Document:

Exhibit 10.1

     

    Financing
      Agreement

    

    

    Dated
      as
      of April 1, 2007

    

    

    By
      and
      Between

    

    

    Washoe
      County, Nevada

    

    

    and

    

    

    Sierra
      Pacific Power Company

    

    

    

    Relating
      To

    Water
      Facilities Refunding Revenue Bonds

    (Sierra
      Pacific Power Company Project)

    Series
      2007A

    

     

    The
      amounts payable to the Issuer (except for amounts payable to, and certain rights
      and privileges of, the Issuer under Sections 4.2(e), 4.2(g) and 6.4 hereof
      and any rights of the Issuer to receive any notices, certificates, requests,
      requisitions or communications hereunder) and certain other rights of the Issuer
      under this Financing Agreement have been pledged and assigned under the
      Indenture of Trust dated as of April 1, 2007, between the Issuer and The Bank
      of
      New York, as Trustee.

    

    

    
      
        
          2205650.01.07.doc

          2147411

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Financing
      Agreement

    ______________

     

    Table
      of Contents

     

    (This
      Table of Contents is not a part of this Agreement

    and
      is
      only for convenience of reference).

     

    Section Heading
      Page

     

    
      	
              Article I

            	
              Definitions

            	 

    

     

     

    
      	
              Article II

            	
              Representations

            	 

    

     

    
      	 	
              Section 2.1.

            	
            	 Representations and Covenants by the
              Issuer

    

    
      	 	
              Section 2.2.

            	
               

            	 Representations
              by the Company

    

     

    
      	
              Article III

            	
              Issuance
                of the Bonds

            	 

    

     

    
      	 	
              Section 3.1.

            	
            	 Agreement
              to Issue Bonds; Application of Bond
              Proceeds

    

    
      	 	
              Section 3.2.

            	
            	 Deposit
              of Additional Funds by Company; Redemption of Prior
              Bonds

    

    
      	 	
              Section 3.3.

            	
            	 Investment
              of Moneys in the Bond Fund and the Prior Bonds Redemption
              Fund

    

    
      	 	
              Section 3.4.

            	
               

            	 Tax
              Exempt Status of Bonds

    

     

    
      	
              Article IV

            	
              Loan
                and Provisions for Repayment

            	 

    

     

    
      	 	
              Section 4.1.

            	
               

            	 Loan
              of Bond Proceeds

    

    
      	 	
              Section 4.2.

            	
               

            	 Loan
              Repayments and Other Amounts Payable

    

    
      	 	
              Section 4.3.

            	
            	 No
              Defense or Set-Off

    

    
      	 	
              Section 4.4.

            	
               

            	 Payments
              Pledged and Assigned

    

    
      	 	
              Section 4.5.

            	
               

            	 Payment
              of the Bonds and Other Amounts

    

     

    
      	
              Article V

            	
              Special
                Covenants and Agreements

            	 

    

     

    
      	 	
              Section 5.1.

            	
               

            	 Company
              to Maintain its Corporate Existence; Conditions Under Which Exceptions
              Permitted

    

    
      	 	
              Section 5.2.

            	
               

            	 Annual
              Statement

    

    
      	 	
              Section 5.3.

            	
            	 Reserved

    

    
      	 	
              Section 5.4.

            	
               

            	 Recordation
              and Other Instruments

    

    
      	 	
              Section 5.5.

            	
            	 No
              Warranty by the Issuer

    

    
      	 	
              Section 5.6.

            	
            	 Agreement
              as to Ownership of the Project

    

    
      	 	
              Section 5.7.

            	
               

            	 Company
              to Furnish Notice of Rate Period Adjustments; Liquidity Facility
              Requirements; ARS Rate Period Provisions

    

    
      	 	
              Section 5.8.

            	
            	 Information
              Reporting, Etc.

    

    
      	 	
              Section 5.9.

            	
               

            	 Limited
              Liability of Issuer

    

    
      	 	
              Section 5.10.

            	
               

            	 Reserved

    

    
      	 	
              Section 5.11.

            	
               

            	 Indenture
              Covenants

    

     

    
      	
              Article VI

            	
              Events
                of Default and Remedies

            	 

    

     

    
      	 	
              Section 6.1.

            	
            	 Events
              of Default Defined

    

    
      	 	
              Section 6.2.

            	
               

            	 Remedies
              on Default

    

    
      	 	
              Section 6.3.

            	
               

            	
               No
                Remedy Exclusive

            

    

    
      	 	
              Section 6.4.

            	
               

            	 Agreement
              to Pay Fees and Expenses of Counsel

    

    
      	 	
              Section 6.5.

            	
            	 No
              Additional Waiver Implied by One Waiver; Consents to
              Waivers

    

     

    
      	
              Article VII

            	
              Options
                and Obligations of Company; Prepayments; Redemption of
                Bonds

            	 

    

     

    
      	 	
              Section 7.1.

            	
               

            	 Option
              to Prepay

    

    
      	 	
              Section 7.2.

            	
               

            	 Obligation
              to Prepay

    

    
      	 	
              Section 7.3.

            	
               

            	 Notice
              of Prepayment

    

     

    
      	
              Article VIII

            	
              Miscellaneous

            	 

    

     

    
      	 	
              Section 8.1.

            	
               

            	 Notices

    

    
      	 	
              Section 8.2.

            	
               

            	 Assignments

    

    
      	 	
              Section 8.3.

            	
               

            	 Severability

    

    
      	 	
              Section 8.4.

            	
               

            	 Execution
              of Counterparts

    

    
      	 	
              Section 8.5.

            	
            	 Amounts
              Remaining in Bond Fund

    

    
      	 	
              Section 8.6.

            	
               

            	 Amendments,
              Changes and Modifications

    

    
      	 	
              Section 8.7.

            	
            	 Governing
              Law

    

    
      	 	
              Section 8.8.

            	
               

            	 Authorized
              Issuer and Company Representatives

    

    
      	 	
              Section 8.9.

            	
               

            	 Term
              of the Agreement

    

    
      	 	
              Section 8.10.

            	
            	 Cancellation
              at Expiration of Term

    

    
      	 	
              Section 8.11.

            	
               

            	 Bond
              Insurance

    

     

    Signature

    

    

    

    
      
        
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    This
      Financing Agreement made and entered into as of April 1, 2007, by and between
      Washoe County, Nevada, a political subdivision of the State of Nevada, party
      of
      the first part (hereinafter referred to as the “Issuer”), and Sierra Pacific
      Power Company, a corporation duly organized and existing under the laws of
      the
      State of Nevada, party of the second part (hereinafter referred to as the
“Company”),

     

    W
      i t n e s s e t h:

     

    In
      consideration of the respective representations and agreements hereinafter
      contained, the parties hereto agree as follows (provided, that in the
      performance of the agreements of the Issuer herein contained, any obligation
      it
      may thereby incur shall not constitute or give rise to a pecuniary liability
      or
      a charge upon its general credit or against its taxing powers but shall be
      payable solely out of the Revenues (as hereinafter defined) derived from this
      Financing Agreement and the Bonds, as hereinafter defined):

     

    Article
      I

     

    

     

    Definitions

     

    The
      following terms shall have the meanings specified in this Article unless the
      context clearly requires otherwise. The singular shall include the plural and
      the masculine shall include the feminine.

     

    “Act”
      means the County Economic Development Revenue Bond Law, as amended, contained
      in
      Sections 244A.669 to 244A.763, inclusive, of the Nevada Revised
      Statutes.

     

    “Administrative
      Expenses” means the reasonable and necessary expenses (including the reasonable
      value of employee services and fees of Counsel) incurred by the Issuer in
      connection with the Bonds, this Agreement, the Indenture and any transaction
      or
      event contemplated by this Agreement or the Indenture.

     

    “Agreement”
      means this Financing Agreement by and between the Issuer and the Company, as
      from time to time amended and supplemented.

     

    “Auction
      Agent” means the auction agent appointed in accordance with the provisions of
      the Indenture.

     

    “Authorized
      Company Representative” means any person who, at the time, shall have been
      designated to act on behalf of the Company by a written certificate furnished
      to
      the Issuer, the Remarketing Agent and the Trustee containing the specimen
      signature of such person and signed on behalf of the Company by any officer
      of
      the Company. Such certificate may designate an alternate or
      alternates.

     

    “Authorized
      Issuer Representative” means any person at the time designated to act on behalf
      of the Issuer by a written certificate furnished to the Company and the Trustee
      containing the specimen signature of such person and signed on behalf of the
      Issuer by its Chairman. Such certificate may designate an alternate or
      alternates.

     

    “Bankruptcy
      Code” means the United States Bankruptcy Reform Act of 1978, as amended from
      time to time, or any substitute or replacement legislation.

     

    “Bond”
or
      “Bonds” means the Issuer’s bonds identified in Section 2.02 of the
      Indenture.

     

    “Bond
      Counsel” means the Counsel who renders the opinion as to the tax-exempt status
      of interest on the Bonds or other nationally recognized municipal bond counsel
      mutually acceptable to the Issuer and the Company.

     

    “Bond
      Fund” means the fund created by Section 6.02 of the Indenture.

     

    “Code”
      means the United States Internal Revenue Code of 1986, as amended, and
      regulations promulgated or proposed thereunder.

     

    “Company”
      means Sierra Pacific Power Company, a Nevada corporation, and its successors
      and
      assigns and any surviving, resulting or transferee corporation as permitted
      in
      Section 5.1 hereof.

     

    “Counsel”
      means an attorney at law or a firm of attorneys (who may be an employee of
      or
      counsel to the Issuer or the Company or the Trustee) duly admitted to the
      practice of law before the highest court of any state of the United States
      of
      America or of the District of Columbia.

     

    “Delivery
      Agreement” means the Delivery Agreement dated the Dated Date, between the
      Company and the Trustee, as amended, supplemented or restated from time to
      time,
      pursuant to which the Company will issue to the Trustee the G&R Notes at the
      time of the initial authentication and delivery of the Bonds.

     

    “Extraordinary
      Services” and “Extraordinary Expenses” means all services rendered and all
      expenses (including fees and expenses of Counsel) incurred under the Indenture
      and the Tax Agreement other than Ordinary Services and Ordinary
      Expenses.

     

    “Force
      Majeure” means acts of God, strikes, lockouts or other industrial disturbances;
      acts of public enemies; orders or restraints of any kind of the governments
      of
      the United States or of the State, or any of their departments, agencies or
      officials, or any civil or military authority; insurrections; riots; landslides;
      lightning; earthquakes; fires; tornadoes; volcanoes; storms; droughts; floods;
      explosions, breakage, or malfunction or accident to machinery, transmission
      lines, pipes or canals, even if resulting from negligence; civil disturbances;
      or any other cause not reasonably within the control of the
      Company.

     

    “G&R
      Indenture” means the General and Refunding Mortgage Indenture dated as of
      May 1, 2001 between the Company and the G&R Trustee, as amended and
      supplemented.

     

    “G&R
      Notes” means the Company’s $40,000,000 General and Refunding Mortgage Note,
      Series O, No. O-1, due March 1, 2036.

     

    “G&R
      Trustee” means The Bank of New York, as trustee under the G&R Indenture or
      any successor trustee.

     

    “Governing
      Body” means the Board of County Commissioners of the Issuer.

     

    “Hereof,”
      “herein,” “hereunder” and other words of similar import refer to this Agreement
      as a whole.

     

    “Indenture”
      means the Indenture of Trust relating to this Agreement between the Issuer
      and
      The Bank of New York, as Trustee, of even date herewith, pursuant to which
      the
      Bonds are authorized to be issued, including any indentures supplemental thereto
      or amendatory thereof.

     

    “Issuer”
      means Washoe County, Nevada, and any successor body to the duties or functions
      of the Issuer.

     

    “Ordinary
      Services” and “Ordinary Expenses” means those services normally rendered and
      those expenses including fees and expenses of Counsel, normally incurred by
      a
      trustee or paying agent under instruments similar to the Indenture and the
      Tax
      Agreement.

     

    “Owner”
      or “owner of Bonds” means the Person or Persons in whose name or names a Bond
      shall be registered on books of the Issuer kept by the Registrar for that
      purpose in accordance with the terms of the Indenture.

     

    “Person”
      means natural persons, firms, partnerships, associations, corporations, trusts
      and public bodies.

     

    “Prior
      Bond Fund” means the fund established pursuant to Section 6.02 of the Prior
      Indenture.

     

    “Prior
      Bonds” means the Issuer’s Water Facilities Refunding Revenue Bonds (Sierra
      Pacific Power Company Project) Series 2001, currently outstanding in the
      aggregate principal amount of $80,000,000.

     

    “Prior
      Indenture” means the Indenture of Trust dated as of March 1, 2001 between
      the Issuer and the Prior Trustee pursuant to which the Prior Bonds were
      issued.

     

    “Prior
      Trustee” means The Bank of New York, as trustee under the Prior
      Indenture.

     

    “Project”
      means the Project as defined in the Project Certificate.

     

    “Project
      Certificate” means the Company’s Project and Refunding Certificate, delivered
      concurrently with the issuance of the Bonds, with respect to certain facts
      which
      are within the knowledge of the Company and certain reasonable assumptions
      of
      the Company, to enable Chapman and Cutler LLP, as Bond Counsel, to
      determine that interest on the Bonds is not includable in the gross income
      of
      the Owners of the Bonds for federal income tax purposes.

     

    “Rebate
      Fund” means the Rebate Fund, if any, created and established pursuant to the Tax
      Agreement.

