FINANCING AGREEMENT
 
Dated as of September 1, 2008
 
By and Between
 
CLARK COUNTY, NEVADA
 
and
 
SOUTHWEST GAS CORPORATION
 
relating to
 
CLARK COUNTY, NEVADA
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(SOUTHWEST GAS CORPORATION PROJECT)
SERIES 2008A
 

 

                                                                  
 
 

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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
Investment of Moneys
4
 
SECTION 3.4
Costs of Issuance
4
ARTICLE IV   LOAN AND PROVISIONS FOR REPAYMENT
5
 
SECTION 4.1
Loan of Bond Proceeds
5
 
SECTION 4.2
Loan Repayments and Other Amounts Payable
5
 
SECTION 4.3
Unconditional Obligation
7
 
SECTION 4.4
Payments Pledged and Assigned
7
 
SECTION 4.5
Payment of the Bonds and Other Amounts
8
ARTICLE V    SPECIAL COVENANTS AND AGREEMENTS
8
 
SECTION 5.1
Right of Access to the Project and Records
8
 
SECTION 5.2
Borrower’s Maintenance of Its Existence; Assignments
9
 
SECTION 5.3
Insurance
10
 
SECTION 5.4
Maintenance and Repair; Taxes; Utility and Other Charges
10
 
SECTION 5.5
Qualification in Nevada
11
 
SECTION 5.6
No Warranty by the Issuer
11
 
SECTION 5.7
Agreement as to Use of the Project
11
 
SECTION 5.8
Notices and Certificates Required to be Delivered to the Trustee
11
 
SECTION 5.9
Borrower to Furnish Notice of Adjustments of Interest Rate Periods
12
 
SECTION 5.10
Information Reporting
12
 
SECTION 5.11
Tax Covenants; Rebate
12
 
SECTION 5.12
Continuing Disclosure
13
 
SECTION 5.13
Liquidity Facility
13
 
SECTION 5.14
Letter of Credit
13

 
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SECTION 5.15
Requirement to Deliver Letter of Credit or Liquidity Facility Under Certain
Circumstances
14
 
SECTION 5.16
Bond Insurance
14
ARTICLE VI   EVENTS OF DEFAULT AND REMEDIES
15
 
SECTION 6.1
Events of Default Defined
15
 
SECTION 6.2
Remedies on Default
16
 
SECTION 6.3
No Remedy Exclusive
18
 
SECTION 6.4
Agreement to Pay Fees and Expenses of Counsel
19
 
SECTION 6.5
No Additional Waiver Implied by One Waiver; Consents to Waivers
19
ARTICLE VII  OPTION AND OBLIGATION OF BORROWER TO PREPAY
19
 
SECTION 7.1
Option to Prepay
19
 
SECTION 7.2
Obligation to Prepay
20
 
SECTION 7.3
Notice of Prepayment; Amount to be Prepaid
20
 
SECTION 7.4
Cancellation at Expiration of Term
20
ARTICLE VIII NON-LIABILITY OF ISSUER
21
 
SECTION 8.1
Non-Liability of the Issuer
21
ARTICLE IX    MISCELLANEOUS
21
 
SECTION 9.1
Notices
21
 
SECTION 9.2
Assignments
21
 
SECTION 9.3
Severability
21
 
SECTION 9.4
Execution of Counterparts
21
 
SECTION 9.5
Amounts Remaining in Bond Fund
22
 
SECTION 9.6
Amendments, Changes and Modifications
22
 
SECTION 9.7
Governing Law
22
 
SECTION 9.8
Authorized Issuer and Borrower Representatives
22
 
SECTION 9.9
Term of the Agreement
22
 
SECTION 9.10
Binding Effect
22
 
SECTION 9.11
Trustee as a Party in Interest and Third Party Beneficiary
22
EXHIBIT A-1    DESCRIPTION OF THE PROJECT
A-1

 
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THIS FINANCING AGREEMENT made and entered into as of September 1, 2008 (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, 2008
(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 2008A (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 refinance part of the Cost of the Project, including the
refunding of the Refunded Bonds, 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 refinancing the Project, including the refunding of the Refunded
Bonds, 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 16, 2008, 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:
 

 
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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 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.
 

 
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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 represents
that the Borrower has acquired, constructed, equipped, and installed 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 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
refinance 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                                Investment of Moneys.  Any moneys
held as a part of the Bond 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.
 
SECTION 3.4                                Costs of Issuance.  The Borrower
covenants and agrees to pay all costs incurred in connection with the issuance
of the Bonds, and the Issuer shall have no obligation with respect to such
costs.
 

 
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ARTICLE IV
 
LOAN AND PROVISIONS FOR REPAYMENT
 
SECTION 4.1                                Loan of Bond Proceeds.  i)  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 refinance 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.  ii)  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 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 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 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.
 

 
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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 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
 

 
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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 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.
 

 
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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 5.13 or 5.14, or 5.16, or the Bonds 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 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
 

 
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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 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                                Maintenance and Repair; Taxes;
Utility and Other Charges.  The Borrower agrees to maintain, to the extent
permitted by applicable law and regulation, the
 

 
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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.
 
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; and
 
(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
 

 
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between the Trustee and the Borrower (including, without limitation, removal or
replacement of the Remarketing Agent, if any).
 
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 1986 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 1986 Code.
 
(c)           The Borrower covenants that it will not use or permit the use of
any property refinanced 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 1986
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
 

 
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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 1986 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 5.12                                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.
 
SECTION 5.13                                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 5.13 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 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 5.14                                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 5.14 and in Section 5.15 and to the requirements of the Indenture.
 

 
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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 5.14, 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.  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 5.13 or 5.14, 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 5.16                                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 5.16 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
 

 
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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
 
(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
 

 
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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
 
(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.
 

 
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(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 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.
 

 
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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.
 
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
 

 
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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 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.
 
 
 
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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.  iii)  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.
 
(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 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.
 
 
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
 

 
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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.
 
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
 

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Chair, Board of County Commissioners
(SEAL)

Attest:
 
 
/s/ Shirley B. Parraguirre
 

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County Clerk
SOUTHWEST GAS CORPORATION

By:   /s/ Kenneth J. Kenny
 

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Authorized Borrower Representative

 
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EXHIBIT A-1
 
DESCRIPTION OF THE PROJECT
 
 
[attached]
 

 

 
 

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