Exhibit 10.1


                               INDENTURE OF TRUST



                                     BETWEEN



                         NEW YORK STATE ENERGY RESEARCH
                            AND DEVELOPMENT AUTHORITY



                                       AND



                                 CITIBANK, N.A.,
                                   as Trustee



                          Dated as of November 1, 2005



                                 - relating to -
                    $82,000,000 Gas Facilities Revenue Bonds
(The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York Project),



                                  2005 Series A

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<TABLE>

                                TABLE OF CONTENTS
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                                                                                                               Page



                                    ARTICLE I

                                   DEFINITIONS
<S>              <C>                                                                                            <C>
Section 1.01.     Definitions of Specific Terms...................................................................5
Section 1.02.     Rules of construction..........................................................................13

                                   ARTICLE II

        DESCRIPTION; AUTHORIZATION; MANNER OF EXECUTION; AUTHENTICATION;
                       REGISTRATION AND TRANSFER OF BONDS

Section 2.01.     Authorization of Bonds; Issuance of Bonds in one or more series; designation of Bonds..........15
Section 2.02.     Creation and particulars of the Bonds; form of Bonds...........................................16
Section 2.03.     Application of Bond Proceeds...................................................................17
Section 2.04.     Mutilated, lost, stolen or destroyed Bonds.....................................................17
Section 2.05.     Temporary Bonds................................................................................18
Section 2.06.     Execution and Authentication of Bonds..........................................................18
Section 2.07.     Books of Registry..............................................................................19
Section 2.08.     Persons treated as owners......................................................................19
Section 2.09.     Transfer, Registration and Exchange of Bonds...................................................19
Section 2.10.     Global Form; Securities Depository.............................................................20

                                   ARTICLE III

                      SECURITY FOR BONDS; ISSUANCE OF BONDS

Section 3.01.     Pledge and assignment effected by Indenture; Bonds equally and ratably secured.................23
Section 3.02.     Issuance of Bonds..............................................................................23

                                   ARTICLE IV

                         CORPORATION OBLIGATION PAYMENTS

Section 4.01.     Company Obligation Payments....................................................................25
Section 4.02.     Credits on the Company Obligation..............................................................25


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                                    ARTICLE V

                                   [RESERVED]


                                   ARTICLE VI

                  CREATION OF SPECIAL FUNDS AND ACCOUNTS; APPLICATION AND INVESTMENT OF REVENUES

Section 6.01.     Creation of Funds and Accounts.................................................................27
Section 6.02.     Deposit of Company Obligation Payments.........................................................27
Section 6.03.     Application of Monies in the Bond Fund.........................................................28
Section 6.04.     Investment of Funds............................................................................29

                                   ARTICLE VII

                                   [RESERVED]


                                  ARTICLE VIII

                                 CREDIT FACILITY

Section 8.01.     Provisions with respect to the Bond Insurer....................................................31
Section 8.02.     Rights of Credit Facility Issuer...............................................................33

                                   ARTICLE IX

                               REDEMPTION OF BONDS

Section 9.01.     Bonds to be redeemed only in manner provided in Article IX.....................................34
Section 9.02.     Special Tax Redemption Provisions..............................................................35
Section 9.03.     Selection of Bonds to be Redeemed..............................................................37
Section 9.04.     Notice of redemption...........................................................................37
Section 9.05.     Effect of Redemption...........................................................................38
Section 9.06.     Extraordinary Redemption at demand of the State................................................38
Section 9.07.     Purchase of Bonds..............................................................................38
Section 9.08.     Cancellation of Redeemed Bonds.................................................................39

                                    ARTICLE X

                               THE PRIOR BOND FUND

Section 10.01.    Prior Bond Fund................................................................................39

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                                   ARTICLE XI

                              PARTICULAR COVENANTS

Section 11.01.    Payment of principal of, interest on, and redemption premium of Bonds..........................40
Section 11.02.    Performance of covenants.......................................................................40
Section 11.03.    Further instruments............................................................................40
Section 11.04.    Inspection of Project books....................................................................40
Section 11.05.    No extension of time of payment of interest....................................................40
Section 11.06.    Trustee's and Registrar and Paying Agent's fees, charges and expenses; Indemnification
                  of Authority and Trustee.......................................................................40
Section 11.07.    Agreement of the State.........................................................................41
Section 11.08.    Recording and Filing...........................................................................41
Section 11.09.    Rights Under the Participation Agreement.......................................................41

                                   ARTICLE XII

                              DEFAULTS AND REMEDIES

Section 12.01.    Events of Default..............................................................................42
Section 12.02.    Notice to Holders and Others Upon Occurrence of an Event of Default or a Payment
                  Default........................................................................................42
Section 12.03.    Declaration of Principal and Interest As Due...................................................43
Section 12.04.    Action by Trustee Upon Occurrence of Event of Default..........................................44
Section 12.05.    Powers of Trustee With Respect to Participation Agreement and Other Agreements.................45
Section 12.06.    Disposition of Monies in Event of Insufficiencies in Funds and Accounts........................46
Section 12.07.    Effect of Delay or Omission; Waiver of Default; Direction of Remedial Proceedings by
                  the Holders....................................................................................47
Section 12.08.    Suits or Actions by Holders; Any Holder May Enforce Overdue Payment of His or Her Bond
                  or Interest Thereon............................................................................48
Section 12.09.    Remedies Not Exclusive.........................................................................49
Section 12.10.    Effect of Abandonment of Proceedings on Default................................................49
Section 12.11.    Interest on Overdue Amounts....................................................................49

                                  ARTICLE XIII

        CONCERNING THE TRUSTEE; APPOINTMENT OF REGISTRAR AND PAYING AGENT

Section 13.01.    Appointment of Trustee.........................................................................50
Section 13.02.    Indemnification of Trustee as Condition for Remedial Action....................................50
Section 13.03.    Trustee Not Liable for Failure of the Authority or Company to Act..............................50
Section 13.04.    Certain Duties and Responsibilities of the Trustee.............................................50
Section 13.05.    Limitations on Obligations and Responsibilities of Trustee and Registrar and Paying
                  Agent..........................................................................................53
Section 13.06.    Compensation and Indemnification of Trustee....................................................54
Section 13.07.    Statements from Trustee........................................................................54


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Section 13.08.    Notice of Default..............................................................................54
Section 13.09.    Trustee and Registrar and Paying Agent May Deal in Bonds.......................................55
Section 13.10.    Trustee and the Registrar and Paying Agent Not Responsible For Recitals........................55
Section 13.11.    Qualification of the Trustee...................................................................55
Section 13.12.    Resignation and Removal of Trustee.............................................................55
Section 13.13.    Successor Trustee..............................................................................57
Section 13.14.    Appointment of Registrar and Paying Agent......................................................57
Section 13.15.    Trustee may intervene in judicial proceedings involving Authority or the Company...............57
Section 13.16.    General Provisions Regarding Registrar and Paying Agent........................................58
Section 13.17.    Payment of Registrar and Paying Agent; Indemnification.........................................59
Section 13.18.    Registrar and Paying Agent's Performance; Duty of Care.........................................59
Section 13.19.    Qualifications of Registrar and Paying Agent...................................................59
Section 13.20.    Resignation or Removal of Registrar and Paying Agent and Successor to Registrar and
                  Paying Agent; Termination of Registrar and Paying Agent's Obligations..........................59
Section 13.21.    Appointment of Additional Paying Agents; Each Paying Agent to Hold Money in Trust..............60

                                   ARTICLE XIV

         EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND OWNERSHIP OF BONDS;
          EXCLUSION OF BONDS OWNED BY THE AUTHORITY OR THE CORPORATION

Section 14.01.    Execution of Requests, Directions and Consents and Other Instruments and Proof of
                  Same; Ownership of Bonds and Proof of Same.....................................................61
Section 14.02.    Meetings of Holders............................................................................62
Section 14.03.    Exclusion of Bonds Held by or for the Authority, the Company and of Bonds No Longer
                  Deemed Outstanding Hereunder...................................................................63

                                   ARTICLE XV

    AMENDING AND SUPPLEMENTING THE INDENTURE AND THE PARTICIPATION AGREEMENT

Section 15.01.    Amending and Supplementing Indenture Without Consent of Holders................................64
Section 15.02.    Amending and Supplementing Indenture with Consent of Holders...................................65
Section 15.03.    Notation upon Bonds; New Bonds Issued upon Amendments..........................................66
Section 15.04.    Effectiveness of Supplemental Indentures.......................................................66
Section 15.05.    Supplemental Indenture Affecting Credit Facility Issuer........................................66
Section 15.06.    Supplemental Agreements Not Requiring the Consent of the Holders...............................66
Section 15.07.    Notice and Consent for Supplemental Agreements Requiring the Consent of the Holders............67
Section 15.08.    Effectiveness of Supplemental Agreement........................................................67
Section 15.09.    Supplemental Agreement Affecting Credit Facility Provider......................................67


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                                   ARTICLE XVI

                                   DEFEASANCE

Section 16.01.    Discharge of Liens and Pledges; Bonds No Longer Deemed to be Outstanding Hereunder.............69
Section 16.02.    Release of Indenture, Termination of Right, Title and Interest of Trustee......................70
Section 16.03.    Bonds Not Presented for Payment When Due; Monies Held for the Bonds after Due Date of
                  Bonds..........................................................................................70

                                  ARTICLE XVII

             FORM OF BONDS AND ENDORSEMENT AND ASSIGNMENT PROVISIONS

Section 17.01.    Form of Bonds and Endorsement and Assignment Provisions........................................72

                                  ARTICLE XVIII

                                  MISCELLANEOUS

Section 18.01.    Benefits of Indenture Limited to Authority, Company, Trustee, Registrar and Paying
                  Agent, Credit Facility Issuer, and Holders of the Bonds........................................73
Section 18.02.    Indenture a Contract; Indenture Binding Upon Successors or Assigns of the Authority............73
Section 18.03.    Notice to Holders of Bonds.....................................................................73
Section 18.04.    Waiver of Notice...............................................................................73
Section 18.05.    Effect of Saturdays, Sundays and Non-Business Days.............................................74
Section 18.06.    Partial Invalidity.............................................................................74
Section 18.07.    Law and Place of Enforcement of Indenture......................................................74
Section 18.08.    Requests, Approvals and Directions of Authority................................................74
Section 18.09.    Notices, Demands; Requests.....................................................................74
Section 18.10.    Effect of Article and Section Headings and Table of Contents...................................76
Section 18.11.    Liability of Authority Limited to Revenues.....................................................76
Section 18.12.    Waiver of Personal Liability...................................................................76
Section 18.13.    Indenture May be Executed in Counterparts; Effectiveness of Indenture..........................76
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                                       v


<PAGE>


     THIS  INDENTURE  OF  TRUST,  made and  dated as of  November  1,  2005 (the
"Indenture"),  by and between New York State  Energy  Research  and  Development
Authority (the "Authority"), a body corporate and politic, constituting a public
benefit corporation,  and Citibank, N.A., as trustee (the "Trustee"), a national
association  organized  and  existing  under  the laws of the  United  States of
America with its  principal  corporate  trust office  located in The City of New
York.

                          W I T N E S S E T H  T H A T:

     WHEREAS,  pursuant  to special act of the  Legislature  of the State of New
York (Title 9 of Article 8 of the Public  Authorities  Law of New York,  as from
time to time amended and supplemented,  herein called the "Act"),  the Authority
has been  established  as a body  corporate and politic,  constituting  a public
benefit corporation; and

     WHEREAS,  pursuant to the Act, the  Authority is empowered to contract with
any power  company to  participate  in the  incorporation  of  features in power
plants and the  construction of associated  facilities to the extent required by
the public interest in development,  health, recreation, safety, conservation of
natural resources and aesthetics; and

     WHEREAS,  pursuant to the Act,  the  Authority  has also been  empowered to
extend  credit and make loans from bond and note  proceeds to any person for the
construction,  acquisition and installation of, or for the  reimbursement to any
person for costs in connection  with,  any special energy project (as defined in
the Act),  including,  but not limited to, any land, works, system,  building or
other  improvement,  and all real and personal  properties  of any nature or any
interest  in any of them which are  suitable  for or related to the  furnishing,
generation or production of energy; and

     WHEREAS, the Authority is also authorized under the Act to borrow money and
issue its negotiable bonds and notes to provide  sufficient monies for achieving
its corporate purposes; and

     WHEREAS,  the Authority is also authorized  under the Act to enter into any
contracts  and to  execute  all  instruments  necessary  or  convenient  for the
exercise of its corporate powers and the fulfillment of its corporate  purposes,
including the refunding of outstanding bonds and notes of the Authority; and

     WHEREAS,  The Brooklyn Union Gas Company d/b/a KeySpan Energy  Delivery New
York (the "Company") is a public utility corporation doing business in the State
of New York; and

     WHEREAS,  the Company has requested that the Authority  issue bonds for the
purpose of refunding the  Authority's  Adjustable  Rate Gas  Facilities  Revenue
Bonds, Series 1989A (The Brooklyn Union Gas Company Project) and Adjustable Rate
Gas  Facilities  Revenue  Bonds,  Series 1989B (The  Brooklyn  Union Gas Company
Project) in the aggregate  principal  amount of $82,000,000  (collectively,  the
"Prior  Bonds")  which  were  issued  to  provide  funds  for  the  acquisition,
construction, and installation of certain facilities for the local furnishing of
gas within The City of New York; and


<PAGE>


     WHEREAS,  pursuant to Resolution  No. 1093 adopted  September 19, 2005, the
Authority has determined to issue the Bonds,  in an aggregate  principal  amount
not to exceed  $82,000,000,  for the purpose of refunding  the Prior Bonds,  all
such Bonds to be issued under and secured by this Indenture; and

     WHEREAS,  contemporaneously  with the execution hereof, the Company and the
Authority  have entered  into a  Participation  Agreement of even date  herewith
(herein referred to as the "Participation Agreement"); and

     WHEREAS,  the bonds to be issued will be in the aggregate  principal amount
of  $82,000,000  and will be  designated  as Gas  Facilities  Revenue Bonds (The
Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York Project), 2005
Series A (the  "Bonds"),  which,  along with other  funds to be  provided by the
Company,  will be used to refund the Prior Bonds,  such Bonds to be issued under
and secured by this Indenture; and

     WHEREAS,  simultaneously  with the issuance and delivery of such Bonds, the
Company will execute and deliver a promissory note dated the date of issuance of
such Bonds (the  "Company  Obligation")  as evidence of its  obligation  to make
payments required by the Participation Agreement; and

     WHEREAS,  all acts,  conditions  and things  necessary  or  required by the
Constitution  and  statutes of the State of New York,  or  otherwise,  to exist,
happen,  and be performed as prerequisites to the passage of this Indenture,  do
exist, have happened, and have been performed; and

     WHEREAS,  the Trustee has accepted the trusts created by this Indenture and
in evidence thereof has joined in the execution hereof; and

     NOW, THEREFORE,  for and in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the Authority hereby agrees with
the Trustee and with the respective  owners,  from time to time, of the Bonds or
any part thereof as follows:

     That in order to declare the terms and conditions  upon which the Bonds are
authenticated,  issued and delivered,  and in  consideration of the premises and
the  acceptance by the Trustee of the trusts hereby  created and of the purchase
and  acceptance  of the Bonds by the  Holders  thereof,  and for other  good and
valuable  consideration,  the  receipt of which is hereby  acknowledged,  and in
order to secure payment of the principal of and premium, if any, and interest on
the Bonds according to their tenor and effect and the performance and observance
by the Authority of all covenants,  agreements and conditions  herein and in the
Bonds contained, the Authority has acknowledged,  executed, signed and delivered
this  Indenture,  has caused or will cause the Company to deliver to the Trustee
the Company  Obligation  pursuant  to the  Participation  Agreement,  and hereby
assigns,  confirms,  pledges  with and sets  over and  entrusts  to the  Trustee
hereunder,  its  successors in trust and assigns,  subject to the  provisions of
this  Indenture  (the  following  being  called  the  "Trust  Estate"):  (a) the
Revenues,  (b) the  Participation  Agreement  dated as of  November 1, 2005 (the
"Participation  Agreement"),  and  all  rights,  remedies  and  interest  of the
Authority under the Participation  Agreement and any other agreement relating to
the  Project  (exclusive  of  the  Authority's  rights,  but  in no  way  in any


                                       2
<PAGE>


derogation  of  the  Trustee's  rights,   with  respect  to  (i)  administrative
compensation,  attorney's fees and indemnification, (ii) the receipt of notices,
opinions,  reports,  copies of  instruments  and other items of a similar nature
required to be delivered to the  Authority  under the  Participation  Agreement,
(iii) granting  approvals and consents and making  determinations  when required
under the  Participation  Agreement,  (iv) making  requests for  information and
inspections in accordance with the Participation  Agreement, (v) Article III and
Sections 4.04, 4.08, 4.09 and 4.10 of the  Participation  Agreement and, insofar
as the  obligations  of the  Company  under  Section  4.07  relate  to taxes and
assessments  imposed  upon  the  Authority  and not the  Trustee,  Section  4.07
thereof, and (vi) the right to amend the Participation  Agreement),  (c) the Tax
Regulatory  Agreement dated November 1, 2005 (the "Tax  Regulatory  Agreement"),
and all rights,  remedies and interest of the Authority  thereunder,  subject to
the provisions of the Tax Regulatory Agreement relating to the amendment thereof
and to a reservation by the Authority of the right to enforce the obligations of
the Company  thereunder  independently  of the  Trustee,  (d) all other  monies,
rights  and  properties  held by the  Trustee  or  other  depositary  under  the
Indenture,  including, but only for the benefit of the persons specified herein,
the proceeds of any draw,  borrowing or payment under any Credit Facility (other
than the  Policy),  and the  securities  (and the  interest,  income and profits
therefrom) in which such monies may from time to time be invested  (exclusive of
the  proceeds of a Credit  Facility (as  hereinafter  defined) and of amounts on
deposit in the Rebate Fund (as hereinafter defined)),  and (e) any and all other
real or  personal  property  of every  nature  from  time to time  hereafter  by
delivery  or  by  writing  of  any  kind  specially   mortgaged,   pledged,   or
hypothecated,  as and for additional security hereunder, by the Company in favor
of the Trustee or the Authority  which are hereby  authorized to receive any and
all such property at any and all times and to hold and apply the same subject to
the terms hereof.

     TO HAVE  AND TO  HOLD,  all and  singular  of said  Trust  Estate  unto the
Trustee, its successors in trust and assigns,  forever, in trust,  nevertheless,
to  inure  to the use and  benefit  of the  Holders  of all the  Bonds,  for the
securing of the  observance  or  performance  of all the terms,  provisions  and
conditions  therein  and herein  contained  and for the equal and  proportionate
benefit and security of all and  singular the present and future  Holders of the
Bonds,  without  preference,  priority,  prejudice or  distinction as to lien or
otherwise of any Bond over any other Bond, to the end that each Holder of a Bond
shall  have the same  rights,  privileges  and lien  under and by virtue of this
Indenture, except as hereinafter otherwise specifically provided;

     AND UPON THE CONDITION  THAT, if the Authority shall cause to be paid fully
and promptly and  indefeasibly  when due all of its  indebtedness,  liabilities,
obligations  and  sums at any  time  secured  hereby,  including  interest,  its
Trustee's fees,  reasonable expenses  (including its reasonable  attorneys' fees
and expenses), and indemnity amounts and shall promptly, faithfully and strictly
keep, perform and observe, or cause to be kept,  performed and observed,  all of
its covenants, obligations, warranties and agreements contained herein, then and
in such event,  this Indenture  shall be and become void and of no further force
and effect, otherwise the same shall remain in full force and effect.

     THIS INDENTURE FURTHER WITNESSETH,  and it is expressly declared,  that all
Bonds issued and secured hereunder are to be issued, authenticated and delivered
and all said  income  and  Revenues  hereby  pledged  are to be  dealt  with and
disposed  of under,  upon and  subject to the terms,  conditions,  stipulations,
covenants,  agreements,  trusts, uses and purposes as hereinafter expressed, and
the  Authority  has agreed and  covenanted,  and does hereby agree and covenant,


                                       3
<PAGE>


with the Trustee and with the respective Holders, from time to time, of the said
Bonds, or any part thereof,  as follows (provided that in the performance of the
agreements of the Authority herein contained any obligation it may thereby incur
for the payment of money shall never constitute a general or moral obligation of
the State of New York or any political subdivision thereof within the meaning of
any state  constitutional  provision or statutory  limitation,  and shall not be
secured directly or indirectly by the full faith and credit,  the general credit
or any  revenue or taxes of the State of New York or any  political  subdivision
thereof,  but shall be payable  solely out of the  income and  Revenues  derived
under the Participation  Agreement and the Company  Obligation and from drawings
under the Credit  Facility  (other than the Policy),  if any, and other  monies,
rights and properties of the Trust Estate), that is to say:



                                       4
<PAGE>



                                   ARTICLE I

                                   DEFINITIONS

     Section  1.01.  Definitions  of Specific  Terms.  Unless the context  shall
clearly indicate some other meaning or may otherwise require,  the terms defined
in this Section shall,  for all purposes of this Indenture and of any indenture,
resolution or other instrument  amendatory hereof or supplemental  hereto and of
any certificate,  opinion,  instrument or document herein or therein  mentioned,
have the meanings herein specified, with the following definitions to be equally
applicable to both the singular and plural forms of any terms herein defined and
vice versa.

     Act shall mean the New York State Energy Research and Development Authority
Act,  Title 9 of  Article 8 of the  Public  Authorities  Law of the State of New
York, as from time to time amended and supplemented.

     Additional  Payments shall mean the fees and expenses  payable  pursuant to
Sections 4.04 and 4.05 of the Participation Agreement.

     Administration  Fees shall mean the  amounts  payable by the Company to the
Authority  pursuant to Section 4.04 of the  Participation  Agreement to defray a
portion  of  the  expenses   incurred  by  the  Authority  in   conducting   and
administering  its  financing  programs  and the  amount  payable  as state bond
issuance charge pursuant to Section 4.04 of the Participation Agreement.

     Authority  shall  mean New  York  State  Energy  Research  and  Development
Authority, the public benefit corporation created by the Act, and its successors
and assigns.

     Authorized Company  Representative shall mean any officer or other employee
of the Company at the time designated to act on behalf of the Company by written
certificate  furnished to the Authority and the Trustee  containing the specimen
signature  of such person and signed on behalf of the  Company by its  Chairman,
President or a Vice President and its Secretary or an Assistant Secretary.

     Authorized  Officer  shall  mean the  Chair,  Vice-Chair,  President,  Vice
President, Treasurer, Assistant Treasurer or Secretary of the Authority.

     Bond or Bonds shall mean $82,000,000 aggregate principal amount of the "Gas
Facilities  Revenue Bonds (The Brooklyn  Union Gas Company d/b/a KeySpan  Energy
Delivery New York Project), 2005 Series A" issued as authorized in Article II at
any time Outstanding.

     Bond  Counsel  shall  mean  an  attorney  or firm or  firms  of  attorneys,
satisfactory to the Authority,  experienced in laws relating to tax exemption of
interest on bonds of states and their political subdivisions.

     Bond Fund shall mean the Bond Fund created in Article VI.


                                       5
<PAGE>


     Bond  Insurer  shall mean  Financial  Guaranty  Insurance  Company,  or any
successor thereto.

     Bond  Purchase  Agreement  shall mean the Bond  Purchase  Agreement,  dated
October 26, 2005, among the Authority,  the Company and the  underwriters  named
therein.

     Bond Year shall have the meaning set forth in the Tax Regulatory Agreement.

     Business Day shall mean any day other than a Saturday,  Sunday or other day
on which the New York Stock Exchange or banks are authorized or obligated by law
or  executive  order to close in New  York,  New  York,  or any city in which is
located the principal  corporate trust office of the Trustee,  the Registrar and
Paying Agent or the Bond Insurer.

     Code shall mean the Internal  Revenue Code of 1986, as amended from time to
time.  Each reference to a section of the Code herein shall be deemed to include
the United States  Treasury  Regulations  proposed or in effect  thereunder  and
applied  to the Bonds or the use of  proceeds  thereof,  and also  includes  all
amendments  and  successor   provisions  unless  the  context  clearly  requires
otherwise.

     Company  shall mean The Brooklyn  Union Gas Company  d/b/a  KeySpan  Energy
Delivery New York, and any surviving, resulting or transferee corporation in any
merger,  consolidation or transfer of assets  permitted under the  Participation
Agreement.

     Company  Obligation  shall mean the promissory note of the Company executed
by the Company and delivered to the Trustee,  to evidence the obligations of the
Company  to  repay  the  loan  to be  made  by  the  Authority  pursuant  to the
Participation Agreement.

     Company Obligation Payments shall mean the portion of the Payments required
to be made by the Company pursuant to Article IV of the Participation  Agreement
and the  Company  Obligation  to be applied  to the  payment  of  principal  of,
premium, if any, and interest on the Bonds.

     Computation  Period shall have the meaning set forth in the Tax  Regulatory
Agreement  entered into by the Authority and the Company in connection  with the
Bonds.

     construction, when used with respect to the Project, shall include, without
limitation, the construction, acquisition and installation of such Project.

     Credit Facility shall mean any instrument satisfactory to the Authority and
the Bond Insurer entered into or obtained in connection with the Bonds,  such as
a letter of credit,  committed line of credit,  insurance policy, surety bond or
standby bond purchase agreement, or any combination of the foregoing, and issued
by a  bank  or  banks,  other  financial  institution  or  institutions,  or any
combination of the foregoing  which provides for the payment of principal of and
interest on all Bonds coming due and payable during the term thereof.

     Credit  Facility  Issuer  shall  mean any bank or banks or other  financial
institution or institutions, having issued any Credit Facility.


                                       6
<PAGE>


     DTC shall mean The Depository Trust Company,  New York, New York, a limited
purpose trust company organized under the laws of the State of New York.

     Effective Date shall mean November 1, 2005.

     Event of  Default  shall  mean any event of  default  specified  in Section
12.01.

     Fiscal Year shall mean the fiscal year of the Company as  established  from
time to time by the Company which as of the Effective  Date is the  twelve-month
period  commencing  on January 1 of each calendar year and ending on December 31
of such calendar year.

     Fitch shall mean Fitch Ratings and its successor or successors, and if such
corporation shall for any reason no longer perform the functions of a securities
rating agency or shall be replaced by some other  nationally  recognized  rating
agency by the  Authority at the request of the Company,  "Fitch" shall be deemed
to refer to such other  nationally  recognized  rating agency  designated by the
Authority at the request of the Company.