     

    “Regulated
      Utility Company” means a corporation (or a limited liability company) engaged in
      the distribution of electricity, gas and/or water and which is regulated by
      the
      applicable public service commissions in all of the states that comprise its
      service area.

     

    “Remarketing
      Agent” means the remarketing agent, if any, appointed in accordance with
      Section 4.08 of the Indenture and any permitted successor
      thereto.

     

    “Reorganization”
      means any reorganization, consolidation or merger of the Company or its
      affiliates, or any transfer or lease of a substantial portion of the assets
      of
      the Company or its affiliates, as a result of which the obligor under the
      Agreement or the obligor on the G&R Notes ceases to be a Regulated Utility
      Company.

     

    “State”
      means the State of Nevada.

     

    “Tax
      Agreement” means the Tax Exemption Certificate and Agreement with respect to the
      Bonds, dated the date of delivery of the Bonds, among the Company, the Issuer
      and the Trustee, as from time to time amended and supplemented.

     

    “Trust
      Estate” means the property conveyed to the Trustee pursuant to the Granting
      Clauses of the Indenture.

     

    “Trustee”
      means The Bank of New York, as Trustee under the Indenture, and any successor
      Trustee appointed pursuant to Section 10.06 or 10.09 of the Indenture at
      the time serving as Trustee thereunder, and any separate or co-trustee serving
      as such thereunder.

     

    All
      other
      terms used herein which are defined in the Indenture shall have the same
      meanings assigned them in the Indenture unless the context otherwise
      requires.

     

    Article
      II

     

    Representations

     

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

     

    (a)The
      Issuer is a duly organized and existing political subdivision of the State
      of
      Nevada. Under the provisions of the Act, the Issuer is authorized to enter
      into
      the transactions contemplated by this Agreement, the Indenture and the Tax
      Agreement and to carry out its obligations hereunder and thereunder. The Issuer
      has duly authorized the execution and delivery of this Agreement, the Indenture
      and the Tax Agreement.

     

    (b)The
      Bonds
      are to be issued under and secured by the Indenture, pursuant to which certain
      of the Issuer’s interests in this Agreement and the Revenues derived by the
      Issuer pursuant to this Agreement will be pledged and assigned as security
      for
      payment of the principal of, premium, if any, and interest on, the
      Bonds.

     

    (c)The
      Governing Body of the Issuer has found that the issuance of the Bonds will
      further the public purposes of the Act.

     

    (d)The
      Issuer has not assigned and will not assign any of its interests in this
      Agreement other than pursuant to the Indenture.

     

    (e)No
      member
      of the Governing Body of the Issuer, nor any other officer of the Issuer, has
      any interest, financial (other than ownership of less than one-tenth of one
      percent (.1%) of the publicly traded securities issued by the Company or its
      affiliated corporations), employment or other, in the Company or in the
      transactions contemplated hereby.

     

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

     

    (a)The
      Company is a corporation duly incorporated under the laws of the State and
      is in
      good standing in the State, is qualified to do business as a foreign corporation
      in all other states and jurisdictions wherein the nature of the business
      transacted by the Company or the nature of the property owned or leased by
      it
      makes such licensing or qualification necessary, and has the power to enter
      into
      and by proper corporate action has been duly authorized to execute and deliver
      this Agreement and the Tax Agreement.

     

    (b)Neither
      the execution and delivery of this Agreement or the Tax Agreement, the
      consummation of the transactions contemplated hereby and thereby, nor the
      fulfillment of or compliance with the terms and conditions of this Agreement
      and
      the Tax Agreement, conflicts with or results in a breach of any of the terms,
      conditions or provisions of any corporate restriction or any agreement or
      instrument to which the Company is now a party or by which it is bound, or
      constitutes a default under any of the foregoing, or results in the creation
      or
      imposition of any lien, charge or encumbrance whatsoever upon any of the
      property or assets of the Company under the terms of any instrument or agreement
      other than the Indenture.

     

    (c)The
      statements, information and descriptions contained in the Project Certificate
      and the Tax Agreement, as of the date hereof and at the time of the delivery
      of
      the Bonds to the Underwriter, are and will be true, correct and complete, do
      not
      and will not contain any untrue statement or misleading statement of a material
      fact, and do not and will not omit to state a material fact required to be
      stated therein or necessary to make the statements, information and descriptions
      contained therein, in the light of the circumstances under which they were
      made,
      not misleading.

     

    Article III

     

    Issuance
      of the Bonds

     

    Section 3.1.Agreement
      to Issue Bonds; Application of Bond Proceeds.
      In
      order to provide funds to lend to the Company to refund a portion of the Prior
      Bonds as provided in Section 4.1 hereof, the Issuer agrees that it will
      issue under the Indenture, sell and cause to be delivered to the Underwriter,
      its Bonds in the aggregate principal amount of $40,000,000, 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 follows: (1) in the Bond
      Fund, a sum equal to the accrued interest, if any, paid by the Underwriter;
      and
      (2) $40,000,000 in the Prior Bonds Redemption Fund to be remitted by the
      Trustee to the Prior Trustee as provided in Section 6.07 of the Indenture
      for deposit in the Prior Bond Fund to be used to pay to the owners thereof
      $40,000,000 of the principal of the Prior Bonds upon redemption
      thereof.

     

    Section 3.2.Deposit
      of Additional Funds by Company; Redemption of Prior Bonds.
      The
      Company covenants that such additional amounts as may be required to redeem
      the
      Prior Bonds in accordance with Section 3.1 hereof will be timely deposited
      with the Prior Trustee pursuant to the Prior Indenture for such purpose. Income
      derived from the investment of the proceeds of the Bonds deposited in the Prior
      Bonds Redemption Fund will be used, to the extent available, to satisfy the
      obligations of the Company specified in this Section 3.2. The Company
      covenants that it will cause the Prior Bonds to be redeemed within 90 days
      after
      the issuance and delivery of the Bonds.

     

    Section 3.3.Investment
      of Moneys in the Bond Fund and the Prior Bonds Redemption
      Fund.
      Except
      as otherwise herein provided, any moneys held as a part of the Bond Fund and
      the
      Prior Bonds Redemption Fund shall be invested or reinvested by the Trustee
      at
      the specific written direction of an Authorized Company Representative as to
      specific investments, to the extent permitted by law, in:

     

    (a)bonds
      or
      other obligations of the United States of America;

     

    (b)bonds
      or
      other obligations, the payment of the principal of and interest on which is
      unconditionally guaranteed by the United States of America;

     

    (c)obligations
      issued or guaranteed as to principal and interest by any agency or person
      controlled or supervised by and acting as an instrumentality of the United
      States of America pursuant to authority granted by the Congress of the United
      States of America;

     

    (d)obligations
      issued or guaranteed by any state of the United States of America, or any
      political subdivision of any such state, or in funds consisting of such
      obligations to the extent described in Section 1.148-8(e)(3)(iii) of the
      1992 Treasury Regulations;

     

    (e)prime
      commercial paper;

     

    (f)prime
      finance company paper;

     

    (g)bankers’
      acceptances drawn on and accepted by commercial banks;

     

    (h)repurchase
      agreements fully secured by obligations issued or guaranteed as to principal
      and
      interest by the United States of America or by any person controlled or
      supervised by and acting as an instrumentality of the United States of America
      pursuant to authority granted by the Congress of the United States of
      America;

     

    (i)certificates
      of deposit issued by commercial banks, including banks domiciled outside of
      the
      United States of America; and

     

    (j)units
      of
      taxable government money market portfolios composed of obligations guaranteed
      as
      to principal and interest by the United States of America or repurchase
      agreements fully collateralized by such obligations.

     

    The
      investments so purchased shall be held by the Trustee and shall be deemed at
      all
      times a part of the fund and the accounts therein, if any, for which they were
      made and the interest accruing thereon and any profit realized therefrom shall
      be credited to such fund and the accounts therein, if any, subject to the
      provisions of the Tax Agreement. The Company agrees that to the extent any
      moneys in the Bond Fund represent moneys held for the payment of particular
      Bonds, or to the extent that any moneys are held for the payment of the purchase
      price of Bonds pursuant to Article IV of the Indenture, such moneys shall
      not be invested.

     

    Section 3.4.Tax
      Exempt Status of Bonds.
      The
      Company covenants and agrees that it has not taken or permitted and will not
      take or permit any action which results in interest paid on the Bonds being
      included in gross income of the holders or beneficial owners of the Bonds for
      purposes of federal income taxation (other than a holder or beneficial owner
      who
      is a “substantial user” of the Project or a “related person” within the meaning
      of Section 147(a) of the Code). The Company covenants that none of the
      proceeds of the Bonds or the payments to be made under this Agreement, or any
      other funds which may be deemed to be proceeds of the Bonds pursuant to
      Section 148(a) of the Code, will be invested or used in such a way, and
      that no actions will be taken or not taken, as to cause the Bonds to be treated
      as “arbitrage bonds” within the meaning of Section 148(a) of the Code.
      Without limiting the generality of the foregoing, the Company covenants and
      agrees that it will comply with the provisions of the Tax Agreement and the
      Project Certificate.

     

    For
      purposes of the immediately preceding paragraph, the Company will be deemed
      to
      have taken or permitted or omitted to take any action which is taken or
      permitted or omitted by Truckee Meadows Water Authority, the owner of the
      Project, or any subsequent owner or operator of the Project or portion thereof.
      The Company has received a certificate dated the Dated Date from Truckee Meadows
      Water Authority with respect to the Project. This certificate is attached to
      the
      Project Certificate.

     

    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 Company the proceeds (exclusive of accrued interest, if any)
      received by the Issuer from the sale of the Bonds in order to refund a portion
      of the Prior Bonds, and the Company agrees to apply the gross proceeds of such
      loan to the refunding of a portion of the Prior Bonds as set forth in
      Sections 3.1 and 3.2 hereof.

     

    (b)The
      Issuer and the Company 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 refund all
      or
      any principal amount of the Bonds.

     

    Section 4.2.Loan
      Repayments and Other Amounts Payable.
      (a) On each date provided in or pursuant to the Indenture for the payment
      (whether at maturity or upon redemption or acceleration) of principal of, and
      premium, if any, and interest on, the 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 Company 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(a) hereof, a sum equal to the
      amount payable on such date (whether at maturity or upon redemption or
      acceleration) as principal of, and premium, if any, and interest on, the Bonds
      as provided in the Indenture; provided, however, that the obligation of the
      Company to make any such repayment installment shall be reduced by the amount
      of
      any moneys then on deposit in the Bond Fund and available for such payment;
      and
      provided further, that the obligation of the Company to make any such payment
      shall be deemed to be satisfied and discharged to the extent provided for under
      a liquidity facility (if applicable) or under the G&R Notes.

     

    (b)The
      Company shall pay to the Trustee amounts equal to the amounts to be paid by
      the
      Trustee for the purchase of Bonds pursuant to Article IV of the Indenture.
      Such
      amounts shall be paid by the Company to the Trustee in immediately available
      funds on the date such payments pursuant to Section 4.05 of the Indenture
      are to be made; provided, however, that the obligation of the Company to make
      any such payment shall be deemed to be satisfied and discharged to the extent
      moneys are available from the source described in clause (i) of
      Section 4.05(a) of the Indenture and to the extent moneys are available
      under any liquidity facility (if applicable).

     

    (c)The
      Company agrees to pay to the Trustee (i) the fees of the Trustee for the
      Ordinary Services rendered by it and an amount equal to the Ordinary Expenses
      incurred by it under the Indenture and the Tax Agreement, as and when the same
      become due, and (ii) the reasonable fees, charges and expenses of the Trustee
      for reasonable Extraordinary Services and Extraordinary Expenses, as and when
      the same become due, incurred under the Indenture and the Tax Agreement. The
      Company agrees that the Trustee, its officers, agents, servants and employees,
      shall not be liable for, and agrees that it will at all times indemnify and
      hold
      harmless the Trustee, its officers, agents, servants and employees against,
      and
      pay all expenses of the Trustee, its officers, agents, servants and employees,
      relating to any lawsuit, proceeding or claim and resulting from any action
      or
      omission taken or made by or on behalf of the Trustee, its officers, agents,
      servants and employees pursuant to this Agreement, the Indenture or the Tax
      Agreement, that may be occasioned by any cause (other than the negligence or
      willful misconduct of the Trustee, its officers, agents, servants and
      employees). In case any action shall be brought against the Trustee in respect
      of which indemnity may be sought against the Company, the Trustee shall promptly
      notify the Company in writing and the Company shall be entitled to assume
      control of the defense thereof, including the employment of Counsel reasonably
      satisfactory to the Trustee and the payment of all expenses. The Trustee shall
      have the right to employ separate Counsel in any such action and participate
      in
      the defense thereof, but the fees and expenses of such Counsel shall be paid
      by
      the Trustee unless (i) the employment of such Counsel has been authorized
      by the Company,
      (ii) the Trustee has determined (which determination may be based upon an
      opinion of counsel delivered to the Trustee and furnished to the Company) that
      there may be a conflict of interest of such Counsel retained by the Company
      between the Company and the Trustee in the conduct of such defense,
      (iii) the Company ceases or terminates the employment of such Counsel
      retained by the Company or (iv) such Counsel retained by the Company
      withdraws with respect to such defense.
      The
      Company shall not be liable for any settlement of any such action without its
      consent, but if any such action is settled with the consent of the Company
      or if
      there be final judgment for the plaintiff in any such action, the Company agrees
      to indemnify and hold harmless the Trustee from and against any loss or
      liability by reason of such settlement or final judgment. The Company agrees
      that the indemnification provided herein shall survive the termination of this
      Agreement or the Indenture or the resignation of the Trustee. For purposes
      of
      this Section 4.2(c), the Trustee is deemed a third party beneficiary of this
      Agreement.

