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FINANCING AGREEMENT

Dated as of September 1, 2006

By and Between

CLARK COUNTY, NEVADA

and

SOUTHWEST GAS CORPORATION

relating to

CLARK COUNTY, NEVADA

INDUSTRIAL DEVELOPMENT REVENUE BONDS

(SOUTHWEST GAS CORPORATION PROJECT)

SERIES 2006A

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FINANCING AGREEMENT

_________________

TABLE OF CONTENTS

(This Table of Contents is not a part of this Agreement
and is only for convenience of reference)

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

 

 

 

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

10

 

SECTION 5.1

Right of Access to the Project and Records

10

 

SECTION 5.2

Borrower’s Maintenance of Its Existence; Assignments

10

 

SECTION 5.3

Establishment of Completion Date; Obligation of Borrower to

 

 

 

Complete

12

 

SECTION 5.4

Maintenance and Repair; Taxes; Utility and Other Charges

12

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TABLE OF CONTENTS
(CONTINUED)

Page

 

SECTION 5.5

Qualification in Nevada

13

 

SECTION 5.6

No Warranty by the Issuer

13

 

SECTION 5.7

Agreement as to Use of the Project

13

 

SECTION 5.8

Notices and Certificates Required to be Delivered to the Trustee

13

 

SECTION 5.9

Borrower to Furnish Notice of Adjustments of Interest Rate Periods

14

 

SECTION 5.10

Information Reporting

14

 

SECTION 5.11

Tax Covenants; Rebate

14

 

SECTION 5.12

Continuing Disclosure

15

 

SECTION 5.13

Liquidity Facility

15

 

SECTION 5.14

Letter of Credit

16

 

SECTION 5.15

Requirement to Deliver Letter of Credit or Liquidity Facility

 

 

 

Under Certain Circumstances

16

 

SECTION 5.16

Bond Insurance

17

ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES

18

 

SECTION 6.1

Events of Default Defined

18

 

SECTION 6.2

Remedies on Default

19

 

SECTION 6.3

No Remedy Exclusive

21

 

SECTION 6.4

Agreement to Pay Fees and Expenses of Counsel

22

 

SECTION 6.5

No Additional Waiver Implied by One Waiver; Consents to

 

 

 

Waivers

22

ARTICLE VII

OPTION AND OBLIGATION OF BORROWER TO PREPAY

22

 

SECTION 7.1

Option to Prepay

22

 

SECTION 7.2

Obligation to Prepay

23

 

SECTION 7.3

Notice of Prepayment; Amount to be Prepaid

23

 

SECTION 7.4

Cancellation at Expiration of Term

23

ARTICLE VIII

NON-LIABILITY OF ISSUER

24

 

SECTION 8.1

Non-Liability of the Issuer

24

ARTICLE IX

MISCELLANEOUS

24

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TABLE OF CONTENTS
(CONTINUED)

Page

 

SECTION 9.1

Notices

24

 

SECTION 9.2

Assignments

24

 

SECTION 9.3

Severability

25

 

SECTION 9.4

Execution of Counterparts

25

 

SECTION 9.5

Amounts Remaining in Bond Fund

25

 

SECTION 9.6

Amendments, Changes and Modifications

25

 

SECTION 9.7

Governing Law

25

 

SECTION 9.8

Authorized Issuer and Borrower Representatives

25

 

SECTION 9.9

Term of the Agreement

25

 

SECTION 9.10

Binding Effect

26

 

SECTION 9.11

Trustee and Bond Insurer as Parties in Interest and Third Party

 

 

Beneficiaries

26

EXHIBIT A

Description of the Project

A-1

 

 

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        THIS FINANCING AGREEMENT made and entered into as of September 1, 2006
(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 September 1, 2006
(the “Indenture”), with The Bank of New York Trust Company, N.A., as trustee
(the “Trustee”) thereunder, pursuant to which $56,000,000 principal amount of
Clark County, Nevada Industrial Development Revenue Bonds (Southwest Gas
Corporation Project) Series 2006A (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 September 20, 2005, the Issuer adopted an initial resolution
authorizing the issuance of bonds in an amount not to exceed $250,000,000 for a
variety of purposes, from which authorization $100,000,000 of bonds have been
issued to date to finance a portion of the Cost of the Project. On September 5,
2006, the Issuer adopted a resolution approving the issuance of the Bonds in an
amount not to exceed $56,000,000.

        (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:

 

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        (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 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 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.

 

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        (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.

        (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 agrees that it will acquire,
construct, equip, and install, or complete the acquisition, construction,
equipping, and installation of the Project and all other facilities and real and
personal property necessary for the operation of 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. The Borrower agrees to proceed with due diligence to complete the
Project within three years from the date hereof.