     Governmental  Obligations  shall  mean  any  of  the  following  which  are
non-callable:

          (a) U.S. Treasury  Certificates,  Notes and Bonds (including State and
     Local Government Series);

          (b) direct general  obligations  of the U.S.  Treasury which have been
     stripped by the Treasury itself, CATS, TIGRS and similar securities;

          (c) the  interest  component of  Resolution  Funding  Corp.  (REFCORP)
     strips which have been  stripped by request to the Federal  Reserve Bank of
     New York in book-entry form;

          (d)  pre-refunded  municipal bonds rated "Aaa" by Moody's and "AAA" by
     S&P. If, however, the issue is only rated by S&P (i.e., there is no Moody's
     rating), then the pre-refunded bonds must have been pre-refunded with cash,
     direct  U.S.  or U.S.  guaranteed  obligations,  or AAA rated  pre-refunded
     municipals to satisfy this condition;

          (e) obligations  issued by the following  agencies which are backed by
     the  full  faith  and  credit  of the  U.S.:  direct  obligations  or fully
     guaranteed   certificates  of  beneficial  ownership  issued  by  the  U.S.
     Export-Import  Bank;  certificates  of beneficial  ownership  issued by the
     Farmers Home  Administration;  obligations  issued by the Federal Financing
     Bank;   participation   certificates   issued  by  the   General   Services
     Administration;   guaranteed  Title  XI  financing  by  the  U.S.  Maritime
     Administration;  and Project Notes,  Local Authority Bonds, New Communities
     Debentures - U.S. government  guaranteed debentures and U.S. Public Housing
     Notes and Bonds - U.S. government guaranteed public housing notes and bonds
     issued by the U.S. Department of Housing and Urban Development.


                                       7
<PAGE>


     Indenture shall mean this Indenture of Trust, dated as of November 1, 2005,
between  the  Authority  and  the  Trustee,  as  the  same  may  be  amended  or
supplemented from time to time in accordance with the terms hereof.

     Insurance  Agreement  shall mean the Insurance  Agreement dated November 1,
2005, by and among the Company, the Trustee and the Bond Insurer.

     Investment Securities shall mean any of the following which at the time are
legal  investments  under the laws of the State of New York for the monies  held
hereunder:

     1.   Direct  obligations  of the United  States of America  and  securities
          fully and  unconditionally  guaranteed  as to the  timely  payment  of
          principal  and  interest  by  the  United  States  of  America  ("U.S.
          Government Securities").

     2.   Direct obligations  (excluding all derivative  obligations,  including
          without   limitation  inverse  floaters,   residuals,   interest-only,
          principal-only and range notes; obligations that have a possibility of
          returning a zero or negative  yield if held to  maturity;  obligations
          that do not have a fixed par value or those whose terms do not promise
          a fixed  dollar  amount at maturity or call date;  and  Collateralized
          Mortgage-Backed Obligations (collectively,  "Excluded Securities")) of
          the following  federal agencies which are fully guaranteed by the full
          faith and credit of the United States of America:

          (a)  Export-Import  Bank of the United States - Direct obligations and
               fully guaranteed  certificates of beneficial interest

          (b)  Federal Housing Administration - debentures

          (c)  General Services Administration - participation certificates

          (d)  Government National Mortgage  Association  ("GNMAs") - guaranteed
               mortgage-backed    securities   and   guaranteed    participation
               certificates

          (e)  Small   Business   Administration   -  guaranteed   participation
               certificates and guaranteed pool certificates

          (f)  U.S.  Department of Housing & Urban Development - local authority
               bonds

          (g)  U.S. Maritime Administration - guaranteed Title XI financings

          (h)  Washington  Metropolitan  Area  Transit  Authority  -  guaranteed
               transit bonds

     3.   Direct  obligations   (excluding  all  Excluded   Securities)  of  the
          following federal agencies which are not fully guaranteed by the faith
          and credit of the United States of America:

          (a)  Federal  National  Mortgage  Association  ("FNMAs") - senior debt
               obligations rated Aaa by Moody's  Investors  Service  ("Moody's")
               and AAA by Standard & Poor's Ratings Services ("S&P")

          (b)  Federal Home Loan Mortgage Corporation ("FHLMCs") - participation
               certificates and senior debt obligations rated Aaa by Moody's and
               AAA by S&P


                                       8
<PAGE>


          (c)  Federal  Home Loan  Banks -  consolidated  debt  obligations  (d)
               Student  Loan  Marketing   Association  -  debt  obligations  (e)
               Resolution Funding Corporation - debt obligations

     4.   Direct,  general  obligations  of any  state of the  United  States of
          America or any  subdivision  or agency  thereof  whose  uninsured  and
          unguaranteed  general  obligation  debt  is  rated,  at  the  time  of
          purchase,  A2 or better  by  Moody's  and A or  better by S&P,  or any
          obligation  fully  and   unconditionally   guaranteed  by  any  state,
          subdivision  or  agency  whose  uninsured  and  unguaranteed   general
          obligation  debt is rated,  at the time of  purchase,  A2 or better by
          Moody's and A or better by S&P.

     5.   Commercial  paper  (having  original  maturities  of not more than 270
          days) rated, at the time of purchase, P-1 by Moody's and A-1 or better
          by S&P.

     6.   Certificates of deposit,  savings accounts,  deposit accounts or money
          market deposits in amounts that are  continuously and fully insured by
          the Federal Deposit Insurance Corporation ("FDIC"), including the Bank
          Insurance Fund and the Savings Association Insurance Fund.

     7.   Certificates of deposit,  deposit accounts,  federal funds or bankers'
          acceptances (in each case having  maturities of not more than 365 days
          following  the date of purchase) of any  domestic  commercial  bank or
          United  States  branch  office of a foreign  bank,  provided that such
          bank's short-term certificates of deposit are rated P-1 by Moody's and
          A-1 or better by S&P (not considering holding company ratings).

     8.   Investments in money-market funds rated AAAm or AAAm-G by S&P.

     9.   Money market funds having a rating in the highest investment  category
          given to money market funds by recognized  credit  rating  agencies at
          the time of  acquisition,  including any fund for which the Trustee or
          an  affiliate  of  the  Trustee  serves  as  an  investment   advisor,
          administrator,    shareholder    servicing    agent,    custodian   or
          sub-custodian, notwithstanding that (i) the Trustee or an affiliate of
          the Trustee charges and collects fees and expenses from such funds for
          services rendered  (provided that such charges,  fees and expenses are
          on terms  consistent  with terms  negotiated at arm's length) and (ii)
          the Trustee  charges  and  collects  fees and  expenses  for  services
          rendered, pursuant to this Indenture.

     Interest Payment Date shall mean the February 1 or August 1 next succeeding
the  Effective  Date and each  February  1 or  August  1  thereafter;  provided,
however,  that if the February 1 or August 1 next  succeeding the Effective Date
occurs  less than  twenty-one  (21) days after such  Effective  Date,  the first
Interest  Payment Date shall be the second such date  following  such  Effective
Date;  provided,  however,  that  if  any  such  date  determined  in any of the
foregoing  clauses is not a Business Day, the Interest Payment Date shall be the
next succeeding day which is a Business Day.


                                       9
<PAGE>


     Moody's shall mean Moody's Investors Service, Inc., a corporation organized
and  existing  under  the laws of the State of  Delaware  and its  successor  or
successors,  and if such corporation  shall for any reason no longer perform the
functions of a securities rating agency or if Moody's shall be replaced, subject
to the  definition  of  "prevailing  rating"  in the  definition  of  Applicable
Percentage,  by some other nationally  recognized rating agency by the Authority
at the request of the Company,  "Moody's" shall be deemed to refer to such other
nationally  recognized  rating agency designated by the Authority at the request
of the Company.

     Officer's  Certificate  shall mean a  certificate  signed by an  Authorized
Officer of the Authority.

     Opinion of Bond Counsel shall mean a written opinion of Bond Counsel.

     Outstanding,  whether  appearing  in upper or lower  case,  when  used with
respect  to any  Bond  shall  mean,  as of any  date,  any Bond  theretofore  or
thereupon  being   authenticated  and  delivered   pursuant  to  this  Indenture
(including  Bonds  considered to be  "Outstanding"  in  accordance  with Section
8.01.1(b) hereof), except:

          (a) a Bond  cancelled  by the  Trustee or  accepted by the Trustee for
     cancellation at or prior to such date;

          (b) Bonds that have been redeemed in accordance with the terms hereof;

          (c) Bonds paid or deemed to be paid as  provided  in  Article  XVI and
     Section 2.04;

          (d) Bonds in lieu of or in  substitution  for which  other Bonds shall
     have been authenticated and delivered pursuant to the Indenture; and

provided,  however,  that in  determining  whether  the owners of the  requisite
principal  amount  of  Bonds   outstanding  have  given  any  request,   demand,
authorization,  direction, notice, consent or waiver hereunder, Bonds held by or
for the  account  of the  Company  shall be  disregarded  and  deemed  not to be
outstanding,  except that in determining  whether the Trustee shall be protected
in relying upon any such  request,  demand,  authorization,  direction,  notice,
consent  or waiver,  only  Bonds  which a  responsible  officer  of the  Trustee
actually knows to be so held shall be so  disregarded.  Bonds so held which have
been  pledged  in good  faith may be  regarded  as  outstanding  if the  pledgee
establishes  to the  satisfaction  of the Trustee the pledgee's  right so to act
with  respect to such Bonds and that the pledgee is not the Company and that the
pledgee is not holding for the account of the Company.

     owner,  Holder,  Holder of a Bond,  Bondowner and Bondholder shall mean the
Registered  Owner of any Bond,  except in Section 9.02,  and in any  correlative
provision with respect to any other series of Bonds.

     Participation Agreement shall mean the Participation Agreement, dated as of
November 1, 2005,  between the  Authority  and the  Company,  as the same may be
amended and supplemented by Supplemental Agreements from time to time.


                                       10
<PAGE>


     Paying Agent shall mean Citibank,  N.A. in its capacity as Paying Agent for
the Bonds, or its successors or assigns.

     Payments shall mean  collectively the Company  Obligation  Payments and the
Additional Payments.

     Payment  Default  shall  mean the  occurrence  of (i) an  Event of  Default
pursuant to paragraph  (a) or (b) of Section  12.01 hereof and (ii) a default by
the Bond Insurer under the Policy.

     Person  shall  mean  an  individual,  a  corporation,  a  partnership,   an
association, a joint stock company, a trust, any unincorporated  organization or
a government or political subdivision thereof.

     Policy  shall  mean a Credit  Facility  issued by the Bond  Insurer  on the
Effective  Date in the form of a  municipal  bond  new  issue  insurance  policy
insuring the  regularly  scheduled  payments of principal of and interest on the
Bonds as provided therein.

     Principal Corporate Trust Office shall mean, for Bond transfer purposes and
for  purposes  of  presentment   and  surrender  of  the  Bonds  for  the  final
distributions thereon, Citibank, N.A., 111 Wall Street, 15th Floor, New York, NY
10005, Attention: 15th Floor Window, and for all other purposes, Citibank, N.A.,
388 Greenwich  Street,  14th Floor,  New York, NY 10013,  Attention:  Agency and
Trust - Keyspan,  or any other address that the Trustee may designate  from time
to time by notice to the Holders, the Authority and the Company.

     Prior  Bonds  shall mean the  Authority's  Adjustable  Rate Gas  Facilities
Revenue  Bonds,  Series  1989A (The  Brooklyn  Union Gas  Company  Project)  and
Adjustable Rate Gas Facilities  Revenue Bonds,  Series 1989B (The Brooklyn Union
Gas Company Project), each dated March 2, 1989.

     Prior Trustee  shall mean  JPMorgan  Chase Bank,  N.A.  (formerly  known as
Chemical Bank, as successor to Manufacturers Hanover Trust Company).

     Project shall mean the  facilities  which were financed or refinanced  with
proceeds of the Prior Bonds and which are so identified and described in Exhibit
A to the Participation Agreement.

     Registered  Owner  shall  mean the person or persons in whose name or names
the particular Bond shall be registered on the books of registry.

     Registrar  and Paying  Agent  shall mean  Citibank,  N.A.  in its  separate
capacity as  Registrar  and Paying  Agent for the Bonds,  or its  successors  or
assigns.

     Responsible Officer shall mean, when used with respect to the Trustee,  any
officer  assigned to the Corporate  Trust  Division (or any successor  thereto),
including any Vice  President,  Assistant Vice  President,  Trust  Officer,  any
Assistant  Secretary,  any trust  officer or any other  officer  of the  Trustee
customarily  performing functions similar to those performed by any of the above
designated  officers,   in  each  case  having  direct  responsibility  for  the
administration of this Agreement.


                                       11
<PAGE>


     Revenues shall mean and include all income,  revenues and monies derived by
the  Authority  under the  Participation  Agreement  and the Company  Obligation
(except  administrative  compensation  and  indemnification  payable  under  the
Participation Agreement), and, without limiting the generality of the foregoing,
shall  include  to the  extent  provided  in  this  Indenture,  earnings  on the
investment  of monies held under this  Indenture and the proceeds of the sale of
any such  investments.  The term "Revenues" shall not include monies received as
proceeds  from the sale of the Bonds or any other  bonds,  notes or evidences of
indebtedness or as grants or gifts.

     S&P shall  mean  Standard & Poor's  Ratings  Services,  a  division  of The
McGraw-Hill  Companies,  Inc.  and  its  successor  or  successors,  and if such
corporation shall for any reason no longer perform the functions of a securities
rating  agency  or if S&P  shall  be  replaced,  subject  to the  definition  of
"prevailing  rating" in the definition of Applicable  Percentage,  by some other
nationally  recognized  rating  agency by the  Authority  at the  request of the
Company,  "S&P"  shall be deemed to refer to such  other  nationally  recognized
rating agency designated by the Authority at the request of the Company.

     Securities  Depository  shall mean The  Depository  Trust  Company  and its
successors and assigns or if (i) the then Securities Depository resigns from its
functions as depository of the Bonds or (ii) the Authority  discontinues  use of
the then Securities  Depository  pursuant to Section 2.10, any other  securities
depository  which agrees to follow the  procedures  required to be followed by a
Securities  Depository in connection with the Bonds and which is selected by the
Authority,  with the consent of the Company and the Trustee  pursuant to Section
2.10.

     Special  Mandatory  Redemption  shall have the meaning set forth in Section
9.02.

     Stated Maturity, shall mean February 1, 2024, provided that, subject to the
next sentence,  in any case where the date of maturity of, or payment of premium
on,  interest on, or principal of, the Bonds or the date fixed for redemption of
any Bonds shall be on a day other than a Business Day, then payment of interest,
principal  and  premium,  if any,  need not be made on such date but may be made
(without additional interest) on the next succeeding Business Day, with the same
force  and  effect  as if made on the date of  maturity  or the date  fixed  for
redemption.

     Supplemental  Indenture  shall  mean  any  indenture  supplementary  to  or
amendatory  of the  Indenture  now or hereafter  duly  executed and delivered in
accordance with the provisions hereof.

     Supplemental  Agreement shall mean an agreement  supplementing  or amending
the  Participation  Agreement,  as the same may be amended and supplemented from
time to time.

     Tax Regulatory  Agreement  shall mean,  with respect to the Bonds,  the Tax
Regulatory Agreement, dated as of the date of delivery of the Bonds, between the
Authority  and  the  Company,  and  any  and  all  modifications,   alterations,
amendments and supplements thereto.


                                       12
<PAGE>


     Trust  Estate  shall mean the  meaning  assigned  to such term in the first
paragraph following the recitals herein.

     Trustee shall mean the banking corporation having trust powers appointed by
the  Authority  as Trustee  hereunder  and  serving as such  hereunder,  and any
surviving,  resulting or  transferee  corporation  as provided in Article  XIII.
References  to  principal  office  of the  Trustee  shall  mean  the  applicable
Principal Corporate Trust Office of the Trustee.

     U.S.  Government shall mean the federal  government of the United States of
America.

     Section 1.02. Rules of construction.  Unless the context clearly  indicates
to the contrary,  the  following  rules shall apply to the  construction  of the
Indenture:

          (a) Words  importing  the  singular  number  shall  include the plural
     number and vice versa;

          (b) Words  importing the redemption or calling for redemption of Bonds
     shall not be deemed to refer to or  connote  the  payment of Bonds at their
     stated maturity or upon the  acceleration  of the principal  thereof by the
     Trustee under Article XII;

          (c) All  references  herein to  particular  articles or  sections  are
     references to articles or sections of the Indenture; and

          (d) The  captions and headings  herein are solely for  convenience  of
     reference  and shall not  constitute a part of the Indenture nor shall they
     affect its meaning, construction or effect.

     Whenever in this Indenture any governmental unit including the Authority or
any official, officer, director or department of a governmental unit, is defined
or referred  to, such  definition  or  reference  shall be deemed to include the
governmental  unit or official,  officer,  board,  agency,  commission,  body or
department  succeeding to or in whom or which is vested, the functions,  rights,
powers,  duties and obligations of such governmental  unit,  official,  officer,
director or department, as the case may be, encompassed by this Indenture.

     Unless the  context  shall  clearly  indicate  otherwise  or may  otherwise
require, in this Indenture words importing persons include firms,  partnerships,
associations,  corporations  (public  and  private),  public  bodies and natural
persons,  and also include  executors,  administrators,  trustees,  receivers or
other representatives.

     Unless the  context  shall  clearly  indicate  otherwise  or may  otherwise
require  computation on other than an annual basis,  in this Indenture  whenever
any interest rate or rate of interest is defined or referred to, such rate shall
be a rate per annum.

     Unless the  context  shall  clearly  indicate  otherwise  or may  otherwise
require,  in this  Indenture:  (i)  references  to articles,  sections and other
subdivisions, whether by number or letter or otherwise, are to the respective or
corresponding  articles,  sections and  subdivisions of this Indenture,  as such
articles,  sections or  subdivisions  may be amended from time to time; (ii) the


                                       13
<PAGE>


terms  "herein,"  "hereunder,"  "hereby,"  "hereto,"  "hereof,"  and any similar
terms,  refer to this  Indenture and to this Indenture as a whole and not to any
particular   article,   section  or  subdivision  hereof;  and  (iii)  the  word
"heretofore"  means before the time of effectiveness of this Indenture;  and the
word "hereafter" means after the time of effectiveness of this Indenture.


                                       14
<PAGE>


                                   ARTICLE II

                DESCRIPTION; AUTHORIZATION; MANNER OF EXECUTION;
               AUTHENTICATION; REGISTRATION AND TRANSFER OF BONDS

     Section  2.01.  Authorization  of Bonds;  Issuance  of Bonds in one or more
series;  designation of Bonds. 1. No Bonds may be issued under the provisions of
this Indenture except in accordance with the provisions of this Article.

     2. There is hereby created and  established  under this Indenture one issue
of revenue bonds of the Authority, limited to $82,000,000 in aggregate principal
amount,  of "Gas Facilities  Revenue Bonds (The Brooklyn Union Gas Company d/b/a
KeySpan  Energy  Delivery  New York  Project),  2005 Series A." The Bonds may be
designated and redesignated  from time to time by the Authority in such a way as
to identify one or more subseries of the Bonds. Such subseries may be designated
as subseries A-1,  subseries A-2 or subseries A-3, as the case may be, or may be
further redesignated as subseries A-1-1,  subseries A-1-2 or subseries A-1-3, as
the case may be, and so forth.  Each Bond shall bear upon the face  thereof such
designation or  redesignation,  if any. In the event the Bonds are designated or
redesignated  as one or  more  subseries,  all  references  to  "Bonds"  in this
Indenture  shall  refer to each such  subseries  unless  the  context  otherwise
requires.

     3. The Bonds shall be secured by the Trust Estate. The lien, pledge, charge
and  assignment  of the Trust Estate  created  hereby shall be valid and binding
from the  Effective  Date,  and the Company  Obligation  Payments made under the
Company Obligation and the Participation  Agreement shall be immediately subject
thereto upon receipt by the Trustee.

     4. The Bonds are limited  obligations of the Authority  payable solely from
payments to be made by the Company  pursuant to the Company  Obligation  and the
Participation  Agreement and the other  monies,  rights and  properties  pledged
hereunder,  hereafter obtained with respect thereto and secured by a pledge from
the  Authority  to the Trustee of the  Participation  Agreement  and the Company
Obligation.  The Bonds  shall  not be a debt of the  State of New York,  and the
State of New York shall not be liable thereon.

     5. The  covenants  and  agreements  herein set forth to be performed by the
Authority shall be for the benefit, security and protection of any Holder of the
Bonds and the Bond Insurer.

     6. Neither the Trustee nor any Holder of the Bonds shall be required to see
that the monies  derived  from such Bonds are applied to the purpose or purposes
for which such Bonds are issued.

     7. The Bonds shall be issued under this Indenture for the purpose of paying
a portion of the redemption price of the Prior Bonds.

     8. The Bonds shall be initially issued in fully  registered  form,  without
coupons, and dated their date of first authentication and delivery.


                                       15
<PAGE>


     Section 2.02.  Creation and  particulars  of the Bonds;  form of Bonds.  1.
There shall be issued under and secured by the Indenture a series of Bonds to be
designated "Gas  Facilities  Revenue Bonds (The Brooklyn Union Gas Company d/b/a
KeySpan  Energy  Delivery  New York  Project),  2005 Series A" in the  aggregate
principal amount of up to $82,000,000. The definitive aggregate principal amount
of the Bonds  shall be as set forth in the  written  request  and  authorization
delivered to the Trustee by the Authority.  Each Bond shall be dated November 1,
2005  (unless  otherwise  specified  in the written  request  and  authorization
delivered to the Trustee by the  Authority)  and shall bear  interest  from such
date or, if later,  from the February 1 or August 1 next  preceding  the date of
authentication  to which  interest  shall  have been paid,  unless  such date of
authentication  is a  February 1 or August 1 to which  interest  shall have been
paid, in which case from such date until the Authority's obligation with respect
to the payment of the  principal  amount of such Bond shall be  discharged.  The
Bonds shall bear interest at the rate of four point seven per centum (4.70%) per
annum.  Interest shall be calculated on the basis of a 360-day year,  consisting
of  twelve  30-day  months.  Interest  as due shall be  payable  on the Bonds on
February  1 and  August 1 in each  year,  commencing  February  1, 2006 by check
mailed to the Registered Owner whose name appears on the books of registry as of
the close of  business on the last day  (whether  or not a Business  Day) of the
month preceding such interest payment date (the "Regular Record Date"); provided
that,  at the option of each  Registered  Owner of at least one million  dollars
($1,000,000) in aggregate principal amount of the Bonds,  payment of interest on
such Bonds shall be made by wire  transfer upon written  notice  received by the
Trustee  from such  Registered  Owner at least  five days  prior to the  Regular
Record  Date,  containing  the  wire  transfer  address  (which  shall be in the
continental  United States) to which such  Registered  Owner wishes to have such
wire  directed.  Any such interest not so  punctually  paid or duly provided for
("Defaulted Interest") shall cease to be payable to the Registered Owner on such
Regular  Record  Date,  and may be paid to the  person in whose name any Bond is
registered at the close of business on a Special  Record Date to be fixed by the
Trustee,  such date to be not more  than 15 nor less  than 10 days  prior to the
date of such proposed  payments.  The Trustee shall cause notice of the proposed
payment of such  Defaulted  Interest and the Special  Record Date therefor to be
mailed, first class postage prepaid, to each Bondowner, at his or her address as
it appears in the books of registry, not less than 10 days prior to such Special
Record Date, and may, in its discretion,  cause a similar notice to be published
once in a newspaper in each place where Bonds are payable,  but such publication
shall not be a condition  precedent to the  establishment of such Special Record
Date.

     2. The Bonds are issuable in the form of registered  bonds without  coupons
in the  denomination of $5,000 or any integral  multiple of $5,000 not exceeding
the  aggregate  principal  amount of such  series of Bonds.  The Bonds  shall be
numbered  consecutively  from  "2005A-1"  upwards  as  issued,  or as  otherwise
provided by the  Registrar and Paying Agent.  If the Bonds are  redesignated  to
identify  one or more  additional  subseries,  the Bonds  shall be  numbered  in
accordance with their subseries designation.  The Bonds shall mature (subject to
the right of prior  redemption  at the  prices  and dates and upon the terms and
conditions hereinafter set forth) on the Stated Maturity.

     3. The Bonds shall be  substantially  in the form set forth in the recitals
to the Indenture, with such appropriate variations,  omissions and insertions as
are permitted or required by the Indenture,  and may have endorsed  thereon such
legends or text as may be necessary or  appropriate to conform to any applicable
rules and regulations of any governmental  authority or any usage or requirement
of law with respect thereto.


                                       16
<PAGE>


     4. The  principal of and premium,  if any, on each Bond shall be payable to
the owner of such Bond upon  presentation and surrender  thereof when due at the
applicable  Principal  Corporate Trust Office.  All payments of principal of and
premium,  if any,  and  interest  on the Bonds  shall be  payable in any coin or
currency of the United  States of America  which at the time of payment is legal
tender for the payment of public and private debts.

     Section 2.03.  Application  of Bond  Proceeds.  The proceeds of sale of the
Bonds shall be  deposited  with the Prior  Trustee for deposit in the Prior Bond
Fund pursuant to the Prior Indenture in accordance with Section 10.01.

     Section 2.04. Mutilated,  lost, stolen or destroyed Bonds. In the event any
Bond shall be lost,  stolen,  destroyed,  wholly or in part, or so defaced as to
impair its value to the  Holder,  the  Authority  shall  execute and the Trustee
shall, upon compliance with the terms provided by law,  authenticate and deliver
a new Bond of like date and tenor in exchange or  replacement  therefor  against
delivery  for  cancellation  of  such  mutilated  Bond,  or in  lieu  of  and in
replacement of a destroyed,  stolen or lost Bond, and upon payment by the Holder
of the  reasonable  expenses of the Registrar and Paying Agent and the Authority
and the  reasonable  charges of the Trustee and  Registrar  and Paying  Agent in
connection  therewith  and, in the event that the Bond is  destroyed,  stolen or
lost,  the  Holder's  filing  with the  Registrar  and Paying  Agent of evidence
satisfactory to it that the Bond was destroyed,  stolen or lost, of the Holder's
ownership thereof, and furnishing the Trustee and the Registrar and Paying Agent
such  security  and  indemnity as is  satisfactory  to them which shall name the
Authority as an additional  indemnified party. Any replacement Bond issued under
the  provisions  of this  Section in exchange or  substitution  for the defaced,
mutilated or partly  destroyed Bond or in  substitution  for the allegedly lost,
stolen or wholly  destroyed  Bond shall be  entitled to the  identical  benefits
under this Indenture as was the original Bond in lieu of which such  replacement
Bond is issued.  Each such  replacement  Bond shall be prepared in substantially
the same manner as the original.

     Notwithstanding  the foregoing  provisions  of this  Section,  if the lost,
stolen,  destroyed,  defaced or  mutilated  Bond has  matured or been called for
redemption and the date fixed for redemption thereof has arrived,  at the option
of the  Authority,  payment of the amount due  thereon  may be made  without the
issuance  of any  replacement  Bond upon  receipt of like  evidence,  indemnity,
security  and payment of expenses  and the  surrender  for  cancellation  of the
defaced or mutilated or partly  destroyed Bond and upon such other conditions as
the Trustee may prescribe.