     

    (d)The
      Company agrees to pay all costs incurred in connection with the issuance of
      the
      Bonds from sources other than Bond proceeds and the Issuer shall have no
      obligation with respect to such costs.

     

    (e)The
      Company agrees to indemnify and hold harmless the Issuer and any member,
      officer, official or employee of the Issuer against any and all losses, costs,
      charges, expenses, judgments and liabilities created by or arising out of this
      Agreement, the Indenture, the Remarketing Agreement, the Auction Agreement,
      the
      Bond Purchase Agreement, any Broker-Dealer Agreement or the Tax Agreement or
      otherwise incurred in connection with the issuance of the Bonds. The Company
      agrees to pay the Issuer its Closing Fee in connection with the issuance of
      the
      Bonds in the amount of $40,000. The Issuer may submit to the Company periodic
      statements, not more frequently than monthly, for its Administrative Expenses
      and the Company shall make payment to the Issuer of the full amount of each
      such
      statement within 30 days after the Company receives such
      statement.

     

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

     

    (g)In
      the
      event the Company shall fail to make any of the payments required by (a) or
      (b)
      of this Section 4.2, the payment so in default shall continue as an
      obligation of the Company until the amount in default shall have been fully
      paid
      and the Company will pay interest to the extent permitted by law, on any overdue
      amount at the rate of interest borne by the Bonds on the date on which such
      amount became due and payable until paid. In the event that the Company shall
      fail to make any of the payments required by (c), (d), (e) or (f) of this
      Section 4.2, the payment so in default shall continue as an obligation of
      the Company until the amount in default shall have been fully paid, and the
      Company agrees to pay the same with interest thereon to the extent permitted
      by
      law at a rate 1% above the rate of interest then charged by the Trustee on
      90-day commercial loans to its prime commercial borrowers until
      paid.

     

    Section 4.3.No
      Defense or Set-Off.
      The
      obligation of the Company to make the payments pursuant to this Agreement shall
      be absolute and unconditional without defense or set-off by reason of any
      default by the Issuer under this Agreement or under any other agreement between
      the Company and the Issuer or for any other reason, it being the intention
      of
      the parties that the payments required hereunder will be paid in full when
      due
      without any delay or diminution whatsoever.

     

    Section 4.4.Payments
      Pledged and Assigned.
      It is
      understood and agreed that all payments required to be made by the Company
      pursuant to Section 4.2 hereof (except payments made to the Trustee
      pursuant to Section 4.2(c) hereof, to the Remarketing Agent and the Auction
      Agent pursuant to Section 4.2(f) hereof, to the Issuer pursuant to
      Section 4.2(e) hereof and to any or all the Issuer and the Trustee and the
      Remarketing Agent pursuant to Section 4.2(g) hereof) and certain rights of
      the Issuer hereunder are pledged and assigned by the Indenture. The Company
      consents to such pledge and assignment. The Issuer hereby directs the Company
      and the Company hereby agrees to pay or cause to be paid to the Trustee all
      said
      amounts except 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(e) and (g) hereof. The Project will not
      constitute any part of the security for the Bonds, except to the extent that
      the
      Trustee as holder of G&R Notes has a lien on property under the G&R
      Indenture.

     

    Section 4.5.Payment
      of the Bonds and Other Amounts.
      The
      Bonds and interest and premium, if any, thereon shall be payable solely from
      (i) payments made by the Company to the Trustee under Section 4.2(a)
      hereof and (ii) other moneys on deposit in the Bond Fund and available
      therefor.

     

    Payments
      of principal of, and premium, if any, or interest on, the Bonds with moneys
      in
      the Bond Fund constituting proceeds from the sale of the Bonds 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.

     

    Whenever
      any Bonds are redeemable in whole or in part at the option of the Company,
      the
      Trustee, on behalf of the Issuer, shall redeem the same upon the request of
      the
      Company and such redemption (unless conditional) shall be made from payments
      made by the Company to the Trustee under 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 such Bonds are thereby
      deemed paid in full, the Trustee shall notify the Company and the Issuer that
      such payment requirement has been satisfied. Subject to the foregoing, or unless
      the Company is entitled to a credit under this Agreement or the Indenture,
      all
      payments shall be in the full amount required by Section 4.2(a)
      hereof.

     

    Article
      V

     

    Special
      Covenants and Agreements

     

    Section 5.1.Company
      to Maintain its Corporate Existence; Conditions Under Which Exceptions
      Permitted.
      The
      Company agrees that during the term of this Agreement, it will maintain its
      corporate existence and its good standing in the State, will not dissolve or
      otherwise dispose of all or substantially all of its assets and will not
      consolidate with or merge into another corporation unless the acquirer of its
      assets or the corporation with which it shall consolidate or into which it
      shall
      merge shall (i) be a corporation organized under the laws of one of the
      states of the United States of America, (ii) be qualified to do business in
      the State, and (iii) assume in writing all of the obligations of the
      Company under this Agreement and the Tax Agreement. Any transfer of all or
      substantially all of the Company’s generation assets shall not be deemed to
      constitute a “disposition of all or substantially all of the Company’s assets”
within the meaning of the preceding paragraph. Any such transfer of the
      Company’s generation assets shall not relieve the Company of any of its
      obligations under this Agreement.

     

    The
      Company hereby agrees that so long as any of the Bonds are insured by a Bond
      Insurance Policy issued by the Bond Insurer and the Bond Insurer shall not
      have
      failed to comply with its payment obligations under such Policy, in the event
      of
      a Reorganization, unless otherwise consented to by the Bond Insurer, the
      obligations of the Company under, and in respect of, the Bonds, the G&R
      Notes, the G&R Indenture and the Agreement shall be assumed by, and shall
      become direct and primary obligations of, a Regulated Utility Company such
      that
      at all times the obligor under this Agreement and the obligor on the G&R
      Notes is a Regulated Utility Company. The
      Company shall deliver to the Bond Insurer a certificate of the president, any
      vice president or the treasurer and an opinion of counsel reasonably acceptable
      to the Bond Insurer stating in each case that such Reorganization complies
      with
      the provisions of this paragraph.

     

    The
      Company need not comply with any of the provisions of this Section 5.1 if,
      at the time of such merger or consolidation, the Bonds will be defeased as
      provided in Article VIII of the Indenture. The Company need not comply with
      the provisions of the second paragraph of this Section 5.1 if the Bonds are
      redeemed as provided in Section 3.01(B)(3) of the Indenture or if the Bond
      Insurance Policy is terminated as described in Section 3.06 of the
      Indenture in connection with a purchase of the Bonds by the Company in lieu
      of
      their redemption.

     

    Section 5.2.Annual
      Statement.
      The
      Company agrees to have an annual audit made by its regular independent certified
      public accountants and to furnish the Trustee (within 30 days after receipt
      by
      the Company) with a balance sheet and statement of income and surplus showing
      the financial condition of the Company and its consolidated subsidiaries, if
      any, at the close of each fiscal year and the results of operations of the
      Company and its consolidated subsidiaries, if any, for each fiscal year,
      accompanied by a report of said accountants that such statements have been
      prepared in accordance with generally accepted accounting principles. The
      Company’s obligations under this Section 5.2 may be satisfied by delivering
      a copy of the Company’s Annual Report on Form 10-K to the Trustee within
      10 days after it is filed with the Securities and Exchange
      Commission.

     

    Delivery
      of such reports, information and documents to the Trustee is for informational
      purposes only and the Trustee’s receipt of such shall not constitute
      constructive notice of any information contained therein or determinable from
      information contained therein, including the Company’s compliance with any of
      its covenants hereunder (as to which the Trustee is entitled to rely exclusively
      on officer’s certificates).

     

    Section 5.3.Reserved.
      

     

    Section 5.4.Recordation
      and Other Instruments.
      The
      Company shall cause such security agreements, financing statements and all
      supplements thereto and other instruments as may be required from time to time
      to be kept, to be recorded and filed in such manner and in such places as may
      be
      required by law in order to fully preserve, protect and perfect the security
      of
      the Owners of the Bonds and the rights of the Trustee, and to perfect the
      security interest created by the Indenture. The Company agrees to abide by
      the
      provisions of Section 5.11 of the Indenture to the extent applicable to the
      Company.

     

    Section 5.5.No
      Warranty by the Issuer.
      The
      Issuer makes no warranty, either express or implied, as to the
      Project.

     

    Section 5.6.Agreement
      as to Ownership of the Project.
      The
      Issuer and the Company agree that title to the Project shall not be in the
      Issuer, and that the Issuer shall have no interest in the Project.

     

    Section 5.7.Company
      to Furnish Notice of Rate Period Adjustments; Liquidity Facility Requirements;
      ARS Rate Period Provisions.
       The
      Company 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 Company elects to
      exercise any such option, the Company agrees that it shall cause notices of
      adjustments of Rate Periods (or rescissions thereof) to be given to the Issuer,
      the Trustee and the Remarketing Agent in accordance with Section 2.03(a),
      (b), (c), (d) or (e) of the Indenture, and a copy of each such notice shall
      also
      be given at such time to S&P and Moody’s.

     

    The
      Company hereby agrees that, so long as the Bonds are insured by a Bond Insurance
      Policy issued by the Bond Insurer and notwithstanding the provisions of Section
      2.03 of the Indenture, it shall not give notice of its intention to adjust
      the
      Rate Period for the Bonds to a Daily Rate Period, a Weekly Rate Period or a
      Flexible Rate Period until the Company shall provide a liquidity facility
      reasonably acceptable to the Bond Insurer from a liquidity facility provider
      reasonably acceptable to the Bond Insurer in accordance with the Bond Insurer’s
      liquidity facility requirements to be effective on the related date of
      adjustment.

     

    If
      during
      any ARS Rate Period (i) consisting of Auction Periods of 35 days or less,
      the Bonds shall bear interest at the Maximum Rate for a period in excess of
      180
      days, or (ii) consisting of one Auction Period of 180 days or more, the
      Bonds shall bear interest at the Maximum Rate for such Period, the Company
      shall
      notify the Bond Insurer in writing of such event and agrees to cooperate with
      the Bond Insurer to take all steps reasonably necessary to adjust the Rate
      Period on the Bonds as soon as reasonably practicable in accordance with the
      provisions of the Indenture to the Rate Period which the Remarketing Agent
      advises the Company and the Bond Insurer will be the lowest interest rate
      (taking into account all relevant costs) which would enable the Remarketing
      Agent to sell all the Bonds on the date of such adjustment at a price equal
      to
      100% of the principal amount thereof (the “Lowest Interest Rate Period”). If at
      such time the Company shall be in default under the Agreement but the Bond
      Insurer shall not have failed to comply with its payment obligations under
      the
      Bond Insurance Policy, the Bond Insurer may, in its discretion, direct the
      Company to provide notice of the adjustment of the Rate Period on the Bonds
      to
      the Lowest Interest Rate Period in accordance with the provisions of Section
      2.03 of the Indenture.

     

    Section 5.8.Information
      Reporting, Etc.
      The
      Issuer covenants and agrees that, upon the direction of the Company 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, Utah 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 Return for Tax-Exempt Private Activity Bond Issues (Form 8038)
      of the Internal Revenue Service (or any successor form) and which shall be
      completed by the Company and Bond Counsel based in part upon information
      supplied by the Company and Bond Counsel.

     

    Section 5.9.Limited
      Liability of Issuer.
      Any
      obligation or liability of the Issuer created by or arising out of this
      Agreement or otherwise incurred in connection with the issuance of the Bonds
      (including without limitation any liability created by or arising out of the
      representations, warranties or covenants set forth herein or otherwise) shall
      not impose a debt or pecuniary liability upon the Issuer or the State or any
      political subdivision thereof, or a charge upon the general credit or taxing
      powers of any of the foregoing, but shall be payable solely out of the Revenues
      or other amounts payable by the Company to the Issuer hereunder or otherwise
      (including without limitation any amounts derived from indemnifications given
      by
      the Company).

     

    Neither
      the issuance of the Bonds nor the delivery of this Agreement shall, directly
      or
      indirectly or contingently, obligate the Issuer or the State or any political
      subdivision thereof to levy any form of taxation therefor or to make any
      appropriation for their payment. Nothing in the Bonds or in the Indenture or
      this Agreement or the proceedings of the Issuer authorizing the Bonds or in
      the
      Act or in any other related document shall be construed to authorize the Issuer
      to create a debt of the Issuer or the State or any political subdivision thereof
      within the meaning of any constitutional or statutory provision of the State.
      The principal of, and premium, if any, and interest on, the Bonds shall be
      payable solely from the funds pledged for their payment in accordance with
      the
      Indenture and available therefor under this Agreement. Neither the State nor
      any
      political subdivision thereof shall in any event be liable for the payment
      of
      the principal of, premium, if any, or interest on, the Bonds or for the
      performance of any pledge, obligation or agreement of any kind whatsoever which
      may be undertaken by the Issuer. No breach of any such pledge, obligation or
      agreement may impose any pecuniary liability upon the Issuer or the State or
      any
      political subdivision thereof, or any charge upon the general credit or against
      the taxing power of the Issuer or
      the
      State or any political subdivision thereof.

