Document:

exhibit1003.htm

     

    
      	 
      

    

    

    

     

    FINANCING
AGREEMENT

     

    Dated as
of September 1, 2008

     

    By and
Between

     

    CLARK
COUNTY, NEVADA

     

    and

     

    SOUTHWEST
GAS CORPORATION

     

    relating
to

     

    CLARK
COUNTY, NEVADA

    INDUSTRIAL
DEVELOPMENT REVENUE BONDS

    (SOUTHWEST
GAS CORPORATION PROJECT)

    SERIES
2008A

     

    

    

    
      	 
      

    

    

    

    
      
        
                                                                            

        

         

      

      
         

        
          

        

      

      
         

        
          TABLE
OF CONTENTS

          

          Page

           

        

      

    

    

      
        	
                ARTICLE
      I    DEFINITIONS

              	
                1

              
	 
      	
                SECTION
      1.1

              	
                Definitions
      of Terms

              	
                1

              
	 
      	
                SECTION
      1.2

              	
                Number
      and Gender

              	
                1

              
	 
      	
                SECTION
      1.3

              	
                Articles,
      Sections

              	
                1

              
	
                ARTICLE
      II   REPRESENTATIONS

              	
                2

              
	 
      	
                SECTION
      2.1

              	
                Representations
      by the Issuer

              	
                2

              
	 
      	
                SECTION
      2.2

              	
                Representations
      by the Borrower

              	
                2

              
	
                ARTICLE
      III  THE PROJECT; ISSUANCE OF THE BONDS

              	
                4

              
	 
      	
                SECTION
      3.1

              	
                The
      Project

              	
                4

              
	 
      	
                SECTION
      3.2

              	
                Agreement
      to Issue Bonds; Application of Bond Proceeds

              	
                4

              
	 
      	
                SECTION
      3.3

              	
                Investment
      of Moneys

              	
                4

              
	 
      	
                SECTION
      3.4

              	
                Costs
      of Issuance

              	
                4

              
	
                ARTICLE
      IV   LOAN AND PROVISIONS FOR REPAYMENT

              	
                5

              
	 
      	
                SECTION
      4.1

              	
                Loan
      of Bond Proceeds

              	
                5

              
	 
      	
                SECTION
      4.2

              	
                Loan
      Repayments and Other Amounts Payable

              	
                5

              
	 
      	
                SECTION
      4.3

              	
                Unconditional
      Obligation

              	
                7

              
	 
      	
                SECTION
      4.4

              	
                Payments
      Pledged and Assigned

              	
                7

              
	 
      	
                SECTION
      4.5

              	
                Payment
      of the Bonds and Other Amounts

              	
                8

              
	
                ARTICLE
      V    SPECIAL COVENANTS AND AGREEMENTS

              	
                8

              
	 
      	
                SECTION
      5.1

              	
                Right
      of Access to the Project and Records

              	
                8

              
	 
      	
                SECTION
      5.2

              	
                Borrower’s
      Maintenance of Its Existence; Assignments

              	
                9

              
	 
      	
                SECTION
      5.3

              	
                Insurance

              	
                10

              
	 
      	
                SECTION
      5.4

              	
                Maintenance
      and Repair; Taxes; Utility and Other Charges

              	
                10

              
	 
      	
                SECTION
      5.5

              	
                Qualification
      in Nevada

              	
                11

              
	 
      	
                SECTION
      5.6

              	
                No
      Warranty by the Issuer

              	
                11

              
	 
      	
                SECTION
      5.7

              	
                Agreement
      as to Use of the Project

              	
                11

              
	 
      	
                SECTION
      5.8

              	
                Notices
      and Certificates Required to be Delivered to the Trustee

              	
                11

              
	 
      	
                SECTION
      5.9

              	
                Borrower
      to Furnish Notice of Adjustments of Interest Rate Periods

              	
                12

              
	 
      	
                SECTION
      5.10

              	
                Information
      Reporting

              	
                12

              
	 
      	
                SECTION
      5.11

              	
                Tax
      Covenants; Rebate

              	
                12

              
	 