     Except as provided  in this  sentence  and as  permitted  in the  following
paragraph, any replacement Bond shall be in the form of the Bond being replaced,
and be dated the date of its  issuance and bear such number as shall be assigned
thereto by the Registrar and Paying Agent, with such subseries  designation,  if
any,  as may be deemed  appropriate  by the  Registrar  and  Paying  Agent.  The
Registrar  and Paying Agent shall make an  appropriate  notation in the books of
registry that a replacement Bond has been issued in exchange or substitution for
the defaced, mutilated, lost, stolen, or wholly or partly destroyed Bond.


                                       17
<PAGE>


     There may be imprinted or affixed on the face and the panel  portion of any
duplicate Bond a mark to identify such Bond as a replacement Bond.

     Prior to arranging for the  preparation or printing of a replacement  Bond,
the  Trustee  and the  Registrar  and Paying  Agent may require a deposit by the
Holder to secure the Trustee,  the  Registrar and Paying Agent and the Authority
for costs and expenses incurred by them in the preparation,  printing, execution
and issuance of such replacement Bond.

     Any amount of such deposit  received by the  Registrar  and Paying Agent in
excess of the amount  required to reimburse the Registrar and Paying Agent,  the
Trustee or the Authority  for costs and expenses  shall be returned to the party
which made the deposit.

     Any  defaced,  mutilated  or  partly  destroyed  Bond  surrendered  to  the
Registrar  and Paying  Agent in  substitution  for a new Bond  pursuant  to this
Section shall be cancelled by the Trustee.

     Section 2.05. Temporary Bonds. Pending the preparation of definitive Bonds,
interim receipts or certificates  (herein referred to as "Temporary  Bonds") may
initially be issued, exchangeable for definitive Bonds when the latter are ready
for delivery. Such Temporary Bonds may be printed,  lithographed or typewritten,
shall be of such  denomination  or  denominations  as may be  determined  by the
Authority  and may contain  such  references  to any of the  provisions  of this
Indenture as may be appropriate.  If Temporary  Bonds are issued,  the Authority
will cause to be furnished duly executed  definitive  Bonds without  delay,  and
thereupon  the  Temporary  Bonds  may be  surrendered  for  cancellation  at the
applicable  Principal  Corporate  Trust  Office of the Trustee in  exchange  for
definitive  Bonds and without  charge for such  exchange,  and the Registrar and
Paying Agent shall deliver in exchange for such  Temporary  Bonds so surrendered
an equal  aggregate  principal  amount of  definitive  duly executed  Bonds,  of
authorized  denominations.  Until so  exchanged,  the  Temporary  Bonds shall be
entitled to the same benefits under this Indenture as definitive Bonds.

     Section 2.06.  Execution and  Authentication  of Bonds.  The Bonds shall be
executed on behalf of the Authority by the manual or facsimile  signature of its
Chair,  Vice-Chair,  President,  Treasurer  or any Vice  President  and shall be
sealed  with  the  seal  of the  Authority,  or in  lieu  thereof  shall  bear a
lithographed,  engraved or otherwise  reproduced facsimile of such seal attested
by the manual or facsimile signature of its Vice President, Treasurer, Secretary
or an Assistant Secretary.

     Bonds  bearing  the  manual  signature  of  an  officer  of  the  Authority
authorized  to execute  such Bonds in office on the date of such manual  signing
thereof and Bonds bearing the facsimile signature of an officer of the Authority
authorized  to execute  such Bonds in office on the date of the  reproducing  of
such facsimile  signature on such Bonds, shall be valid and binding  obligations
in accordance with their terms, notwithstanding that before the delivery thereof
and payment  therefor  the person whose  signature  appears  thereon  shall have
ceased to be such officer.


                                       18
<PAGE>


     Only  Bonds  having  endorsed  thereon  a  certificate  of   authentication
substantially  in the form set  forth in  Article  XVII,  duly  executed  by the
Trustee shall be entitled to any right or benefit under this Indenture. No Bonds
shall be valid or obligatory for any purpose  unless and until such  certificate
of  authentication  shall  have  been duly  executed  by the  Trustee,  and such
certificate  of the Trustee upon a Bond shall be  conclusive  evidence that such
Bond has been duly authenticated and delivered under this Indenture and that the
Holder  thereof is entitled to the  benefits of this  Indenture.  The  Trustee's
certificate  of  authentication  on any Bond  shall be  deemed to have been duly
executed if signed by an authorized officer of the Trustee.

     Section 2.07. Books of Registry.  The Registrar and Paying Agent shall keep
or cause to be kept at its  principal  office books  (herein  referred to as the
"books of registry" or  "registration  books") for the registration and transfer
of the Bonds.  Upon  presentation  at its applicable  Principal  Corporate Trust
Office for such purpose the Registrar and Paying  Agent,  under such  reasonable
regulations  as it may  prescribe,  shall  register or transfer,  or cause to be
registered or transferred,  on said books of registry,  the Bonds as hereinafter
set forth.  The books of registry  shall at all times during  business  hours be
open for  inspection  by the  Authority,  the Company,  the Bond Insurer and the
Trustee or their duly authorized agents or representatives upon reasonable prior
notice.

     Section 2.08.  Persons treated as owners. The Authority,  the Trustee,  and
the  Registrar  and  Paying  Agent  may,  for all  purposes,  deem and treat the
Registered Owner of any Bond as the absolute owner of such Bond,  whether or not
such  Bond is  overdue,  and  neither  the  Authority  nor the  Trustee  nor the
Registrar and Paying Agent shall be affected by any notice to the contrary.

     Payment  made to the  Registered  Owner of any Bond for the purpose of such
payment in  accordance  with the  provisions of this Section 2.08 shall be valid
and  effectual,  to the  extent  of the sum or  sums so  paid,  to  satisfy  and
discharge  the  liability  upon such Bond in respect of which such  payment  was
made.

     Section 2.09. Transfer, Registration and Exchange of Bonds. The transfer of
the Bonds may be registered only upon the books of registry  required to be kept
pursuant to Section  2.07 upon  surrender  thereof to the  Registrar  and Paying
Agent, together with an assignment duly executed by the Holder thereof or his or
her duly authorized  agent and accompanied by a guarantee of signature,  each in
such form as shall be satisfactory  to the Registrar and Paying Agent.  Upon any
such  registration of transfer the Authority shall execute and the Trustee shall
authenticate  and  deliver  in  exchange  for  such  Bonds a new  Bond or  Bonds
registered in the name of the  transferee or  transferees  for a like  aggregate
principal  amount,  of any  denomination  or  denominations  authorized  by this
Indenture. No transfer of any Bond shall be effective until entered on the books
of registry.

     Any Bond  surrendered in any such  registration of transfer shall forthwith
be cancelled by the  Trustee.  Any Bonds  registered  and  transferred  to a new
Holder  pursuant  to this  Section  shall  be  delivered  to the  Holder  at the
applicable Principal Corporate Trust Office of the Registrar and Paying Agent or
sent by first-class mail to the Holder at his or her request, risk and expense.


                                       19
<PAGE>


     Bonds, upon surrender thereof at the applicable  Principal  Corporate Trust
Office of the  Registrar and Paying  Agent,  together  with an  assignment  duly
executed  by the  Holder or his or her  authorized  agent and  accompanied  by a
guarantee  of  signature,  each in such  form as  shall be  satisfactory  to the
Registrar  and  Paying  Agent,  may,  at the option of the  Holder  thereof,  be
exchanged for an equal aggregate  principal  amount of Bonds of any denomination
or denominations  authorized by this Indenture and in the same form as the Bonds
surrendered  for  exchange.  All Bonds so  surrendered  pursuant to this Section
shall be cancelled by the Trustee.

     Any Bonds to be  delivered  to the Holder upon any such  exchange  shall be
delivered to the Holder at the applicable  Principal  Corporate  Trust Office of
the Registrar and Paying Agent or sent by first-class mail to the Holder thereof
at his or her request, risk and expense.

     Any taxes or other governmental charges required to be paid with respect to
the  registration  of  transfer  or  exchange  of the Bonds shall be paid by the
Holder  requesting  registration  of such  transfer or exchange,  as a condition
precedent to the exercise of such privilege.  The Authority or the Registrar and
Paying Agent, or both, may charge the Company for every registration of transfer
or exchange sufficient to reimburse it for any and all costs required to be paid
in respect thereof.

     Section 2.10. Global Form;  Securities  Depository.  1. Except as otherwise
provided in this Section 2.10, the Bonds in the form of one separate global bond
for each series shall be registered in the name of the Securities  Depository or
its nominee and ownership  thereof shall be maintained in book entry form by the
Securities Depository for the account of the Agent Members thereof.

     Except as provided in  subsection  (3) of this  Section 2.10 and in Section
8.01, the Bonds may, at the request of the Company, be transferred, in whole but
not in part,  only to the  Securities  Depository or a nominee of the Securities
Depository,  or to a successor Securities Depository selected or approved by the
Authority,  with the consent of the Company and the Trustee for such series,  or
to a nominee of such successor  Securities  Depository.  Each global certificate
for the Bonds shall bear a legend substantially to the following effect: "Except
as otherwise  provided in Sections 2.03 and 8.01 of the  Indenture,  this global
bond may, at the request of the  Company,  be  transferred,  in whole but not in
part, only to the Securities Depository as defined in the Indenture or a nominee
of the  Securities  Depository or to a successor  Securities  Depository or to a
nominee of a successor Securities Depository."

     2. The Authority,  the Company,  the Trustee,  and the Registrar and Paying
Agent shall have no responsibility or obligation with respect to:

     (a)  the  accuracy  of the  records  of the  Securities  Depository  or any
          beneficial owners with respect to any beneficial ownership interest in
          the Bonds;

     (b)  the  delivery to any  beneficial  owner of the Bonds or other  person,
          other than the  Securities  Depository  or its  nominee as  registered
          owner, of any notice with respect to the Bonds;

     (c)  the  payment  to any  beneficial  owner of the Bonds or other  person,
          other than the  Securities  Depository  or its  nominee as  registered
          owner, of any amount with respect to the principal or premium, if any,
          or interest on the Bonds;


                                       20
<PAGE>


     (d)  its  acceptance of any consent given by the  Securities  Depository or
          other action taken by the Securities  Depository as registered  owner;
          or

     (e)  the selection by the Securities Depository of any beneficial owners to
          receive payment in the event of a partial redemption of Bonds,  except
          for the Trustee's obligations under this Indenture.

Except as otherwise provided in Section 8.01 hereof, the Authority, the Company,
and the  Trustee,  the  Registrar  and  Paying  Agent may  treat the  Securities
Depository as, and deem the  Securities  Depository to be, the absolute owner of
the Bonds for all purposes whatsoever, including without limitation:

     (a)  the payment of  principal  and  premium,  if any,  and interest on the
          Bonds;

     (b)  giving  notices of  redemption  and other  matters with respect to the
          Bonds; and

     (c)  registering transfers with respect to the Bonds.

     Payment by the Trustee of principal  or  redemption  price,  if any, of and
premium,  if any,  and  interest  on such  Bonds  to or upon  the  order  of the
Securities Depository or its nominee during any period when it is the registered
owner of such Bonds shall be valid and effective to satisfy and discharge  fully
the Authority's obligation with respect to the amounts so paid.

     3. The  Authority  may, and at the request of the Company may,  discontinue
the use of a Securities Depository for the Bonds.

     4. If at any time the Securities  Depository notifies the Authority and the
Company that it is unwilling or unable to continue as Securities Depository with
respect to the Bonds or if at any time the Securities Depository shall no longer
be  registered or in good standing  under the  Securities  Exchange Act or other
applicable  statute or regulation and a successor  Securities  Depository is not
appointed  by the  Authority  with the consent of the  Company and the  Trustee,
within 90 days after the  Authority  and the  Company  receive  notice or become
aware of such  condition,  as the case may be, this  Section  shall no longer be
applicable  and the Authority  shall execute and the Trustee shall  authenticate
and  deliver  certificates  representing  the Bonds of such  series as  provided
below.  In addition,  the Authority may determine at any time, at the request of
the Company,  that the Bonds shall no longer be  represented by global bonds and
that the  provisions of  subsections  (1) and (2) above shall no longer apply to
such series of Bonds. The Authority shall have no  responsibility to confirm any
of the information provided to it by the Securities Depository.  Absent manifest
error,  neither the Company nor the Trustee shall have responsibility to confirm
any of the information provided to it by the Securities Depository.  In any such
event the Authority shall execute and the Trustee shall authenticate and deliver
certificates   representing   the  Bonds  of  such  series  as  provided  below.
Certificates  for Bonds  issued in exchange  for a global bond  pursuant to this
subsection shall be registered in such names in authorized  denominations as the
Securities  Depository,  pursuant to instructions  from the beneficial owners or
otherwise, shall instruct the Authority and the Trustee.


                                       21
<PAGE>


     5. The  Authority  and the Trustee are hereby  authorized to enter into any
arrangements determined necessary or desirable with any Securities Depository in
order to effectuate  this Section and both of them shall act in accordance  with
this Indenture and any such  agreement.  Without  limiting the generality of the
foregoing,  any such arrangements may alter the manner of effecting  delivery of
Bonds and the  transfer  of funds  for the  payment  of Bonds to the  Securities
Depository.









                                       22
<PAGE>


                                   ARTICLE III

                      SECURITY FOR BONDS; ISSUANCE OF BONDS

     Section 3.01.  Pledge and assignment  effected by Indenture;  Bonds equally
and ratably  secured.  In  accordance  with the  provisions  of  subsection 8 of
Section 1860 of the Act, the pledge and  assignment  effected by this  Indenture
shall be valid  and  binding  from the date of  execution  and  delivery  of the
Indenture,  the moneys so pledged and  assigned  and  hereafter  received by the
Authority shall be subject to the lien of such pledge and assignment without any
physical  delivery  thereof or further act, and such lien shall be a continuing,
irrevocable  and exclusive  first lien and shall be valid and binding as against
all parties having claims of any kind in tort, contract or otherwise against the
Authority  irrespective of whether such parties have notice thereof. In addition
to the pledges and  assignments  set forth above,  the Authority  hereby further
grants to the Trustee the same power as the  Authority  to enforce  from time to
time the rights of the Authority  set forth in Article III of the  Participation
Agreement,  subject to the provisions of the Participation Agreement relating to
the amendment thereof.

     All Bonds  issued  and to be issued  hereunder  are,  and are to be, to the
extent  provided in the Indenture,  equally and ratably secured by the Indenture
without  preference,  priority or  distinction  on account of the actual time or
times of the  authentication  or delivery  or  maturity of the Bonds,  or any of
them, so that, subject to the provisions of Section 11.05, all Bonds at any time
outstanding  hereunder shall have the same right,  lien and preference under and
by virtue of this Indenture and shall all be equally and ratably  secured hereby
with like effect as if they had all been executed,  authenticated  and delivered
simultaneously on the date hereof. The aggregate principal amount of Bonds which
may be executed by the Authority and  authenticated by the Trustee and delivered
and secured by the  Indenture  is not limited  except as is or may  hereafter be
provided in the Indenture or as may be limited by law.

     Section  3.02.  Issuance  of Bonds.  The  Bonds  shall be  executed  by the
Authority  substantially  in the form  prescribed  by  Section  17.01 and in the
manner   herein  set  forth  and  shall  be  deposited   with  the  Trustee  for
authentication,  but  before  the Bonds  shall  initially  be  delivered  by the
Trustee, there shall be filed with the Trustee the following:

     (a)  an  order   executed   by  an   Authorized   Officer   directing   the
          authentication  and  delivery of the Bonds to or upon the order of the
          Securities  Depository or its nominee,  upon payment to the Trustee of
          the purchase price therein set forth;

     (b)  a fully executed counterpart of this Indenture;

     (c)  a fully executed counterpart of the Participation Agreement;

     (d)  the fully executed Policy;

     (e)  the fully executed Company Obligation;

     (f)  a fully executed counterpart of the Tax Regulatory Agreement;


                                       23
<PAGE>


     (g)  an opinion of counsel to the Company,  addressed  to the  Underwriters
          (as defined in the Bond  Purchase  Agreement),  with  reliance  letter
          addressed  to  the  Authority,  the  Trustee  and  the  Bond  Insurer,
          substantially  to the  effect,  and  dated  as,  required  by  Section
          8(d)(9)(ii) of the Bond Purchase Agreement;

     (h)  an opinion of counsel to the Bond Insurer, addressed to the Authority,
          the Company, and the Trustee,  substantially to the effect required by
          Section 8(d)(9)(iv) of the Bond Purchase Agreement; and

(i)      an Opinion of Bond Counsel to the Authority and the Trustee (i) as to
         the validity of the Bonds and (ii) that all conditions precedent to the
         issuance of the Bonds have been met.

     When the  documents  mentioned  in clauses (a) to (i),  inclusive,  of this
Section  shall have been filed with the  Trustee,  and when the Bonds shall have
been executed and authenticated as required by this Indenture, the Trustee shall
deliver the Bonds to the  Securities  Depository,  but only upon  payment to the
Trustee of the purchase price of the Bonds specified in said order.




                                       24
<PAGE>


                                   ARTICLE IV

                         CORPORATION OBLIGATION PAYMENTS

     Section 4.01.  Company Obligation  Payments.  The Company will make Company
Obligation Payments pursuant to this Indenture and the Participation Agreement.

     Section  4.02.  Credits on the Company  Obligation.  The  Company  shall be
entitled to receive a credit  against its obligation to pay the principal of and
premium,  if any, and interest on, as the case may be, the Company Obligation in
an amount equal to (1) the principal amount of any Bonds secured by such Company
Obligation  surrendered  to the  Trustee  by the  Company or the  Authority  for
cancellation,  (2) the amount of money,  if any,  other than Company  Obligation
Payments,  held by the Trustee and available and designated to make the interest
payment on the Bonds and (3) the  principal  amount of any Bonds secured by such
Company Obligation purchased or redeemed and canceled by the Trustee with moneys
other than Company Obligation  Payments to the extent that the Trustee shall not
have received written notice from the Company that the Company shall not receive
such a credit;  provided,  however,  that the Company shall not receive a credit
for any amounts  furnished  by the State of New York for the  redemption  of the
Bonds in accordance with Section 9.06 nor for any amounts  furnished by any Bond
Insurer.




                                       25
<PAGE>



                                   ARTICLE V

                                   [RESERVED]












                                       26
<PAGE>



                                   ARTICLE VI

                     CREATION OF SPECIAL FUNDS AND ACCOUNTS;
                     APPLICATION AND INVESTMENT OF REVENUES

     Section 6.01. Creation of Funds and Accounts. 1. The following fund and the
following  accounts  therein,  which shall be a special  fund and accounts to be
held by the Trustee, are hereby created and designated as set forth below:

     (a)  Bond Fund

     (b)  Interest Account

     (c)  Principal Account

     (d)  Redemption Account

     (e)  Acceleration Account

     The  designation of each fund and account set forth above shall include the
term "The  Brooklyn  Union Gas Company d/b/a  KeySpan  Energy  Delivery New York
Project 2005 Series A," which term shall  precede the  designation  as set forth
above. Such fund and each such account is, however, sometimes referred to herein
as set forth above.

     2. The Bond Fund and the accounts  therein  shall be held in the custody of
the Trustee.  All monies  required to be  deposited  with or paid to the Trustee
under any provision of this Indenture  shall be held by the Trustee in trust and
applied only in accordance  with the  provisions of this  Indenture and shall be
trust funds for the purposes specified in this Indenture

     Section  6.02.   Deposit  of  Company   Obligation   Payments.   Under  the
Participation  Agreement and the Company Obligation,  the Company shall deposit,
or cause to be deposited,  the following in immediately available funds with the
Trustee as the  Company  Obligation  Payments  become due or are  declared to be
immediately  due and payable under the  Participation  Agreement and the Company
Obligation unless sufficient amounts are then available in such Accounts to make
the  required  payments  therefrom.   The  Trustee  shall  deposit  the  Company
Obligation  Payments  or other money set forth below in the Bond Fund and credit
the Accounts set forth below in the order set forth below:

     (a) No later than 12:00 noon (New York City time) on each Interest  Payment
Date into the Bond Fund for credit to the Interest  Account the amount  required
for the  payment  of the  interest  payable  on the  Outstanding  Bonds  on such
Interest Payment Date.

     (b) On the last Business Day prior to the day on which any redemption is to
occur or on the last  Business Day prior to the Stated  Maturity,  into the Bond
Fund for credit to the Redemption Account or the Principal Account,  as directed
by the Company, the amount required to pay principal of and premium, if any, and
accrued  interest on any Bonds called for redemption or at the Stated  Maturity,
the amount required to pay the principal of the Bonds.


                                       27
<PAGE>


     If other monies are received by the Trustee as advance  payments of Company
Obligation  Payments to be applied to the  redemption of all or a portion of the
Bonds,  such  monies  shall be  deposited  in the Bond  Fund for  credit  to the
Redemption Account therein.

     (c)  Immediately  following  the  declaration  of  principal of and accrued
interest  on the  Bonds  then  Outstanding  to be  immediately  due and  payable
pursuant  to Section  12.03,  into the Bond Fund for credit to the  Acceleration
Account,  the amount  required to pay principal of and accrued  interest on such
Bonds.

     Section  6.03.  Application  of Monies in the Bond  Fund.  1. The Bond Fund
shall be used for the purpose of making  scheduled  payments of principal of and
interest on the Bonds, of making  payments of principal of and premium,  if any,
and accrued  interest on Bonds then subject to  redemption  in the manner herein
provided  and of making  payments of  principal  of and accrued  interest on the
Bonds then Outstanding that have been declared to be immediately due and payable
pursuant  to  Section  12.03.  The  monies in the Bond Fund  shall be applied as
follows:

     (a) Interest  Account.  On each Interest  Payment  Date,  the Trustee shall
apply the amount of monies then  credited to the Interest  Account  equal to the
interest  then  payable  on the Bonds to the  payment of such  interest  on such
Interest Payment Date.

     (b) Principal Account. On the Stated Maturity,  the Trustee shall apply the
amount of monies then credited to the  Principal  Account equal to the principal
amount of Bonds then payable to the payment of such principal on such date.

     (c)  Redemption  Account.  The Trustee shall redeem on the date set for the
redemption  thereof,  as  provided in Article V of this  Indenture,  a principal
amount of Bonds then subject to redemption.  Subject to the following  sentence,
the Trustee shall apply an amount  credited to the  Redemption  Account equal to
the principal  amount and premium,  if any, of Bonds then subject to redemption,
together with accrued interest thereon to the redemption date, to the payment of
such Bonds on the redemption date from funds described in Section 6.02(b)

     Upon the  retirement of any portion of the Bonds by redemption  pursuant to
the provisions of this Section 6.03, the Trustee shall provide the Authority and
the Company  with a notice  stating  the  amounts of the Bonds so  redeemed  and
setting  forth the date of their  redemption  and the amount paid as  principal,
premium and interest thereon.  The expenses in connection with the redemption of
the Bonds shall be paid by the Company as Additional Payments.

     All monies in the Redemption  Account on the last Business Day prior to the
Stated Maturity shall be transferred to the Principal Account.

     (d)  Acceleration  Account.  The  Trustee  shall  promptly  apply an amount
credited  to the  Acceleration  Account  equal to the  principal  amount  of and
accrued  interest on the Bonds then  Outstanding  that have been  declared to be
immediately  due and payable  pursuant to Section  6.03 from funds  described in
Section 6.02(c).


                                       28
<PAGE>


     Section 6.04. Investment of Funds. Monies in the Bond Fund and the accounts
in such fund shall be invested and  reinvested  by the Trustee,  at the specific
written  direction  of the  Company,  so long as the  Company  is not in default
hereunder or under the  Participation  Agreement,  to the extent  reasonable and
practicable in Investment Securities selected by the Company and maturing in the
amounts  and at the times as  determined  by the  Company  so that the  payments
required  to be made from such funds and  accounts  may be made when due. In the
absence  of such  direction  and  subsequent  to the  occurrence  of an Event of
Default hereunder or under the Participation  Agreement,  the Trustee shall hold
monies in the Bond Fund uninvested.  Investment  earnings shall be considered on
deposit in any Fund or Account as of the date they are actually  received by the
Trustee.

     The Trustee,  with the consent of the Company,  shall be authorized to sell
any investment when necessary to make the payments to be made from the funds and
accounts  therein.  All  earnings  on and income  from  monies in said funds and
accounts  created hereby shall be considered to be Revenues and shall be held in
the respective account in the Bond Fund for use and application as are all other
monies deposited in such accounts.  The Trustee shall, in the statement required
by Section 11.07,  set forth the Investment  Securities  held separately in, and
the earnings  realized on investment for, each fund and account  hereunder.  The
Trustee shall not be liable for any  depreciation in the value of the Investment
Securities  acquired  hereunder  or any loss  suffered  in  connection  with any
investment  of  funds  made by it in  accordance  herewith,  including,  without
limitation,  any loss  suffered in  connection  with the sale of any  investment
pursuant hereto.

     The  Trustee  may make  any such  investments  through  its own  investment
department upon written direction of the Company.

     All Investment  Securities  shall  constitute a part of the respective fund
and accounts  therein from which the  investment  in Investment  Securities  was
made.

     Section 6.05.  Disposition  of amounts after payment of Bonds.  Any amounts
remaining in the funds  created  under the  Indenture  after  payment in full of
principal of and premium,  if any, and interest on all the Bonds,  or provisions
for payment  thereof  having been made in accordance  with the provisions of the
Indenture,  and payment of all the fees,  charges and expenses of the Authority,
Trustee,  and the Registrar and Paying Agent,  in accordance  with the Indenture
and the Participation  Agreement,  shall belong to and be paid to the Company by
the Trustee on written demand.






                                       29
<PAGE>



                                  ARTICLE VII

                                   [RESERVED]











                                       30
<PAGE>



                                  ARTICLE VIII

                                 CREDIT FACILITY

     Section   8.01.   Provisions   with  respect  to  the  Bond   Insurer.   1.
Notwithstanding  anything  else  to  the  contrary  herein  and so  long  as the
conditions  set forth in  Section  8.01  hereof  are met,  the  Trustee  and the
Authority  (and, in the case of subsection  (c), the Registrar and Paying Agent)
agree:

     (a)  If, on the interest payment date for the Bonds there is not on deposit
          with the Trustee  sufficient  moneys available to pay all principal of
          and  interest  on the  Bonds  due on  such  date,  the  Trustee  shall
          immediately  notify the Bond  Insurer  and U.S.  Bank  Trust  National
          Association,  New York,  New York or its successor as its Fiscal Agent
          (the  "Fiscal  Agent") of the amount of such  deficiency.  If, by said
          interest  payment date,  such  deficiency has not been provided to the
          Trustee,  the Trustee shall  simultaneously make available to the Bond
          Insurer and to the Fiscal Agent the  registration  books for the Bonds
          maintained by the Registrar and Paying Agent. In addition:

          (i)  The Trustee  shall  provide the Bond  Insurer  with a list of the
               Bondholders  entitled to receive  principal or interest  payments
               from the Bond Insurer under the terms of the Municipal Policy and
               shall make arrangements for the Bond Insurer and its Fiscal Agent
               (1) to mail checks or drafts to  Bondholders  entitled to receive
               full or partial  interest  payments from the Bond Insurer and (2)
               to pay principal of the Bonds  surrendered to the Fiscal Agent by
               the  Bondholders  entitled to receive  full or partial  principal
               payments from the Bond Insurer; and

          (ii) The Trustee shall,  at the time it makes the  registration  books
               available  to the Bond  Insurer  pursuant  to (i)  above,  notify
               Bondholders  entitled to receive the payment of  principal  of or
               interest on the Bonds from the Bond Insurer (1) as to the fact of
               such  entitlement,  (2) that the Bond  Insurer will remit to them
               all or part of the  interest  payments  coming due subject to the
               terms of the Municipal  Policy,  (3) that,  except as provided in
               paragraph (b) below, in the event that any Bondholder is entitled
               to receive full payment of principal from the Bond Insurer,  such
               Bondholder  must tender his Bond with the  instrument of transfer
               in the form provided on the Bond executed in the name of the Bond
               Insurer, and (4) that, except as provided in paragraph (b) below,
               in the event that such  Bondholder is entitled to receive partial
               payment of principal from the Bond Insurer,  such Bondholder must
               tender his Bond for  payment  first to the  Trustee,  which shall
               note on such Bond the portion of  principal  paid by the Trustee,
               and then, with an acceptable  form of assignment  executed in the
               name of the Bond Insurer,  to the Fiscal  Agent,  which will then
               pay the unpaid portion of principal to the Bondholder  subject to
               the terms of the Policy.