     

    Section 5.10.Reserved.

     

    Section 5.11.Indenture
      Covenants.
      The
      Company covenants to observe and perform all of the obligations imposed on
      it
      under the Indenture.

     

    Article
      VI

     

    Events
      of Default and Remedies

     

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

     

    (a)Failure
      by the Company to pay when due any amounts required to be paid under
      Section 4.2(a) hereof, which failure results in an event of default under
      subparagraph (a) or (b) of Section 9.01 of the Indenture; or

     

    (b)Failure
      by the Company to pay or cause to be paid any payment required to be paid under
      Section 4.2(b) hereof, which failure results in an event of default under
      subparagraph (c) of Section 9.01 of the Indenture; or

     

    (c)Failure
      by the Company 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) and (b) above, for a period of 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 Company by the Trustee
      or to the Company 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 such corrective action or diligent pursuit is
      evidenced to the Trustee by a certificate of an Authorized Company
      Representative; or

     

    (d)A
      proceeding or case shall be commenced, without the application or consent of
      the
      Company, 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 Company 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 90 days; or an order for relief against the Company shall be entered
      against the Company in an involuntary case under the Bankruptcy Code (as now
      or
      hereafter in effect) or other applicable law; or

     

    (e)The
      Company 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 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
      Bankruptcy Code or other applicable law; or

     

    (f)Dissolution
      or liquidation of the Company; provided that the term “dissolution or
      liquidation of the Company” shall not be construed to include the cessation of
      the corporate existence of the Company resulting either from a merger or
      consolidation of the Company into or with another corporation or a dissolution
      or liquidation of the Company following a transfer of all or substantially
      all
      of its assets as an entirety, under the conditions permitting such actions
      contained in Section 5.1 hereof; or

     

    (g)The
      occurrence of an “event of default” under the Indenture.

     

    The
      foregoing provisions of Section 6.1(c) are subject to the following
      limitations: If by reason of Force Majeure the Company 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 Company contained in Article IV and
      Section 6.4 hereof, the Company shall not be deemed in default during the
      continuance of such inability. The Company agrees, however, to remedy with
      all
      reasonable dispatch the cause or causes preventing the Company from carrying
      out
      its agreements; provided that the settlement of strikes, lockouts and other
      industrial disturbances shall be entirely within the discretion of the Company
      and the Company 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 Company
      unfavorable to the Company.

     

    Section 6.2.Remedies
      on Default.
      Whenever any event of default referred to in Section 6.1 hereof shall have
      happened and be continuing, the Trustee, as assignee of the Issuer:

     

    (a)shall,
      by
      notice in writing to the Company, 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, premium, if any, and interest
      accrued on, the Bonds) shall become and shall be immediately due and payable
      as
      liquidated damages; and

     

    (b)may
      take
      whatever action at law or in equity as 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 Company under this Agreement. 

     

    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 Company from the Company’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 stockholder, past, present or future, of the Company as such, either
      directly or through the Company, 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 shall be construed to prevent the Issuer from enforcing
      directly any of its rights under Sections 4.2(e), 4.2(g) and 6.4
      hereof.

     

    The
      Company shall promptly notify the Issuer of any action taken by the Company
      under the grant of authority from the Issuer under the last paragraph of
      Section 9.01 of the Indenture.

     

    Section 6.3.No
      Remedy Exclusive.
      No
      remedy herein conferred upon or reserved to the Issuer 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. Subject to the provisions of the Indenture and hereof, such rights
      and
      remedies as are given the Issuer hereunder shall also extend to the Trustee.
      The
      Owners of the Bonds, subject to the provisions of the Indenture, 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 Company 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 Company herein
      contained, the Company agrees that it will on written demand therefor pay to
      the
      Trustee or the Issuer (or to the Counsel for either of such parties if directed
      by such party), the reasonable fees and expenses of such Counsel and such other
      expenses so incurred by or on behalf of the Issuer or the Trustee.

     

    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 Company without the consent of the Trustee to such waiver.
      The
      Trustee shall have the power to waive any default by the Company hereunder,
      except a default under Section 3.4, 4.2(e), 4.2(g) or 6.4 hereof, in so far
      as it pertains to the Issuer, without the prior written concurrence of the
      Issuer. Notwithstanding the foregoing, if, after the acceleration of the
      maturity of the outstanding Bonds by the Trustee pursuant to Section 9.02
      of the Indenture, (i) all arrears of principal of and interest on the
      outstanding Bonds and interest on overdue principal and (to the extent permitted
      by law) on overdue installments of interest at the rate of interest borne by
      the
      Bonds on the date on which such principal or interest became due and payable
      and
      the premium, if any, on all Bonds then Outstanding which have become due and
      payable otherwise than by acceleration, and all other sums payable under the
      Indenture, except the principal of and the interest on such Bonds which by
      such
      acceleration shall have become due and payable, shall have been paid, (ii)
      all
      other things shall have been performed in respect of which there was a default,
      (iii) there shall have been paid the reasonable fees and expenses of the Trustee
      and of the Owners of such Bonds, including reasonable attorneys’ fees paid or
      incurred and (iv) such event of default under the Indenture shall be waived
      in
      accordance with Section 9.09 of the Indenture with the consequence that
      such acceleration under Section 9.02 of the Indenture is rescinded, then
      the Company’s default hereunder shall be deemed to have been waived and its
      consequences rescinded and no further action or consent by the Trustee or the
      Issuer shall be required; provided that there has been furnished an opinion
      of
      Bond Counsel to the effect that such waiver will not adversely affect the
      exemption from federal income taxes of interest on the Bonds.

     

    Article
      VII

     

    Options
      and Obligations of Company;

     

    Prepayments;
      Redemption of Bonds

     

    Section 7.1.Option
      to Prepay.
      The
      Company 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 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
      Company elects to provide for the redemption of Bonds as permitted by this
      Section, the Company 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. If the Company so elects, any redemption of Bonds pursuant to
      Section 3.01(A) of the Indenture may be made conditional.

     

    Section 7.2.Obligation
      to Prepay.
      The
      Company covenants and agrees that if all or any part of the Bonds are
      unconditionally called for redemption in accordance with the Indenture or become
      subject to mandatory redemption (except as otherwise provided in
      Section 3.02 of the Indenture), it will prepay the indebtedness hereunder
      in whole or in part in an amount sufficient to redeem such Bonds on the date
      fixed for the redemption of such Bonds.

     

    Section 7.3.Notice
      of Prepayment.
      Upon
      the exercise of the option granted to the Company in Section 7.1 hereof, or
      upon the Company having knowledge of the occurrence of any event requiring
      mandatory redemption of the Bonds in accordance with Section 3.01(B) of the
      Indenture, the Company shall give written notice to the Issuer, the Remarketing
      Agent, the Auction Agent, the Trustee and the Broker-Dealers. The notice shall
      provide for the date of the application of the prepayment made by the Company
      hereunder to the retirement of the Bonds in whole or in part pursuant to call
      for redemption and shall be given by the Company not less than five Business
      Days prior to the date notice of such redemption must be given by the Trustee
      to
      the Bondholders as provided in Section 3.02 of the Indenture or such later
      date as is acceptable to the Trustee and the Issuer.

     

    Article VIII

     

    Miscellaneous

     

    Section 8.1.Notices.
      (a) Except as otherwise provided herein, all notices, certificates or other
      communications hereunder shall be sufficiently given if in writing and shall
      be
      deemed given when mailed by first class mail, postage prepaid, or by qualified
      overnight courier service, courier charges prepaid, or by facsimile (receipt
      of
      which is orally confirmed) addressed as follows: if to the Issuer, at 1001
      East
      Ninth Street, Building A, Room 225, Reno, Nevada 89512, or to telecopy
      number (775) 328-2037, Attention: Finance Director; if to the Company, at 6226
      West Sahara Avenue, MS #2, Las Vegas, Nevada  89146, or to telecopy number
      (702) 367-5629, Attention: Treasurer; if to the Trustee, at 385 Rifle
      Camp Road, West Paterson, New Jersey 07424, or to telecopy number (973)
      357-7840, Attention: Corporate Trust Services; if to the Remarketing Agent,
      at
      the address set forth in the Remarketing Agreement, if any; and if to the
      Auction Agent, at the address set forth in the Auction Agreement, if any. In
      case by reason of the suspension of regular mail service, it shall be
      impracticable to give notice by first class mail of any event to the Issuer,
      to
      the Company, to the Remarketing Agent, to the Auction Agent when such notice
      is
      required to be given pursuant to any provisions of this Agreement, then any
      manner of giving such notice as shall be satisfactory to the Trustee shall
      be
      deemed to be sufficient giving of such notice. The Issuer, the Company, the
      Trustee, the Remarketing Agent and the Auction Agent may, by notice pursuant
      to
      this Section 8.1, designate any different addresses to which subsequent
      notices, certificates or other communications shall be sent.

     

    (b)The
      Trustee agrees to accept and act upon instructions or directions pursuant to
      this Agreement sent by unsecured e-mail, facsimile transmission or other similar
      unsecured electronic methods, provided, however, that (a) the Company and/or
      Issuer, subsequent to such transmission of written instructions, shall, upon
      request by the Trustee, provide the originally executed instructions or
      directions to the Trustee, (b) upon request by the Trustee, such originally
      executed instructions or directions shall be signed by a person as may be
      designated and authorized to sign for the Company and/or Issuer or in the name
      of the Company and/or Issuer, by an authorized representative of the Company
      and/or Issuer, and (c) upon the request by the Trustee, the Company and/or
      Issuer shall provide to the Trustee an incumbency certificate listing such
      designated persons, which incumbency certificate shall be amended whenever
      a
      person is to be added or deleted from the listing.  If the Company and/or
      Issuer elects to give the Trustee e-mail or facsimile instructions (or
      instructions by a similar electronic method) and the Trustee elects to act
      upon
      such instructions, the Trustee’s reasonable interpretation and understanding of
      such instructions shall be deemed controlling. The Trustee shall not be liable
      for any losses, costs or expenses arising directly or indirectly from the
      Trustee’s reasonable reliance upon and compliance with such instructions
      notwithstanding that such instructions conflict or are inconsistent with a
      subsequent written instruction.

     

    Section 8.2.Assignments.
      This
      Agreement may not be assigned by either party without consent of the other
      and
      the Trustee, except that the Issuer shall assign to the Trustee its rights
      under
      this Agreement (except under Sections 4.2(e), 4.2(g) and 6.4 hereof) as
      provided by Section 4.4 hereof, and the Company may assign its rights under
      this Agreement to any transferee or any surviving or resulting corporation
      as
      provided by Section 5.1 hereof.

     

    Section 8.3.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 8.4.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.

     

    Section 8.5.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, (iv) the fees and expenses of the Remarketing Agent, the Auction
      Agent and the Issuer 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 Company by the Trustee.

     

    Section 8.6.Amendments,
      Changes and Modifications.
      This
      Agreement may be amended, changed, modified, altered or terminated only by
      written instrument executed by the Issuer and the Company, and only if the
      written consent of the Trustee thereto is obtained, and only in accordance
      with
      the provisions of Article XII of the Indenture.

     

    Section 8.7.Governing
      Law.
      This
      Agreement shall be governed exclusively by and construed in accordance with
      the
      applicable laws of the State.

     

    Section 8.8.Authorized
      Issuer and Company Representatives.
      Whenever under the provisions of this Agreement the approval of the Issuer
      or
      the Company is required to take some action at the request of the other, such
      approval of such request shall be given for the Issuer by the Authorized Issuer
      Representative and for the Company by the Authorized Company 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 8.9.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), provided that all representations and certifications by the
      Company as to all matters affecting the tax-exempt status of the Bonds and
      the
      covenants of the Company in Sections 4.2(c), 4.2(d), 4.2(e), 4.2(f) and
      4.2(g) hereof shall survive the termination of this Agreement.

     

    Section 8.10.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 Company 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.

     

    Section 8.11.Bond
      Insurance. The
      payment of the principal of and interest on the Bonds when due is to be insured
      under, and to the extent provided in, the Bond Insurance Policy, including
      the
      endorsements thereto, to be issued by the Bond Insurer, and the Issuer and
      the
      Company agree to be bound by the provisions contained in Appendix C
      to the
      Indenture and the Company agrees to be bound by the provisions contained in
      the
      Insurance Agreement. In the event of any conflict between the provisions of
      Appendix C
      to
      the
      Indenture and the provisions of this Agreement, the provisions of Appendix C
      shall
      govern and control.

     

    All
      references in this Agreement to the Bond Insurer shall only apply so long as
      a
      Bond Insurance Policy issued by the Bond Insurer is in effect for any of the
      Bonds (and the Bond Insurer has not failed to comply with its payment
      obligations under the Bond Insurance Policy).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In
      Witness Whereof,
      the
      Issuer and the Company have caused this Agreement to be executed in their
      respective corporate names and their respective corporate seals to be hereunto
      affixed and attested by their duly authorized officers, all as of the date
      first
      above written.