      	
                SECTION
      5.12

              	
                Continuing
      Disclosure

              	
                13

              
	 
      	
                SECTION
      5.13

              	
                Liquidity
      Facility

              	
                13

              
	 
      	
                SECTION
      5.14

              	
                Letter
      of Credit

              	
                13

              

      

      
        
           

        

        
           -i-

          
            

          

        

        
           

        

      

      

      
        	 
      	
                SECTION
      5.15

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

              	
                14

              
	 
      	
                SECTION
      5.16

              	
                Bond
      Insurance

              	
                14

              
	
                ARTICLE
      VI   EVENTS OF DEFAULT AND REMEDIES

              	
                15

              
	 
      	
                SECTION
      6.1

              	
                Events
      of Default Defined

              	
                15

              
	 
      	
                SECTION
      6.2

              	
                Remedies
      on Default

              	
                16

              
	 
      	
                SECTION
      6.3

              	
                No
      Remedy Exclusive

              	
                18

              
	 
      	
                SECTION
      6.4

              	
                Agreement
      to Pay Fees and Expenses of Counsel

              	
                19

              
	 
      	
                SECTION
      6.5

              	
                No
      Additional Waiver Implied by One Waiver; Consents to
    Waivers

              	
                19

              
	
                ARTICLE
      VII  OPTION AND OBLIGATION OF BORROWER TO PREPAY

              	
                19

              
	 
      	
                SECTION
      7.1

              	
                Option
      to Prepay

              	
                19

              
	 
      	
                SECTION
      7.2

              	
                Obligation
      to Prepay

              	
                20

              
	 
      	
                SECTION
      7.3

              	
                Notice
      of Prepayment; Amount to be Prepaid

              	
                20

              
	 
      	
                SECTION
      7.4

              	
                Cancellation
      at Expiration of Term

              	
                20

              
	
                ARTICLE
      VIII NON-LIABILITY OF ISSUER

              	
                21

              
	 
      	
                SECTION
      8.1

              	
                Non-Liability
      of the Issuer

              	
                21

              
	
                ARTICLE
      IX    MISCELLANEOUS

              	
                21

              
	 
      	
                SECTION
      9.1

              	
                Notices

              	
                21

              
	 
      	
                SECTION
      9.2

              	
                Assignments

              	
                21

              
	 
      	
                SECTION
      9.3

              	
                Severability

              	
                21

              
	 
      	
                SECTION
      9.4

              	
                Execution
      of Counterparts

              	
                21

              
	 
      	
                SECTION
      9.5

              	
                Amounts
      Remaining in Bond Fund

              	
                22

              
	 
      	
                SECTION
      9.6

              	
                Amendments,
      Changes and Modifications

              	
                22

              
	 
      	
                SECTION
      9.7

              	
                Governing
      Law

              	
                22

              
	 
      	
                SECTION
      9.8

              	
                Authorized
      Issuer and Borrower Representatives

              	
                22

              
	 
      	
                SECTION
      9.9

              	
                Term
      of the Agreement

              	
                22

              
	 
      	
                SECTION
      9.10

              	
                Binding
      Effect

              	
                22

              
	 
      	
                SECTION
      9.11

              	
                Trustee
      as a Party in Interest and Third Party Beneficiary

              	
                22

              
	
                EXHIBIT
      A-1    DESCRIPTION OF THE PROJECT

              	
                A-1

              

      

      

      

      
        
           

        

        
           -ii-

          
            

          

        

        
           

        

      

    

     

    THIS
FINANCING AGREEMENT made and entered into as of September 1, 2008 (this
“Agreement”), by and between CLARK COUNTY, NEVADA, a political subdivision of
the State of Nevada, party of the first part (hereinafter sometimes referred to
as the “Issuer”), and SOUTHWEST GAS CORPORATION, a California corporation, party
of the second part (hereinafter sometimes referred to as the
“Borrower”),

     

    W I T N E
S S E T H:

     