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<PAGE>


     (b)  In the  event  that a  Responsible  Officer  of the  Trustee  receives
          written  notice that any payment of principal of or interest on a Bond
          has been  recovered  from a Bondholder  pursuant to the United  States
          Bankruptcy  Code by a trustee in  bankruptcy  in  accordance  with the
          final,  nonappealable order of a court having competent  jurisdiction,
          the Trustee shall,  at the time it provides notice to the Bond Insurer
          pursuant to the Policy,  notify all Bondholders that in the event that
          any  Bondholder's  payment is so recovered,  such  Bondholder  will be
          entitled  to  payment  from the Bond  Insurer  to the  extent  of such
          recovery,  and the  Trustee  shall  furnish  to the Bond  Insurer  its
          records  evidencing  the  payments of principal of and interest on the
          Bonds which have been made by the Trustee and  subsequently  recovered
          from Bondholders, and the dates on which such payments were made.

     (c)  The Bond Insurer shall, to the extent it makes payment of principal of
          or  interest  on the  Bonds,  become  subrogated  to the rights of the
          recipients  of such  payments  in  accordance  with  the  terms of the
          Municipal Policy and, to evidence such subrogation, (i) in the case of
          subrogation as to claims for past due interest, the Trustee shall note
          the Bond  Insurer's  rights  as  subrogee  on the  registration  books
          maintained  by the Trustee upon receipt from the Bond Insurer of proof
          of the payment of interest  thereon to the  Bondholders  of such Bonds
          and  (ii)  in the  case of  subrogation  as to  claims  for  past  due
          principal,  the  Trustee  shall  note the  Bond  Insurer's  rights  as
          subrogee on the  registration  books for the Bonds  maintained  by the
          Registrar  and Paying  Agent upon  receipt of proof of the  payment of
          principal  thereof to the  Bondholders of such Bonds.  Notwithstanding
          anything in Indenture or the Bonds to the contrary,  the Trustee shall
          make payment of such past due interest and past due principal directly
          to the Bond  Insurer to the extent that the Bond Insurer is a subrogee
          with respect thereto.

     (d)  The Trustee  will  accordingly  pay to the Bond  Insurer the amount of
          such  principal  and  interest   (including   principal  and  interest
          recovered  under  subparagraph  (ii)  of the  first  paragraph  of the
          Policy,  which principal and interest shall be deemed past due and not
          to  have  been  paid),  with  interest  thereon  as  provided  in this
          Indenture,  the  Participation  Agreement and the Bonds, but only from
          the  sources  and in the manner  provided  herein  for the  payment of
          principal  of and  interest  on the  Bonds  to  Bondholders,  and will
          otherwise  treat the Bond  Insurer as the owner of such  rights to the
          amount of such principal and interest.

     (e)  The Bond Insurer shall receive notice of the resignation or removal of
          the  Trustee  and the  appointment  of a  successor  thereto  from the
          Company.

     (f)  The Bond Insurer  shall receive  copies of all notices  required to be
          delivered  to  Bondholders  and,  on an  annual  basis,  copies of the
          Company's  audited  financial  statements  and Annual  Budget from the
          Company.

     2. Any notice  that is  required  to be given to a holder of the Bond or to
the  Trustee  pursuant  to the  Indenture  shall  also be  provided  to the Bond
Insurer,  and all  notices  required to be given to the Bond  Insurer  under the
Indenture shall be delivered pursuant to Section 18.05.


                                       32
<PAGE>


     Section 8.02. Rights of Credit Facility Issuer.  Notwithstanding  any other
provision of this Indenture to the contrary, the Credit Facility Issuer shall be
deemed to be the sole  Holder of the Bonds when the  approval,  consent  (except
with  respect to the  consent  that  pursuant  to Article XV is  required  to be
obtained from the Holders of all Bonds Outstanding which would be affected by an
amendment or modification to this Indenture  described in Article XV), direction
or any other action of the Holders of such Bonds is required or may be exercised
under this Indenture, and shall have the right to give notice of, and to control
and direct the enforcement of all rights and remedies  granted to the Holders of
the Bonds or the Trustee for the benefit of the Holders upon,  default hereunder
or under the Company Obligation, including, without limitation: (x) the right to
accelerate the principal of the Bonds as provided in the Indenture,  and (y) the
right to annul any declaration of  acceleration,  and the Credit Facility Issuer
shall also be entitled  to approve all waivers of Events of Default,  so long as
(i) the  Credit  Facility  Issuer is and  remains  solvent  and not party to any
proceeding for the rehabilitation,  liquidation,  conservation or dissolution of
the  Credit  Facility  Issuer;  (ii) the  Credit  Facility  is in full force and
effect;  and (iii) the Credit  Facility Issuer shall have made and be continuing
to make  all  payments  required  to be made  and  meet  all of its  obligations
required to be met under the Credit  Facility.  So long as those  conditions are
met  the  Credit  Facility  Issuer  shall  also  be  treated  as a  third  party
beneficiary  hereunder and as a party  entitled to (i) notify the Trustee of the
occurrence  of an Event of Default and (ii)  request the Trustee to intervene in
judicial  proceedings  that affect  Bonds,  the payment of which is supported by
such Credit  Facility  Issuer,  and the  security  therefor;  provided  that the
Trustee  shall  be  entitled  to  indemnity  satisfactory  to it  prior  to such
intervention;  and the Trustee  shall accept  notice of an Event of Default from
the Credit Facility Issuer. So long as the conditions  specified in clauses (i),
(ii) and (iii) of the first  sentence of this Section are being met with respect
to the Bond Insurer and the Municipal Policy, the Bond Insurer shall be the sole
Credit  Facility Issuer and neither the Authority nor the Trustee shall appoint,
or  consent to or accept  the  appointment  of, an  additional  Credit  Facility
Issuer.




                                       33
<PAGE>


                                   ARTICLE IX

                               REDEMPTION OF BONDS

     Section 9.01.  Bonds to be redeemed only in manner  provided in Article IX.
1.  Any  redemption  of all or any  part  of the  Bonds  which  are  subject  to
redemption, shall be made only in the manner provided in this Article IX.

     2. In the  manner and with the effect  provided  herein,  the Bonds will be
subject to redemption prior to maturity as follows:

          (a) The Bonds shall be subject to redemption prior to maturity, at the
     option of the Authority  exercised at the direction of the Company,  at any
     time on and after  February l, 2016, as a whole or in part at a price equal
     to the principal amount thereof.

          (b) The Bonds shall be subject to  redemption in whole on any interest
     payment date not less than twenty  years after the date of the Bonds,  at a
     redemption price to be determined in accordance with Section 9.05, together
     with unpaid interest  accrued thereon to the date fixed for redemption,  if
     the State of New York furnishes funds therefor as provided in Section 9.05.

     3. The Bonds shall be subject to redemption in whole or in part at any time
at the option of the Authority  exercised at the direction of the Company,  at a
redemption price equal to the principal amount thereof to be redeemed,  together
with unpaid interest accrued thereon to the date fixed for redemption, in any of
the following events:

          (i) The  Project or any  production  facilities  serviced  thereby are
     damaged or destroyed to such extent that, in the reasonable judgment of the
     Company,  (a) the Project or such facilities  cannot reasonably be restored
     within a period of six months from the date of such  damage or  destruction
     to the condition thereof immediately  preceding such damage or destruction,
     (b) the  Company  is  thereby  prevented  or  likely to be  prevented  from
     carrying on its normal  operation of the Project or such  facilities  for a
     period of six months from the date of such damage or  destruction or (c) it
     is not  practicable or desirable to rebuild,  repair or restore the Project
     or such facilities;

          (ii) Title to or the  temporary  use of all or part of the  Project or
     any  production  facilities  serviced  thereby is taken or  condemned  by a
     competent  authority,  which  taking  or  condemnation  in  the  reasonable
     judgment  of the  Company  results or is likely to result in the  Company's
     being  thereby  prevented  or likely to be prevented  from  carrying on its
     normal operation of the Project or such facilities;

          (iii) As a result of  legislative  or  executive  action of the United
     States of America or the State of New York or any political  subdivision of
     either or as a result of a final  decree or judgment of any court after the
     contest thereof by the Company,  (a) the  Participation  Agreement  becomes
     void or  unenforceable  or impossible of performance in accordance with the


                                       34
<PAGE>


     intent  and  purpose  of the  parties  as  expressed  therein or (b) in the
     reasonable  judgment  of the  Company,  unreasonable  burdens or  excessive
     liabilities  are imposed upon the Company by reason of the operation of the
     Project or any production facilities serviced thereby;

          (iv)  In the  reasonable  judgment  of  the  Company,  changes  in the
     economic  availability  of  raw  materials,  operating  supplies  or  labor
     necessary  for the  operation of the Project or any  production  facilities
     serviced  thereby or  technological  or other  changes  occur  which in the
     Company's  reasonable  judgment  render  the  Project  or  such  facilities
     impracticable or uneconomic; and

          (v) Any court or regulatory or administrative  body enters or adopts a
     judgment,  order, decree, rule or regulation requiring the Company to cease
     all or substantially all of its operations at the Project or any production
     facilities  serviced  thereby  to such an extent  that,  in the  reasonable
     judgment of the Company,  it will be thereby prevented from carrying on its
     normal operations at the Project or such facilities;

provided,  however,  that if less  than  all of the  Project  or the  production
facilities  serviced  thereby are affected,  the aggregate  principal  amount of
Bonds to be redeemed, as a percentage of the aggregate principal amount of Bonds
originally issued, may not exceed the percentage which the total facilities cost
for such portion of the Project,  as set forth in the Tax  Regulatory  Agreement
with respect thereto, represents of the total facilities cost for the Project.

     Any such  redemption  shall be on any date  within one year  following  the
determination  by the Company that one of the events listed above permitting the
exercise of the option has occurred.

     If less than all of the Project or production  facilities  serviced thereby
are affected,  the Company shall  deliver to the Trustee and the  Authority,  in
addition  to any  direction  required  under  Article  IX, a  certificate  of an
Authorized  Company  Representative  setting forth the principal  amounts of the
Bonds to be  redeemed  and a  description  in  reasonable  detail  of the  basis
therefor.

     4. If less than all of the Bonds are called for redemption,  the particular
Bonds to be  redeemed  shall be selected at random by the Trustee as provided in
Section 9.03.

     Section  9.02.  Special Tax  Redemption  Provisions.  1. The Bonds shall be
subject to mandatory  redemption as a whole (provided,  however,  that the Bonds
shall be redeemed in part if the Company  obtains an Opinion of Bond  Counsel to
the effect  that,  by redeeming  such portion of the Bonds,  the interest on the
remaining  Bonds will not be  included  for Federal  income tax  purposes in the
gross  income  of  any  owner  of  the  Bonds  (other  than  an  owner  who is a
"substantial  user" of the Project or a "related  person"  within the meaning of
Section  147(a)(1) of the Code)) at any time at a redemption price equal to 100%
of the principal  amount thereof,  together with unpaid interest accrued thereon
to the  redemption  date,  if, in a published or private  ruling of the Internal
Revenue  Service or in a final,  nonappealable  judicial  decision by a court of
competent  jurisdiction  (provided  that  the  Company  has  been  afforded  the


                                       35
<PAGE>


opportunity to  participate  at its own expense in the  proceeding  resulting in
such ruling or in the  litigation  resulting in such  decision,  as the case may
be), it is  determined  that, as a result of a failure by the Company to observe
any covenant,  agreement or representation in the Participation Agreement or the
Tax Regulatory  Agreement,  interest on the Bonds is included for Federal income
tax  purposes in the gross  income (as defined in Section 61 of the Code) of any
owner of a Bond  (other than a  "substantial  user" of the Project or a "related
person"  within the  meaning of Section  147(a)(1)  of the Code),  and,  in such
event, the Bonds shall be subject to such mandatory redemption not more than one
hundred  eighty  (180)  days  after  receipt  by the  Trustee  of notice of such
published or private ruling or judicial  decision and a demand for redemption of
the Bonds.  The  occurrence of an event  requiring  the  redemption of the Bonds
under this  paragraph  does not constitute an event of default under the Company
Obligation or under the Indenture and the sole obligation in such event shall be
for the  Company to prepay the Company  Obligation  in an amount  sufficient  to
redeem the Bonds to the extent required by this paragraph.

     2.  The  Bonds  may be  redeemed  in  whole  or in  part  at any  time at a
redemption  price equal to 100% of the principal  amount thereof,  together with
accrued and unpaid interest  thereon to the redemption  date, if the Company has
determined,  on the basis of the advice of Bond Counsel that, as a result of any
action taken or expected to be taken,  or failure to take  action,  a reasonable
risk exists that interest on the bonds will not be excludable  from gross income
for federal tax purposes.  Such conclusion and certification  shall be evidenced
by delivery to the Trustee of a written  certificate  of an  Authorized  Company
Representative  to the effect  that the Company  has  reached  such  conclusion,
together with a copy of such advice of Bond Counsel.  The occurrence of an event
permitting  the redemption of the Bonds under this paragraph does not constitute
an event of default under the Company  Obligation or under the Indenture and the
sole  option  in such  event  shall be for the  Company  to prepay  the  Company
Obligation in an amount sufficient to redeem the Bonds to the extent required by
this paragraph.

     3. The Bonds will also be subject to mandatory  redemption  at a redemption
price equal to one hundred three percent (103%) of the principal  amount thereof
plus  unpaid  interest  accrued  thereon to the  redemption  date if the Company
reasonably  concludes and certifies to the Trustee in writing that the business,
properties, condition (financial or otherwise), operations or business prospects
of the Company will be  materially  and  adversely  affected  unless the Company
takes or omits to take a specified  action and that the Company has been advised
in writing by Bond Counsel that the specified action or omission would cause the
use of the Project to be such that,  pursuant  to Section  150 of the Code,  the
Company  would not be entitled to deduct the  interest on the Bonds for purposes
of determining the Company's  Federal  taxable income,  for a period of not less
than ninety  (90)  consecutive  or  nonconsecutive  days  during a  twelve-month
period.  Such conclusion and certification shall be evidenced by delivery to the
Trustee of a written certificate of an Authorized Company  Representative to the
effect that the Company has reached such  conclusion,  together with a certified
copy of a resolution  of the Board of Trustees of the Company  authorizing  such
certificate  and a copy of such  advice of Bond  Counsel.  In the event that the
Bonds become subject to redemption as provided in this paragraph, the Bonds will
be redeemed in whole  unless  redemption  of a portion of the Bonds  outstanding
would, in the Opinion of Bond Counsel,  have the result that interest payable on
the Bonds remaining  outstanding  after such redemption  would be deductible for
purposes of determining the Federal taxable income of the Company,  and, in such
event,  the Bonds to be redeemed  shall be selected (in the principal  amount of
$5,000 or any integral  multiple thereof) by lot, in such amount as is necessary


                                       36
<PAGE>


to accomplish  that result.  The occurrence of an event requiring the redemption
of the Bonds under this  paragraph does not constitute an event of default under
the Company  Obligation or under the Indenture and the sole option in such event
shall  be for  the  Company  to  prepay  the  Company  Obligation  in an  amount
sufficient to redeem the Bonds to the extent required by this paragraph.

     Section  9.03.  Selection  of Bonds to be Redeemed.  A redemption  of Bonds
shall be a  redemption  of the whole or of any part of the Bonds  from any funds
available  for  that  purpose  in a  principal  amount  equal  to an  authorized
denomination  (so long as the  principal  amount not  redeemed is an  authorized
denomination). If less than all Bonds shall be redeemed, the particular Bonds to
be redeemed  shall be chosen by the  Trustee,  or the Trustee  shall  direct the
Registrar and Paying Agent to so choose, as hereinafter  provided.  If less than
all the Bonds  shall be  called  for  redemption  under  any  provision  of this
Indenture  permitting such partial redemption,  the particular Bonds or portions
of Bonds to be redeemed shall be selected (a) first, from Bonds held or owned by
or for the issuer of a Credit Facility pursuant to any Credit Facility,  and (b)
second,  from all other Bonds then  Outstanding,  by lot by the Trustee or, upon
direction of the Trustee,  by lot by the Registrar  and Paying Agent;  provided,
however,  that the portion of any Bond to be redeemed  shall be in the principal
amount of $5,000 or any integral  multiple  thereof and that, in selecting Bonds
for redemption,  the Trustee or Registrar and Paying Agent shall treat each Bond
as representing that number of Bonds which is obtained by dividing the principal
amount  of such  registered  Bond by  $5,000  (such  amounts  being  hereinafter
referred to as the "applicable units of principal amount").  If it is determined
that  one or  more,  but  not  all of  the  $5,000  units  of  principal  amount
represented by any such Bond is to be called for redemption, then upon notice of
intention  to redeem such $5,000 unit or units,  the Holders of such Bonds shall
forthwith surrender such Bonds to the Registrar and Paying Agent for (1) payment
of the redemption price (including the redemption  premium,  if any, and accrued
interest  to the date  fixed  for  redemption)  of the  $5,000  unit or units of
principal  amount called for redemption and (2) exchange for a new Bond or Bonds
of the aggregate  principal amount of the unredeemed balance of the principal of
such  Bonds.  If the  Holders of any such Bond of a  denomination  greater  than
$5,000 shall fail to present such Bond to the Registrar  and Paying  Agent,  for
payment and exchange as aforesaid, such Bond shall, nevertheless, become due and
payable on the date  fixed for  redemption  to the extent of the $5,000  unit or
units of principal amount called for redemption (and to that extent only).

     Section 9.04.  Notice of redemption.  (a) Notice of redemption  pursuant to
this  Article  IX  shall  be  given  by the  Trustee  by  mailing  a copy of the
redemption  notice by first-class  mail at least 30 days prior to the date fixed
for redemption to the Holders of the Bonds to be redeemed at the addresses shown
on the  registration  books  maintained by the  Registrar and Paying Agent.  Any
redemption  may be  conditioned  on the receipt of moneys by the  Registrar  and
Paying Agent  sufficient to pay the redemption  price on the redemption  date of
Bonds called for redemption,  if the notice of redemption so states. The Trustee
shall receive  notice of a redemption  from the Authority at least 40 days prior
to the date fixed for redemption..

     (b) Each notice of redemption shall state: (i) the full title of the Bonds,
the redemption  date,  the place of redemption and the redemption  price payable
upon such  redemption;  (ii) that the interest on the Bonds, or on the principal
amount  thereof  to be  redeemed,  shall  cease to accrue  from and  after  such
redemption date and (iii) that on said date there will become due and payable on


                                       37
<PAGE>


the Bonds the principal  amount thereof to be redeemed and the interest  accrued
on such  principal  amount to the redemption  date, if any, and the premium,  if
any, thereon. Each notice of redemption mailed to the Holder of the Bonds shall,
if less than the entire principal sum thereof is to be redeemed,  also state the
principal amount thereof and the distinctive numbers of the Bonds to be redeemed
and that such Bonds must be  surrendered  to the  Trustee  in  exchange  for the
payment of the principal amount thereof to be redeemed and the issuance of a new
Bond  equaling in principal  amount that portion of the  principal sum not to be
redeemed  of the Bonds to be  surrendered.  The  failure  to give  notice to any
Holder of a Bond or any defects in such notice shall not affect the  proceedings
for the redemption of the Bonds for which notice has been properly given.

     Section 9.05. Effect of Redemption.  If the Bonds have been duly called for
redemption and notice of the redemption  thereof has been duly given or provided
for as  hereinbefore  provided and if monies for the payment of the Bonds (or of
the principal  amount  thereof to be redeemed) and the interest to accrue to the
redemption  date  on the  Bonds  (or  of  the  principal  amount  thereof  to be
redeemed),  if any, and the premium, if any, thereon are held for the purpose of
such payment by the Trustee,  then the Bonds (or the principal amount thereof to
be redeemed) shall on the redemption date designated in such notice,  become due
and payable and  interest on the Bonds (or the  principal  amount  thereof to be
redeemed) so called for redemption  shall cease to accrue from such date and the
Holder thereof shall  thereafter have no rights  hereunder as the Holder of such
Bonds (or the  principal  amount  thereof to be redeemed)  except to receive the
principal  amount  thereof  and premium  (if any)  thereon  and  interest to the
redemption date.

     Section  9.06.   Extraordinary  Redemption  at  demand  of  the  State.  In
accordance with the provisions of Section 1864 of the Act, the State of New York
may, upon furnishing sufficient funds therefor,  require the Authority to redeem
prior to maturity,  as a whole, any issue of Bonds, on any interest payment date
not less  than  twenty  years  after the date of the  Bonds of such  issue.  The
Trustee  shall  deposit  such funds in the Bond Fund and,  upon notice  given as
provided  in Section  9.04,  shall  apply such funds to the  redemption  of such
Bonds, at a redemption price equal to the applicable  optional  redemption price
set forth in this Indenture or 105 per cent of the principal amount of the Bonds
to be redeemed,  whichever is less,  together with accrued interest,  if any, to
the date fixed for  redemption,  all in the manner  provided in this Article IX.
Upon such redemption,  the Trustee shall assign the Company Obligation  relating
to the Bonds to or as directed in writing by the  Authority.  Notice of any such
redemption  shall be published in accordance with the provisions of this Article
IX and such Section 1864.

     Section 9.07. Purchase of Bonds. The Company may purchase Bonds at any time
and from time to time.  The  Trustee,  acting at the  written  direction  of the
Company, shall remit the purchase price for such Bonds from any moneys then held
by the Trustee and available for the  redemption or purchase of Bonds;  provided
that any limitations or restrictions on such redemption or purchase contained in
the  Indenture  shall be complied  with.  All such Bonds so  purchased  shall be
canceled by the Trustee,  at the written direction of the Company, in accordance
with Article II.


                                       38
<PAGE>


     Section 9.08.  Cancellation  of Redeemed  Bonds.  Any Bonds  surrendered or
redeemed  pursuant to the  provisions  of this Article shall be cancelled by the
Trustee or the Registrar and Paying Agent.

                                   ARTICLE X

                               THE PRIOR BOND FUND

     Section 10.01.  Prior Bond Fund. 1. There is hereby created and established
a special  trust  fund to be  designated  "Gas  Facilities  Revenue  Bonds  (The
Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York Project), 2005
Series A Prior Bond Fund" (hereinafter  referred to as the "Prior Bond Fund") to
be held by the Trustee. All income or gain on moneys deposited in the Prior Bond
Fund shall be retained therein.

     2. There shall be  deposited  into the Prior Bond Fund the  proceeds of the
Bonds issued hereunder.

     3. The moneys on deposit  from time to time in the Prior Bond Fund shall be
held under and subject to this Indenture, but shall not be subject to the liens,
pledges,  charges,  assignments  and trusts  created hereby for the security and
benefit of the Holders of the Bonds and shall not be  available  for the payment
of Bonds  within the  meaning of the  Indenture,  and shall be used and  applied
solely for the  purpose of  refunding  the Prior  Bonds in  accordance  with the
remaining provisions of this Section.

     4. The Trustee is  authorized  and directed to make payments from the Prior
Bond Fund to remit the redemption  price of the Prior Bonds or costs incurred in
connection  therewith to the Prior Trustee,  upon receipt of a letter or letters
signed by an Authorized Company Representative so directing.












                                       39
<PAGE>



                                   ARTICLE XI

                              PARTICULAR COVENANTS

     Section 11.01. Payment of principal of, interest on, and redemption premium
of Bonds.  The Trustee will  promptly  remit solely from the Company  Obligation
Payments  and other  monies  held by the  Trustee and  available  therefor,  the
principal  of, and the  interest  on, every Bond issued under and secured by the
Indenture and any premium  required to be paid for the  retirement of said Bonds
by redemption,  at the places,  on the dates and in the manner specified in this
Indenture  and in said Bonds  according to the true intent and meaning  thereof,
subject, however, to the provisions of Section 2.01.4.

     Section  11.02.  Performance of covenants.  The Authority  will  faithfully
perform at all times all covenants,  undertakings,  stipulations  and provisions
contained in the Indenture,  in any and every Bond and in all proceedings of the
Authority pertaining thereto.

     Section 11.03.  Further  instruments.  The Authority will from time to time
execute and deliver such further instruments and take such further action as may
be reasonable  and as may be required to carry out the purpose of the Indenture;
provided,  however,  that no such instruments or actions shall pledge the credit
of the  Authority  or the State of New York or the taxing  power of the State of
New York or otherwise be inconsistent with the provisions of Section 1.03.

     Section 11.04.  Inspection of Project books. All books and documents in the
possession  of the  Authority  relating  to  the  Project  or the  Participation
Agreement shall at all times be open to inspection by such  accountants or other
agents as the Trustee or the Bond Insurer may from time to time designate.

     Section  11.05.  No extension  of time of payment of interest.  In order to
prevent any  accumulation of claims for interest after  maturity,  the Authority
will not directly or indirectly extend or assent to the extension of the time of
payment of any claims for  interest on any of the Bonds and will not directly or
indirectly  be a party to or approve any such  arrangement  by  purchasing  such
claims for interest or in any other manner.  In case any such claim for interest
shall be extended in  violation  hereof,  such claim for  interest  shall not be
entitled,  in case of any default  hereunder,  to the benefit or security of the
Indenture  except  subject to the prior payment in full of the principal of, and
premium,  if any, on, all Bonds  issued and  outstanding  hereunder,  and of all
claims for interest which shall not have been so extended or funded.

     Section 11.06. Trustee's and Registrar and Paying Agent's fees, charges and
expenses;  Indemnification of Authority and Trustee.  Pursuant to the provisions
of Section 4.05 of the  Participation  Agreement,  the Company has agreed to pay
the fees and the expenses (including, in the case of the Trustee, the reasonable
fees and expenses of counsel and  accountants)  of the Trustee and the Registrar
and Paying Agent in the amounts set forth more fully therein,  and the Authority
shall have no  liability  for the payment of any fees or expenses of the Trustee
or the Registrar and Paying Agent.