        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
$56,000,000, 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 (but, 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.

 

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

        (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 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 or 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
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.

 

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        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 in order 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 the Cost of the Project 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
account within 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 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.

 

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        (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, the termination of
this Agreement and the resignation or approval of the Trustee.

        (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 result from
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 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 arise out of 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, the expiration of this Agreement and the resignation or
removal of the Trustee.

 

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        The indemnified party shall promptly notify the Borrower in writing of
any claim or action 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 any 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 all obligations required to be performed by it by the Indenture;
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 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.

 

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        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 payments to be made to the Issuer pursuant to Sections
4.2(d), 4.2(e), 4.2(h) and 6.4 hereof and its rights of indemnification and
inspection and rights to receive notices, certificates, requests, requisitions
or other communications and to give consents hereunder) 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.

 

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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 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 5.2Borrower'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
5.13 or 5.14, or 5.16, or the Bonds covered by such existing Bond Insurance,
Liquidity Facility or Letter of Credit shall have been redeemed;

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

        (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; and

 

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        (v) if immediately prior to such merger, consolidation, reorganization
or conversion, or such sale or other disposition, the Borrower is a public
utility regulated by the Public Utility Commission of their respective
jurisdictions (or a similar body in another jurisdiction) or the Federal Energy
Regulatory Commission, such successor entity shall be a public utility regulated
by the Public Utility Commission of their respective jurisdiction (or another
similar body in another jurisdiction) or the Federal Energy Regulatory
Commission.

        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 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.

 

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        (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 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 5.4 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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        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 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 5.5 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 5.6 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 5.7 Agreement as to Use of the Project. The Issuer and the
Borrower agree that the Issuer shall have no interest in the Project.

        SECTION 5.8 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); and

 

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        (d)     prompt notice of any change in the “CUSIP” numbers for the
Bonds, to the extent the Borrower has actual knowledge of any such change.

        SECTION 5.9 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 5.10 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) 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 5.11 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 (other
than a state or local governmental unit) 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.

 

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        (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 5.12 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 5.12.

        To the extent that the Borrower enters into a continuing disclosure
agreement with respect to the Bonds, the Bond Insurer shall be included as a
party to be notified under such agreement.

        SECTION 5.13 Liquidity Facility. At the time of initial issuance and
delivery of the Bonds, there is no Liquidity Facility in effect. 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 5.13 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 related 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.

 

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        SECTION 5.14 Letter of Credit. At the time of initial issuance and
delivery of the Bonds, there is no Letter of Credit in effect. The Borrower may
at any time, upon notice to the Issuer, deliver a Letter of Credit 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 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 related 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 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 5.14, 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
Agreement relating to the existing Letter of Credit, unless the Borrower pays
such purchase price and interest directly to the Bank.

        SECTION 5.15 Requirement to Deliver Letter of Credit or Liquidity
Facility Under Certain Circumstances. Unless otherwise authorized by the Bond
Insurer, or unless the provisions of the last sentence of this Section apply,
the Borrower agrees that, should all or any of the Bonds bear interest at a
Daily Rate, a Weekly Rate, a Flexible Rate or a Term Rate for a Term Rate Period
ending before the Maturity Date, then the Borrower’s obligations to purchase
such Bonds pursuant to Section 4.2(b) hereof shall at all times be supported by
a Liquidity Facility having the following characteristics: (i) such Liquidity
Facility must conform with the requirements of Section 5.13; (ii) such Liquidity
Facility must be accompanied by written evidence from each Rating Agency then
rating the Bonds that, following the delivery of such Liquidity Facility, the
rating on the Bonds shall not be lower than A-1, P-1 or F-1, as applicable;
(iii) should any of such ratings fall below such level after the issuance or
renewal of such Liquidity Facility, the Borrower will have 90 days to replace
such Liquidity Facility with a Liquidity Facility that meets the requirements of
this Section 5.15; and (iv) the terms of such Liquidity Facility, and of any
supplement to or modification of the Indenture or Agreement to accommodate such
Liquidity Facility, shall be acceptable to the Bond Insurer. The terms of any
Letter of Credit, and of any supplement to or modification of the Indenture or
Agreement to accommodate such Letter of Credit, shall be acceptable to the Bond
Insurer. If such Letter of Credit is being delivered to secure the purchase
price of the Bonds purchased by the Tender Agent as provided in Article IV, then
such Letter of Credit must meet the requirements of the foregoing paragraph as
if it were a Liquidity Facility. Notwithstanding the foregoing, but subject to
the terms and conditions on which any Bond Insurance may be issued, no Liquidity
Facility shall be required for any Bonds if not otherwise required by the
Indenture.

