PREFERRED SECURITIES GUARANTEE AGREEMENT SOUTHWEST GAS CAPITAL I Dated as of ________,

1
================================================================================

PREFERRED SECURITIES GUARANTEE AGREEMENT

SOUTHWEST GAS CAPITAL I

Dated as of ____________, ____

================================================================================

Exhibit 4.01

TABLE OF CONTENTS

Section Page
------- ----
ARTICLE I

Definitions and Interpretation

Section 1.1. Definitions and Interpretation. . . . . . . . . . . . . . . . . 2

ARTICLE II

Trust Indenture Act

Section 2.1. Trust Indenture Act; Application. . . . . . . . . . . . . . . . 5
Section 2.2. Lists of Holders of Trust Securities. . . . . . . . . . . . . . 5
Section 2.3. Reports by the Preferred Guarantee Trustee. . . . . . . . . . . 6
Section 2.4. Periodic Reports to Preferred Guarantee Trustee. . . . . . . . 6
Section 2.5. Evidence of Compliance with Conditions Precedent. . . . . . . . 6
Section 2.6. Events of Default; Waiver. . . . . . . . . . . . . . . . . . . 6
Section 2.7. Event of Default; Notice. . . . . . . . . . . . . . . . . . . . 7
Section 2.8. Conflicting Interests. . . . . . . . . . . . . . . . . . . . . 7

ARTICLE III

Power, Duties and Rights of
Preferred Guarantee Trustee

Section 3.1. Powers and Duties of the Preferred Guarantee Trustee. . . . . . 7
Section 3.2. Certain Rights of Preferred Guarantee Trustee. . . . . . . . . 10
Section 3.3. Not Responsible for Recitals or Issuance of Guarantee. . . . . 12

ARTICLE IV

Preferred Guarantee Trustee

Section 4.1. Preferred Guarantee Trustee; Eligibility. . . . . . . . . . . . 12
Section 4.2. Appointment, Removal and Resignation of Preferred Guarantee
Trustees . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE V

Guarantee

Section 5.1. Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.2. Subordination. . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.3. Waiver of Notice and Demand. . . . . . . . . . . . . . . . . . 14

Section 5.4. Obligations Not Affected. . . . . . . . . . . . . . . . . . . . . 15
Section 5.5. Rights of Holders. . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.6. Guarantee of Payment. . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.7. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.8. Independent Obligations. . . . . . . . . . . . . . . . . . . . . 17

ARTICLE VI

Limitation of Transactions; Subordination

Section 6.1. Limitation of Transactions. . . . . . . . . . . . . . . . . . . . 17
Section 6.2. Ranking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE VII

Termination

Section 7.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE VIII

Indemnification

Section 8.1. Exculpation. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.2. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE IX

Miscellaneous

Section 9.1. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 19
Section 9.2. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.4. Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.5. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 21

ii
4

PREFERRED SECURITIES GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
___________, ____, is executed and delivered by Southwest Gas Corporation, a
California corporation (the "Guarantor"), and Xxxxxx Trust and Savings Bank, an
Illinois banking corporation, as trustee (the "Preferred Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of Southwest Gas Capital I, a Delaware
statutory business trust (the "Issuer").

RECITALS

WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of ____________, ____, among the trustees of
the Issuer named therein, the Guarantor as sponsor and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof $____________ aggregate stated liquidation amount
of Preferred Securities designated the _____% Trust Originated Preferred
Securities (the "Preferred Securities");

WHEREAS, as incentive for the Holders (as hereinafter defined)
to purchase the Preferred Securities, the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth in this Guarantee Agreement,
to pay to the Holders of the Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein; and

WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee Agreement") with
substantially identical terms to this Guarantee Agreement for the benefit of the
holders of the Common Securities (as defined herein) except that if an Event of
Default (as defined in the Indenture (as defined herein)), has occurred and is
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee Agreement are subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments under
this Guarantee Agreement.

NOW, THEREFORE, in consideration of the purchase by each Holder
of Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders.

ARTICLE I

Definitions and Interpretation

Section 1.1. Definitions and Interpretation.

In this Guarantee Agreement, unless the context otherwise
requires:

(a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;

(b) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;

(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;

(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee
Agreement unless otherwise specified;

(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined
in this Guarantee Agreement or unless the context otherwise
requires; and

(f) a reference to the singular includes the plural and vice versa.

"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.

"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.

"Common Securities" means the common securities representing
undivided beneficial interests in the assets of the Issuer.

"Covered Person" means any Holder or beneficial owner of
Preferred Securities.

"Direction" by a Person means a written direction signed:

(a) if the Person is a natural person by that Person; or

(b) in any other case, in the name of such Person by one or
more Authorized Officers of that Person.