                                       40
<PAGE>


     Section 11.07. Agreement of the State. In accordance with the provisions of
subdivision 11 of Section 1860 of the Act, the Authority, on behalf of the State
of New York, does hereby pledge to and agree with the Bondholders that the State
of New York will not limit or alter the rights  and powers  vested by the Act in
the Authority to fulfill the terms of any contract made with Bondholders,  or in
any way impair the rights and  remedies  of such  Bondholders,  until the Bonds,
together with the premium and interest thereon, with (to the extent permitted by
law) interest on any unpaid installments of interest, and all costs and expenses
in connection with any action or proceeding by or on behalf of such Bondholders,
are fully met and discharged.

     Section  11.08.  Recording  and  Filing.   Pursuant  to  the  Participation
Agreement,  the Company  covenants  that it will cause all financing  statements
related to this  Indenture  and all  supplements  thereto and the  Participation
Agreement  and  all  supplements   thereto,  as  well  as  such  other  security
agreements,   financing   statements  and  all  supplements  thereto  and  other
instruments as may be required from time to time to be kept,  recorded and filed
in such manner and in such places as may from time to time be required by law in
order to preserve  and protect  fully the  security of Holders and the rights of
the Trustee hereunder, and to take or cause to be taken any and all other action
necessary to perfect the security interest created by this Indenture.

     Section 11.09. Rights Under the Participation  Agreement. The Participation
Agreement, a duly executed counterpart of which has been filed with the Trustee,
sets forth the  covenants and  obligations  of the Authority and the Company and
reference is hereby made to the same for a detailed  statement of said covenants
and obligations of the Company  thereunder.  Subsequent to the issuance of Bonds
and  prior  to  their  payment  in full or  provision  for  payment  thereof  in
accordance with the provisions  hereof,  the Participation  Agreement may not be
effectively  amended,  changed,   modified,  altered  or  terminated  except  in
accordance with the provisions of Article XV hereof.  The Authority  agrees that
the Trustee, in its name or in the name of the Authority, may enforce all rights
of the  Authority and all  obligations  of the Company under and pursuant to the
Participation  Agreement  for and on behalf of the  Holders,  whether or not the
Authority is in default  hereunder.  Nothing herein contained shall be construed
to prevent the  Authority  from  enforcing  directly any or all of its rights to
administrative   compensation  or   indemnification   under  the   Participation
Agreement.






                                       41
<PAGE>


                                  ARTICLE XII

                              DEFAULTS AND REMEDIES

     Section 12.01.  Events of Default.  Each of the following is hereby defined
as and declared to be and shall constitute an "Event of Default":

          (a)  Payment of the  principal  of and  premium,  if any,  on any Bond
     (whether by maturity or  proceedings  for  redemption  in  accordance  with
     Article V hereof  or  otherwise),  shall  not be made  when the same  shall
     become due and payable; or

          (b)  Payment of any  installment  of interest on any Bond shall not be
     made when the same shall become due and payable and such  nonpayment  shall
     continue for three (3) Business Days; or

          (c) Receipt by the Trustee of written  notice from the Bond Insurer of
     the occurrence  and  continuance of an event of default under the Insurance
     Agreement,  dated  November  1,  2005,  between  the Bond  Insurer  and the
     Company, directing the Trustee to declare an Event of Default; or

          (d) The Authority  shall fail in the due and punctual  performance  of
     any of the covenants,  conditions,  agreements,  provisions or obligations,
     other than as set forth in (a) and (b) above,  contained in the Bonds or in
     this  Indenture  or in  any  Supplemental  Indenture  on  the  part  of the
     Authority to be performed,  and such failure shall  continue for sixty (60)
     days after written notice specifying such failure and requiring the same to
     be  remedied  shall  have been given to the  Authority,  the  Company,  the
     Governor,  the  Comptroller  and the  Attorney  General of the State of New
     York,  by the Trustee or to the Trustee,  the  Authority and the Company by
     the  Holders  of not less  than  twenty-five  percent  (25%)  in  aggregate
     principal  amount of the Bonds then  Outstanding as provided for in Section
     12.08;  provided  that if any such failure  shall be such that it cannot be
     cured or  corrected  within  such  sixty  (60)  day  period,  it shall  not
     constitute  an Event of Default  hereunder  if (i)  curative or  corrective
     action is instituted  within such period and  diligently  pursued until the
     failure of  performance  is cured or  corrected,  and (ii) the Bond Insurer
     consents to such extension of the cure period; or

          (e) The  occurrence  of an event of  default  under the  Participation
     Agreement.

     Section 12.02.  Notice to Holders and Others Upon Occurrence of an Event of
Default  or a  Payment  Default.  1.  The  Trustee  shall  give  notice  to  the
Bondholders  of all Events of Default within sixty (60) days after a Responsible
Officer of the  Trustee  has been  notified  thereof or is deemed to have notice
thereof as provided in Article XIII, unless the Event of Default shall have been
cured  before the giving of such notice or unless the  Trustee  shall deem it in
the best interest of the Holders to defer or withhold notice under this Section;
provided,  however,  that if a notice  of an Event  of  Default  is given to any
Bondholder,  the Trustee  shall  concurrently  therewith,  at the request of the
Company, cause a copy to be provided to all beneficial owners; provided further,
that if there is an Event of Default pursuant to Section  12.01(a),  the Trustee
shall give notice to the Bond Insurer immediately.


                                       42
<PAGE>


     Section  12.03.  Declaration  of Principal  and  Interest As Due.  Upon the
occurrence  of an Event of Default  specified in clause (b) of Section  12.01 of
which the Trustee has been  notified by the Credit  Facility  Issuer or the Bond
Insurer,  as the case may be, then, subject to the rights of the Credit Facility
Issuer or the Bond Insurer under Section 8.02 hereof, the Trustee shall upon the
written  request or direction of such issuer of the Credit  Facility or the Bond
Insurer,  as the case may be,  declare the principal of and accrued  interest on
all the  Bonds  then  Outstanding  (if not then due and  payable)  to be due and
payable immediately,  and upon such declaration the same shall become due and be
immediately  due and payable and interest shall  immediately  cease to accrue on
such Bonds, anything contained in the Bonds or in this Indenture to the contrary
(except  for Section  8.02  hereof)  notwithstanding.  Upon the  occurrence  and
continuation of any Event of Default,  except for an Event of Default  specified
in clause (b) of Section  12.01,  of which the Trustee  has been  notified or is
deemed to have notice as provided  in Article  XIII,  then and in every case the
Trustee, by a notice in writing to the Authority,  the Company and (to addresses
then specified by the Authority) the Governor,  the Comptroller and the Attorney
General  of the State of New York,  may with the  written  consent of the Credit
Facility  Issuer,  and shall upon the written request or direction of the Credit
Facility  Issuer,  or, if the Credit  Facility  Issuer is in  default  under the
Credit  Facility,  upon the written  request or  direction of the Holders of not
less then  twenty-five  percent  (25%) in  principal  amount  of the Bonds  then
Outstanding  (determined  in accordance  with the  provisions of Section  14.03)
shall,  declare  the  principal  of and  accrued  interest on all the Bonds then
Outstanding (if not then due and payable) to be due and payable immediately, and
upon such  declaration  the same  shall  become due and be  immediately  due and
payable,  anything  contained in the Bonds or in this  Indenture to the contrary
notwithstanding.  Upon any  declaration of acceleration  hereunder,  the Trustee
shall immediately exercise such rights as it may have as the registered owner of
the Company  Obligation  and under the  Participation  Agreement,  including the
right to have the Company Obligation redeemed by the Company.

     If,  however,  at any time after the principal of the Bonds shall have been
so declared  to be due and  payable,  and before the entry of final  judgment or
decree in any suit, action or proceeding  instituted on account of such Event of
Default,  or before the completion of the  enforcement of any other remedy under
this Indenture, monies shall have accumulated in the Bond Fund sufficient to pay
the principal of and any premium (or redemption price) on all Bonds (or portions
of the principal  amount  thereof) then or  theretofore  required to be redeemed
pursuant to any provisions of this Indenture  (excluding  principal not then due
except by reason of the aforesaid  declaration)  and all arrears of interest and
interest  then  due,  if any,  upon  Bonds  then  Outstanding  and if the  fees,
compensation,  expenses, disbursements,  advances and liabilities of the Trustee
and all other  amounts  then  payable  by the  Company  under the  Participation
Agreement and the Company Obligation shall have been paid or a sum sufficient to
pay the same shall have been deposited  with the Trustee,  and every other Event
of  Default  known  to the  Trustee  in the  observance  or  performance  of any
covenant,  condition  or agreement  contained in the Bonds or in this  Indenture
(other than default in the payment of the  principal of such Bonds then due only
because of a  declaration  under this  Section)  shall have been remedied to the
satisfaction of the Trustee or, the Company shall be taking, or shall be causing
to be taken,  appropriate  action in good faith to effect its cure,  then and in
every such case the Trustee may with the written  consent of the Credit Facility
Issuer, and shall upon the written request of the Credit Facility Issuer, or, if
the Credit  Facility  Issuer is in default under the Credit  Facility,  upon the
written  request or  direction  of the  Holders  of not less than a majority  in


                                       43
<PAGE>


principal  amount of the Bonds  (determined in accordance with the provisions of
Section  14.03) then  Outstanding  shall,  by written  notice to the  Authority,
rescind and annul such declaration and its consequences unless the Trustee shall
have received from the Company  Indenture  Trustee a notice of redemption of any
outstanding   Company  Obligation  held  hereunder  before  such  rescission  or
annulment and such notice of redemption  shall not have been rescinded.  No such
rescission or annulment  pursuant to the next preceding sentence shall extend to
or affect any subsequent default or impair any right consequent thereto.

     Section 12.04. Action by Trustee Upon Occurrence of Event of Default.  Upon
the occurrence and continuation of an Event of Default,  subject to Section 8.02
hereof,  the Trustee  (i) for and on behalf of the  Holders of the Bonds,  shall
have the same rights  hereunder which are possessed by any Holders of the Bonds;
(ii)  shall be  authorized  to  proceed,  in its own name and as  trustee  of an
express trust; (iii) may pursue any available remedy by action at law or suit in
equity to enforce the payment of the  principal of and interest and premium,  if
any,  on the  Bonds;  (iv) may file such  proofs  of claim  and other  papers or
documents  as may be  necessary or advisable in order to have the claims of such
Trustee and of the Bondholders allowed in any judicial  proceedings  relative to
the Company, its creditors, its property or the Bonds; and (v) may, and upon the
written request or direction of the Holders of not less than twenty-five percent
(25%)  in  principal  amount  of  the  Bonds  then  Outstanding  (determined  in
accordance with the provisions of Section 14.03), with the prior written consent
of the Credit Facility  Issuer,  shall proceed to protect and enforce all rights
of the Holders and the Trustee under and as permitted by this  Indenture and the
laws of the State of New York, by such means or appropriate judicial proceedings
as shall be suitable or deemed by it most  effective in the premises,  including
the  appointment  of  temporary  trustees  and any  actions,  suits  or  special
proceedings at law or in equity or in bankruptcy or by proceedings in the office
of any board or officer  having  jurisdiction,  or  otherwise,  whether  for the
specific enforcement of any covenant or agreement contained in this Indenture or
the  Participation  Agreement,  or to require  the  Authority  or the Company to
perform its or their  duties  under the Act, the  Participation  Agreement,  the
Company Obligation,  the Bonds and this Indenture, or in aid of execution of any
power granted in this Indenture or to enforce any other legal or equitable right
or remedy vested in the Holders of the Bonds or the Trustee by this Indenture or
by such  laws,  or for the  appointment  of a  receiver.  All  rights  of action
(including  the right to file proofs of claim) under this Indenture or under any
of the Bonds may be enforced by the Trustee without the possession of any of the
Bonds or the  production  thereof  in any  trial or other  proceedings  relating
thereto. Any such suit or proceeding  instituted by the Trustee shall be brought
in its name and as trustee of an express  trust without the necessity of joining
as  plaintiffs  or  defendants  any  Holders of the Bonds,  and any  recovery or
judgment shall be for the equal benefit of the Holders of the Outstanding Bonds.

     In the  enforcement of any remedy under this Indenture the Trustee shall be
entitled to sue for, enforce payment of and receive any and all amounts, then or
during any Event of Default  becoming,  and at any time remaining,  due from the
Company and unpaid under the Participation  Agreement and the Company Obligation
for  principal,  premium,  interest or otherwise  under any of the provisions of
this  Indenture  or of the Bonds,  with  interest  on overdue  payments  if such
interest  then is permitted by the laws of the State of New York,  together with
any and all costs and expenses of collection  and of all  proceedings  hereunder
and under such  Bonds,  without  prejudice  to any other  right or remedy of the
Trustee or of the Holders, and to recover and enforce judgment or decree against
the  Company  which  is in  default  of its  respective  obligations  under  the


                                       44
<PAGE>


Participation  Agreement  and the  Company  Obligation,  but solely as  provided
herein and in such Bonds, for any portion of such amounts remaining unpaid, with
interest,  costs and expenses, and to collect in any manner provided by law, the
monies  adjudged or decreed to be payable.  Any such judgment shall be recovered
by the Trustee, in its own name and as trustee of an express trust.

     Section 12.05.  Powers of Trustee With Respect to  Participation  Agreement
and Other  Agreements.  If the payments required to be paid to the Trustee under
the  Participation  Agreement  and the  Company  Obligation  or other  agreement
pledged  and  assigned  hereunder,  as the case may be, are not paid when due or
upon the  happening and  continuance  of an Event of Default set forth in clause
(a) of Section 12.01, the Trustee,  in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or proceedings at
law or in equity for the  collection  of all  payments  due and unpaid under the
Participation  Agreement and the Company  Obligation or other agreement,  as the
case may be, and required to be paid to the Trustee,  and may prosecute any such
action or  proceedings  to  judgment or final  decree,  and may enforce any such
judgment or final  decree  against  the  Company or the obligor  under any other
agreement,  as the case may be, and collect in the manner provided by law out of
the  property  of the  Company or such  obligor  wherever  situated,  the monies
adjudged or decreed to be payable.

     In case there shall be pending  proceedings  for the  bankruptcy or for the
reorganization  of the Company under the  Participation  Agreement or an obligor
under any other agreement  pledged and assigned  hereunder,  as the case may be,
under the  Federal  Bankruptcy  Act or any other  applicable  law,  or in case a
receiver or trustee  shall have been  appointed  for the property of the Company
under the Participation Agreement and the Company Obligation or an obligor under
any other  agreement  pledged and  assigned  hereunder,  as the case may be, the
Trustee,  regardless of whether the principal of the Bonds shall then be due and
payable as therein  expressed or by  declaration  or otherwise and regardless of
whether the Trustee  shall have made any demand  pursuant to the power vested in
it by this Indenture,  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  under the  Participation  Agreement  and the  Company
Obligation by the Company or under such other agreement by such obligor,  as the
case may be, and to file such other  papers or  documents as may be necessary or
advisable  in order to have the claims of the Trustee  (including  any claim for
reasonable  compensation to the Trustee, its agents,  attorneys and counsel, and
for  reimbursement  of all expenses and liabilities  incurred,  and all advances
made, by the Trustee  except as a result of its  negligence or bad faith) and of
the Holders allowed in any such judicial  proceedings relative to the Company or
other  obligor,  as the case may be,  or to the  creditors  or  property  of the
Company or other  obligor,  as the case may be, and to collect  and  receive any
monies  or  other  property  payable  or  deliverable  on  such  claims,  and to
distribute in accordance  with the provisions  hereof all amounts  received with
respect to the claims of the Holders and of the Trustee on their behalf, and any
receiver,  assignee  or  trustee  in  bankruptcy  or  reorganization  is  hereby
authorized to make such payments to the Trustee.

     Nothing  herein  contained  shall be deemed to  authorize  the  Trustee  to
authorize  or consent to or accept or adopt on behalf of any Holders any plan of
reorganization,  arrangement,  adjustment or composition  affecting the Bonds or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holders in any such proceeding.


                                       45
<PAGE>


     The  provisions  of  this  Section  shall  not be  construed  as in any way
limiting the powers of the Trustee, with respect to defaults by the Authority or
by the Company under the Participation Agreement and the Company Obligation,  or
an obligor under any other agreement pledged and assigned hereunder, as the case
may be,  whether such powers be expressly or  implicitly  granted to the Trustee
elsewhere  in this  Indenture or in the  Participation  Agreement or the Company
Obligation  or other  agreement,  as the case  may be,  or as a denial  that the
Trustee has any such other powers, but the powers granted to the Trustee by this
Section shall be  supplemental,  additional  and  cumulative to all other powers
possessed by the Trustee with respect to defaults  under this Indenture or under
the Participation  Agreement,  the Company Obligation or other agreement pledged
and assigned hereunder, as the case may be.

     Section 12.06.  Disposition of Monies in Event of  Insufficiencies in Funds
and Accounts.  All monies (other than proceeds of any Credit Facility)  received
by the Trustee  pursuant to any right given or action taken under the provisions
of this  Article,  after  payment of the costs and  expenses of the  proceedings
resulting  in the  collection  of such  monies  and of the  expenses,  fees  and
advances  incurred  or  made  by the  Trustee  or  Registrar  and  Paying  Agent
hereunder, shall be deposited in the Bond Fund. If at any time the monies in the
Bond Fund shall not be  sufficient  to pay the interest or principal or premium,
if any (or the  redemption  price),  of the  Bonds  as the same  become  due and
payable (whether at maturity or upon  proceedings for the redemption  thereof or
by acceleration or otherwise),  the monies in such fund, together with any other
monies then available or thereafter becoming available for such purpose, whether
through  the  exercise  of the  remedies  provided  for in this  Article  XII or
otherwise, shall be applied as follows:

          (a) Unless the  principal  of all the Bonds  shall have become due and
     payable  or shall  have  been  declared  due and  payable  pursuant  to the
     provisions of Section 12.03, all such monies shall be applied:

          First:  to  the  payment  to  the  persons  entitled  thereto  of  all
     installments  of  interest  then due,  in the order of the  maturity of the
     installments  of such interest,  and if the amount  available  shall not be
     sufficient to pay in full any particular  installment,  then to the payment
     ratably,  according to the amounts due on such installment,  to the persons
     entitled thereto, without any discrimination or preference; and

          Second: to the payment of the premium, if any, on and the principal of
     the Bonds, to the purchase and retirement of Bonds and to the redemption of
     Bonds, all in accordance with the provisions of this Indenture.

          (b) If the  principal  of all the  Bonds  shall  have  become  due and
     payable  or shall  have  been  declared  due and  payable  pursuant  to the
     provisions  of  Section  12.03,  all such  monies  shall be  applied to the
     payment of the principal and interest then due and unpaid, with interest on
     such  principal as aforesaid,  without  preference or priority of principal
     over  interest or of interest  over  principal,  or of any  installment  of
     interest over any other  installment  of interest,  or of any Bond over any
     other Bond,  according to the amounts due  respectively  for  principal and
     interest,  to the persons  entitled thereto without any  discrimination  or
     preference  except as to any difference in the respective rates of interest
     specified in the Bonds.


                                       46
<PAGE>


          (c) If the principal of all the Bonds shall have been declared due and
     payable   pursuant  to  the  provisions  of  Section  12.03,  and  if  such
     declaration  shall thereafter have been rescinded and annulled  pursuant to
     the  provisions of such Section 12.03,  then,  subject to the provisions of
     subparagraph (b) above of this paragraph in the event that the principal of
     all the Bonds  shall later  become due and  payable or be declared  due and
     payable  pursuant to the provisions of Section 12.03,  the monies then held
     in the Bond Fund shall be applied to the  payment of the  principal  of and
     premium  (or  redemption  price)  on all  matured  Bonds  and all Bonds (or
     portions of the principal  amount thereof) then or theretofore  required to
     be  redeemed  pursuant  to any  provisions  of  this  Indenture  (excluding
     principal  not then due  except  by  reason  of such  declaration)  and all
     arrears of interest  and  interest  then due,  if any,  upon all Bonds then
     Outstanding,  and any monies thereafter deposited in the Bond Fund shall be
     applied in accordance with the provisions of Article VI.

     Whenever monies are to be applied by the Trustee pursuant to the provisions
of subparagraphs  (a) and (b) of this Section,  (i) such monies shall be applied
by the Trustee at such times,  and from time to time, as the Trustee in its sole
discretion  shall  determine,  having due  regard to the  amount of such  monies
available for  application  and the  likelihood of  additional  monies  becoming
available for such  application in the future;  (ii) the deposit of such monies,
in trust for the proper  purpose,  shall  constitute  proper  application by the
Trustee;  and (iii) the  Trustee  shall  incur no  liability  whatsoever  to the
Authority,  to any Holder or to any other  person for any delay in applying  any
such monies, so long as the Trustee acts with reasonable  diligence,  having due
regard to the circumstances,  and ultimately applies the same in accordance with
such  provisions  of  this  Indenture  as  may be  applicable  at  the  time  of
application by the Trustee.  Whenever the Trustee shall exercise such discretion
in  applying  such  monies,  it shall fix the date  (which  shall be an Interest
Payment  Date unless the Trustee  shall deem another  date more  suitable)  upon
which such  application is to be made and upon such date interest on the amounts
of  principal to be paid on such date shall cease to accrue.  The Trustee  shall
give such notice as it may deem  appropriate of the fixing of any such date, and
shall not be  required  to make  payment to the Holder of any unpaid  Bond until
such Bond shall be surrendered to the Trustee for  appropriate  endorsement,  or
for cancellation if fully paid.

     Section 12.07. Effect of Delay or Omission; Waiver of Default; Direction of
Remedial  Proceedings by the Holders.  No delay or omission of the Trustee or of
any Holder of the Bonds to exercise any right or power accruing upon any default
or Event of Default  shall  impair any such right or power or shall be construed
to be a waiver of any such default or acquiescence therein.

     Anything in this Indenture to the contrary  notwithstanding (but subject to
Section  8.02,  which  shall be  controlling),  the  Holders  of not less than a
majority in principal amount of the Bonds at the time Outstanding (determined in
accordance  with the provisions of Section 14.03) with the prior written consent
of the Credit  Facility  Issuer shall be  authorized  and empowered and have the
right,  by an instrument or concurrent  instruments in writing  delivered to the
Trustee on behalf of the Holders of the Bonds then Outstanding to consent to the
waiver of any Event of Default or its consequences,  and the Trustee shall waive
any Event of  Default  and its  consequences  upon the  written  request  of the
Holders of such majority;  provided, however, that there shall not be waived (i)
any default in payment of  principal  or premium when due or (ii) any default in


                                       47
<PAGE>


payment when due of interest  unless,  in either case,  prior to such waiver all
arrears in principal,  premium, if any, and interest,  with additional interest,
to the extent  permitted  by law,  at the rate then borne by the Bonds,  and all
fees and expenses of the Trustee  shall have been paid or provided  for. No such
waiver shall  extend to or affect any other  existing or  subsequent  default or
Event of Default or impair any rights or remedies consequent thereon.

     Anything in this Indenture to the contrary  notwithstanding (but subject to
Section  8.02,  which  shall be  controlling),  the  Holders  of not  less  than
twenty-five  percent  (25%)  in  principal  amount  of the  Bonds  at  the  time
Outstanding (determined in accordance with the provisions of Section 14.03) with
the prior written  consent of the Credit Facility Issuer shall be authorized and
empowered and have the right,  by an instrument  or  concurrent  instruments  in
writing delivered to the Trustee to direct the time and method of conducting any
proceeding for any remedy to be taken by the Trustee or available to the Trustee
or  available  to the  Holders of the Bonds,  or  exercising  any trust or power
conferred upon the Trustee hereunder  provided:  (1) such direction shall not be
in conflict with any rule of law or with this Indenture or expose the Trustee to
personal liability, or be unduly prejudicial to Holders not joining therein, and
(2) the Trustee may take any other action  deemed proper by the Trustee which is
not inconsistent with such direction.

     Section 12.08. Suits or Actions by Holders;  Any Holder May Enforce Overdue
Payment of His or Her Bond or  Interest  Thereon.  No Holder of any of the Bonds
shall have any right to institute any suit, action or proceeding in equity or at
law for the execution of any trust  hereunder or for any other remedy  hereunder
unless  there  shall have  occurred an Event of Default of which the Trustee has
been notified or is deemed to have notice as provided in Article XIII,  and such
Holder previously shall have given to the Trustee written notice of the Event of
Default on account of which such suit, action or proceeding is to be instituted,
and,  subject to Section 8.02  hereof,  unless also the Holders of not less than
twenty-five  percent  (25%) in  principal  amount of the Bonds then  Outstanding
shall have made written  request of the Trustee after the right to exercise such
powers or right of action,  as the case may be,  shall have  accrued,  and shall
have  afforded  the  Trustee a period of sixty  (60) days  either to  proceed to
exercise the powers  hereinabove  granted or to institute  such action,  suit or
proceeding  in its or their name,  the Trustee  shall have been  indemnified  by
Holders against the costs, expenses and liabilities to be incurred in compliance
with such request,  and shall not have received an  inconsistent  direction from
the Holders of not less than  twenty-five  percent (25%) in principal  amount of
the Bonds and the Trustee  shall have  refused or  neglected to comply with such
request  within a  reasonable  time.  Subject  to  Section  8.02  hereof,  it is
understood  and intended that no one or more Holders of the Bonds hereby secured
shall have any right in any  manner  whatever  by the  action of such  Holder or
Holders to affect,  disturb or prejudice the security of this  Indenture,  or to
enforce  any right  hereunder  except in the manner  herein  provided;  that all
proceedings at law or in equity shall be  instituted,  had and maintained in the
manner  herein  provided and for the benefit of all Holders of such  Outstanding
Bonds;  and that any individual  rights of action or other right given to one or
more of such Holders by law are  restricted by this  Indenture to the rights and
remedies herein provided.  Notwithstanding  the foregoing and subject to Article
XIII,  the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this  Indenture at the request or direction of any of the
Holders,  unless  such  Holders  shall have  offered to the  Trustee  reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.


                                       48
<PAGE>


     Notwithstanding  any other  provision of this  Indenture,  the right of any
Holder of a Bond to receive  payment of the principal of,  premium,  if any, and
interest on such Bond, on or after the  respective  due dates  expressed in such
Bond, or to institute  suit for the  enforcement of any such payment on or after
such respective dates,  shall not be impaired or affected without the consent of
such  Holder,  except  that no Holder of any such Bond  shall  have the right to
institute  any  such  suit,  if  and to  the  extent  that  the  institution  or
prosecution  thereof or the entry of judgment  therein would,  under  applicable
law, result in the surrender,  impairment,  waiver,  or loss of the lien of this
Indenture.