    

    Washoe
      County, Nevada

    

    

    By____________________________

                              
      Chairman

        
      Board of County Commissioners

    (SEAL)

    

    Attest:

     

    ___________________________________

    County
      Clerk

    

    

    Sierra
      Pacific Power Company

     

    By___________________________

                   
      William
      D. Rogers

    Senior
      Vice President, Chief Financial

             
      Officer
      and Treasurer

    (SEAL)

    

    Attest:

     

    ____________________________________

    SecretaryExhibit 10.2

     

    Financing
      Agreement

    

    

    Dated
      as
      of April 1, 2007

    

    

    By
      and
      Between

    

    

    Washoe
      County, Nevada

    

    

    and

    

    

    Sierra
      Pacific Power Company

    

    

    

    Relating
      To

    Water
      Facilities Refunding Revenue Bonds

    (Sierra
      Pacific Power Company Project)

    Series
      2007B

    

    

     

    The
      amounts payable to the Issuer (except for amounts payable to, and certain rights
      and privileges of, the Issuer under Sections 4.2(e), 4.2(g) and 6.4 hereof
      and any rights of the Issuer to receive any notices, certificates, requests,
      requisitions or communications hereunder) and certain other rights of the Issuer
      under this Financing Agreement have been pledged and assigned under the
      Indenture of Trust dated as of April 1, 2007, between the Issuer and The Bank
      of
      New York, as Trustee.

    

    

    
      
        
          2220663.01.02.doc

          2147411

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Financing
      Agreement

    ______________

     

    Table
      of Contents

     

    (This
      Table of Contents is not a part of this Agreement

    and
      is
      only for convenience of reference).

     

    Section HeadingPage

     

    
      	
              Article I

            	
              Definitions

            	 

    

     

     

    
      	
              Article II

            	
              Representations

            	 

    

     

    
      	 	
              Section 2.1.

            	
            	 Representations
              and Covenants by the Issuer

    

    
      	 	
              Section 2.2.

            	
            	 Representations
              by the Company

    

     

    
      	
              Article III

            	
              Issuance
                of the Bonds

            	 

    

     

    
      	 	
              Section 3.1.

            	
               

            	 Agreement
              to Issue Bonds; Application of Bond
              Proceeds

    

    
      	 	
              Section 3.2.

            	
            	 Deposit
              of Additional Funds by Company; Redemption of Prior
              Bonds

    

    
      	 	
              Section 3.3.

            	
            	 Investment
              of Moneys in the Bond Fund and the Prior Bonds Redemption
              Fund

    

    
      	 	
              Section 3.4.

            	
               

            	 Tax
              Exempt Status of Bonds

    

     

    
      	
              Article IV

            	
              Loan
                and Provisions for Repayment

            	 

    

     

    
      	 	
              Section 4.1.

            	
               

            	 Loan
              of Bond Proceeds

    

    
      	 	
              Section 4.2.

            	
               

            	 Loan
              Repayments and Other Amounts Payable

    

    
      	 	
              Section 4.3.

            	
            	 No
              Defense or Set-Off

    

    
      	 	
              Section 4.4.

            	
               

            	 Payments
              Pledged and Assigned

    

    
      	 	
              Section 4.5.

            	
               

            	 Payment
              of the Bonds and Other Amounts

    

     

    
      	
              Article V

            	
              Special
                Covenants and Agreements

            	 

    

     

    
      	 	
              Section 5.1.

            	
            	 Company
              to Maintain its Corporate Existence; Conditions Under Which Exceptions
              Permitted

    

    
      	 	
              Section 5.2.

            	
               

            	 Annual
              Statement

    

    
      	 	
              Section 5.3.

            	
               

            	 Reserved

    

    
      	 	
              Section 5.4.

            	
               

            	 Recordation
              and Other Instruments

    

    
      	 	
              Section 5.5.

            	
            	 No
              Warranty by the Issuer

    

    
      	 	
              Section 5.6.

            	
            	 Agreement
              as to Ownership of the Project

    

    
      	 	
              Section 5.7.

            	
               

            	 Company
              to Furnish Notice of Rate Period Adjustments; Liquidity Facility
              Requirements; ARS Rate Period Provisions

    

    
      	 	
              Section 5.8.

            	
               

            	 Information
              Reporting, Etc.

    

    
      	 	
              Section 5.9.

            	
               

            	 Limited
              Liability of Issuer

    

    
      	 	
              Section 5.10.

            	
               

            	 Reserved

    

    
      	 	
              Section 5.11.

            	
               

            	 Indenture
              Covenants

    

     

    
      	
              Article VI

            	
              Events
                of Default and Remedies

            	 

    

     

    
      	 	
              Section 6.1.

            	
               

            	 Events
              of Default Defined

    

    
      	 	
              Section 6.2.

            	
               

            	 Remedies
              on Default

    

    
      	 	
              Section 6.3.

            	
               

            	 No
              Remedy Exclusive

    

    
      	 	
              Section 6.4.

            	
               

            	 Agreement
              to Pay Fees and Expenses of Counsel

    

    
      	 	
              Section 6.5.

            	
               

            	 No
              additional Waiver Implied by One Waiver, Consents to
              Waivers

    

     

    
      	
              Article VII

            	
              Options
                and Obligations of Company; Prepayments; Redemption of
                Bonds

            	 

    

     

    
      	 	
              Section 7.1.

            	
               

            	 Option
              to Prepay

    

    
      	 	
              Section 7.2.

            	
               

            	 Obligation
              to Prepay

    

    
      	 	
              Section 7.3.

            	
               

            	 Notice
              of Prepayment

    

     

    
      	
              Article VIII

            	
              Miscellaneous

            	 

    

     

    
      	 	
              Section 8.1.

            	
               

            	 Notices

    

    
      	 	
              Section 8.2.

            	
               

            	 Assignments

    

    
      	 	
              Section 8.3.

            	
            	 Severability

    

    
      	 	
              Section 8.4.

            	
               

            	 Execution
              of Counterparts

    

    
      	 	
              Section 8.5.

            	
               

            	 Amounts
              Remaining in Bond Fund

    

    
      	 	
              Section 8.6.

            	
               

            	 Amendments,
              Changes and Modifications

    

    
      	 	
              Section 8.7.

            	
               

            	 Governing
              Law

    

    
      	 	
              Section 8.8.

            	
               

            	 Authorized
              Issuer and Company Representatives

    

    
      	 	
              Section 8.9.

            	
               

            	 Term
              of the Agreement

    

    
      	 	
              Section 8.10.

            	
               

            	 Cancellation
              at Expiration of Term

    

    
      	 	
              Section 8.11.

            	
               

            	 Bond
              Insurance

    

     

    Signature

    

    

    

    
      
        
          --

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

     

    This
      Financing Agreement
      made and
      entered into as of April 1, 2007, by and between Washoe
      County, Nevada,
      a
      political subdivision of the State of Nevada, party of the first part
      (hereinafter referred to as the “Issuer”), and Sierra
      Pacific Power Company,
      a
      corporation duly organized and existing under the laws of the State of Nevada,
      party of the second part (hereinafter referred to as the
“Company”),

     

    W
      i t n e s s e t h:

     

    In
      consideration of the respective representations and agreements hereinafter
      contained, the parties hereto agree as follows (provided, that in the
      performance of the agreements of the Issuer herein contained, any obligation
      it
      may thereby incur shall not constitute or give rise to a pecuniary liability
      or
      a charge upon its general credit or against its taxing powers but shall be
      payable solely out of the Revenues (as hereinafter defined) derived from this
      Financing Agreement and the Bonds, as hereinafter defined):

     

    Article
      I

     

    Definitions

     

    The
      following terms shall have the meanings specified in this Article unless the
      context clearly requires otherwise. The singular shall include the plural and
      the masculine shall include the feminine.

     

    “Act”
      means the County Economic Development Revenue Bond Law, as amended, contained
      in
      Sections 244A.669 to 244A.763, inclusive, of the Nevada Revised
      Statutes.

     

    “Administrative
      Expenses” means the reasonable and necessary expenses (including the reasonable
      value of employee services and fees of Counsel) incurred by the Issuer in
      connection with the Bonds, this Agreement, the Indenture and any transaction
      or
      event contemplated by this Agreement or the Indenture.

     

    “Agreement”
      means this Financing Agreement by and between the Issuer and the Company, as
      from time to time amended and supplemented.

     

    “Auction
      Agent” means the auction agent appointed in accordance with the provisions of
      the Indenture.

     

    “Authorized
      Company Representative” means any person who, at the time, shall have been
      designated to act on behalf of the Company by a written certificate furnished
      to
      the Issuer, the Remarketing Agent and the Trustee containing the specimen
      signature of such person and signed on behalf of the Company by any officer
      of
      the Company. Such certificate may designate an alternate or
      alternates.

     

    “Authorized
      Issuer Representative” means any person at the time designated to act on behalf
      of the Issuer by a written certificate furnished to the Company and the Trustee
      containing the specimen signature of such person and signed on behalf of the
      Issuer by its Chairman. Such certificate may designate an alternate or
      alternates.

     

    “Bankruptcy
      Code” means the United States Bankruptcy Reform Act of 1978, as amended from
      time to time, or any substitute or replacement legislation.

     

    “Bond”
or
      “Bonds” means the Issuer’s bonds identified in Section 2.02 of the
      Indenture.

     

    “Bond
      Counsel” means the Counsel who renders the opinion as to the tax-exempt status
      of interest on the Bonds or other nationally recognized municipal bond counsel
      mutually acceptable to the Issuer and the Company.

     

    “Bond
      Fund” means the fund created by Section 6.02 of the Indenture.

     

    “Code”
      means the United States Internal Revenue Code of 1986, as amended, and
      regulations promulgated or proposed thereunder.

     

    “Company”
      means Sierra Pacific Power Company, a Nevada corporation, and its successors
      and
      assigns and any surviving, resulting or transferee corporation as permitted
      in
      Section 5.1 hereof.

     

    “Counsel”
      means an attorney at law or a firm of attorneys (who may be an employee of
      or
      counsel to the Issuer or the Company or the Trustee) duly admitted to the
      practice of law before the highest court of any state of the United States
      of
      America or of the District of Columbia.

     

    “Delivery
      Agreement” means the Delivery Agreement dated the Dated Date, between the
      Company and the Trustee, as amended, supplemented or restated from time to
      time,
      pursuant to which the Company will issue to the Trustee the G&R Notes at the
      time of the initial authentication and delivery of the Bonds.

     

    “Extraordinary
      Services” and “Extraordinary Expenses” means all services rendered and all
      expenses (including fees and expenses of Counsel) incurred under the Indenture
      and the Tax Agreement other than Ordinary Services and Ordinary
      Expenses.

     

    “Force
      Majeure” means acts of God, strikes, lockouts or other industrial disturbances;
      acts of public enemies; orders or restraints of any kind of the governments
      of
      the United States or of the State, or any of their departments, agencies or
      officials, or any civil or military authority; insurrections; riots; landslides;
      lightning; earthquakes; fires; tornadoes; volcanoes; storms; droughts; floods;
      explosions, breakage, or malfunction or accident to machinery, transmission
      lines, pipes or canals, even if resulting from negligence; civil disturbances;
      or any other cause not reasonably within the control of the
      Company.

     

    “G&R
      Indenture” means the General and Refunding Mortgage Indenture dated as of
      May 1, 2001 between the Company and the G&R Trustee, as amended and
      supplemented.

     

    “G&R
      Notes” means the Company’s $40,000,000 General and Refunding Mortgage Note,
      Series O, No. O-2, due March 1, 2036.

     

    “G&R
      Trustee” means The Bank of New York, as trustee under the G&R Indenture or
      any successor trustee.

     

    “Governing
      Body” means the Board of County Commissioners of the Issuer.

     

    “Hereof,”
      “herein,” “hereunder” and other words of similar import refer to this Agreement
      as a whole.

     

    “Indenture”
      means the Indenture of Trust relating to this Agreement between the Issuer
      and
      The Bank of New York, as Trustee, of even date herewith, pursuant to which
      the
      Bonds are authorized to be issued, including any indentures supplemental thereto
      or amendatory thereof.

     

    “Issuer”
      means Washoe County, Nevada, and any successor body to the duties or functions
      of the Issuer.

     

    “Ordinary
      Services” and “Ordinary Expenses” means those services normally rendered and
      those expenses including fees and expenses of Counsel, normally incurred by
      a
      trustee or paying agent under instruments similar to the Indenture and the
      Tax
      Agreement.

     

    “Owner”
      or “owner of Bonds” means the Person or Persons in whose name or names a Bond
      shall be registered on books of the Issuer kept by the Registrar for that
      purpose in accordance with the terms of the Indenture.

     

    “Person”
      means natural persons, firms, partnerships, associations, corporations, trusts
      and public bodies.

     

    “Prior
      Bond Fund” means the fund established pursuant to Section 6.02 of the Prior
      Indenture.

     

    “Prior
      Bonds” means the Issuer’s Water Facilities Refunding Revenue Bonds (Sierra
      Pacific Power Company Project) Series 2001, currently outstanding in the
      aggregate principal amount of $80,000,000.

     

    “Prior
      Indenture” means the Indenture of Trust dated as of March 1, 2001 between
      the Issuer and the Prior Trustee pursuant to which the Prior Bonds were
      issued.

     

    “Prior
      Trustee” means The Bank of New York, as trustee under the Prior
      Indenture.

     

    “Project”
      means the Project as defined in the Project Certificate.

     

    “Project
      Certificate” means the Company’s Project and Refunding Certificate, delivered
      concurrently with the issuance of the Bonds, with respect to certain facts
      which
      are within the knowledge of the Company and certain reasonable assumptions
      of
      the Company, to enable Chapman and Cutler LLP, as Bond Counsel, to
      determine that interest on the Bonds is not includable in the gross income
      of
      the Owners of the Bonds for federal income tax purposes.

     

    “Rebate
      Fund” means the Rebate Fund, if any, created and established pursuant to the Tax
      Agreement.