    WHEREAS,
concurrently with the execution and delivery of this Agreement, the Issuer is
entering into an Indenture of Trust, dated as of September 1, 2008 (the
“Indenture”), with The Bank of New York Mellon Trust Company N.A., as trustee
(the “Trustee”) thereunder, pursuant to which $50,000,000 principal amount of
Clark County, Nevada Industrial Development Revenue Bonds (Southwest Gas
Corporation Project) Series 2008A (the “Bonds”), will be issued and secured;
and

     

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

     

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

     

     

    ARTICLE
I

     

    DEFINITIONS

     

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

     

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

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
II

     

    REPRESENTATIONS

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (g)           On
September 16, 2008, the Issuer adopted its resolution approving the issuance of
the Bonds.

     

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

     

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

     

    
      
         

      

      
         2

        
          

        

      

      
         

      

    

    (a)              The
Borrower is a corporation duly incorporated and in good standing in the State of
California, is duly qualified to transact business and in good standing in the
State, has power to enter into and by proper corporate action has been duly
authorized to execute and deliver this Agreement and all other documents
contemplated hereby to be executed by the Borrower in connection with the
issuance and sale of the Bonds.

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
         3

        
          

        

      

      
         

      

    

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

     

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

     

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

     

     

    ARTICLE
III

     

    THE
PROJECT; ISSUANCE OF THE BONDS

     

    SECTION
3.1                                The
Project.  The Borrower represents that the Borrower has
acquired, constructed, equipped, and installed the Project and all other
facilities and real and personal property necessary for the operation of the
Project substantially in accordance with the Plans and Specifications for the
Project. The Borrower agrees that it at all times shall operate the Project as a
“project” within the meaning of the Act and so that the Project constitutes
Exempt Facilities.

     

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

     

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

     

    SECTION
3.4                                Costs of
Issuance.  The Borrower covenants and agrees to pay all costs
incurred in connection with the issuance of the Bonds, and the Issuer shall have
no obligation with respect to such costs.

     

    
      
         

      

      
         4

        
          

        

      

      
         

      

    

     

    ARTICLE
IV

     

    LOAN AND
PROVISIONS FOR REPAYMENT

     

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

     

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

     

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

     

    (b)           The
Borrower shall pay or cause to be paid to the Trustee amounts equal to the
amounts to be paid by the Trustee for the purchase of Bonds which have not been
remarketed pursuant to Article IV of the Indenture and the premium, if any, on
the Bonds which have been remarketed pursuant to Article IV of the Indenture, in
each case as and to the extent provided in the Indenture.  Such
amounts shall be paid or caused to be paid by the Borrower to the Trustee,
acting as Tender Agent (or, for so long as the Bonds are Book-Entry Bonds, to
the Securities Depository), in immediately available funds on the dates and no
later than the times such payments pursuant to Section 4.05 of the Indenture are
to be made.  In the event the Borrower shall fail to make (or cause to
be made) any of the payments required in this subsection, the payment so in
default shall continue as an obligation of the Borrower until the amount in
default shall have been fully paid.  The obligation of the Borrower to
make any payment under this subsection shall be deemed to have been satisfied to
the extent of any corresponding payment made by a Bank or a Liquidity Provider
to the Trustee under any Letter of Credit or Liquidity Facility.

     

    
      
         

      

      
         5

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    
      
         

      

      
         6

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

    SECTION
4.4                                Payments Pledged and
Assigned.  It is understood and agreed that all rights to the
payment of moneys hereunder (except payments made to the Trustee pursuant to
Sections 4.2(c), 4.2(e) 4.2(g), 4.2(h) and 6.4 hereof and payments to be made to
the Remarketing

     

    
      
         

      

      
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    Agent and
the Auction Agent pursuant to Section 4.2(f) hereof and the Reserved Rights of
the Issuer) are pledged and assigned to the Trustee by the
Indenture.  The Borrower consents to such pledge and assignment. The
Issuer hereby directs the Borrower and the Borrower hereby agrees to pay or
cause to be paid to the Trustee all said amounts required to be paid by or for
the account of the Borrower pursuant to Section 4.2 hereof (except payments to
be made directly to the Remarketing Agent and the Auction Agent pursuant to
Section 4.2(f) hereof and payments to be made directly to the Issuer pursuant to
Sections 4.2(d), 4.2(e), 4.2(h) and 6.4 hereof).  The Project will not
constitute any part of the security for the Bonds.