     Section  12.09.  Remedies  Not  Exclusive.  No  remedy by the terms of this
Indenture  conferred upon or reserved to the Trustee or the Holders of the Bonds
is intended to be  exclusive  of any other remedy so conferred or reserved or to
be exclusive of other remedies now or hereafter  existing at law or in equity or
by statute,  and each and every such remedy shall be cumulative  and shall be in
addition to any other remedy given hereunder to the Trustee or to the Holders of
the Bonds or now or hereafter existing at law or in equity or by statute.  Every
such  right,  power  and  remedy  given  hereunder  or by law or in equity or by
statute  may be  exercised  from  time to time  and as  often  as may be  deemed
expedient.

     Section 12.10. Effect of Abandonment of Proceedings on Default. In case any
proceeding  taken by the  Trustee or the  Holders of the Bonds on account of any
Event of Default shall have been discontinued or abandoned for any reason,  then
and in every such case the  Authority,  the  Trustee  and the  Holders  shall be
restored to their former positions and rights hereunder,  respectively,  and all
rights,  remedies,  powers and duties of the Trustee shall continue as though no
such proceeding had been taken.

     Section 12.11.  Interest on Overdue Amounts. To the extent permitted by law
all amounts which are due and payable but which have not been so paid under this
Indenture  shall bear interest at the then current rate of interest on the Bonds
until paid.


                                       49
<PAGE>



                                  ARTICLE XIII

                     CONCERNING THE TRUSTEE; APPOINTMENT OF
                           REGISTRAR AND PAYING AGENT

     Section 13.01.  Appointment of Trustee.  Citibank, N.A. is hereby appointed
the Trustee  hereunder  and by the  execution  of this  Indenture  accepts  such
appointment and without  further act, deed or conveyance,  shall be fully vested
with all the estate, properties,  rights, powers, trusts, duties and obligations
of the Trustee hereunder.

     The Trustee  shall set up suitable  accounts for the deposit of the Company
Obligation  Payments and for the payment of the Bonds and the  interest  thereon
and for all other payments  provided or required by this  Indenture,  including,
without limiting the generality of any of the foregoing, setting up of the Funds
created by Articles VI and X.

     Section 13.02. Indemnification of Trustee as Condition for Remedial Action.
The Trustee  shall be under no  obligation to institute any suit, or to take any
remedial  proceeding under this Indenture,  or to enter any appearance or in any
way defend in any suit in which it may be made  defendant,  or to take any steps
in the  execution  of the trusts  hereby  created or in the  enforcement  of any
rights and powers  hereunder,  until it shall be indemnified to its satisfaction
against  any and all costs and  expenses,  outlays  and  counsel  fees and other
reasonable   disbursements,   and  against  all  liability;   the  Trustee  may,
nevertheless,  begin suit,  or appear in and defend suit, or do anything else in
its judgment proper to be done by it as such Trustee,  without indemnity, and in
such case the Trustee shall be reimbursed from the Additional  Payments required
to be made pursuant to the Participation  Agreement for all reasonable costs and
expenses,  outlays and counsel fees and other reasonable  disbursements incurred
in connection  therewith.  If the Company shall fail to make such reimbursement,
the Trustee may  reimburse  itself from any monies in its  possession  under the
provisions  of this  Indenture  and shall be entitled to a  preference  over the
Bonds.  Notwithstanding  the foregoing,  to the extent funds are available,  the
Trustee shall make payments of principal of and premium, if any, and interest on
the Bonds then Outstanding when due, when called for redemption or when declared
to be immediately due and payable in accordance with Article VI.

     Section  13.03.  Trustee Not Liable for Failure of the Authority or Company
to Act. The Trustee shall not be liable or responsible because of the failure of
the  Authority  or the Company or any of their  employees  or agents to make any
collections  or deposits or to perform any act herein  required of the Authority
or the Company.  The Trustee shall not be responsible for the application of any
of the proceeds of the Bonds or any other monies deposited with it and paid out,
withdrawn or transferred hereunder if such application,  payment,  withdrawal or
transfer shall be made in accordance with the provisions of this Indenture.  The
immunities and exemptions  from liability of the Trustee  hereunder shall extend
to its directors, officers, employees and agents.

     Section 13.04.  Certain  Duties and  Responsibilities  of the Trustee.  (a)
Except during the continuance of an Event of Default  specified in Section 12.01
of which a Responsible Officer of the Trustee has actual knowledge,


                                       50
<PAGE>


          1. the Trustee  shall  undertake  to perform such duties and only such
     duties as are  specifically  set forth in this  Indenture,  and no  implied
     covenants  or  obligations  shall be read into this  Indenture  against the
     Trustee; and

          2.  in the  absence  of  bad  faith  on  its  part,  the  Trustee  may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates, resolutions, statements,
     reports,  documents,  orders,  instruments  or  opinions  furnished  to the
     Trustee and conforming to the  requirements of this  Indenture;  but in the
     case of any such certificates or opinions which by any provision hereof are
     specifically  required to be furnished to the Trustee, the Trustee shall be
     under a duty to examine the same to  determine  whether or not they conform
     to the  requirements of this Indenture (but need not confirm or investigate
     the accuracy of mathematical  calculations,  the content thereof,  or other
     facts stated therein).

     (b) In case an Event of Default specified in Section 12.01 has occurred and
is  continuing  of  which  a  Responsible  Officer  of the  Trustee  has  actual
knowledge, the Trustee shall exercise such of the rights and powers vested in it
by this  Indenture,  and use the same degree of care and skill in such exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.

     (c) None of the provisions of this Indenture  shall be construed to relieve
the Trustee from liability for negligent  action,  negligent  failure to act, or
willful misconduct, except that

          1. this  subsection  (c) shall not be construed to limit the effect of
     subsection (a) of this Section;

          2. the Trustee  shall not be liable for any error of judgment  made in
     good  faith by a  Responsible  Officer of the  Trustee,  unless it shall be
     proved that the Trustee was negligent;

          3. in the  absence  of bad faith on its  part,  the  Trustee  shall be
     protected  and shall incur no liability in acting or  proceeding  or in not
     acting or not proceeding  upon any  resolution,  order,  notice,  telegram,
     request,  consent,  waiver,  certificate,   statement,  affidavit,  voucher
     requisition,  bond or other  paper or  document  which  the  Trustee  shall
     believe  to be  genuine  and to have been  adopted  or signed by the proper
     board or person or to have been prepared and  furnished  pursuant to any of
     the  provisions  of this  Indenture,  or upon the  written  opinion  of any
     attorney,  engineer,  accountant or other expert believed by the Trustee to
     be qualified in relation to the subject  matter,  and the Trustee  shall be
     under no duty to make any  investigation  or inquiry  as to any  statements
     contained or matters  referred to in any such instrument but may accept and
     rely upon the same as conclusive evidence of the truth and accuracy of such
     statements; and

          4. the 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  aggregate  principal  amount of
     the Outstanding  Bonds relating to the time, method and place of conducting
     any proceeding for any remedy  available to the Trustee,  or exercising any
     trust or power  conferred  upon the Trustee,  under the  provisions of this
     Indenture.


                                       51
<PAGE>


     (d)  Notwithstanding  anything contained  elsewhere in this Indenture,  the
Trustee shall have the right to reasonably require, in respect of the payment or
withdrawal  of any  monies or the  taking of any  action  whatsoever  within the
purview of this Indenture, any showings,  certificates,  opinions, appraisals or
other information,  or corporate action or evidence thereof, in addition to that
required by the terms hereof as a condition of such action by the Trustee.

     (e) The Trustee may execute any of the trusts or powers  hereof and perform
any of its duties by or through attorneys, agents or receivers, and shall not be
responsible  for any  negligence or misconduct on the part of any such attorney,
agent or receiver  appointed by it if the Trustee shall have  exercised due care
and diligence in appointing or selecting  such person,  and shall be entitled to
advice of counsel  concerning  all  matters of the trusts  hereof and the duties
hereunder,  and may in all cases pay such  reasonable  compensation  to all such
attorneys, agents and receivers as may reasonably be employed in connection with
the  trusts  hereof.  The  Trustee  may act upon the  opinion  or  advice of any
attorney or attorneys (who may be the attorney or attorneys for the Authority or
the Company),  approved by the Trustee in the exercise of reasonable  care,  and
the Trustee shall not be responsible  for any loss or damage  resulting from any
action or nonaction in good faith in reliance upon such opinion or advice.

     (f) Whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established  prior to taking,  suffering
or omitting any action  hereunder,  the Trustee (unless other evidence be herein
specifically  prescribed)  may,  in the  absence  of  bad  faith  on  its  part,
conclusively rely upon a certificate of an Authorized Company  Representative or
an Authorized Officer.

     (g) The Trustee shall not be accountable  for the use by the Company of any
proceeds of the Bonds authenticated or delivered hereunder.

     (h) The  Trustee  shall  not be  required  to give any  bonds or  surety in
respect of the execution of its trusts and powers hereunder.

     (i) The  Trustee may treat and deem the Holder of any Bonds as set forth in
the books of the registry hereunder as the absolute owner thereof.

     (j) The Trustee shall not be held liable by reason of any  insufficiency in
any account held by or on behalf of the Trustee  resulting  from any  investment
loss on any Investment  Securities  included  therein (except to the extent that
the Trustee is the obligor and has  defaulted  thereon)  nor will the Trustee be
liable for interest on any money  received by it except as the Trustee may agree
in writing with the Company or the Authority.

     (k) The  Trustee  shall not be required to take notice or be deemed to have
notice or  knowledge  of any  default or Event of Default  unless a  Responsible
Officer of the Trustee shall have  received  written  notice or obtained  actual
knowledge thereof. In the absence of receipt of such notice or actual knowledge,
the  Trustee  may  conclusively  assume  that  there is no  default  or Event of
Default.


                                       52
<PAGE>


     (l) The  Trustee  shall not be  required to expend or risk its own funds or
otherwise incur any financial liability for the performance of any of its duties
hereunder or the exercise of any of its rights or powers if there is  reasonable
ground for  believing  that the  repayment  of such funds or adequate  indemnity
against such risk or liability is not reasonably assured to it.

     (m) The Trustee shall have no duty (A) to see to any recording,  filing, or
depositing  of  this  Indenture  or any  agreement  referred  to  herein  or any
financing statement or continuation statement evidencing a security interest, or
to see to the  maintenance  of any such  recording or filing or depositing or to
any  rerecording,  refiling or  redepositing  of any thereof,  (B) to see to any
insurance  relating to the Project (but not including the insurance on the Bonds
provided by the  Policy),  or (C) to see to the payment or discharge of any tax,
assessment,  or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Bond Fund.

     (n) The right of the Trustee to perform any discretionary act enumerated in
this  Indenture  shall not be construed as a duty,  and the Trustee shall not be
answerable  for  other  than  its  negligence  or  willful   misconduct  in  the
performance of such act.

     (o)  Notwithstanding  any other  provision of this  Indenture,  the Trustee
shall notify the Authority, the Company, the Bond Insurer and the Bondholders of
(i) any Event of Default  for which a  Responsible  Officer of the  Trustee  has
actual  knowledge  and (ii) the  Trustee's  failure to receive  any fees due and
owing from the Company.  The Trustee  shall notify the Authority and the Company
if it does not receive its fees as required hereunder.

     Section 13.05.  Limitations on Obligations and  Responsibilities of Trustee
and Registrar  and Paying Agent.  The Trustee and the Registrar and Paying Agent
shall be under no  obligation  to effect or maintain  insurance  or to renew any
policies of  insurance  or to inquire as to the  sufficiency  of any policies of
insurance carried by the Company,  or to report, or make or file claims or proof
of loss for, any loss or damage insured  against or which may occur,  or to keep
itself informed or advised as to the payment of any taxes or assessments,  or to
require any such payment to be made.  The Trustee and the  Registrar  and Paying
Agent,  except as to the acceptance of the trusts by the Trustee's  execution of
this  Indenture  and  the  performance  of  their  respective   responsibilities
hereunder, shall have no responsibility in respect of the validity, sufficiency,
due execution or acknowledgment of this Indenture, or in respect of the validity
of the Bonds or the due  execution  or  issuance  thereof.  The  Trustee and the
Registrar  and Paying Agent shall be under no  obligation to see that any duties
herein or in the Participation Agreement or any Credit Facility imposed upon the
Authority,  the Company,  the issuer of any Credit Facility,  or any party other
than  themselves  in their  capacity as Trustee and  Registrar and Paying Agent,
respectively,  or any covenants  herein contained on the part of any party other
than  themselves  in their  capacity as Trustee and  Registrar and Paying Agent,
respectively,  to be performed,  shall be done or performed, and the Trustee and
the Registrar  and Paying Agent shall be under no obligation  for failure to see
that any such  duties or  covenants  are so done or  performed.  Notwithstanding
anything in this  Agreement to the contrary,  the Trustee shall not be liable to
any Holder for special,  indirect or consequential  losses  (including,  but not
limited to, lost profits).


                                       53
<PAGE>


     Section 13.06. Compensation and Indemnification of Trustee. The Company has
agreed in the  Participation  Agreement  (1) to pay to the Trustee  from time to
time such  compensation for all services  rendered by it hereunder or shall from
time to time be agreed in writing (including the reasonable compensation and the
expenses and disbursements of its agents and counsel) (which  compensation shall
not be  limited  by any  provision  of law in  regard to the  compensation  of a
trustee of an express trust); (2) except as otherwise expressly provided herein,
to  reimburse  the  Trustee  upon  its  request  for  all  reasonable  expenses,
disbursements  and advances  incurred or made by the Trustee in accordance  with
any provision of this Indenture  (including the reasonable  compensation and the
expenses and disbursements of its agents and counsel),  except any such expense,
disbursement  or advance as may be  attributable to its negligence or bad faith;
and (3) to indemnify the Trustee and any director, officer, employee or agent of
the Trustee, for, and to hold it harmless against, any loss,  liability,  claim,
or expense  (including  reasonable  costs and  expenses  of  litigation,  and of
investigation,  counsel fees, damages, judgments and amounts paid in settlement)
arising out of or incurred without  negligence,  willful misconduct or bad faith
on  its  part,   arising  out  of  or  in  connection  with  the  acceptance  or
administration  of this trust,  including  the costs and  expenses of  defending
itself  against  any claim or  liability  in  connection  with the  exercise  or
performance of any of its powers or duties hereunder.

     Section  13.07.  Statements  from  Trustee.  It  shall  be the  duty of the
Trustee,  on or about the fifteenth  (15th) day of each month, and at such other
reasonable  time or times as may be  determined by the Authority or the Company,
to file with the Authority,  upon the written request thereof, and the Company a
statement setting forth in respect of the preceding calendar month:

          (a) the amount  withdrawn  from or transferred to each Fund or Account
     by the  Trustee  under the  provisions  of this  Indenture,  and the amount
     received by the  Trustee and held on account of each Fund or Account  under
     the provisions of this Indenture;

          (b) the amount on deposit with it at the end of such calendar month to
     the credit of each such Fund or Account;

          (c) a monthly  account of  reconciliation  and income which includes a
     brief  description of all obligations held by it as an investment of monies
     in each such Fund or Account;

          (d) the  amount  applied  to the  redemption  of the  Bonds  under the
     provisions  of  Article  IX and  Section  6.03 and the  amount of the Bonds
     remaining Outstanding; and

          (e) any other  information  which the  Authority  or the  Company  may
     reasonably request.

     All  records  and files  pertaining  to the Bonds  and the  Company  in the
custody of the Trustee shall be open at all  reasonable  times upon prior notice
to  the  inspection  of  the  Authority,   the  Company  and  their  agents  and
representatives.

     Section 13.08. Notice of Default. Except upon the happening of any Event of
Default specified in clauses (a) through (b),  inclusive,  of Section 12.01, the
Trustee  shall not be obliged to take  notice or be deemed to have notice of any


                                       54
<PAGE>


Event of Default hereunder, unless a Responsible Officer of the Trustee has been
specifically  notified  in writing of such Event of Default by the issuer of any
Credit Facility, by the Authority, by the Company, or by the Holders of not less
than  twenty-five  percent  (25%) in  aggregate  principal  amount  of the Bonds
Outstanding and such written notice

     Section  13.09.  Trustee and  Registrar and Paying Agent May Deal in Bonds.
The bank or trust company acting as Trustee and Registrar and Paying Agent under
this Indenture,  and its directors,  officers,  employees or agents, may in good
faith buy,  sell,  own,  hold and deal in the Bonds  issued under and secured by
this Indenture, and may join in the capacity of a Holder of a Bond in any action
which any Holder of a Bond may be  entitled  to take with like effect as if such
bank or trust  company were not the Trustee or Registrar  and Paying Agent under
this Indenture.

     Section 13.10.  Trustee and the Registrar and Paying Agent Not  Responsible
For Recitals. The recitals,  statements and representations contained herein and
in the  Bonds  shall be taken  and  construed  as made by and on the part of the
Authority, and not by the Trustee or Registrar and Paying Agent, and the Trustee
and  the  Registrar  and  Paying  Agent   assumes,   and  shall  be  under,   no
responsibility  for  the  correctness  of the  same  or  for  the  recording  or
re-recording or filing or refiling of the Indenture or any  supplements  thereto
or any instruments of further assurance (including financing  statements) except
as otherwise  provided  herein.  The Trustee and the  Registrar and Paying Agent
make no representations as to the value of any property pledged hereunder to the
payment of Bonds or as to the title of the  Authority or the Company  thereto or
as to the validity,  sufficiency or adequacy of the security afforded thereby or
hereby or as to the  validity of this  Indenture,  the Company  Obligation,  the
Participation Agreement, any Credit Facility or of the Bonds.

     Section 13.11.  Qualification of the Trustee. There shall at all times be a
Trustee  hereunder  which shall be a bank and/or trust company,  having combined
capital and  unimpaired  surplus of at least  $50,000,000,  duly  authorized  to
exercise  corporate  trust powers and subject to examination by federal or state
authority.  The Trustee  hereunder  shall not be required to  maintain,  and any
successor  Trustee shall not be required to have, an office in the city in which
the applicable Principal Corporate Trust Office of the initial Trustee hereunder
is located, but shall be required to have an office in New York State.

     If at any time the Trustee  shall cease to be eligible in  accordance  with
the provisions of this Section 13.11, it shall resign  immediately in the manner
and with the effect specified in Section 13.12.

     Section  13.12.  Resignation  and Removal of  Trustee.  No  resignation  or
removal of the Trustee and no  appointment  of a successor  Trustee  pursuant to
this Article shall become  effective  until the acceptance of appointment by the
successor Trustee under Section 13.13:

          (a) The  Trustee  may  resign  at any time by  giving  written  notice
     thereof  to  the  Authority,  the  Company  and  the  Bond  Insurer.  If an
     instrument  of  acceptance  by a  successor  Trustee  shall  not have  been
     delivered to the Trustee  within  thirty (30) days after the giving of such
     notice of  resignation,  the  retiring  Trustee may  petition  any court of
     competent jurisdiction for the appointment of a successor Trustee.


                                       55
<PAGE>


          (b) The  Trustee  may  resign  at any time by  giving  written  notice
     thereof to the  Authority,  the Company and the Bond Insurer.  In addition,
     the  Trustee  may be removed  at any time by (i)  demand of the  registered
     owners of at least a majority in principal  amount of the Bonds of a series
     then Outstanding  (determined in accordance with this Indenture),  (ii) the
     Authority,  at the written request of the Company,  provided the Company is
     not in default under this Indenture,  (iii) the Authority other than during
     the  continuance  of an Event of  Default,  or (iv) the  Authority,  at the
     written request of the Bond Insurer or the Company (provided the Company is
     not in  default  under  this  Indenture)  for  breach of trust  under  this
     Indenture,  and, in either case, by a written  instrument  delivered to the
     Trustee and the Authority, the Bond Insurer or the Company, as applicable.

          (c) If at any time:

               (1) the Trustee  shall cease to be eligible  under  Section 13.11
          and shall fail to resign after written  request by the  Authority,  by
          the Company,  by the Bond Insurer or by a Holder who shall have been a
          bona fide Holder for at least six months,

               (2) the  Trustee  shall  become  incapable  of acting or shall be
          adjudged a bankrupt  or  insolvent  or a receiver of the Trustee or of
          its property  shall be  appointed,  or any public  officer  shall take
          charge or control of the Trustee or of its property or affairs for the
          purpose of rehabilitation, conservation or liquidation, or

               (3) there is a breach of trust under the Indenture,

         then, in any such case, (i) the Authority may remove, and the Company
         may request the Authority to remove, the Trustee, or (ii) the Bond
         Insurer or any Holder who has been a bona fide Holder for at least six
         months may, on behalf of itself and all other similarly situated,
         petition any court of competent jurisdiction for the removal of the
         Trustee and the appointment of a successor.

          (d) If the Trustee  shall  resign,  be removed or become  incapable of
     acting,  or if a vacancy  shall  occur in the office of the Trustee for any
     cause, the Authority shall promptly appoint a successor; the Company or the
     issuer of any Credit Facility or both of them,  having the right to request
     or consent to the appointment of a particular qualified institution as such
     successor. Within one year after such resignation, removal or incapability,
     or the occurrence of such vacancy,  a successor Trustee may be appointed by
     an instrument or concurrent  instruments in writing executed by the Holders
     of a majority in principal amount of the Bonds then  Outstanding  delivered
     to the Authority and the retiring  Trustee,  and, upon such  delivery,  the
     successor Trustee so appointed shall, forthwith upon its acceptance of such
     appointment,  become the  successor  Trustee and  supersede  the  successor
     Trustee appointed by the Authority.


                                       56
<PAGE>


          (e) The Authority shall give notice to the Trustee,  the Company,  the
     Registrar and Paying Agent,  the Bond Insurer and the  Bondholders  of each
     resignation  and  each  removal  of a  Trustee  and each  appointment  of a
     successor  Trustee in the manner set forth in Section 18.03 with respect to
     Bondholders,  Section  8.01 with respect to the Bond  Insurer,  and Section
     18.09 with respect to the Company.  Each notice shall  include the name and
     address of the applicable Principal Corporate Trust Office of the successor
     Trustee.

          (f) The  Trustee at any time other than during the  continuance  of an
     Event of Default  and for any reason  may be  removed by an  instrument  in
     writing, executed by an Authorized Officer,  appointing a successor,  filed
     with the Trustee so removed.

     Section  13.13.   Successor  Trustee.  Every  successor  Trustee  appointed
hereunder shall execute, acknowledge and deliver to its predecessor, and also to
the  Authority  and  the  Company,  an  instrument  in  writing  accepting  such
appointment hereunder, and thereupon such successor Trustee, without any further
act,  shall  become  fully  vested with all the rights,  immunities,  powers and
trusts and subject to all the duties and obligations,  of its  predecessor;  but
such predecessor shall, nevertheless,  on written request of its successor or of
the Authority and upon payment of expenses,  charges and other  disbursements of
such predecessor  which are payable pursuant to the provisions of Sections 13.02
and 13.06,  execute and deliver an  instrument  transferring  to such  successor
Trustee  all the  rights,  immunities,  powers  and  trusts of such  predecessor
hereunder;  and every predecessor  Trustee shall deliver all property and monies
held by it hereunder to its successor, subject,  nevertheless, to its first lien
and preference  provided for in Sections 13.02 and 13.06.  Should any instrument
in writing  from the  Authority  be required by any  successor  Trustee for more
fully vesting in such Trustee the rights,  immunities,  powers and trusts hereby
vested or intended to be vested in the predecessor  Trustee, any such instrument
in writing shall and will, on request,  be executed,  acknowledged and delivered
by the Authority.

     Notwithstanding any of the foregoing  provisions of this Article,  any bank
or trust  company  having  power to perform the duties and execute the trusts of
this Indenture and otherwise  qualified to act as Trustee hereunder with or into
which the bank or trust company  acting as Trustee may be  converted,  merged or
consolidated,  or to which the  corporate  trust  business  assets as a whole or
substantially  as a whole of such bank or trust  company  may be sold,  shall be
deemed the successor of the Trustee, upon written notice to the Authority.

     Section 13.14. Appointment of Registrar and Paying Agent. Citibank, N.A. is
hereby  appointed by the Authority at the request of the Company to serve as the
Registrar  and  Paying  Agent  hereunder.  The  Company  shall have the right to
request the  appointment of an institution  meeting the  requirements of Section
13.19 to serve as successor  thereto in the event of the removal or  resignation
of such Registrar and Paying Agent.

     The Trustee  hereby  appoints  any  Registrar  and Paying  Agent  appointed
hereunder as authenticating agent.

     Section  13.15.  Trustee may  intervene in judicial  proceedings  involving
Authority or the Company.  In any judicial  proceeding to which the Authority or
the  Company is a party and which in the  opinion of the Trustee and its counsel


                                       57
<PAGE>


has a substantial  bearing on the interests of owners of the Bonds,  the Trustee
may in its own name or as trustee of an express trust intervene on behalf of the
owners of the Bonds and shall, upon receipt of indemnity  satisfactory to it, do
so if requested in writing by the owners of at least  twenty-five per cent (25%)
in  aggregate  principal  amount of Bonds then  outstanding  if permitted by the
court having jurisdiction in the premises.

     Section 13.16. General Provisions Regarding Registrar and Paying Agent.

(a)  The Registrar and Paying Agent shall:

          (i) hold all Bonds delivered to it for purchase hereunder in trust for
     the benefit of the  respective  Bondholders  which shall have so  delivered
     such Bonds until monies representing the purchase price of such Bonds shall
     have  been  delivered  to or for the  account  of or to the  order  of such
     Holders and deliver said Bonds in  accordance  with the  provisions of this
     Indenture;

          (ii) hold all monies  delivered  to it for the  purchase of Bonds,  in
     trust for the benefit of the person or entity who has delivered such monies
     until the Bonds  purchased  with such monies have been  delivered to or for
     the account of such person or entity as provided in this Indenture;

          (iii)  maintain  the books of registry and keep such books and records
     as shall be consistent with prudent  industry  practice and make such books
     and records available for inspection by the Trustee,  the Authority and the
     Company at all reasonable times;

          (iv) perform the duties and undertake the obligations assigned to them
     in Sections 2.04, 2.05, 2.07 and 2.09;

          (v) at the  request  of a  beneficial  owner,  provide  copies  of all
     notices received by it, directly to such beneficial owner.

     (b) The  Registrar  and  Paying  Agent may deem and treat the Holder of any
Bonds as set forth in the books of  registry  hereunder  as the  absolute  owner
thereof;

     (c) The Registrar and Paying Agent may in good faith hold any other form of
indebtedness  issued by the Authority or any security issued by the Company,  or
any  affiliate of the Company;  own,  accept or negotiate  any drafts,  bills of
exchange,  acceptances or obligations thereof;  and make disbursements  therefor
and enter into any commercial or business arrangement therewith; all without any
liability  on the  part of such  Registrar  and  Paying  Agent  for any  real or
apparent conflict of interest by reason of any such actions; and

     (d) The Registrar and Paying Agent agrees to cooperate with the Trustee and
the Company in preparing and conveying  information necessary for drawings under
any Credit Facility. To the extent that any other certificate to be submitted by
the Trustee to an issuer of a Credit Facility in connection with a drawing under
the Credit Facility  requires the Trustee to state that the Registrar and Paying
Agent has certified certain information to the Trustee, the Registrar and Paying
Agent  agrees to provide  such  certification  to the Trustee to the extent such
information is known to it.