     

    “Regulated
      Utility Company” means a corporation (or a limited liability company) engaged in
      the distribution of electricity, gas and/or water and which is regulated by
      the
      applicable public service commissions in all of the states that comprise its
      service area.

     

    “Remarketing
      Agent” means the remarketing agent, if any, appointed in accordance with
      Section 4.08 of the Indenture and any permitted successor
      thereto.

     

    “Reorganization”
      means any reorganization, consolidation or merger of the Company or its
      affiliates, or any transfer or lease of a substantial portion of the assets
      of
      the Company or its affiliates, as a result of which the obligor under the
      Agreement or the obligor on the G&R Notes ceases to be a Regulated Utility
      Company.

     

    “State”
      means the State of Nevada.

     

    “Tax
      Agreement” means the Tax Exemption Certificate and Agreement with respect to the
      Bonds, dated the date of delivery of the Bonds, among the Company, the Issuer
      and the Trustee, as from time to time amended and supplemented.

     

    “Trust
      Estate” means the property conveyed to the Trustee pursuant to the Granting
      Clauses of the Indenture.

     

    “Trustee”
      means The Bank of New York, as Trustee under the Indenture, and any successor
      Trustee appointed pursuant to Section 10.06 or 10.09 of the Indenture at
      the time serving as Trustee thereunder, and any separate or co-trustee serving
      as such thereunder.

     

    All
      other
      terms used herein which are defined in the Indenture shall have the same
      meanings assigned them in the Indenture unless the context otherwise
      requires.

     

    Article
      II

     

    Representations

     

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

     

    (a)The
      Issuer is a duly organized and existing political subdivision of the State
      of
      Nevada. Under the provisions of the Act, the Issuer is authorized to enter
      into
      the transactions contemplated by this Agreement, the Indenture and the Tax
      Agreement and to carry out its obligations hereunder and thereunder. The Issuer
      has duly authorized the execution and delivery of this Agreement, the Indenture
      and the Tax Agreement.

     

    (b)The
      Bonds
      are to be issued under and secured by the Indenture, pursuant to which certain
      of the Issuer’s interests in this Agreement and the Revenues derived by the
      Issuer pursuant to this Agreement will be pledged and assigned as security
      for
      payment of the principal of, premium, if any, and interest on, the
      Bonds.

     

    (c)The
      Governing Body of the Issuer has found that the issuance of the Bonds will
      further the public purposes of the Act.

     

    (d)The
      Issuer has not assigned and will not assign any of its interests in this
      Agreement other than pursuant to the Indenture.

     

    (e)No
      member
      of the Governing Body of the Issuer, nor any other officer of the Issuer, has
      any interest, financial (other than ownership of less than one-tenth of one
      percent (.1%) of the publicly traded securities issued by the Company or its
      affiliated corporations), employment or other, in the Company or in the
      transactions contemplated hereby.

     

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

     

    (a)The
      Company is a corporation duly incorporated under the laws of the State and
      is in
      good standing in the State, is qualified to do business as a foreign corporation
      in all other states and jurisdictions wherein the nature of the business
      transacted by the Company or the nature of the property owned or leased by
      it
      makes such licensing or qualification necessary, and has the power to enter
      into
      and by proper corporate action has been duly authorized to execute and deliver
      this Agreement and the Tax Agreement.

     

    (b)Neither
      the execution and delivery of this Agreement or the Tax Agreement, the
      consummation of the transactions contemplated hereby and thereby, nor the
      fulfillment of or compliance with the terms and conditions of this Agreement
      and
      the Tax Agreement, conflicts with or results in a breach of any of the terms,
      conditions or provisions of any corporate restriction or any agreement or
      instrument to which the Company is now a party or by which it is bound, or
      constitutes a default under any of the foregoing, or results in the creation
      or
      imposition of any lien, charge or encumbrance whatsoever upon any of the
      property or assets of the Company under the terms of any instrument or agreement
      other than the Indenture.

     

    (c)The
      statements, information and descriptions contained in the Project Certificate
      and the Tax Agreement, as of the date hereof and at the time of the delivery
      of
      the Bonds to the Underwriter, are and will be true, correct and complete, do
      not
      and will not contain any untrue statement or misleading statement of a material
      fact, and do not and will not omit to state a material fact required to be
      stated therein or necessary to make the statements, information and descriptions
      contained therein, in the light of the circumstances under which they were
      made,
      not misleading.

     

    Article III

     

    Issuance
      of the Bonds

     

    Section 3.1.Agreement
      to Issue Bonds; Application of Bond Proceeds.
      In
      order to provide funds to lend to the Company to refund a portion of the Prior
      Bonds as provided in Section 4.1 hereof, the Issuer agrees that it will
      issue under the Indenture, sell and cause to be delivered to the Underwriter,
      its Bonds in the aggregate principal amount of $40,000,000, 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 follows: (1) in the Bond
      Fund, a sum equal to the accrued interest, if any, paid by the Underwriter;
      and
      (2) $40,000,000 in the Prior Bonds Redemption Fund to be remitted by the
      Trustee to the Prior Trustee as provided in Section 6.07 of the Indenture
      for deposit in the Prior Bond Fund to be used to pay to the owners thereof
      $40,000,000 of the principal of the Prior Bonds upon redemption
      thereof.

     

    Section 3.2.Deposit
      of Additional Funds by Company; Redemption of Prior Bonds.
      The
      Company covenants that such additional amounts as may be required to redeem
      the
      Prior Bonds in accordance with Section 3.1 hereof will be timely deposited
      with the Prior Trustee pursuant to the Prior Indenture for such purpose. Income
      derived from the investment of the proceeds of the Bonds deposited in the Prior
      Bonds Redemption Fund will be used, to the extent available, to satisfy the
      obligations of the Company specified in this Section 3.2. The Company
      covenants that it will cause the Prior Bonds to be redeemed within 90 days
      after
      the issuance and delivery of the Bonds.

     

    Section 3.3.Investment
      of Moneys in the Bond Fund and the Prior Bonds Redemption
      Fund.
      Except
      as otherwise herein provided, any moneys held as a part of the Bond Fund and
      the
      Prior Bonds Redemption Fund shall be invested or reinvested by the Trustee
      at
      the specific written direction of an Authorized Company Representative as to
      specific investments, to the extent permitted by law, in:

     

    (a)bonds
      or
      other obligations of the United States of America;

     

    (b)bonds
      or
      other obligations, the payment of the principal of and interest on which is
      unconditionally guaranteed by the United States of America;

     

    (c)obligations
      issued or guaranteed as to principal and interest by any agency or person
      controlled or supervised by and acting as an instrumentality of the United
      States of America pursuant to authority granted by the Congress of the United
      States of America;

     

    (d)obligations
      issued or guaranteed by any state of the United States of America, or any
      political subdivision of any such state, or in funds consisting of such
      obligations to the extent described in Section 1.148-8(e)(3)(iii) of the
      1992 Treasury Regulations;

     

    (e)prime
      commercial paper;

     

    (f)prime
      finance company paper;

     

    (g)bankers’
      acceptances drawn on and accepted by commercial banks;

     

    (h)repurchase
      agreements fully secured by obligations issued or guaranteed as to principal
      and
      interest by the United States of America or by any person controlled or
      supervised by and acting as an instrumentality of the United States of America
      pursuant to authority granted by the Congress of the United States of
      America;

     

    (i)certificates
      of deposit issued by commercial banks, including banks domiciled outside of
      the
      United States of America; and

     

    (j)units
      of
      taxable government money market portfolios composed of obligations guaranteed
      as
      to principal and interest by the United States of America or repurchase
      agreements fully collateralized by such obligations.

     

    The
      investments so purchased shall be held by the Trustee and shall be deemed at
      all
      times a part of the fund and the accounts therein, if any, for which they were
      made and the interest accruing thereon and any profit realized therefrom shall
      be credited to such fund and the accounts therein, if any, subject to the
      provisions of the Tax Agreement. The Company agrees that to the extent any
      moneys in the Bond Fund represent moneys held for the payment of particular
      Bonds, or to the extent that any moneys are held for the payment of the purchase
      price of Bonds pursuant to Article IV of the Indenture, such moneys shall
      not be invested.

     

    Section 3.4.Tax
      Exempt Status of Bonds.
      The
      Company covenants and agrees that it has not taken or permitted and will not
      take or permit any action which results in interest paid on the Bonds being
      included in gross income of the holders or beneficial owners of the Bonds for
      purposes of federal income taxation (other than a holder or beneficial owner
      who
      is a “substantial user” of the Project or a “related person” within the meaning
      of Section 147(a) of the Code). The Company covenants that none of the
      proceeds of the Bonds or the payments to be made under this Agreement, or any
      other funds which may be deemed to be proceeds of the Bonds pursuant to
      Section 148(a) of the Code, will be invested or used in such a way, and
      that no actions will be taken or not taken, as to cause the Bonds to be treated
      as “arbitrage bonds” within the meaning of Section 148(a) of the Code.
      Without limiting the generality of the foregoing, the Company covenants and
      agrees that it will comply with the provisions of the Tax Agreement and the
      Project Certificate.

     

    For
      purposes of the immediately preceding paragraph, the Company will be deemed
      to
      have taken or permitted or omitted to take any action which is taken or
      permitted or omitted by Truckee Meadows Water Authority, the owner of the
      Project, or any subsequent owner or operator of the Project or portion thereof.
      The Company has received a certificate dated the Dated Date from Truckee Meadows
      Water Authority with respect to the Project. This certificate is attached to
      the
      Project Certificate.

     

    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 Company the proceeds (exclusive of accrued interest, if any)
      received by the Issuer from the sale of the Bonds in order to refund a portion
      of the Prior Bonds, and the Company agrees to apply the gross proceeds of such
      loan to the refunding of a portion of the Prior Bonds as set forth in
      Sections 3.1 and 3.2 hereof.

     

    (b)The
      Issuer and the Company 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 refund all
      or
      any principal amount of the Bonds.

     

    Section 4.2.Loan
      Repayments and Other Amounts Payable.
      (a) On each date provided in or pursuant to the Indenture for the payment
      (whether at maturity or upon redemption or acceleration) of principal of, and
      premium, if any, and interest on, the 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 Company 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(a) hereof, a sum equal to the
      amount payable on such date (whether at maturity or upon redemption or
      acceleration) as principal of, and premium, if any, and interest on, the Bonds
      as provided in the Indenture; provided, however, that the obligation of the
      Company to make any such repayment installment shall be reduced by the amount
      of
      any moneys then on deposit in the Bond Fund and available for such payment;
      and
      provided further, that the obligation of the Company to make any such payment
      shall be deemed to be satisfied and discharged to the extent provided for under
      a liquidity facility (if applicable) or under the G&R Notes.

     

    (b)The
      Company shall pay to the Trustee amounts equal to the amounts to be paid by
      the
      Trustee for the purchase of Bonds pursuant to Article IV of the Indenture.
      Such
      amounts shall be paid by the Company to the Trustee in immediately available
      funds on the date such payments pursuant to Section 4.05 of the Indenture
      are to be made; provided, however, that the obligation of the Company to make
      any such payment shall be deemed to be satisfied and discharged to the extent
      moneys are available from the source described in clause (i) of
      Section 4.05(a) of the Indenture and to the extent moneys are available
      under any liquidity facility (if applicable).

     

    (c)The
      Company agrees to pay to the Trustee (i) the fees of the Trustee for the
      Ordinary Services rendered by it and an amount equal to the Ordinary Expenses
      incurred by it under the Indenture and the Tax Agreement, as and when the same
      become due, and (ii) the reasonable fees, charges and expenses of the Trustee
      for reasonable Extraordinary Services and Extraordinary Expenses, as and when
      the same become due, incurred under the Indenture and the Tax Agreement. The
      Company agrees that the Trustee, its officers, agents, servants and employees,
      shall not be liable for, and agrees that it will at all times indemnify and
      hold
      harmless the Trustee, its officers, agents, servants and employees against,
      and
      pay all expenses of the Trustee, its officers, agents, servants and employees,
      relating to any lawsuit, proceeding or claim and resulting from any action
      or
      omission taken or made by or on behalf of the Trustee, its officers, agents,
      servants and employees pursuant to this Agreement, the Indenture or the Tax
      Agreement, that may be occasioned by any cause (other than the negligence or
      willful misconduct of the Trustee, its officers, agents, servants and
      employees). In case any action shall be brought against the Trustee in respect
      of which indemnity may be sought against the Company, the Trustee shall promptly
      notify the Company in writing and the Company shall be entitled to assume
      control of the defense thereof, including the employment of Counsel reasonably
      satisfactory to the Trustee and the payment of all expenses. The Trustee shall
      have the right to employ separate Counsel in any such action and participate
      in
      the defense thereof, but the fees and expenses of such Counsel shall be paid
      by
      the Trustee unless (i) the employment of such Counsel has been authorized
      by the Company,
      (ii) the Trustee has determined (which determination may be based upon an
      opinion of counsel delivered to the Trustee and furnished to the Company) that
      there may be a conflict of interest of such Counsel retained by the Company
      between the Company and the Trustee in the conduct of such defense,
      (iii) the Company ceases or terminates the employment of such Counsel
      retained by the Company or (iv) such Counsel retained by the Company
      withdraws with respect to such defense.
      The
      Company shall not be liable for any settlement of any such action without its
      consent, but if any such action is settled with the consent of the Company
      or if
      there be final judgment for the plaintiff in any such action, the Company agrees
      to indemnify and hold harmless the Trustee from and against any loss or
      liability by reason of such settlement or final judgment. The Company agrees
      that the indemnification provided herein shall survive the termination of this
      Agreement or the Indenture or the resignation of the Trustee. For purposes
      of
      this Section 4.2(c), the Trustee is deemed a third party beneficiary of this
      Agreement.