     

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

     

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

     

     

    ARTICLE
V

     

    SPECIAL
COVENANTS AND AGREEMENTS

     

    SECTION
5.1                                Right of Access to the
Project and Records.  The Borrower agrees that during the term
of this Agreement the Issuer, the Trustee and the duly authorized agents of
either of them shall have the right at all reasonable times during normal
business hours to examine the books and records of the Borrower with respect to
the Project and to enter upon the site of the Project to examine and inspect the
Project; provided, however, that this right is subject to federal and State laws
and regulations applicable to the site of the Project.  The rights of
access hereby reserved to the Issuer and the Trustee may be exercised only after
such agent shall have executed release of liability and secrecy agreements if
requested by the Borrower in the form then currently used by the Borrower, and
nothing contained in this Section or in any other provision of this Agreement
shall be construed to entitle the Issuer or the Trustee to any information or
inspection involving the confidential know-how of the Borrower.

     

    
      
         

      

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

     

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

     

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

     

    (ii)           any
existing Bond Insurance, Liquidity Facility or Letter of Credit will remain in
full force and effect or will be replaced as provided in Sections 5.13 or 5.14,
or 5.16, or the Bonds shall have been redeemed or have been converted to a
different Rate Period following a mandatory tender;

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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    merger
within ten (10) Business Days after its completion, together with the officer’s
certificate described in the preceding sentence.

     

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

     

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

     

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

     

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

     

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

     

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

     

    SECTION
5.3                                Insurance
..  The Borrower agrees that it will keep, or cause to be kept,
(i) the Project insured against such risks and in such amounts as are
consistent with its insurance practices for similar types of facilities (which
may include self-insurance), and (ii) insurance against all direct or
contingent loss or liability for personal injury, death or property damage
occasioned by the operation of the Project, which insurance may include
self-insurance and may be a part of the policy or policies of insurance
customarily maintained by the Borrower in connection with its general property
and liability insurance upon all of the plants and properties operated by it
(including such deductibles as may be provided in said policies).

     

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

     

    
      
         

      

      
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    Project,
or cause the Project to be so maintained, during the term of this Agreement
(i) in as reasonably safe condition as its operations shall permit and
(ii) in good repair and in good operating condition, ordinary wear and tear
excepted, making from time to time all necessary repairs thereto and renewals
and replacements thereof.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (c)           Prompt
written disclosure of any significant change known to the Borrower that occurs
which would adversely impact the Trustee’s ability to perform its duties under
the Indenture, or of any conflicts which may result because of other business
dealings

     

    
      
         

      

      
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    between
the Trustee and the Borrower (including, without limitation, removal or
replacement of the Remarketing Agent, if any).

     

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

     

    SECTION
5.10                                Information
Reporting.  The Issuer covenants and agrees that, upon the
direction of the Borrower or Bond Counsel, it will mail or cause to be mailed to
the Secretary of the Treasury (or his designee as prescribed by regulation,
currently the Internal Revenue Service Center, Ogden, UT 84201) a statement
setting forth the information required by Section 149(e) of the 1986 Code, which
statement shall be in the form of the Information Reporting Statement
(Form 8038) of the Internal Revenue Service (or any successor form as may
be necessary from time to time with respect to any Bonds).

     

    SECTION
5.11                                Tax Covenants;
Rebate.  

     

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

     

    (b)           The
Borrower covenants that it will not take any action or fail to take any action
with respect to the Bonds which would cause any of the Bonds to be “arbitrage
bonds” within the meaning of Section 148 of the 1986 Code.