                                       58
<PAGE>


     Section 13.17. Payment of Registrar and Paying Agent; Indemnification.  The
Authority will cause the Company to agree in the Participation  Agreement to pay
all  reasonable  fees,  charges and expenses of the  Registrar and Paying Agent,
including reasonable attorneys' fees and expenses, for acting under and pursuant
to this Indenture. In addition, the Authority will cause the Company to agree in
the Participation  Agreement to indemnify the Registrar and Paying Agent and its
directors,  officers and  employees  against and save them harmless from any and
all losses, costs, charges,  expenses,  judgments and liabilities incurred while
carrying out the transactions  contemplated by this Indenture,  except that said
indemnity  does not apply to the extent  that they are  caused by the  negligent
action,  negligent  failure  to act,  bad  faith or  willful  misconduct  of the
Registrar and Paying Agent or its directors, officers, employees or agents.

     Section 13.18. Registrar and Paying Agent's Performance;  Duty of Care. The
duties and  obligations  of the  Registrar  and Paying Agent shall be determined
solely by the  provisions  of this  Indenture.  None of the  provisions  of this
Indenture  shall be  construed  to relieve the  Registrar  and Paying Agent from
liability for negligent action,  negligent failure to act or willful misconduct,
except that the  Registrar  and Paying Agent shall not be liable  except for the
performance of such duties and obligations as are specifically set forth in this
Indenture,  and,  in the absence of bad faith on the part of the  Registrar  and
Paying Agent,  the Registrar and Paying Agent may  conclusively  rely, as to the
truth of the statements  expressed  therein,  upon any document furnished to the
Registrar and Paying Agent and conforming to the  requirements of this Indenture
and the Registrar and Paying Agent may conclusively  rely and shall be protected
in acting upon any document believed by it to be genuine and to have been signed
or presented by the proper party or parties,  provided  that, in the case of any
such document which by any provision of this Indenture is specifically  required
to be furnished to the  Registrar  and Paying  Agent,  the  Registrar and Paying
Agent shall be under a duty to examine the same to  determine  whether or not it
conforms to the  requirements of this Indenture.  The Registrar and Paying Agent
may act upon the opinion or advice of any attorney or attorneys  (who may be the
attorney or attorneys for the Authority or the Company), approved by the Trustee
in the exercise of reasonable care, and the Registrar and Paying Agent shall not
be responsible for any loss or damage  resulting from any action or nonaction in
good faith in reliance upon such opinion or advice.

     Section 13.19.  Qualifications of Registrar and Paying Agent. The Registrar
and Paying Agent,  including any successor appointed pursuant to this Indenture,
shall be a  corporation  duly  organized  under the laws of the United States of
America  or any  state or  territory  thereof,  having a  combined  capital  and
unimpaired  surplus of at least $50,000,000 and authorized by law to perform all
the duties  imposed upon it by this  Indenture.  The  Registrar and Paying Agent
shall have an office or agency in New York,  New York capable of performing  its
obligations hereunder.

     Section  13.20.  Resignation  or Removal of Registrar  and Paying Agent and
Successor to Registrar  and Paying  Agent;  Termination  of Registrar and Paying
Agent's  Obligations.  The Registrar and Paying Agent may at any time resign and
be discharged of the duties and obligations  created  hereunder  giving at least
sixty days' notice to the  Authority,  the Bond  Insurer,  the Company,  and the


                                       59
<PAGE>


Trustee.  The  Registrar  and  Paying  Agent may be removed at any time upon and
pursuant to the request of the  Company or the Bond  Insurer  (for breach of its
obligations hereunder) by an instrument,  signed by the Authority and filed with
the  Trustee  and the  Registrar  and Paying  Agent,  the  Company  and the Bond
Insurer,  provided that such removal shall not take effect until the appointment
of a successor  Registrar and Paying Agent.  The Authority at the request of the
Company shall appoint a successor Registrar and Paying Agent effective as of the
effectiveness of any such resignation or removal.  Each successor  Registrar and
Paying  Agent shall be a qualified  institution  selected by the Company and, so
long as a Credit  Facility  is in  effect,  approved  by the  issuer of a Credit
Facility, and approved and appointed by the Authority.

     In the event of the  resignation  or  removal of the  Registrar  and Paying
Agent,  the Registrar and Paying Agent shall pay over and deliver any monies and
Bonds held by it in such capacity to its successor or, if there is no successor,
to the Trustee.  In the event that there is no successor  to the  Registrar  and
Paying Agent on the  effective  date of its  resignation,  the entity  acting as
Trustee shall perform the functions of the Registrar and Paying Agent;  provided
that monies held by the Trustee  pursuant to this paragraph  shall not be deemed
to be held by the Trustee in its capacity as Trustee.

     Section 13.21.  Appointment of Additional Paying Agents;  Each Paying Agent
to Hold Money in Trust.  The Authority may at the request of the Company appoint
an  additional  Paying  Agent or Paying  Agents for the Bonds.  Each such Paying
Agent shall hold in trust  subject to the  provisions  of the  Indenture for the
benefit of the Holders all sums held by such Paying Agent for the payment of the
principal of, premium,  if any, and interest on the Bonds. Any such Paying Agent
may be any person or corporation authorized to perform such functions, including
to the extent permitted by law, the Company.




                                       60
<PAGE>



                                   ARTICLE XIV

                   EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND
                     OWNERSHIP OF BONDS; EXCLUSION OF BONDS
                    OWNED BY THE AUTHORITY OR THE CORPORATION

     Section  14.01.  Execution of Requests,  Directions  and Consents and Other
Instruments  and  Proof  of Same;  Ownership  of Bonds  and  Proof of Same.  Any
request, direction, consent or other instrument required by this Indenture to be
signed or executed by Holders of Bonds may be signed or executed by such Holders
in person or by agent or agents duly  appointed  in  writing,  and may be in any
number of  concurrent  writings of  substantially  similar  tenor.  Proof of the
execution of any such request,  direction,  consent or other  instrument or of a
writing  appointing  any such agent,  and of the holding or  ownership of Bonds,
shall be sufficient for any purpose of this Indenture and shall be conclusive in
favor of the Trustee  hereunder with regard to any action taken by it under such
request,  direction,  consent or other instrument or of a writing appointing any
such agent, if made in the following manner:

          (a) the fact  and  date of the  execution  by any  person  of any such
     request, direction, consent or other instrument in writing may be proved in
     any reasonable manner which the Trustee deems sufficient;

          (b) the  ownership  of Bonds  shall be proved by the books of registry
     kept under the provisions of this Indenture.

     Any  request,  direction,  consent  or vote of the Holder of any Bond shall
bind and be  conclusive  upon the  Holder  of such  Bond  giving  such  request,
direction or consent or casting  such vote and upon every  future  Holder of the
same Bond in respect of  anything  done or suffered to be done by the Trustee or
otherwise,  or by the Holders of other  Bonds,  in  pursuance  of such  request,
direction,  consent or vote, and whether or not such future Holder has knowledge
of or information as to such request, direction,  consent or vote; provided that
any request, direction,  consent or vote of the Holder of a Bond required by any
of the  provisions  hereof may be revoked by the  Holder  giving  such  request,
direction,  consent  or vote or by a  subsequent  Holder if such  revocation  in
writing  is  filed  with the  Trustee,  prior  to the  time  when  the  request,
direction,  consent  or vote  of the  percentage  of the  Holders  of the  Bonds
required by such provision shall have been given and action taken by the Trustee
or otherwise, or by the Holders of other Bonds, under authority of such request,
direction, consent or vote.

     The  payment  of or on  account  of  principal  to or upon the order of the
person in whose name the Bonds shall at the time be  registered on said books of
registry and the payment of interest to or upon the order of any person in whose
name the Bonds shall at the time be registered on said books of registry,  shall
be valid and effectual fully to satisfy and discharge all liability hereunder or
upon the Bonds to the extent of the sum or sums so paid.

     The Authority at the request of the Company may establish a record date for
the taking of any action by the Holders.


                                       61
<PAGE>


     Section 14.02.  Meetings of Holders. The Trustee or the Holders of not less
than twenty percent (20%) in principal  amount of the Bonds then Outstanding may
at any time call a meeting of the  Holders  of the Bonds for the  purpose of the
consenting to, the approving, the requesting, or the directing by the Holders of
the  Bonds  of any  action  required  to be  consented  to or  approved  by them
hereunder or which they may request or direct  hereunder to be taken, or for the
making by the Holders of any  appointments  they may make hereunder,  or for the
purpose of taking any other action which the Holders may take hereunder,  or for
any other purpose  concerning  the payment and security of the Bonds  hereunder.
Every such meeting shall be held at such place in The City of New York, State of
New York, as may be specified in the notice calling such meeting. Written notice
of such meeting,  stating the place and time of the meeting and in general terms
the  business to be  submitted,  shall be mailed to the Holders  whose names and
addresses  then appear upon the books of  registry by the  Registrar  and Paying
Agent or the Holders  calling such  meeting,  not less than twenty (20) days nor
more than sixty (60) days before  such  meeting.  Any meeting of Holders  shall,
however,  be valid without  notice if the Holders of all Bonds then  Outstanding
are present in person or by proxy or if notice is waived before or within thirty
(30) days after the meeting by those not so present.

     Attendance and voting by Holders at meetings thereof may be in person or by
proxy.  Holders of Bonds may, by an  instrument  in writing  under their  hands,
appoint any person or persons,  with full power of substitution,  as their proxy
to attend and vote at any meeting for them.

     Persons  named by the  Trustee,  or elected by the Holders of a majority in
principal  amount of the Bonds  represented at the meeting in person or by proxy
in the  event the  Trustee  is not  represented  at such  meeting,  shall act as
temporary  chairman  and  temporary  secretary  of any  meeting  of  Holders.  A
permanent chairman and a permanent secretary of such meeting shall be elected by
the Holders of a majority in principal  amount of the Bonds  represented at such
meeting in person or by proxy.  The  permanent  chairman  of the  meeting  shall
appoint  two (2)  inspectors  of votes  who shall  count all votes  cast at such
meeting,  except votes on the election of chairman and  secretary as  aforesaid,
and who shall make and file with the  secretary  of the  meeting and the Trustee
their verified report of all such votes cast at the meeting.

     The Holders of not less than the principal  amount of the Bonds required by
the provisions hereof to consent to, approve, request or direct any action to be
taken at a meeting of Holders,  or required by the provisions hereof to make any
appointments to be made at such meeting, or required by the provisions hereof to
take any  other  action to be taken at such  meeting,  must be  present  at such
meeting  in  person  or by  proxy  in  order  to  constitute  a  quorum  for the
transaction of such business.  Less than a quorum,  however, shall have power to
adjourn the meeting from time to time without notice of such  adjournment  other
than the announcement thereof at the meeting;  provided,  however,  that if such
meeting is adjourned  by less than a quorum for more than ten (10) days,  notice
of such  adjournment  shall be given by the Trustee at least five (5) days prior
to the adjourned date of the meeting.

     Any Holder of a Bond shall be  entitled in person or by proxy to attend and
vote at such  meeting  as Holder of the Bond or Bonds  registered  in his or her
name without producing such Bond or Bonds. Such persons and their proxies shall,
if required, produce such proof of personal identity as shall be satisfactory to
the Secretary of the meeting.


                                       62
<PAGE>


     All proxies  presented at such meeting  shall be delivered to the Inspector
of Votes and filed with the Secretary of the meeting. The right of a proxy for a
Holder to attend the meeting and act and vote thereat may be proved  (subject to
the Trustee's right to require  additional proof) by a written proxy executed by
such Holder as aforesaid.

     The  officers or nominees of the Trustee may be present or  represented  at
such meeting and take part  therein,  but shall not be entitled to vote thereat,
except for such  officers  or  nominees  who are  Holders or proxies for Holders
(including the Trustee).

     The vote at any such  meeting  of the  Holder  of any  Bond,  or his or her
proxy, entitled to vote thereat shall be binding upon such Holder and upon every
subsequent Holder of such Bond (whether or not such subsequent Holder has notice
thereof).

     Section 14.03. Exclusion of Bonds Held by or for the Authority, the Company
and of Bonds No Longer Deemed Outstanding Hereunder.  In determining whether the
Holders of the requisite  aggregate  principal amount of Bonds have concurred in
any demand,  request,  direction,  consent, vote or waiver under this Indenture,
any  Bonds  which  are  owned  by or on  behalf  of or for  the  account  of the
Authority,  the Company  and,  except for the purposes of Article XVI, any Bonds
which are deemed no longer  Outstanding  hereunder  shall be disregarded and not
included  for the  purpose of any such  determination,  and the  Holders of such
Bonds  shall not be  entitled  to vote upon,  consent to or concur in any action
provided in this Indenture,  except that for the purposes of determining whether
the  Trustee  shall  be  protected  in  relying  on any  such  demand,  request,
direction,  consent, vote or waiver only Bonds which the Trustee knows are owned
as aforesaid shall be disregarded. The Trustee may require each Holder of a Bond
or Bonds,  before such Holder's demand,  request,  direction,  consent,  vote or
waiver  shall be deemed  effective,  to  reveal  if the  Bonds as to which  such
demand,  request,  direction,  consent, vote or waiver is made, granted, cast or
given are disqualified as provided in this Section.




                                       63
<PAGE>


                                   ARTICLE XV

                  AMENDING AND SUPPLEMENTING THE INDENTURE AND
                           THE PARTICIPATION AGREEMENT

     Section 15.01.  Amending and  Supplementing  Indenture  Without  Consent of
Holders.  The Authority  and the Trustee,  from time to time and at any time and
without the consent or concurrence of any Holder,  may enter into a Supplemental
Indenture,  (i) to make any changes,  modifications,  amendments or deletions to
this  Indenture  that may be required to permit the  Indenture  to be  qualified
under the Trust  Indenture  Act of 1939 of the United  States of America or (ii)
for any one or more of the following purposes:

          (a) (x) to make any changes or  corrections  in this  Indenture or any
     Supplemental Indenture as to which the Authority shall have been advised by
     counsel that the same are required for the purpose of curing or  correcting
     any ambiguity or defective or inconsistent provision or omission or mistake
     or manifest error contained in this Indenture or Supplemental Indenture, or
     (y) to insert in this  Indenture  such  provisions  clarifying  matters  or
     questions  arising  under this  Indenture as are  necessary or desirable if
     such provisions shall not materially and adversely affect the rights of the
     Holders;

          (b) to add  additional  covenants and  agreements of the Authority for
     the purpose of further securing the payment of the Bonds;

          (c)  to  surrender  any  right,  power  or  privilege  reserved  to or
     conferred upon the Authority by the terms of this Indenture;

          (d) to confirm as further assurance any lien, pledge or charge, or the
     subjection to any lien,  pledge or charge,  created or to be created by the
     provisions of this Indenture or any Supplemental Indenture;

          (e) to grant to or confer  upon the  Holders  any  additional  rights,
     remedies,  powers, authority or security that lawfully may be granted to or
     conferred  upon them,  or to grant to or to confer upon the Trustee for the
     benefit of the Holders any additional rights,  duties,  remedies,  power or
     authority;

          (f) to provide for the issuance of Bonds in book entry or coupon form,
     if at the time permitted by applicable law;

          (g) to provide for the substitution of rating agencies;

          (h) to provide for any new  administrative  or  procedural  provisions
     made  necessary  or  desirable  by  the  issuance  of  a  Credit  Facility,
     including,  but not limited to, any amendment  necessary to obtain a rating
     on the Bonds based upon such facility; and

          (i) to modify,  amend or supplement the Indenture in such manner as to
     permit  the  qualification  of the  Bonds  for  deposit  with a  Securities
     Depository,  and, in connection therewith,  if they so determine, to add to
     the  Indenture,  such other  terms,  conditions  and  provisions  as may be
     required to permit such qualification.


                                       64
<PAGE>


     No Supplemental  Indenture shall be entered into without the consent of the
Bond Insurer (which consent shall not be unreasonably  withheld),  and unless in
the  opinion of Bond  Counsel  which shall be  delivered  and  addressed  to the
Trustee  (which  opinion  may be combined  with the opinion  required by Section
15.04)  the  execution  of  such  Supplemental  Indenture  is  permitted  by the
foregoing  provisions of this Section and the  provisions  of such  Supplemental
Indenture do not  materially  and adversely  affect the rights of the Holders of
the Bonds and the Trustee may rely on any such opinion.

     Section  15.02.  Amending  and  Supplementing  Indenture  with  Consent  of
Holders.  With the consent of the Holders of a majority in  principal  amount of
the Bonds then  Outstanding and the Bond Insurer,  the Authority and the Trustee
from time to time and at any time may enter into a  Supplemental  Indenture  for
the  purpose  of  adding  any  provisions  to,  or  changing  in any  manner  or
eliminating any of the provisions of, this  Indenture,  or modifying or amending
the rights and obligations of the Authority hereunder,  or modifying or amending
in any manner the rights of the Holders;  provided that,  without the consent of
the Bond Insurer  (which  consent  shall not be  unreasonably  withheld) and the
specific consent of the Holders of all Bonds Outstanding which would be affected
thereby no  Supplemental  Indenture  amending or  supplementing  the  provisions
hereof  shall:  (a)  change  the  fixed  maturity  date for the  payment  of the
principal of any Bond,  or the dates for the payment of interest  thereon or the
terms of the purchase or redemption  thereof,  or reduce the principal amount of
any Bond or the rate of interest  thereon or the method of calculating  the same
except as  otherwise  provided in this  Indenture;  or (b) reduce the  aforesaid
percentage  of Bonds,  the  Holders  of which are  required  to  consent  to any
Supplemental   Indenture  amending  or  supplementing  the  provisions  of  this
Indenture;  or (c) give to any Bond any  preference  over any other Bond secured
hereby;  or (d)  authorize  the  creation  of any pledge of  payments  under the
Participation  Agreement or Company Obligation Payments prior or superior to the
pledge of a lien and  charge  thereon  assigned  herein  for the  payment of the
Bonds;  or (e)  effect  any  change in the  purchase  or  redemption  provisions
relating to the Bonds; or (f) deprive any Holders in any material respect of the
security  afforded  by  this  Indenture.  A  modification  or  amendment  of the
provisions of Article VI hereof with respect to the Bond Fund or any other Funds
or  Accounts  established  thereby  shall not be deemed a change in the terms of
payment;  provided that no such modification or amendment shall, except upon the
consent of the Holders of all Bonds  Outstanding  affected  thereby,  reduce the
amount or amounts  required to be  deposited  in the Bond Fund.  Nothing in this
paragraph  contained,  however,  shall be  construed  as  making  necessary  the
approval  of  the  Holders  of  the  execution  of  any  Supplemental  Indenture
authorized by the provisions of Section 15.01.

     The proof of the  giving of any  consent  by any  Holder  required  by this
Section and of the holding of the Bonds for the purpose of giving consents shall
be made in  accordance  with the  provisions  of  Article  XIV.  It shall not be
necessary that the consent of the Holders approve the particular form of wording
of the proposed supplemental amendment or supplement, but it shall be sufficient
if such consent approves the substance of the proposed  amendment or supplement.
After the  Holders of the  required  percentage  of Bonds shall have filed their
consents to the amending or supplementing  hereof pursuant to this Section,  the
Authority shall mail a copy of notice of such consent,  postage prepaid, to each
Holder at his or her address as it appears upon the books of registry and to the
Trustee.  Nothing in this paragraph  contained,  however,  shall be construed as
requiring  the  giving  of  notice  of any  amending  or  supplementing  of this


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<PAGE>


Indenture  authorized by this Section.  A record of the consents  shall be filed
with the  Trustee,  and shall be proof of the matters  therein  stated until the
contrary is proved.  No action or  proceeding  to set aside or  invalidate  such
Supplemental  Indenture  or any of the  proceedings  for its  adoption  shall be
instituted  or maintained  unless such action or proceeding is commenced  within
sixty (60) days after the mailing of the notice required by this paragraph.

     Section 15.03.  Notation upon Bonds; New Bonds Issued upon Amendments.  The
Bonds delivered after the effective date of any action taken as provided in this
Article,  if any, may and shall if required by the Trustee bear a notation as to
such action,  by endorsement or otherwise and in form approved by the Authority.
In that  case,  upon  demand  of any  Holder  at such  effective  date  and upon
presentation of Bonds at the applicable  Principal Corporate Trust Office of the
Trustee or other  transfer agent or registrar  hereunder for such Bonds,  and at
such additional  offices,  if any, as the Authority may select and designate for
that purpose, a suitable notation shall be made on the Bonds.

     Section 15.04. Effectiveness of Supplemental Indentures. Upon the execution
pursuant to this Article by the  Authority  and the Trustee of any  Supplemental
Indenture  amending or  supplementing  the  provisions of this Indenture and the
delivery to the Trustee of an opinion of Bond  Counsel  addressed to the Trustee
(upon which  opinion the Trustee,  subject to the  provisions  of Article  XIII,
shall be fully  protected  in  relying)  to the  effect  that such  Supplemental
Indenture  (a) is  permitted by the  provisions  of this Article XV and has been
duly executed in accordance  with the  provisions  hereof and applicable law and
that the provisions  thereof are valid,  and (b) does not have an adverse effect
on the  exclusion of interest on the Bonds from gross income for federal  income
tax purposes,  or upon such later date as may be specified in such  Supplemental
Indenture,  (i) this  Indenture  and the Bonds shall be modified  and amended in
accordance  with  such  Supplemental  Indenture;  (ii)  the  respective  rights,
limitations of rights,  obligations,  duties and immunities under this Indenture
of the Authority,  the Trustee,  and the Holders shall thereafter be determined,
exercised  and  enforced  under this  Indenture  subject in all respects to such
modifications  and amendments;  and (iii) all of the terms and conditions of any
such  Supplemental  Indenture shall be a part of the terms and conditions of the
Bonds and of this Indenture for any and all purposes.

     Section 15.05.  Supplemental Indenture Affecting Credit Facility Issuer. No
Supplemental  Indenture  affecting  the  rights  or  obligations  of the  Credit
Facility Issuer which takes effect while any Credit Facility is in effect may be
entered into by the  Authority and the Trustee or be consented to by the Holders
without  written  consent  of  each  Credit  Facility  Issuer.  So  long  as the
conditions  set  forth in  Section  8.02 are met by the  Bond  Insurer  and with
respect to the Policy,  no  Supplemental  Indenture  may be entered  into by the
Authority and the Trustee without written consent of the Bond Insurer.

     Section  15.06.  Supplemental  Agreements  Not Requiring the Consent of the
Holders.  The  Authority  and the Company may,  with the written  consent of the
Trustee but without notice to or consent of any Holder, from time to time and at
any time, agree to such supplemental agreements  supplementing the Participation
Agreement  or  amendments  to  the  Participation  Agreement  as  shall  not  be


                                       66
<PAGE>


inconsistent  with the terms and  provisions of the  Participation  Agreement or
this Indenture and, in the opinion of the Authority, shall not be detrimental to
the interests of the Holders (which  Supplemental  Agreements  shall  thereafter
form a part of the Participation Agreement):

          (a) to  cure  any  ambiguity  or  formal  defect  or  omission  in the
     Participation Agreement or in any Supplemental Agreement;

          (b) to grant to or confer  upon the  Trustee  for the  benefit  of the
     Holders any additional rights, remedies, powers, authority or security that
     may lawfully be granted to or conferred upon the Holders or the Trustee; or

          (c) to provide for or add any further changes or corrections  that are
     necessary or desirable to comply with any  Supplemental  Indenture  entered
     into pursuant to Section 15.01;

provided  that no such  Supplemental  Agreement  shall be effective  without the
consent of the Bond Insurer (which consent shall not be unreasonably  withheld),
and provided  further  that no such  Supplemental  Agreement  which takes effect
while a Credit  Facility is in effect shall be effective prior to the receipt by
such parties of the written consent of each Credit Facility Issuer.

     Section 15.07. Notice and Consent for Supplemental Agreements Requiring the
Consent  of the  Holders.  Except  for  Supplemental  Agreements  or  amendments
provided for in Section 15.06, neither the Authority nor the Trustee shall agree
or consent,  as the case may be, to any  Supplemental  Agreement or amendment to
the  Participation  Agreement  unless  notice of the proposed  execution of such
Supplemental  Agreement or amendment shall have been given and the Holders shall
have consented to and approved the execution thereof in the same manner and form
as  provided  for in  Section  15.02  in the  case of  Supplemental  Indentures;
provided that no such  Supplemental  Agreement  which  materially  and adversely
affects any issuer of a Credit  Facility (so long as such Credit  Facility is in
effect)  shall be effective  prior to the receipt by such parties of the written
consent of the Credit Facility Issuer.

     Section 15.08.  Effectiveness of Supplemental Agreement. Upon the execution
pursuant to this Article and of applicable  law by the Authority and the Company
of any Supplemental  Agreement  amending or supplementing  the provisions of the
Participation  Agreement  and the  delivery to the Trustee of an Opinion of Bond
Counsel that such Supplemental  Agreement is in due form, has been duly executed
in  accordance  with  the  provisions  hereof  and  applicable  law and that the
provisions  thereof are valid (upon which  opinion the  Trustee,  subject to the
provisions of Article XIII,  shall be fully protected in relying),  or upon such
later  date  as may  be  specified  in  such  Supplemental  Agreement,  (i)  the
Participation  Agreement  shall be modified and amended in accordance  with such
Supplemental  Agreement;  (ii) the  respective  rights,  limitations  of rights,
obligations,  duties and immunities  thereunder of the Authority and the Company
shall thereafter be determined, exercised and enforced thereunder subject in all
respects to such  modifications  and amendments;  and (iii) all of the terms and
conditions of any such  Supplemental  Agreement shall be a part of the terms and
conditions thereof for any and all purposes.

     Section 15.09.  Supplemental  Agreement Affecting Credit Facility Provider.
No Supplemental Agreement or amendments to the Participation Agreement affecting
the rights or obligations of the Credit  Facility Issuer which take effect while


                                       67
<PAGE>


any Credit  Facility  is in effect may be entered  into by the  Authority  or be
consented  to by the Holders  without  written  consent of each Credit  Facility
Issuer.  So long as the conditions set forth in Section 8.02 are met by the Bond
Insurer and with respect to the Policy, no Supplemental Agreement may be entered
into by the Authority or be consented to by the Trustee  without written consent
of the Bond Insurer.











