive the termination of this Agreement.

SECTION 9.10 Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the Issuer, the Borrower and their respective successors
and assigns, subject, however, to the limitations contained in Section 5.2
hereof.

SECTION 9.11 Trustee as a Party in Interest and Third Party Beneficiary. The
parties hereto acknowledge and agree that as to any right to indemnity or
payment of fees and expenses provided in Section 4.2 hereof the Trustee is a
party in interest and third party beneficiary under this Agreement entitled to
enforce its rights as so stated herein as if it were a party hereto.

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

 

CLARK COUNTY, NEVADA

By:

 

/s/ Rory Reid

 

     Chair, Board of County Commissioners

 

(SEAL)

Attest:

/s/ Diana Alba

County Clerk

 

SOUTHWEST GAS CORPORATION

By:

 

/s/ Kenneth J. Kenny

 

       Authorized Borrower Representative

[Signature page – Financing Agreement]

 

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EXHIBIT A

DESCRIPTION OF THE PROJECT

The Project will be undertaken in the Southern Nevada Division in Clark County
and will consist of certain additions and improvements to, and replacements of,
the Borrower’s natural gas distribution and transmission system through which
the Borrower furnishes natural gas to its customers in Clark County, Nevada, and
certain other plant, property and equipment used or to be used for the same
purposes, including meters, customer service connections, mains and pressure
regulators.