     

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

     

    (d)           The
Borrower shall calculate, or cause to be calculated, its rebate liability at
such times as are required by Section 148(f) of the 1986 Code and any temporary,
proposed or final Regulations as may be applicable to such Bonds from time to
time.  The Borrower shall provide to the Trustee a copy of each
calculation of rebate liability prepared by or on behalf of the Borrower, which
documentation shall be made available to the Issuer upon request.  The
Borrower shall make any and all payments to the Trustee for deposit in the
Rebate Fund, or as

     

    
      
         

      

      
         12

        
          

        

      

      
         

      

    

    otherwise
required to be made to the United States Department of the Treasury in
connection with any of the Bonds pursuant to Section 148(f) of the 1986
Code.

     

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

     

    SECTION
5.12                                Continuing
Disclosure.  The Borrower shall undertake the continuing
disclosure requirements promulgated under S.E.C. Rule 15c2-12, as it may from
time to time hereafter be amended or supplemented, if applicable, and the Issuer
shall have no liability to the holders of the Bonds or any other person with
respect to such disclosure matters.  Notwithstanding any other
provision of the Indenture, failure of the Borrower to comply with the
requirements of S.E.C. Rule 15c2-12, as it may from time to time hereafter be
amended or supplemented, shall not be considered an Event of Default; however,
the Trustee, subject to Article X of the Indenture, may (and, at the request of
the Remarketing Agent or the holders of at least 25% in aggregate principal
amount of Outstanding Bonds, shall) or any Bondholder or beneficial owner of any
Bonds may take such actions as may be necessary and appropriate, including
seeking mandate or specific performance by court order, to cause the Borrower to
comply with its obligations under this Section 5.12.

     

    SECTION
5.13                                Liquidity
Facility.  At the time of initial issuance and delivery of the
Bonds, there is no Liquidity Facility in effect with respect to the
Bonds.  The Borrower may at any time, upon notice to the Issuer,
deliver to the Trustee a Liquidity Facility effective at the start
of a Rate Period, or at another time consistent with the Indenture, subject to
the conditions set forth in this Section 5.13 and in Section 5.15 and to the
requirements of the Indenture.

     

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

     

    SECTION
5.14                                Letter of
Credit.  At the time of their initial issuance and delivery,
the Bonds will be secured by an Initial Letter of Credit.  Thereafter,
the Borrower may at any time, upon notice to the Issuer, deliver a Letter of
Credit at the start of a Rate Period, or at another time consistent with the
Indenture, subject to the conditions set forth in this Section 5.14 and in
Section 5.15 and to the requirements of the Indenture.

     

    
      
         

      

      
         13

        
          

        

      

      
         

      

    

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

     

    If a
Letter of Credit is already in effect, upon delivery of a new Letter of Credit
pursuant to this Section 5.14, the provider of the new Letter of Credit shall
refund to the provider of the existing Letter of Credit the purchase price of
all Outstanding Bank Bonds, including any accrued and unpaid interest on such
Bank Bonds, calculated as set forth in the Reimbursement Agreement relating to
the existing Letter of Credit, unless the Borrower pays such purchase price and
interest directly to the Bank.

     

    SECTION
5.15                                Requirement to Deliver
Letter of Credit or Liquidity Facility Under Certain
Circumstances.  The Borrower must, upon (i) any Expiration
Date, if the Bonds will, immediately after such Expiration Date, bear interest
at a Daily Rate, a Weekly Rate or a Flexible Rate or (ii) any change in Rate
Period to a Daily Rate Period, Weekly Rate Period or Flexible Rate Period, other
than a change from a Weekly Rate Period to a Daily Rate Period or from a Daily
Rate Period to a Weekly Rate Period, deliver a Letter of Credit or Liquidity
Facility conforming with the requirements of Section 5.13 or 5.14, as
applicable, together with written evidence from each Rating Agency then rating
the Bonds that, following the delivery of such Letter of Credit or Liquidity
Facility, the rating on the Bonds shall not be lower than A-1, P-1 or F-1, as
applicable, or the current short-term rating from such Rating Agency will not be
reduced or withdrawn.