"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Guarantee Agreement.

"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer shall have received a payment
of interest or principal on the Notes therefor from the Guarantor, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price") to the extent the Issuer has received a
payment of interest or principal on the Notes from the Guarantor with respect to
any Preferred Securities called for redemption by the Issuer, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Notes to the Holders in
exchange for Preferred Securities as provided in the Declaration or the
redemption of all of the Preferred Securities upon the maturity or redemption of
the Notes), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution").

"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.

"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.

"Indenture" means the Indenture dated as of _____________,
____, among the Note Issuer and Xxxxxx Trust and Savings Bank, as trustee, and
any indenture supplemental thereto pursuant to which certain Notes are to be
issued.

"Majority in liquidation amount of the Trust Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation

or otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Preferred Securities.

"Note Issuer" means the Guarantor in its capacity as issuer of
the Notes.

"Notes" means the subordinated debt securities of the Note
Issuer issued pursuant to the Indenture and acquired by the Issuer.

"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:

(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition relating
thereto;

(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the
Officers' Certificate;

(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and

(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.

"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.

"Preferred Guarantee Trustee" means Xxxxxx Trust and Savings
Bank, until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee Agreement, and
thereafter means each such Successor Preferred Guarantee Trustee.

"Responsible Officer" means, when used with respect to the
Preferred Guarantee Trustee, an officer of the Trustee in the Corporate Trust
Office, including the president, any vice-president, any assistant
vice-president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, any

trust officer or assistant trust officer or any other officer customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.

"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.

"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.

"Trust Indenture Act" means the Trust Indenture Act of 1939, in
effect at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.

"Trust Securities" means collectively the Common Securities and
the Preferred Securities.

ARTICLE II

Trust Indenture Act

Section 2.1. Trust Indenture Act; Application.

(a) This Guarantee Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this
Guarantee Agreement and shall, to the extent applicable, be
governed by such provisions; and

(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust
Indenture Act, such duties imposed by the Trust Indenture Act
shall control.

Section 2.2. Lists of Holders of Trust Securities.

(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee
may reasonably require, of the names and addresses of the
Holders of the Preferred Securities ("List of Holders") as of
such date, (i) within 14 days after _________ and _______ of
each

year, and (ii) at any other time within 30 days of receipt by
the Guarantor of a written request for a List of Holders as of
a date no more than 14 days before such List of Holders is
given to the Preferred Guarantee Trustee provided that the
Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from
the most recent List of Holders given to the Preferred
Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it
on receipt of a new List of Holders.

(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the
Trust Indenture Act.

Section 2.3. Reports by the Preferred Guarantee Trustee.

Within 60 days after ____________ of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

Section 2.4. Periodic Reports to Preferred Guarantee Trustee.

The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.

Section 2.5. Evidence of Compliance with Conditions Precedent.

The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Guarantee Agreement that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.

Section 2.6. Events of Default; Waiver.

The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of

all of the Preferred Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.

Section 2.7. Event of Default; Notice.

(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default known to the Preferred Guarantee Trustee, unless such defaults have been
cured before the giving of such notice, provided, that, the Preferred Guarantee
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Preferred Securities.

(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice as provided in Section 9.3, or a Responsible
Officer shall have obtained actual notice, of such Event of Default.

Section 2.8. Conflicting Interests.

The Declaration shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of the first proviso contained in
Section 310(b) of the Trust Indenture Act.

ARTICLE III

Power, Duties and Rights of
Preferred Guarantee Trustee

Section 3.1. Powers and Duties of the Preferred Guarantee Trustee.

(a) This Guarantee Agreement shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the
Preferred Securities, and the Preferred Guarantee Trustee shall
not transfer this Guarantee Agreement to any Person except a
Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.5(b)

or to a Successor Preferred Guarantee Trustee on acceptance by
such Successor Preferred Guarantee Trustee of its appointment
to act as Successor Preferred Guarantee Trustee. The right,
title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee
Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.

(b) If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Guarantee
Agreement for the benefit of the Holders of the Preferred
Securities.

(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Guarantee
Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured
or waived pursuant to Section 2.6), the Preferred Guarantee
Trustee shall exercise such of the rights and powers vested in
it by this Guarantee Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his
or her own affairs.