     

    (d)The
      Company agrees to pay all costs incurred in connection with the issuance of
      the
      Bonds from sources other than Bond proceeds and the Issuer shall have no
      obligation with respect to such costs.

     

    (e)The
      Company agrees to indemnify and hold harmless the Issuer and any member,
      officer, official or employee of the Issuer against any and all losses, costs,
      charges, expenses, judgments and liabilities created by or arising out of this
      Agreement, the Indenture, the Remarketing Agreement, the Auction Agreement,
      the
      Bond Purchase Agreement, any Broker-Dealer Agreement or the Tax Agreement or
      otherwise incurred in connection with the issuance of the Bonds. The Company
      agrees to pay the Issuer its Closing Fee in connection with the issuance of
      the
      Bonds in the amount of $40,000. The Issuer may submit to the Company periodic
      statements, not more frequently than monthly, for its Administrative Expenses
      and the Company shall make payment to the Issuer of the full amount of each
      such
      statement within 30 days after the Company receives such
      statement.

     

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

     

    (g)In
      the
      event the Company shall fail to make any of the payments required by (a) or
      (b)
      of this Section 4.2, the payment so in default shall continue as an
      obligation of the Company until the amount in default shall have been fully
      paid
      and the Company will pay interest to the extent permitted by law, on any overdue
      amount at the rate of interest borne by the Bonds on the date on which such
      amount became due and payable until paid. In the event that the Company shall
      fail to make any of the payments required by (c), (d), (e) or (f) of this
      Section 4.2, the payment so in default shall continue as an obligation of
      the Company until the amount in default shall have been fully paid, and the
      Company agrees to pay the same with interest thereon to the extent permitted
      by
      law at a rate 1% above the rate of interest then charged by the Trustee on
      90-day commercial loans to its prime commercial borrowers until
      paid.

     

    Section 4.3.No
      Defense or Set-Off.
      The
      obligation of the Company to make the payments pursuant to this Agreement shall
      be absolute and unconditional without defense or set-off by reason of any
      default by the Issuer under this Agreement or under any other agreement between
      the Company and the Issuer or for any other reason, it being the intention
      of
      the parties that the payments required hereunder will be paid in full when
      due
      without any delay or diminution whatsoever.

     

    Section 4.4.Payments
      Pledged and Assigned.
      It is
      understood and agreed that all payments required to be made by the Company
      pursuant to Section 4.2 hereof (except payments made to the Trustee
      pursuant to Section 4.2(c) hereof, to the Remarketing Agent and the Auction
      Agent pursuant to Section 4.2(f) hereof, to the Issuer pursuant to
      Section 4.2(e) hereof and to any or all the Issuer and the Trustee and the
      Remarketing Agent pursuant to Section 4.2(g) hereof) and certain rights of
      the Issuer hereunder are pledged and assigned by the Indenture. The Company
      consents to such pledge and assignment. The Issuer hereby directs the Company
      and the Company hereby agrees to pay or cause to be paid to the Trustee all
      said
      amounts except 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(e) and (g) hereof. The Project will not
      constitute any part of the security for the Bonds, except to the extent that
      the
      Trustee as holder of G&R Notes has a lien on property under the G&R
      Indenture.

     

    Section 4.5.Payment
      of the Bonds and Other Amounts.
      The
      Bonds and interest and premium, if any, thereon shall be payable solely from
      (i) payments made by the Company to the Trustee under Section 4.2(a)
      hereof and (ii) other moneys on deposit in the Bond Fund and available
      therefor.

     

    Payments
      of principal of, and premium, if any, or interest on, the Bonds with moneys
      in
      the Bond Fund constituting proceeds from the sale of the Bonds 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.

     

    Whenever
      any Bonds are redeemable in whole or in part at the option of the Company,
      the
      Trustee, on behalf of the Issuer, shall redeem the same upon the request of
      the
      Company and such redemption (unless conditional) shall be made from payments
      made by the Company to the Trustee under 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 such Bonds are thereby
      deemed paid in full, the Trustee shall notify the Company and the Issuer that
      such payment requirement has been satisfied. Subject to the foregoing, or unless
      the Company is entitled to a credit under this Agreement or the Indenture,
      all
      payments shall be in the full amount required by Section 4.2(a)
      hereof.

     

    Article
      V

     

    Special
      Covenants and Agreements

     

    Section 5.1.Company
      to Maintain its Corporate Existence; Conditions Under Which Exceptions
      Permitted.
      The
      Company agrees that during the term of this Agreement, it will maintain its
      corporate existence and its good standing in the State, will not dissolve or
      otherwise dispose of all or substantially all of its assets and will not
      consolidate with or merge into another corporation unless the acquirer of its
      assets or the corporation with which it shall consolidate or into which it
      shall
      merge shall (i) be a corporation organized under the laws of one of the
      states of the United States of America, (ii) be qualified to do business in
      the State, and (iii) assume in writing all of the obligations of the
      Company under this Agreement and the Tax Agreement. Any transfer of all or
      substantially all of the Company’s generation assets shall not be deemed to
      constitute a “disposition of all or substantially all of the Company’s assets”
within the meaning of the preceding paragraph. Any such transfer of the
      Company’s generation assets shall not relieve the Company of any of its
      obligations under this Agreement.

     

    The
      Company hereby agrees that so long as any of the Bonds are insured by a Bond
      Insurance Policy issued by the Bond Insurer and the Bond Insurer shall not
      have
      failed to comply with its payment obligations under such Policy, in the event
      of
      a Reorganization, unless otherwise consented to by the Bond Insurer, the
      obligations of the Company under, and in respect of, the Bonds, the G&R
      Notes, the G&R Indenture and the Agreement shall be assumed by, and shall
      become direct and primary obligations of, a Regulated Utility Company such
      that
      at all times the obligor under this Agreement and the obligor on the G&R
      Notes is a Regulated Utility Company. The
      Company shall deliver to the Bond Insurer a certificate of the president, any
      vice president or the treasurer and an opinion of counsel reasonably acceptable
      to the Bond Insurer stating in each case that such Reorganization complies
      with
      the provisions of this paragraph.

     

    The
      Company need not comply with any of the provisions of this Section 5.1 if,
      at the time of such merger or consolidation, the Bonds will be defeased as
      provided in Article VIII of the Indenture. The Company need not comply with
      the provisions of the second paragraph of this Section 5.1 if the Bonds are
      redeemed as provided in Section 3.01(B)(3) of the Indenture or if the Bond
      Insurance Policy is terminated as described in Section 3.06 of the
      Indenture in connection with a purchase of the Bonds by the Company in lieu
      of
      their redemption.

     

    Section 5.2.Annual
      Statement.
      The
      Company agrees to have an annual audit made by its regular independent certified
      public accountants and to furnish the Trustee (within 30 days after receipt
      by
      the Company) with a balance sheet and statement of income and surplus showing
      the financial condition of the Company and its consolidated subsidiaries, if
      any, at the close of each fiscal year and the results of operations of the
      Company and its consolidated subsidiaries, if any, for each fiscal year,
      accompanied by a report of said accountants that such statements have been
      prepared in accordance with generally accepted accounting principles. The
      Company’s obligations under this Section 5.2 may be satisfied by delivering
      a copy of the Company’s Annual Report on Form 10-K to the Trustee within
      10 days after it is filed with the Securities and Exchange
      Commission.

     

    Delivery
      of such reports, information and documents to the Trustee is for informational
      purposes only and the Trustee’s receipt of such shall not constitute
      constructive notice of any information contained therein or determinable from
      information contained therein, including the Company’s compliance with any of
      its covenants hereunder (as to which the Trustee is entitled to rely exclusively
      on officer’s certificates).

     

    Section 5.3.Reserved.
      

     

    Section 5.4.Recordation
      and Other Instruments.
      The
      Company shall cause such security agreements, financing statements and all
      supplements thereto and other instruments as may be required from time to time
      to be kept, to be recorded and filed in such manner and in such places as may
      be
      required by law in order to fully preserve, protect and perfect the security
      of
      the Owners of the Bonds and the rights of the Trustee, and to perfect the
      security interest created by the Indenture. The Company agrees to abide by
      the
      provisions of Section 5.11 of the Indenture to the extent applicable to the
      Company.

     

    Section 5.5.No
      Warranty by the Issuer.
      The
      Issuer makes no warranty, either express or implied, as to the
      Project.

     

    Section 5.6.Agreement
      as to Ownership of the Project.
      The
      Issuer and the Company agree that title to the Project shall not be in the
      Issuer, and that the Issuer shall have no interest in the Project.

     

    Section 5.7.Company
      to Furnish Notice of Rate Period Adjustments; Liquidity Facility Requirements;
      ARS Rate Period Provisions.
       The
      Company 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 Company elects to
      exercise any such option, the Company agrees that it shall cause notices of
      adjustments of Rate Periods (or rescissions thereof) to be given to the Issuer,
      the Trustee and the Remarketing Agent in accordance with Section 2.03(a),
      (b), (c), (d) or (e) of the Indenture, and a copy of each such notice shall
      also
      be given at such time to S&P and Moody’s.

     

    The
      Company hereby agrees that, so long as the Bonds are insured by a Bond Insurance
      Policy issued by the Bond Insurer and notwithstanding the provisions of Section
      2.03 of the Indenture, it shall not give notice of its intention to adjust
      the
      Rate Period for the Bonds to a Daily Rate Period, a Weekly Rate Period or a
      Flexible Rate Period until the Company shall provide a liquidity facility
      reasonably acceptable to the Bond Insurer from a liquidity facility provider
      reasonably acceptable to the Bond Insurer in accordance with the Bond Insurer’s
      liquidity facility requirements to be effective on the related date of
      adjustment.

     

    If
      during
      any ARS Rate Period (i) consisting of Auction Periods of 35 days or less,
      the Bonds shall bear interest at the Maximum Rate for a period in excess of
      180
      days, or (ii) consisting of one Auction Period of 180 days or more, the
      Bonds shall bear interest at the Maximum Rate for such Period, the Company
      shall
      notify the Bond Insurer in writing of such event and agrees to cooperate with
      the Bond Insurer to take all steps reasonably necessary to adjust the Rate
      Period on the Bonds as soon as reasonably practicable in accordance with the
      provisions of the Indenture to the Rate Period which the Remarketing Agent
      advises the Company and the Bond Insurer will be the lowest interest rate
      (taking into account all relevant costs) which would enable the Remarketing
      Agent to sell all the Bonds on the date of such adjustment at a price equal
      to
      100% of the principal amount thereof (the “Lowest Interest Rate Period”). If at
      such time the Company shall be in default under the Agreement but the Bond
      Insurer shall not have failed to comply with its payment obligations under
      the
      Bond Insurance Policy, the Bond Insurer may, in its discretion, direct the
      Company to provide notice of the adjustment of the Rate Period on the Bonds
      to
      the Lowest Interest Rate Period in accordance with the provisions of Section
      2.03 of the Indenture.

     

    Section 5.8.Information
      Reporting, Etc.
      The
      Issuer covenants and agrees that, upon the direction of the Company 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, Utah 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 Return for Tax-Exempt Private Activity Bond Issues (Form 8038)
      of the Internal Revenue Service (or any successor form) and which shall be
      completed by the Company and Bond Counsel based in part upon information
      supplied by the Company and Bond Counsel.

     

    Section 5.9.Limited
      Liability of Issuer.
      Any
      obligation or liability of the Issuer created by or arising out of this
      Agreement or otherwise incurred in connection with the issuance of the Bonds
      (including without limitation any liability created by or arising out of the
      representations, warranties or covenants set forth herein or otherwise) shall
      not impose a debt or pecuniary liability upon the Issuer or the State or any
      political subdivision thereof, or a charge upon the general credit or taxing
      powers of any of the foregoing, but shall be payable solely out of the Revenues
      or other amounts payable by the Company to the Issuer hereunder or otherwise
      (including without limitation any amounts derived from indemnifications given
      by
      the Company).

     

    Neither
      the issuance of the Bonds nor the delivery of this Agreement shall, directly
      or
      indirectly or contingently, obligate the Issuer or the State or any political
      subdivision thereof to levy any form of taxation therefor or to make any
      appropriation for their payment. Nothing in the Bonds or in the Indenture or
      this Agreement or the proceedings of the Issuer authorizing the Bonds or in
      the
      Act or in any other related document shall be construed to authorize the Issuer
      to create a debt of the Issuer or the State or any political subdivision thereof
      within the meaning of any constitutional or statutory provision of the State.
      The principal of, and premium, if any, and interest on, the Bonds shall be
      payable solely from the funds pledged for their payment in accordance with
      the
      Indenture and available therefor under this Agreement. Neither the State nor
      any
      political subdivision thereof shall in any event be liable for the payment
      of
      the principal of, premium, if any, or interest on, the Bonds or for the
      performance of any pledge, obligation or agreement of any kind whatsoever which
      may be undertaken by the Issuer. No breach of any such pledge, obligation or
      agreement may impose any pecuniary liability upon the Issuer or the State or
      any
      political subdivision thereof, or any charge upon the general credit or against
      the taxing power of the Issuer or
      the
      State or any political subdivision thereof.