     

    SECTION
5.16                                Bond
Insurance.  At the time of initial issuance and delivery of the
Bonds, there is no Bond Insurance in effect with respect to the
Bonds.  The Borrower may at any time, upon notice to the Issuer,
deliver to the Trustee Bond Insurance effective at the start
of a Rate Period, or at another time consistent with the Indenture, subject to
the conditions set forth in this Section 5.16 and to the requirements of the
Indenture.

     

    Not less
than thirty (30) days prior to the delivery of any Bond Insurance, the Borrower
shall (i) deliver to the Trustee, the Remarketing Agent and the Auction
Agent a written commitment for the delivery of such Bond Insurance,
(ii) inform the Trustee, the Remarketing Agent and the Auction Agent of the
date on which the Bond Insurance will become effective and (iii) inform the
Trustee of the rating expected to apply to the Bonds after the Bond Insurance is
delivered.  On or prior to the date of the delivery of any Bond
Insurance to the Trustee, the Borrower shall cause to be furnished to the
Trustee and the Issuer (i) an opinion of Bond Counsel

     

    
      
         

      

      
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    to the
effect that the delivery of such Bond Insurance to the Trustee is authorized
under the Indenture and complies with the terms hereof and thereof and will not
adversely affect the Tax-Exempt status of the Bonds and (ii) an opinion of
counsel to the Bond Insurer to the effect that the Bond Insurance is exempt from
registration under the Securities Act of 1933, as amended, and is enforceable in
accordance with its terms, except to the extent that enforceability thereof may
be limited by bankruptcy, reorganization or similar laws limiting the
enforceability of creditors’ rights generally and except that no opinion need be
expressed as to the availability of any discretionary equitable
rights.

     

     

    ARTICLE
VI

     

    EVENTS OF
DEFAULT AND REMEDIES

     

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

     

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

     

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

     

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

     

    (d)           The
Borrower shall admit in writing its inability to pay its debts generally as they
become due or shall file a petition in voluntary bankruptcy or shall make any
general assignment for the benefit of its creditors, or shall consent to the
appointment of a receiver or

     

    
      
         

      

      
         15

        
          

        

      

      
         

      

    

    trustee
of all or substantially all of its property, or shall commence a voluntary case
under the United States Bankruptcy Code (as now or hereafter in effect), or
shall file in any court of competent jurisdiction a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, or shall fail to controvert in
a timely or appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under such United States Bankruptcy Code or
other applicable law; or

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
         16

        
          

        

      

      
         

      

    

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

     

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

     

    The
provisions of clause (a) of the preceding paragraph are subject to the condition
that if, at any time after the unpaid indebtedness under Section 4.2(a) hereof
shall have been so declared due and payable, and before any judgment or decree
for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, there shall have been deposited with the Trustee a sum
sufficient to pay all the principal of the Bonds matured prior to such
declaration and all matured installments of interest (if any) upon all the
Bonds, with interest on such overdue installments of principal as provided
herein, and the reasonable expenses of the Trustee and the Issuer, and any and
all other defaults known to the Trustee (other than in the payment of principal
of and interest on the Bonds due and payable solely by reason of such
declaration) shall have been made good or cured to the satisfaction of the
Trustee or provision deemed by the Trustee to be adequate shall have been made
therefor, then, and in every such case, the Trustee shall, on behalf of the
Owners of all the Bonds, with the consent of the Bank or the Bond Insurer, if
any (except in the event of a Bank Default or Insurer Default), rescind and
annul such declaration and its consequences and waive such default; provided
that no such rescission and annulment shall extend to or shall affect any
subsequent default, or shall impair or exhaust any right or power consequent
thereon.

     

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

     

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

     

    
      
         

      

      
         17

        
          

        

      

      
         

      

    

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

     

    Nothing
herein contained, including, without limitation, the last two paragraphs of this
Section 6.2,  shall be construed to prevent the Issuer from
enforcing directly any of its rights under Section 5.1 hereof and under Sections
4.2(d), 4.2(e), 4.2(h) and 6.4 hereof.