(d) No provision of this Guarantee Agreement shall be construed to
relieve the Preferred Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:

(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of
Default that may have occurred:

(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely
by the express provisions of this Guarantee
Agreement, and the Preferred Guarantee Trustee
shall not be liable except for the performance
of such duties and obligations as are
specifically set forth in this Guarantee
Agreement, and no implied covenants or
obligations shall be read into this Guarantee
Agreement against the Preferred Guarantee
Trustee; and

(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred
Guarantee Trustee may conclusively rely, as to
the truth of the statements and the
correctness of the opinions expressed therein,
upon any certificates or opinions furnished to
the Preferred Guarantee Trustee and conforming
to the requirements of this Guarantee
Agreement; but in the case of any such
certificates or opinions that by any provision
hereof are specifically required to be
furnished to the Preferred Guarantee Trustee,
the Preferred Guarantee Trustee shall be under
a duty to examine the same to determine
whether or not they conform to the
requirements of this Guarantee Agreement;

(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a
Responsible Officer of the Preferred Guarantee
Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;

(iii) the Preferred Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be
taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority
in liquidation amount of the Preferred Securities
relating to the time, method and place of conducting
any proceeding for any remedy available to the
Preferred Guarantee Trustee, or exercising any trust
or power conferred upon the Preferred Guarantee
Trustee under this Guarantee Agreement; and

(iv) no provision of this Guarantee Agreement shall require
the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial
liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not
reasonably assured to it.

Section 3.2. Certain Rights of Preferred Guarantee Trustee.

(a) Subject to the provisions of Section 3.1:

(i) The Preferred Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting
upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been
signed, sent or presented by the proper party or
parties.

(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently
evidenced by a Direction or an Officers' Certificate.

(iii) Whenever, in the administration of this Guarantee
Agreement, the Preferred Guarantee Trustee shall deem
it desirable that a matter be proved or established
before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless
other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt
of such request, shall be promptly delivered by the
Guarantor.

(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any
instrument (or any rerecording, refiling or
registration thereof).

(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such
counsel with respect to legal matters shall be full
and complete authorization and protection in respect
of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any
of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions
concerning the administration of this Guarantee
Agreement from any court of competent jurisdiction.

(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder
shall have provided to the Preferred Guarantee Trustee
such security and indemnity acceptable to the
Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying
with such request or direction, including such
reasonable advances as may be requested by the
Preferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this
Guarantee Agreement.

(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters
stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or
document, but the Preferred Guarantee Trustee, in its
discretion may make such further inquiry or
investigation into such facts or matters as it may see
fit.

(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys, and the Preferred Guarantee Trustee shall
not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due
care by it hereunder.

(ix) Any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the
Preferred Securities, and the signature of the
Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such
action. No third party shall be required to inquire as
to the authority of the Preferred Guarantee Trustee to
so act or as to its compliance with any of the terms
and provisions of this Guarantee Agreement, both of
which shall be conclusively evidenced by the Preferred
Guarantee Trustee's or its agent's taking such action.

(x) Whenever in the administration of this Guarantee
Agreement the Preferred Guarantee Trustee shall deem
it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other
action hereunder, the Preferred Guarantee Trustee (i)
may request instructions from the Holders of the
Preferred Securities, (ii) may refrain from enforcing
such remedy or right or taking such other action until
such instructions are received, and (iii) shall be
protected in acting in accordance with such
instructions.

(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Preferred Guarantee
Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent
in accordance with applicable law, to perform any such act or
acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Preferred
Guarantee Trustee shall be construed to be a duty.

Section 3.3. Not Responsible for Recitals or Issuance of Guarantee.

The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Guarantee Agreement.

ARTICLE IV

Preferred Guarantee Trustee

Section 4.1. Preferred Guarantee Trustee; Eligibility.

(a) There shall at all times be a Preferred Guarantee Trustee which
shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under
the laws of the United States of America or any State
or Territory thereof or of the District of Columbia,
or a corporation or Person permitted by the Securities
and Exchange Commission to act

as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of
at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to
above, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of
condition so published.

(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred
Guarantee Trustee shall immediately resign in the manner and
with the effect set out in Section 4.2(c).

(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of
the Trust Indenture Act, the Preferred Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.

Section 4.2. Appointment, Removal and Resignation of Preferred Guarantee
Trustees.

(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the
Guarantor.

(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor
Preferred Guarantee Trustee and delivered to the Guarantor and
the resigning Preferred Guarantee Trustee.

(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have
been appointed or until its removal or resignation. The
Preferred Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and

delivered to the Guarantor, which resignation shall not take
effect until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by instrument in
writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.

(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section
4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Preferred Guarantee
Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as
it may deem proper, appoint a Successor Preferred Guarantee
Trustee.

ARTICLE V

Guarantee

Section 5.1. Guarantee.

The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

Section 5.2. Subordination.

If an event of default under the Indenture has occurred and is
continuing, the rights of holders of the Common Securities to receive payments
under the Common Securities Guarantee Agreement are subordinated to the rights
of Holders of Preferred Securities to receive Guarantee Payments.