 

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        SECTION 5.16 BOND INSURANCE.

        (a)     At the time of their initial issuance and delivery, the Bonds
will be secured by an Initial Financial Guaranty Insurance Policy issued by the
Bond Insurer. Thereafter, 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 5.16 and to the requirements of the
Indenture.

        (b)     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 related 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 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.

        (c)     Concurrently with delivery to the Trustee, the Borrower shall
deliver to any Bond Insurer copies of any notices delivered to the Trustee
pursuant to Sections 5.8, 5.9, 5.13, 5.14, 5.15 and this Section 5.16.

        (d)     The representations and covenants in this Agreement are in
addition to, and not in replacement of, any representations and covenants
contained in any agreement between the Borrower and any Bond Insurer. Without
limiting the generality of the foregoing, any Liquidity Facility delivered
pursuant to Section 5.13 above shall, in addition to conforming to the
requirements of this Agreement, conform to such other requirements as shall be
contained in any such agreement between the Borrower and any Bond Insurer.

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:

 

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        (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

        (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 the Bond Insurer, Bank or Liquidity Provider
of notice of the occurrence of an ‘event of default’ or under the insurance
agreement entered into between the Borrower and the Bond Insurer 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.

 

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        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 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 and the Bond Insurer, as
required pursuant to Section 9.03 of the Indenture, 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 under Sections
4.2(d), 4.2(e), 4.2(h) and 6.4 hereof.

        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 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.

 

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        Anything in this Agreement to the contrary notwithstanding, upon the
occurrence and continuance of an Event of Default with respect to Bonds
supported by Bond Insurance, except in the event of an Insurer Default
applicable to a particular Bond Insurer, the Bond Insurer providing Bond
Insurance 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 covered by such Bond Insurance, including,
without limitation: (i) the right to accelerate the payment, in the manner
described in subsection (a) of this Section 6.2, of that portion of the
Borrower’s indebtedness hereunder attributable to the Bonds, (ii) the right to
annul any declaration of acceleration relating to the Borrower’s indebtedness
hereunder attributable to the Bonds, and (iii) the right to consent to all
waivers of Events of Default hereunder in respect of the Bonds.

        Subject to the rights of the Bond Insurer as provided in the preceding
paragraph, but anything else in this Agreement to the contrary notwithstanding,
upon the occurrence and continuance of an Event of Default with respect to Bonds
supported by a Letter of Credit, except in the event of a Bank Default
applicable to a particular Bank, the Bank providing the Letter of Credit 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 covered by such Letter of Credit, including, without
limitation: (i) the right to accelerate the payment, in the manner described in
subsection (a) of this Section 6.2, of that portion of the Borrower’s
indebtedness hereunder attributable to the Bonds and (ii) the right to annul any
declaration of acceleration relating to the Borrower’s indebtedness hereunder
attributable to the Bonds, and the Bank shall also be entitled to approve all
waivers of Events of Default hereunder in respect of the Bonds.

        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.

 

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        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 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.
Subject to the provisions of Section 6.2, the Trustee shall have the 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.

 

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        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 Bond
Insurer, 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.

        (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.

 

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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, 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.

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 under Sections 4.2(d),
4.2(e), 4.2(h) and 6.4 hereof and rights of the Issuer to make inspections or to
receive any notices, certificates, requests, requisitions or communications
hereunder and to give consent hereunder) as provided by Section 4.4 hereof,
(ii) the Borrower may assign its rights under this Agreement as provided by
Section 5.2 hereof; and (iii) the Issuer may not assign this Agreement except
upon receipt by the Trustee of an Opinion of Bond Counsel to the affect that
such assignment will not adversely affect the Tax-Exempt status of the Bonds.

        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.

 

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        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; provided,
however, that the rights, duties and benefits of the Trustee shall be governed
by the laws of the State of New York.

        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 and Bond Insurer as Parties in Interest and Third
Party Beneficiaries. 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. To the extent that this Agreement confers upon or gives or grants
to the Bond Insurer any right, remedy or claim under or by reason of this
Agreement, the Bond Insurer is hereby explicitly recognized as being a
third-party beneficiary hereunder and may enforce any such right, remedy or
claim conferred, given or granted hereunder.

 

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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
——————————————
Rory Reid
Chairman, Board of County Commissioners

(SEAL)

Attest:

/S/ SHIRLEY B. PARRAGUIRRE
Shirley B. ParraguirreCounty
Clerk

SOUTHWEST GAS CORPORATION

By: /s/ KENNETH J. KENNY
——————————————
Kenneth J. Kenny
Authorized Borrower Representative

 

 

 

 

 

 

 

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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.

 

 

 

 

 

 

 

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