     

    In case
proceedings shall be pending for the bankruptcy or for the reorganization of the
Borrower under the federal bankruptcy laws or any other applicable law, or in
case a receiver or trustee shall have been appointed for the property of the
Borrower or in the case of any other similar judicial proceedings relative to
the Borrower, or the creditors or property of the Borrower, then the Trustee
shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount owing and
unpaid pursuant to this Agreement and, in case of any judicial proceedings, to
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee allowed in such judicial
proceedings relative to the Borrower, its creditors or its property, and to
collect and receive any moneys or other property payable or deliverable on any
such claims, and to distribute such amounts as provided in the Indenture after
the deduction of its reasonable charges and expenses.  Any receiver,
assignee or trustee in bankruptcy or reorganization is hereby authorized to make
such payments to the Trustee, and to pay to the Trustee any amount due if for
reasonable compensation and expenses, including reasonable expenses and fees of
counsel incurred by it up to the date of such distribution.

     

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

     

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

     

    SECTION
6.3                                No Remedy
Exclusive.  No remedy herein conferred upon or reserved to the
Issuer or the Trustee is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other

     

    
      
         

      

      
         18

        
          

        

      

      
         

      

    

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

     

    SECTION
6.4                                Agreement to Pay Fees and
Expenses of Counsel.  In the event the Borrower should default
under any of the provisions of this Agreement and the Issuer or the Trustee
should employ Counsel or incur other expenses for the collection of the
indebtedness hereunder or the enforcement of performance or observance of any
obligation or agreement on the part of the Borrower herein contained, the
Borrower agrees that it will on demand therefor pay to the Trustee, the Issuer
or, if so directed by the Issuer, to the Counsel for the Issuer, the reasonable
fees of such Counsel and such other reasonable expenses so incurred by or on
behalf of the Issuer or the Trustee.  If the circumstances set forth
in this Section 6.4 shall occur with the result that the Borrower is obligated
to make payments to the Trustee under this Section 6.4, and so long as such
obligation shall be continuing, in order to secure such obligation of the
Borrower to the Trustee, the Trustee shall have a lien prior to the Bonds on all
moneys held by the Trustee under the Indenture except those moneys held in trust
to pay the principal of and premium, if any, and interest on, or the purchase
price of, particular Bonds and except for moneys, if any, in the Rebate
Fund.  If the Trustee incurs fees and expenses in connection with a
default specified in Section 6.1(c), 6.1(d) or 6.1(e) of this Agreement, such
fees and expenses are understood to include expenses of administration under any
bankruptcy law.

     

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

     

     

    ARTICLE
VII

     

    OPTION
AND OBLIGATION OF BORROWER TO PREPAY

     

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

     

     

    
      
        
           

        

        
           19

          
            

          

        

        
           

        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
         20

        
          

        

      

      
         

      

    

     

    ARTICLE
VIII

     

    NON-LIABILITY
OF ISSUER

     

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

     

     

    ARTICLE
IX

     

    MISCELLANEOUS

     

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

     

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

     

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

     

    SECTION
9.4                                Execution of
Counterparts.  This Agreement may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument; provided, however, that for purposes
of perfecting a

     

    
      
         

      

      
         21

        
          

        

      

      
         

      

    

    security
interest in this Agreement by the Trustee, only the counterpart delivered,
pledged and assigned to the Trustee shall be deemed the original.

     

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

     

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

     

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

     

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

     

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

     

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

     

    SECTION
9.11                                Trustee as a Party in
Interest and Third Party Beneficiary.  The parties hereto
acknowledge and agree that as to any right to indemnity or payment of fees and
expenses

     

    provided
in Section 4.2 hereof the Trustee is a party in interest and third party
beneficiary under this Agreement entitled to enforce its rights as so stated
herein as if it were a party hereto.