Section 5.3. Waiver of Notice and Demand.

The Guarantor hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of

nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

Section 5.4. Obligations Not Affected.

The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:

(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Issuer;

(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the
performance of any other obligation under, arising out of, or
in connection with, the Preferred Securities (other than an
extension of time for payment of Distributions, Redemption
Price, Liquidation Distribution or other sums payable that
results from the extension of any interest payment period on
the Notes or any extension of the maturity date of the Notes
permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to
the terms of the Preferred Securities, or any action on the
part of the Issuer granting indulgence or extension of any
kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets
of the Issuer;

(e) any invalidity of, or defect or deficiency in the Preferred
Securities;

(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or

(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of

a guarantor, it being the intent of this Section 5.4 that the
obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

Section 5.5. Rights of Holders.

(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method
and place of conducting of any proceeding for any remedy
available to the Preferred Guarantee Trustee in respect of this
Guarantee Agreement or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Guarantee
Agreement.

(b) If the Preferred Guarantee Trustee fails to enforce this
Guarantee Agreement, any Holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Issuer, the
Preferred Guarantee Trustee or any other Person.

Section 5.6. Guarantee of Payment.

This Guarantee Agreement creates a guarantee of payment and not
of collection.

Section 5.7. Subrogation.

The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee Agreement; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.

Section 5.8. Independent Obligations.

The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.4 hereof.

ARTICLE VI

Limitation of Transactions; Subordination

Section 6.1. Limitation of Transactions.

So long as any Preferred Securities remain outstanding, if
there shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on, or
make any distribution with respect to, or redeem, purchase or acquire or make a
liquidation payment with respect to, any of its capital stock and (b) the
Guarantor shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by the Guarantor
which rank pari passu with or junior to the Notes, provided, that, the foregoing
restriction in this Section 6.1(a) shall not apply to any stock dividends paid
by the Guarantor, where the dividend stock is the same stock as that on which
the dividend is being paid.

Section 6.2. Ranking.

This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor (other than the Common
Securities Guarantee or any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Affiliate of
the Guarantor), (ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.

ARTICLE VII

Termination

Section 7.1. Termination.

This Guarantee Agreement shall terminate upon (i) full payment
of the Redemption Price of all Preferred Securities, (ii) the distribution of
the Notes to the Holders of all Preferred Securities or (iii) full payment of
the amounts payable in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Preferred Securities Guarantee.
Notwithstanding anything contained herein to the contrary, the obligations of
the Guarantor set forth in Article VIII hereof shall survive termination of this
Guarantee Agreement or the earlier resignation or removal of the Preferred
Guarantee Trustee.

ARTICLE VIII

Indemnification

Section 8.1. Exculpation.

(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee Agreement or by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.

(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which

Distributions to Holders of Preferred Securities might properly be paid.

Section 8.2. Indemnification.

(a) To the fullest extent permitted by applicable law, the Guarantor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person in connection with
this Guarantee Agreement including without limitation by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Guarantee Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.

(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of any undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.2(a).

ARTICLE IX

Miscellaneous

Section 9.1. Successors and Assigns.

All guarantees and agreements contained in this Guarantee
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.

Section 9.2. Amendments.

Except with respect to any changes that do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Guarantee Agreement may only be amended with the prior approval of the
Holders of at least 66-2/3% in liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus

accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all the outstanding Preferred Securities (as defined in the
Declaration). The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Trust Securities apply to the giving of such
approval. The Preferred Guarantee Trustee may, but shall have no obligation to,
execute and deliver any amendment to this Guarantee Agreement which affects the
Preferred Guarantee Trustee's rights, duties or immunities hereunder or
otherwise.

Section 9.3. Notices.

All notices provided for in this Guarantee Agreement shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail as follows:

(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such
other address as the Preferred Guarantee Trustee may give
notice of to the Holders of the Preferred Securities):

Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Administration
Telecopy Number: (000) 000-0000

(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may
give notice of to the Holders of the Preferred Securities):

Southwest Gas Corporation
0000 Xxxxxx Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Telecopy Number: (000) 000-0000

All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.

Section 9.4. Benefit.

This Guarantee Agreement is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.

Section 9.5. Governing Law.

THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee Agreement to be executed by their respective officers thereunto duly
authorized, as of the day and year first above written.

SOUTHWEST GAS CORPORATION

By:
-------------------------------
Name:
Title:

XXXXXX TRUST AND SAVINGS BANK,
as Preferred Guarantee Trustee

By:
--------------------------------
Name:
Title:

Document Metadata

Table of Contents

PREFERRED SECURITIES GUARANTEE AGREEMENT SOUTHWEST GAS CAPITAL I Dated as of ________,

Document Metadata