     

    Section 5.10.Reserved.

     

    Section 5.11.Indenture
      Covenants.
      The
      Company covenants to observe and perform all of the obligations imposed on
      it
      under the Indenture.

     

    Article
      VI

     

    Events
      of Default and Remedies

     

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

     

    (a)Failure
      by the Company to pay when due any amounts required to be paid under
      Section 4.2(a) hereof, which failure results in an event of default under
      subparagraph (a) or (b) of Section 9.01 of the Indenture; or

     

    (b)Failure
      by the Company to pay or cause to be paid any payment required to be paid under
      Section 4.2(b) hereof, which failure results in an event of default under
      subparagraph (c) of Section 9.01 of the Indenture; or

     

    (c)Failure
      by the Company 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) and (b) above, for a period of 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 Company by the Trustee
      or to the Company 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 such corrective action or diligent pursuit is
      evidenced to the Trustee by a certificate of an Authorized Company
      Representative; or

     

    (d)A
      proceeding or case shall be commenced, without the application or consent of
      the
      Company, 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 Company 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 90 days; or an order for relief against the Company shall be entered
      against the Company in an involuntary case under the Bankruptcy Code (as now
      or
      hereafter in effect) or other applicable law; or

     

    (e)The
      Company 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 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
      Bankruptcy Code or other applicable law; or

     

    (f)Dissolution
      or liquidation of the Company; provided that the term “dissolution or
      liquidation of the Company” shall not be construed to include the cessation of
      the corporate existence of the Company resulting either from a merger or
      consolidation of the Company into or with another corporation or a dissolution
      or liquidation of the Company following a transfer of all or substantially
      all
      of its assets as an entirety, under the conditions permitting such actions
      contained in Section 5.1 hereof; or

     

    (g)The
      occurrence of an “event of default” under the Indenture.

     

    The
      foregoing provisions of Section 6.1(c) are subject to the following
      limitations: If by reason of Force Majeure the Company 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 Company contained in Article IV and
      Section 6.4 hereof, the Company shall not be deemed in default during the
      continuance of such inability. The Company agrees, however, to remedy with
      all
      reasonable dispatch the cause or causes preventing the Company from carrying
      out
      its agreements; provided that the settlement of strikes, lockouts and other
      industrial disturbances shall be entirely within the discretion of the Company
      and the Company 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 Company
      unfavorable to the Company.

     

    Section 6.2.Remedies
      on Default.
      Whenever any event of default referred to in Section 6.1 hereof shall have
      happened and be continuing, the Trustee, as assignee of the Issuer:

     

    (a)shall,
      by
      notice in writing to the Company, 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, premium, if any, and interest
      accrued on, the Bonds) shall become and shall be immediately due and payable
      as
      liquidated damages; and

     

    (b)may
      take
      whatever action at law or in equity as 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 Company under this Agreement. 

     

    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 Company from the Company’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 stockholder, past, present or future, of the Company as such, either
      directly or through the Company, 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 shall be construed to prevent the Issuer from enforcing
      directly any of its rights under Sections 4.2(e), 4.2(g) and 6.4
      hereof.

     

    The
      Company shall promptly notify the Issuer of any action taken by the Company
      under the grant of authority from the Issuer under the last paragraph of
      Section 9.01 of the Indenture.

     

    Section 6.3.No
      Remedy Exclusive.
      No
      remedy herein conferred upon or reserved to the Issuer 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. Subject to the provisions of the Indenture and hereof, such rights
      and
      remedies as are given the Issuer hereunder shall also extend to the Trustee.
      The
      Owners of the Bonds, subject to the provisions of the Indenture, 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 Company 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 Company herein
      contained, the Company agrees that it will on written demand therefor pay to
      the
      Trustee or the Issuer (or to the Counsel for either of such parties if directed
      by such party), the reasonable fees and expenses of such Counsel and such other
      expenses so incurred by or on behalf of the Issuer or the Trustee.

     

    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 Company without the consent of the Trustee to such waiver.
      The
      Trustee shall have the power to waive any default by the Company hereunder,
      except a default under Section 3.4, 4.2(e), 4.2(g) or 6.4 hereof, in so far
      as it pertains to the Issuer, without the prior written concurrence of the
      Issuer. Notwithstanding the foregoing, if, after the acceleration of the
      maturity of the outstanding Bonds by the Trustee pursuant to Section 9.02
      of the Indenture, (i) all arrears of principal of and interest on the
      outstanding Bonds and interest on overdue principal and (to the extent permitted
      by law) on overdue installments of interest at the rate of interest borne by
      the
      Bonds on the date on which such principal or interest became due and payable
      and
      the premium, if any, on all Bonds then Outstanding which have become due and
      payable otherwise than by acceleration, and all other sums payable under the
      Indenture, except the principal of and the interest on such Bonds which by
      such
      acceleration shall have become due and payable, shall have been paid, (ii)
      all
      other things shall have been performed in respect of which there was a default,
      (iii) there shall have been paid the reasonable fees and expenses of the Trustee
      and of the Owners of such Bonds, including reasonable attorneys’ fees paid or
      incurred and (iv) such event of default under the Indenture shall be waived
      in
      accordance with Section 9.09 of the Indenture with the consequence that
      such acceleration under Section 9.02 of the Indenture is rescinded, then
      the Company’s default hereunder shall be deemed to have been waived and its
      consequences rescinded and no further action or consent by the Trustee or the
      Issuer shall be required; provided that there has been furnished an opinion
      of
      Bond Counsel to the effect that such waiver will not adversely affect the
      exemption from federal income taxes of interest on the Bonds.

     

    Article
      VII

     

    Options
      and Obligations of Company;

     

    Prepayments;
      Redemption of Bonds

     

    Section 7.1.Option
      to Prepay.
      The
      Company 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 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
      Company elects to provide for the redemption of Bonds as permitted by this
      Section, the Company 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. If the Company so elects, any redemption of Bonds pursuant to
      Section 3.01(A) of the Indenture may be made conditional.

     

    Section 7.2.Obligation
      to Prepay.
      The
      Company covenants and agrees that if all or any part of the Bonds are
      unconditionally called for redemption in accordance with the Indenture or become
      subject to mandatory redemption (except as otherwise provided in
      Section 3.02 of the Indenture), it will prepay the indebtedness hereunder
      in whole or in part in an amount sufficient to redeem such Bonds on the date
      fixed for the redemption of such Bonds.

     

    Section 7.3.Notice
      of Prepayment.
      Upon
      the exercise of the option granted to the Company in Section 7.1 hereof, or
      upon the Company having knowledge of the occurrence of any event requiring
      mandatory redemption of the Bonds in accordance with Section 3.01(B) of the
      Indenture, the Company shall give written notice to the Issuer, the Remarketing
      Agent, the Auction Agent, the Trustee and the Broker-Dealers. The notice shall
      provide for the date of the application of the prepayment made by the Company
      hereunder to the retirement of the Bonds in whole or in part pursuant to call
      for redemption and shall be given by the Company not less than five Business
      Days prior to the date notice of such redemption must be given by the Trustee
      to
      the Bondholders as provided in Section 3.02 of the Indenture or such later
      date as is acceptable to the Trustee and the Issuer.

     

    Article VIII

     

    Miscellaneous

     

    Section 8.1.Notices.
      (a) Except as otherwise provided herein, all notices, certificates or other
      communications hereunder shall be sufficiently given if in writing and shall
      be
      deemed given when mailed by first class mail, postage prepaid, or by qualified
      overnight courier service, courier charges prepaid, or by facsimile (receipt
      of
      which is orally confirmed) addressed as follows: if to the Issuer, at 1001
      East
      Ninth Street, Building A, Room 225, Reno, Nevada 89512, or to telecopy
      number (775) 328-2037, Attention: Finance Director; if to the Company, at 6226
      West Sahara Avenue, MS #2, Las Vegas, Nevada  89146, or to telecopy number
      (702) 367-5629, Attention: Treasurer; if to the Trustee, at 385 Rifle
      Camp Road, West Paterson, New Jersey 07424, or to telecopy number (973)
      357-7840, Attention: Corporate Trust Services; if to the Remarketing Agent,
      at
      the address set forth in the Remarketing Agreement, if any; and if to the
      Auction Agent, at the address set forth in the Auction Agreement, if any. In
      case by reason of the suspension of regular mail service, it shall be
      impracticable to give notice by first class mail of any event to the Issuer,
      to
      the Company, to the Remarketing Agent, to the Auction Agent when such notice
      is
      required to be given pursuant to any provisions of this Agreement, then any
      manner of giving such notice as shall be satisfactory to the Trustee shall
      be
      deemed to be sufficient giving of such notice. The Issuer, the Company, the
      Trustee, the Remarketing Agent and the Auction Agent may, by notice pursuant
      to
      this Section 8.1, designate any different addresses to which subsequent
      notices, certificates or other communications shall be sent.

     

    (b)The
      Trustee agrees to accept and act upon instructions or directions pursuant to
      this Agreement sent by unsecured e-mail, facsimile transmission or other similar
      unsecured electronic methods, provided, however, that (a) the Company and/or
      Issuer, subsequent to such transmission of written instructions, shall, upon
      request by the Trustee, provide the originally executed instructions or
      directions to the Trustee, (b) upon request by the Trustee, such originally
      executed instructions or directions shall be signed by a person as may be
      designated and authorized to sign for the Company and/or Issuer or in the name
      of the Company and/or Issuer, by an authorized representative of the Company
      and/or Issuer, and (c) upon the request by the Trustee, the Company and/or
      Issuer shall provide to the Trustee an incumbency certificate listing such
      designated persons, which incumbency certificate shall be amended whenever
      a
      person is to be added or deleted from the listing.  If the Company and/or
      Issuer elects to give the Trustee e-mail or facsimile instructions (or
      instructions by a similar electronic method) and the Trustee elects to act
      upon
      such instructions, the Trustee’s reasonable interpretation and understanding of
      such instructions shall be deemed controlling. The Trustee shall not be liable
      for any losses, costs or expenses arising directly or indirectly from the
      Trustee’s reasonable reliance upon and compliance with such instructions
      notwithstanding that such instructions conflict or are inconsistent with a
      subsequent written instruction.

     

    Section 8.2.Assignments.
      This
      Agreement may not be assigned by either party without consent of the other
      and
      the Trustee, except that the Issuer shall assign to the Trustee its rights
      under
      this Agreement (except under Sections 4.2(e), 4.2(g) and 6.4 hereof) as
      provided by Section 4.4 hereof, and the Company may assign its rights under
      this Agreement to any transferee or any surviving or resulting corporation
      as
      provided by Section 5.1 hereof.

     

    Section 8.3.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 8.4.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.

     

    Section 8.5.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, (iv) the fees and expenses of the Remarketing Agent, the Auction
      Agent and the Issuer 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 Company by the Trustee.

     

    Section 8.6.Amendments,
      Changes and Modifications.
      This
      Agreement may be amended, changed, modified, altered or terminated only by
      written instrument executed by the Issuer and the Company, and only if the
      written consent of the Trustee thereto is obtained, and only in accordance
      with
      the provisions of Article XII of the Indenture.

     

    Section 8.7.Governing
      Law.
      This
      Agreement shall be governed exclusively by and construed in accordance with
      the
      applicable laws of the State.

     

    Section 8.8.Authorized
      Issuer and Company Representatives.
      Whenever under the provisions of this Agreement the approval of the Issuer
      or
      the Company is required to take some action at the request of the other, such
      approval of such request shall be given for the Issuer by the Authorized Issuer
      Representative and for the Company by the Authorized Company 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 8.9.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), provided that all representations and certifications by the
      Company as to all matters affecting the tax-exempt status of the Bonds and
      the
      covenants of the Company in Sections 4.2(c), 4.2(d), 4.2(e), 4.2(f) and
      4.2(g) hereof shall survive the termination of this Agreement.

     

    Section 8.10.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 Company 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.

     

    Section 8.11.Bond
      Insurance. The
      payment of the principal of and interest on the Bonds when due is to be insured
      under, and to the extent provided in, the Bond Insurance Policy, including
      the
      endorsements thereto, to be issued by the Bond Insurer, and the Issuer and
      the
      Company agree to be bound by the provisions contained in Appendix C
      to the
      Indenture and the Company agrees to be bound by the provisions contained in
      the
      Insurance Agreement. In the event of any conflict between the provisions of
      Appendix C
      to
      the
      Indenture and the provisions of this Agreement, the provisions of Appendix C
      shall
      govern and control.

     

    All
      references in this Agreement to the Bond Insurer shall only apply so long as
      a
      Bond Insurance Policy issued by the Bond Insurer is in effect for any of the
      Bonds (and the Bond Insurer has not failed to comply with its payment
      obligations under the Bond Insurance Policy).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In
      Witness Whereof,
      the
      Issuer and the Company have caused this Agreement to be executed in their
      respective corporate names and their respective corporate seals to be hereunto
      affixed and attested by their duly authorized officers, all as of the date
      first
      above written.

    

    Washoe
      County, Nevada

    

    

    By
      ______________________________

                                
      Chairman

             
      Board
      of
      County Commissioners

    (SEAL)

    

    Attest:

     

    ___________________________________

    County
      Clerk

    

    

    Sierra
      Pacific Power Company

     

    By
      _____________________________

                      
      William
      D. Rogers

         
Senior
      Vice President, Chief Financial

                    Officer
      and Treasurer

    (SEAL)

    

    Attest:

     

    ____________________________________

    Secretary

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