     

    [REMAINDER
OF THIS PAGE INTENTIONALLY BLANK]

     

    
      
         

      

      
         22

        
          

        

      

      
         

      

    

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

     

    CLARK
COUNTY, NEVADA

    

    

    

    By:    /s/ Rory
Reid

     

      
        

      

    

    Chair,
Board of County Commissioners

    (SEAL)

    

    

    Attest:

     

     

    /s/ Shirley B.
Parraguirre

     

      
        

      

    

    County
Clerk

    SOUTHWEST
GAS CORPORATION

    

    

    

    By:   /s/
Kenneth J. Kenny

     

      
        
Authorized
Borrower Representative

    

    

    
      
         

      

      
        23 

        
          

        

      

      
         

      

    

    EXHIBIT
A-1

     

    DESCRIPTION OF THE
PROJECT

     

     

    [attached]exhibit10_1.htm

    
      

    

     

    
 

    
      877 North 8th West, Riverton,
WY  82501 USA, Ph:  (307) 856-9271, Fx: (307) 857-3050,
www.usnrg.com

      

      

      For
Immediate Release

      

      U.S.
ENERGY CORP. UPDATES TSX LISTING STRATEGY

      

      

      RIVERTON,
Wyoming – November 6, 2008 – U.S. Energy Corp. (NASDAQ Capital Market: “USEG”)
(“USE” or the “Company”), a natural resources exploration and development
company with interests in molybdenum, oil and gas, and real estate, today
announced that in light of current economic conditions it intends to suspend
finalizing its application for a listing on the Toronto Stock
Exchange.

      

      “In light
of the turbulent market conditions in the last quarter, we have chosen to
suspend our efforts to list on the TSX until an improvement in market conditions
warrants doing so,” stated Keith Larsen, CEO of U.S. Energy Corp.  “We
continue to believe that the TSX is one of the premier exchanges globally for
resource companies and that a Canadian listing could eventually play a role in
our future plans,” he added.

      

      

      * * * *
*

      
        
           

        

        
           

          
            

          

        

        
           

          
            Press
Release

            November
6, 2008

            Page 2 of
2

            

            

          

        

      

      

      About
U.S. Energy Corp.

      

      U.S.
Energy Corp. is a diversified natural resource company with interests in
molybdenum, oil and gas, and real estate.  The Company is
headquartered in Riverton, Wyoming and its common stock is listed on The NASDAQ
Capital Market under the symbol “USEG”.

      

      * * * *
*

      

      

      Disclosure
Regarding Mineral Resources Under SEC and Canadian Regulations; and
Forward-Looking Statements

      

      The
Company owns or may come to own stock in companies which are traded on foreign
exchanges, and may have agreements with some of these companies to acquire
and/or develop the Company’s mineral properties.  An example is Sutter
Gold Mining Inc.  These other companies are subject to the reporting
requirements of other jurisdictions.

      

      United
States residents are cautioned that some of the information available about our
mineral properties, which is reported by the other companies in foreign
jurisdictions, may be materially different from what the Company is permitted to
disclose in the United States.

      

      This
news release includes statements which may constitute “forward-looking”
statements, usually containing the words “believe,” “estimate,” “project,”
“expect," or similar expressions.  These statements are made pursuant
to the safe harbor provision of the Private Securities Litigation Reform Act of
1995.  Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements.  Factors that would cause or contribute to
such differences include, but are not limited to, future trends in mineral
prices, the availability of capital, competitive factors, and other
risks.  By making these forward-looking statements, the Company
undertakes no obligation to update these statements for revision or changes
after the date of this release.

      

      For
further information on the differences between the reporting limitations of the
United States, compared to reports filed in foreign jurisdictions, and also
concerning forward-looking statements, please see the Company’s Form 10-K
(“Disclosure Regarding Forward-Looking Statements”; “Disclosure Regarding
Mineral Resources under SEC and Canadian Regulation”; and “Risk Factors”); and
similar disclosures in the Company’s Forms 10-Q.

      

      *
* * * *

      

      For
further information, please contact:

      

      Reggie
Larsen

      Director
of Investor Relations

      U.S.
Energy Corp.

      (800)
776-9271

      Reggie@usnrg.com

      

      Nick
Hurst

      The
Equicom Group

      Investor
Relations

      (403)
538-4845

      nhurst@equicomgroup.com

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}]]