                                       68
<PAGE>


                                  ARTICLE XVI

                                   DEFEASANCE

     Section 16.01. Discharge of Liens and Pledges; Bonds No Longer Deemed to be
Outstanding  Hereunder.  Bonds shall continue to be Outstanding  hereunder until
such  Bonds  shall be  cancelled  in  accordance  with  Section  2.09 or paid at
maturity or redeemed pursuant to Article II or Article IX or otherwise defeased.
The  obligations of the Authority  under this Indenture and the liens,  pledges,
charges,  trusts,  covenants  and  agreements of the  Authority,  herein made or
provided for, shall be, subject to the terms of Section 16.02,  fully discharged
and  satisfied as to the Bonds or portion  thereof and the Bonds shall no longer
be deemed to be Outstanding hereunder:

          (a) when the Bonds  shall  have  been  cancelled,  or shall  have been
     surrendered for cancellation and are subject to cancellation, or shall have
     been  redeemed by the Trustee from monies held by it under this  Indenture;
     or

          (b) if the  Bonds  have  not  been  cancelled  or so  surrendered  for
     cancellation or subject to cancellation,  or so redeemed,  when (1) payment
     of the  principal of and premium,  if any, on the Bonds,  plus  interest on
     such principal to the due date thereof  (whether such due date be by reason
     of maturity or upon  redemption or  prepayment,  or  otherwise)  and of any
     purchase  price  which is or may become due on such Bonds  either (i) shall
     have been made or caused to be made in accordance  with the terms  thereof,
     or (ii) shall have been  provided for by  irrevocably  depositing  with the
     Trustee  in  trust,  and  irrevocably   appropriating   and  setting  aside
     exclusively  for such payments (A) monies  sufficient to make such payment,
     or (B)  Governmental  Obligations  maturing as to principal and interest in
     such  amounts  and at  such  times  as  will  insure  the  availability  of
     sufficient  and  timely  monies to make such  payments  when due,  or (C) a
     combination of both such monies and Governmental Obligations, whichever the
     Authority  deems to be in its best  interest,  (2)  there  shall  have been
     delivered to the Trustee and the Bond Insurer (x) a letter addressed to the
     Trustee  from  a firm  of  independent  public  accountants  verifying  the
     mathematical  accuracy of the  sufficiency  of the deposit made pursuant to
     (1)(ii)  above,  and (y) an opinion of Bond Counsel to the effect that upon
     the  provision of payment on the Bonds as described in (1)(ii)  above,  the
     Bonds are no longer deemed to be Outstanding  under the Indenture,  and (3)
     all  necessary and proper fees,  compensation  and expenses of the Trustee,
     the Registrar and Paying Agent and the Authority pertaining to the Bonds or
     portion thereof with respect to which such deposit is made, shall have been
     paid or the payment thereof provided to the satisfaction of the Trustee.

     At such  time as the Bonds  shall be  deemed  to be no  longer  Outstanding
hereunder, as aforesaid,  such Bonds shall cease to accrue interest from the due
date  thereof  (whether  such due date  occurs by reason  of  maturity,  or upon
redemption or prepayment or otherwise)  and, except for the purposes of any such
payment from such monies or Governmental Obligations, shall no longer be secured
by or entitled to the benefits of this Indenture.


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<PAGE>


     Any such monies so  deposited  with the Trustee as provided in this Section
may at the written  direction of the Company also be invested and  reinvested in
Governmental Obligations,  maturing in the amounts and times as hereinbefore set
forth,  and all income  from all  Governmental  Obligations  in the hands of the
Trustee  pursuant to this  Section  which is not required for the payment of the
Bonds and interest  thereon with respect to which such monies shall have been so
deposited shall be paid to the Company or if any Bonds are then Outstanding,  be
deposited in the Bond Fund to pay the principal  amount of Bonds then payable as
and when realized and collected.

     Anything in this Article XVI to the contrary notwithstanding,  if monies or
Governmental  Obligations  have been  deposited  or set aside  with the  Trustee
pursuant to this Section for the payment of the Bonds, the Bonds shall be deemed
to have been paid in full. No amendment to the  provisions of this Article shall
be made without the consent of the Holders of the Bonds affected thereby.

     The Trustee shall promptly  surrender any Credit  Facility (if  appropriate
for the type of instrument or  instruments  then serving as Credit  Facility) to
the issuer of such Credit  Facility for  cancellation  or shall  otherwise  take
appropriate   action  to  terminate  the  Credit  Facility  following  any  such
defeasance.

     Section  16.02.  Release  of  Indenture,  Termination  of Right,  Title and
Interest  of Trustee.  When the Bonds  shall be deemed to be paid in  accordance
with the provisions of Section 16.01, then and in the case all right,  title and
interest of the Trustee under this Indenture  shall thereupon  cease,  determine
and become  void,  and the Trustee in such case shall  release  this  Indenture,
shall  execute  such  documents to evidence  such  release as may be  reasonably
required by the  Authority and furnish the  Authority  with the same,  and shall
turn over to the Company any surplus monies and balances remaining in any of the
Funds and Accounts  created in or held under this  Indenture,  other than monies
and  Governmental  Obligations  held by it  pursuant  to  Section  16.01  or the
provisions  of Section  16.03 for the  redemption,  payment or prepayment of the
Bonds; otherwise, this Indenture shall be, continue and remain in full force and
effect.

     Notwithstanding  the  satisfaction  and  discharge of this  Indenture,  the
rights of the Trustee and the  Registrar  and Paying  Agent under  Article  XIII
shall survive defeasance of the Bonds hereunder.

     Section  16.03.  Bonds Not Presented for Payment When Due;  Monies Held for
the  Bonds  after  Due Date of  Bonds.  Subject  to the  provisions  of the next
sentence of this paragraph, if the Bonds shall not be presented for payment when
the principal thereof shall become due, whether at maturity or at the date fixed
for  the  redemption  thereof,  or  otherwise,  and if  monies  or  Governmental
Obligations  shall  at such due date be held by the  Trustee  in trust  for that
purpose sufficient and available to pay the principal of and premium, if any, on
the Bonds,  together  with all  interest  due on such  principal to the due date
thereof  or to the date  fixed for  redemption  thereof,  all  liability  of the
Authority and the Company for such payment shall forthwith cease,  determine and
be completely  discharged,  and thereupon it shall be the duty of the Trustee to
hold said monies or Governmental  Obligations  without  liability to the Holders
for interest thereon, in trust for the benefit of the Holders,  which thereafter
shall be restricted  exclusively to said monies or Governmental  Obligations for
any  claim of  whatever  nature  on its part on or with  respect  to the  Bonds,
including for any claim for the payment thereof. Notwithstanding anything to the
contrary in Section 6.04,  any monies or  Governmental  Obligations  held by the


                                       70
<PAGE>


Trustee for the Holders after the principal of and premium, if any, and interest
on the  Bonds or any  portion  thereof  with  respect  to which  such  monies or
Governmental  Obligations  have  been so set aside has  become  due and  payable
(whether at maturity or upon  redemption or  prepayment  or otherwise)  shall be
either  held  uninvested  as cash or at the  written  direction  of the  Company
invested and  reinvested in  Governmental  Obligations  which mature on the next
Business Day. Any such monies or  Governmental  Obligations  held by the Trustee
for the Holders after the principal of and premium,  if any, and interest on the
Bonds or any portion  thereof with respect to which such monies or  Governmental
Obligations  have been so set aside  has  become  due and  payable  (whether  at
maturity  or upon  redemption  or  prepayment  or  otherwise)  shall  be  deemed
abandoned  property  when such  monies or  Governmental  Obligations  shall have
remained  unpaid or  undelivered to the Holder or Holders  entitled  thereto for
three years from the date the principal of and premium,  if any, and interest on
the Bonds or any portion thereof has become due and payable and shall be subject
to the laws of the  State of New  York  relating  to  disposition  of  unclaimed
property.








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<PAGE>



                                  ARTICLE XVII

                                  FORM OF BONDS
                    AND ENDORSEMENT AND ASSIGNMENT PROVISIONS

     Section 17.01. Form of Bonds and Endorsement and Assignment Provisions. The
form of Bond, the form of the certificate of authentication thereof, the form of
endorsement  to  appear  thereon  and the form of  assignment  thereof  shall be
substantially in the form set forth in Appendix A hereto.












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<PAGE>


                                 ARTICLE XVIII

                                  MISCELLANEOUS

     Section  18.01.  Benefits  of  Indenture  Limited  to  Authority,  Company,
Trustee,  Registrar and Paying Agent, Credit Facility Issuer, and Holders of the
Bonds.  With the  exception of rights or benefits  herein  expressly  conferred,
nothing  expressed or  mentioned in or to be implied from this  Indenture or the
Bonds is  intended or should be  construed  to confer upon or give to any person
other than the  Authority,  the Company,  the Trustee,  the Registrar and Paying
Agent,  the Credit  Facility  Issuer,  and the Holders of the Bonds any legal or
equitable  right,  remedy or claim  under or by reason of or in  respect to this
Indenture  or  any  covenant,  condition,  stipulation,  promise,  agreement  or
provision herein contained.  Unless otherwise  expressly set forth herein,  this
Indenture  and  all  of  the  covenants,  conditions,   stipulations,  promises,
agreements and  provisions  hereof are intended to be and shall be for and inure
to the sole and exclusive  benefit of the Authority,  the Company,  the Trustee,
the Registrar and Paying Agent, the Credit Facility Issuer, the Bond Insurer and
the Holders of the Bonds as herein and therein provided.

     Section 18.02.  Indenture a Contract;  Indenture Binding Upon Successors or
Assigns of the Authority. In consideration of the acceptance of the Bonds by any
person  who  shall  hold the same from  time to time,  each of the  obligations,
duties,  limitations and restraints imposed by this Indenture upon the Authority
or any employee  thereof shall be deemed to be a covenant  between the Authority
and every Holder and this  Indenture  and every  provision  and covenant  hereof
shall be a  contract  by the  Authority  with the  Holders  of the Bonds  issued
hereunder to secure the full and final payment of the principal of, premium,  if
any, of and the interest on the Bonds  executed  and  delivered  hereunder.  The
provisions of the Act shall be a contract by the Authority  with the Holders and
the duties of the  Authority  and any  employee  thereof  under the Act shall be
enforceable by the Holders.  This Indenture shall be enforceable by the Holders,
by mandamus or other  appropriate  suit,  action or  proceeding  in any court of
competent  jurisdiction.  The  covenants and  agreements  herein set forth to be
performed by the Authority and any employee  thereof,  shall be for the benefit,
security and protection of the Holders. All the terms,  provisions,  conditions,
covenants,  warranties  and  agreements  contained  in this  Indenture  shall be
binding upon the assigns of the Authority, and shall inure to the benefit of the
Trustee, its successors or substitutes in trust and assigns, and the Holders.

     Section 18.03.  Notice to Holders of Bonds. Except as is otherwise provided
in this  Indenture,  any provision for the mailing of a notice or other paper to
the Holders shall be fully complied with if it is mailed postage prepaid, to the
Holder  of the  Bonds at such  Holder's  address  appearing  upon  the  books of
registry kept pursuant to Section 2.07.  The Trustee shall furnish a copy of any
notice to a Holder  upon a request by the Holder  that a copy of such  notice be
provided directly to the Holder; provided,  however, that any failure to provide
such a copy of a  notice  to a Holder  shall  not  affect  the  validity  of the
provision of the notice in the preceding sentence.

     Section 18.04.  Waiver of Notice.  Whenever in this Indenture the giving of
notice by mail, publication, or otherwise is required, the giving of such notice
may be waived by the person entitled to receive such notice, and in any case the
giving or receipt  of such  notice  shall not be a  condition  precedent  to the
validity of any action taken in reliance upon such waiver.


                                       73
<PAGE>


     Section 18.05.  Effect of Saturdays,  Sundays and Non-Business Days. Except
as otherwise specifically provided herein,  whenever this Indenture requires any
action to be taken on a  Saturday,  Sunday or other day which is not a  Business
Day, such action shall be taken on the first Business Day occurring  thereafter.
Except as otherwise specifically provided herein, whenever in this Indenture the
time within  which any action is required to be taken or within  which any right
will lapse or expire shall terminate on a Saturday, Sunday or other day which is
not a Business Day, such time shall  continue to run until  midnight on the next
succeeding Business Day.

     Section 18.06.  Partial Invalidity.  If any one or more of the covenants or
agreements  or portions  thereof  provided in this  Indenture on the part of the
Authority  or the Trustee to be  performed  should be  determined  by a court of
competent  jurisdiction  to be contrary to law, then such covenant or covenants,
or such  agreement or  agreements,  or such  portions  thereof,  shall be deemed
severable  from the  remaining  covenants  and  agreements  or portions  thereof
provided in this Indenture and the invalidity thereof shall in no way affect the
validity of the other  provisions  of this  Indenture  or of the Bonds,  but the
Holders shall retain all the rights and benefits  accorded to them hereunder and
under any applicable provisions of law.

     If any provisions of this Indenture shall be held or deemed to be or shall,
in fact, be inoperative or  unenforceable  or invalid in any particular  case in
any  jurisdiction  or  jurisdictions  or in all  jurisdictions,  or in all cases
because it conflicts with any  constitution or statute or rule of public policy,
or for any  other  reason,  such  circumstances  shall  not have the  effect  of
rendering the provision in question  inoperative or  unenforceable or invalid in
any  other  case  or  circumstance,  or of  rendering  any  other  provision  or
provisions  herein  contained  inoperative  or  unenforceable  or invalid to any
extent whatsoever.

     Section 18.07.  Law and Place of  Enforcement of Indenture.  This Indenture
shall be construed and  interpreted in accordance  with the laws of the State of
New York and all  suits  and  actions  arising  out of this  Indenture  shall be
instituted in a court of competent jurisdiction in the State of New York.

     Section 18.08. Requests, Approvals and Directions of Authority. Whenever in
this Indenture a request, approval, direction or other action is required of the
Authority,  such  request,  approval,  direction or other action shall be in the
form of and evidenced by a certificate of an Authorized Officer of the Authority
unless otherwise provided herein.

     Section 18.09. Notices,  Demands;  Requests.  Except as otherwise set forth
herein,  all notices,  demands,  directions  and requests to be given to or made
hereunder by the Company, the Authority, the Trustee, the Remarketing Agent, the
Auction  Agent and the  Registrar  and  Paying  Agent  shall be given or made in
writing and shall be deemed to be properly  given or made if sent by first class
United States mail, postage prepaid, addressed as follows:


                                       74
<PAGE>


(a) As to the Company                   Michael Taunton
                                        Senior Vice President, Treasurer & Chief
                                        Risk Officer
                                        One MetroTech Center
                                        Brooklyn, NY 11201-3851

(b) As to the Authority                 17 Columbia Circle
                                        Albany, New York 12203
                                        Attention: President

(c) As to the Trustee                   Citibank, N.A.
                                        388 Greenwich Street, 14th Floor
                                        New York, NY 10013
                                        Attn: Agency & Trust, KeySpan

(d) As to the Registrar and             Citibank, N.A.
       Paying Agent                     388 Greenwich Street, 14th Floor
                                        New York, NY 10013
                                        Attn:  Agency & Trust, KeySpan

(e) As to the Bond Insurer              125 Park Avenue, 5th Floor
                                        New York, NY 10017


     Any such notice,  demand,  direction or request may also be  transmitted to
the appropriate  above-mentioned party by telegram,  telecopy,  telex or similar
means  and  shall be  deemed  to be  properly  given or made at the time of such
transmission  if, and only if, such  transmission  of notice shall be in writing
and sent as specified above.

     Any  notice,  demand,  direction  or request  given or  transmitted  to the
Trustee  or the  Authority  shall be  effective  only upon  receipt.  Any notice
received  by the  Trustee as provided  in this  Section  18.09 shall  constitute
actual knowledge of a Responsible Officer of the Trustee.

     Any notice  that is  required to be given to a holder of the Bond or to the
Trustee  pursuant to the  Indenture  shall also be provided to the Bond Insurer,
and all notices  required to be given to the Bond  Insurer  under the  Indenture
shall be in writing.

     Any of such  addresses  may be changed at any time upon  written  notice of
such change sent by  first-class  United States mail,  postage  prepaid,  to the
other parties by the party affecting the change.

     If the Bonds  shall be rated by  Moody's,  the  Trustee  shall  furnish  to
Moody's at 99 Church Street, New York, New York, Attention: Corporate Department
Structured  Finance  Group or such other office as Moody's may  designate to the
Trustee, if the Bonds shall be rated by S&P, the Trustee shall furnish to S&P at
55 Water  Street,  New  York,  New  York  10041,  Attention:  Letter  of  Credit
Surveillance  Group, and if the Bonds shall be rated by Fitch, the Trustee shall
furnish to Fitch  Ratings at One State Street Plaza,  New York,  New York 10004,
Attention:  Municipal  Structured  Finance Group (i) a copy of each amendment to


                                       75
<PAGE>


the Indenture, Participation Agreement, and each Credit Facility of which it has
knowledge, (ii) notice of the termination, extension or expiration of any Credit
Facility,  (iii)  notice of the payment of all the Bonds (iv) notice of a Change
in the Interest Rate Mode,  and (v) notice of any successor  Trustee,  Registrar
and Paying Agent or Remarketing Agent;  provided,  however,  that failure by the
Trustee to so notify Moody's,  S&P or Fitch shall not result in any liability on
the part of the Trustee or affect the validity of such documents or actions.

     Section  18.10.  Effect  of  Article  and  Section  Headings  and  Table of
Contents. The heading or titles of the several Articles and Sections hereof, and
any table of contents  appended hereto or to copies hereof,  shall be solely for
convenience  of  reference  and  shall not  affect  the  meaning,  construction,
interpretation or effect of this Indenture.

     Section 18.11. Liability of Authority Limited to Revenues.  Notwithstanding
anything in this Indenture or in the Bonds contained, the Authority shall not be
required to advance any monies  derived  from any source other than the Revenues
and other assets  pledged  under this  Indenture for any of the purposes in this
Indenture  mentioned,  whether for the payment of the  principal  or  redemption
price of or  interest on the Bonds or for any other  purpose of this  Indenture.
Pursuant to Section 4.08 of the Participation  Agreement, the Company has agreed
to indemnify  and hold harmless the Authority and the Trustee from all liability
arising  hereunder  and for any loss or damage to  property  or any injury to or
death of any person that may be occasioned by any cause  whatsoever  arising out
of the operation or any Project or the financing thereof.

     Section 18.12. Waiver of Personal Liability.  No member,  officer, agent or
employee of the Authority  shall be  individually  or personally  liable for the
payment of the  principal of or premium,  if any, or interest on the Bonds or be
subject to any personal  liability or  accountability  by reason of the issuance
thereof;  but nothing herein  contained shall relieve any such member,  officer,
agent or employee from the  performance  of any official duty provided by law or
by this Indenture.

     Section 18.13. Indenture May be Executed in Counterparts;  Effectiveness of
Indenture.  This Indenture may be simultaneously executed in counterparts.  Each
such counterpart so executed shall be deemed to be an original, and all together
shall  constitute but one and the same  instrument.  This  Indenture  shall take
effect  on  the  Effective  Date.   Notwithstanding   the  Effective  Date,  for
convenience  and  purposes  of  reference  this  Indenture  shall be dated as of
November  1, 2005 and may be cited and  referred to as the  "Indenture  of Trust
dated as of November 1, 2005".

                 [Signature Page S-1 of this Indenture Follows]





                                       76
<PAGE>


     IN WITNESS WHEREOF,  the Authority has caused this Indenture to be executed
by its  President,  Vice  President or Treasurer  and its  corporate  seal to be
hereunto  affixed and attested by its Assistant  Secretary,  and the Trustee has
caused this  Indenture to be executed by its authorized  officer,  all as of the
date first above written.

                                                  NEW YORK STATE ENERGY RESEARCH
                                                   AND DEVELOPMENT AUTHORITY


                                                  By
                                                     -------------------
                                                       President

(SEAL)

Attest:

---------------------------------
         Assistant Secretary

                                                  CITIBANK, N.A., as Trustee,


                                                  By
                                                     -------------------





                                      S-1

<PAGE>


                                                                     APPENDIX A


                                 [Form of Bonds]

     Unless this certificate is presented by an authorized representative of The
Depository  Trust Company,  a New York corporation  ("DTC"),  to the Authority's
agent for registration of transfer,  exchange,  or payment,  and any certificate
issued  is  registered  in the name of Cede & Co.  or in such  other  name as is
requested  by an  authorized  representative  of DTC (and any payment is made to
Cede  &  Co.  or  to  such  other  entity  as  is  requested  by  an  authorized
representative  of DTC), ANY TRANSFER,  PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE  BY OR TO ANY PERSON IS  WRONGFUL  inasmuch  as the  registered  owner
hereof, Cede & Co., has an interest herein.

                       NEW YORK STATE ENERGY RESEARCH AND
                              DEVELOPMENT AUTHORITY
                          Gas Facilities Revenue Bonds
(The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York Project),
                                  2005 Series A

<TABLE>
<CAPTION>

No. 2005 AR-                                                                                            $82,000,000


                INTEREST RATE
                  ON DATE OF                                               ORIGINAL
               AUTHENTICATION             MATURITY DATE                   ISSUE DATE                   CUSIP
               --------------             -------------                   ----------                   -----
<S>                                     <C>                           <C>
                                         February 1, 2024              November 1, 2005

REGISTERED OWNER:

PRINCIPAL SUM:  EIGHTY-TWO MILLION DOLLARS
</TABLE>

     NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY (the "Authority"),
a body  corporate  and  politic,  constituting  a  public  benefit  corporation,
organized and existing under and by virtue of the laws of the State of New York,
for value received, hereby promises to pay, but solely from the revenues, income
and other monies  hereinafter  specified and not  otherwise,  to the  registered
owner named above or registered assigns, the principal amount specified above on
the maturity  date  specified  above  (subject to the right of prior  redemption
hereinafter described), upon presentation and surrender of this Bond, and to pay
interest on such principal  amount,  but solely from such  revenues,  income and
other  monies  hereinafter  specified  and  not  otherwise,  from  the  date  of
authentication  hereof,  or,  if  later,  from the  February  1 or August 1 next
preceding the date of  authentication  to which  interest  shall have been paid,
unless such date of authentication is a February 1 or August 1 to which interest
shall  have been  paid,  in which  case from  such  date  until the  Authority's


<PAGE>


obligation  with  respect to the  payment of the  principal  amount of such Bond
shall be discharged,  at the rate of interest per annum  specified  above,  such
interest  being  payable on  February  1 and  August 1 in each year,  commencing
February 1, 2006, by check mailed to the  registered  owner hereof at his or her
address as it appears on the registration books kept by the Registrar and Paying
Agent pursuant to the Indenture hereinafter mentioned;  provided, that (i) while
the Securities  Depository (as defined in the Indenture) is the registered owner
of the Bonds, all payments of principal of and premium,  if any, and interest on
the Bonds shall be paid to the Securities Depository by wire transfer,  and (ii)
interest on the Bonds shall be payable, at the option of any registered owner of
at least one million dollars  ($1,000,000) in aggregate  principal amount of the
Bonds, by wire transfer upon written notice received by the Registrar and Paying
Agent from such  registered  owner at least five days prior to the Record  Date,
containing the wire transfer  address (which shall be in the continental  United
States) to which such  registered  owner wishes to have such wire  directed.  If
interest is in default it shall be paid to the person in whose name this Bond is
registered as of the close of business on a Special  Record Date as set forth in
the Indenture.  Except as set forth above,  principal of and premium, if any, on
this Bond are payable at the  applicable  Principal  Corporate  Trust  Office of
Citibank,  N.A.,  in New York,  New York,  as Registrar  and Paying Agent of the
Bonds.  Principal of and premium,  if any, and interest on this Bond are payable
in lawful money of the United States of America.

     This  Bond is one of a duly  authorized  issue of  Bonds  of the  Authority
designated as "Gas  Facilities  Revenue  Bonds (The  Brooklyn  Union Gas Company
d/b/a KeySpan Energy  Delivery New York Project),  2005 Series A", issued in the
aggregate  principal  amount of eighty-two  million dollars  ($82,000,000)  (the
"Bonds").  The Bonds may be designated and redesignated from time to time by the
Authority  in such a way as to  identify  one or  more  subseries  of the  Bonds
pursuant to Article II of the Indenture.  This Bond and the issue of which it is
one are  authorized to be issued and are issued  under,  pursuant to and in full
compliance  with  the  Constitution  and  statutes  of the  State  of New  York,
including  particularly  the New York  State  Energy  Research  and  Development
Authority Act, Title 9 of Article 8 of the Public  Authorities  Law of the State
of New York, as amended (the "Act"),  a resolution  of the Authority  adopted on
September  19,  2005,  and an  Indenture  of Trust  dated as of November 1, 2005
between  the  Authority  and  Citibank,  N.A. as Trustee  (herein,  as it may be
amended from time to time, called the  "Indenture").  The Bonds are being issued
pursuant to a Participation Agreement dated as of November 1, 2005 (hereinafter,
as  it  may  be  amended  or  supplemented   from  time  to  time,   called  the
"Participation  Agreement"),  between the Authority  and The Brooklyn  Union Gas
Company d/b/a KeySpan Energy  Delivery New York (the  "Company") for the purpose
of refinancing certain prior obligations  originally issued to provide funds for
the acquisition,  construction,  and installation of certain  facilities for the
local  furnishing  of gas  within  The City of New York (all of said  facilities
being  referred  to  herein as the  "Project").  Pursuant  to the  Participation
Agreement, the Company delivered the Company Obligation to the Trustee, pursuant
to which the Company is required to make  payments to the Trustee for deposit to
the Bond Fund established  pursuant to the Indenture in an amount  sufficient to
pay principal of and premium, if any, and interest on the Bonds when due. A copy
of the Participation  Agreement is on file at the applicable Principal Corporate
Trust  Office  of  the  Trustee,   and  reference  is  hereby  directed  to  the
Participation Agreement for the provisions thereof.


                                       2
<PAGE>


     A copy of the Indenture is on file at the  applicable  Principal  Corporate
Trust Office of the Trustee.  Reference is hereby  directed to the Indenture for
the provisions, among others, with respect to the custody and application of the
proceeds of the Bonds; the collection and disposition of revenues; a description
of the  nature and extent of the  security  for the Bonds,  the funds and monies
pledged for the payment of the principal of and premium, if any, and interest on
the Bonds;  the nature and extent and manner of enforcement  of the pledge;  the
rights and remedies of the registered owners of Bonds with respect thereto;  the
conditions  for and the  permissible  extent  of  alteration,  modification  and
amendment of the Indenture;  the terms and  conditions  upon which this Bond and
the issue of which it is one are issued;  the rights,  duties and obligations of
the Authority and the Trustee  thereunder;  the terms and provisions  upon which
the liens, pledges, charges, trusts and covenants made therein may be discharged
at or prior to the  maturity,  purchase or redemption of this issue and pursuant
to which this Bond thereafter will no longer be secured by the Indenture,  or be
deemed to be outstanding  thereunder,  if sufficient monies or certain specified
securities  shall have been  deposited with the Trustee and held in trust solely
for the payment  thereof;  and for all other terms and provisions  thereof.  The
provisions of the Act and the Indenture  shall be a contract with the registered
owner of this Bond,  and the duties of the  Authority  and any employee  thereof
under said Act and the Indenture  shall be enforceable  by the registered  owner
hereof,  by mandamus or other  appropriate  suit,  action or proceeding,  in any
court of competent jurisdiction in the State of New York.

     The Bonds  are not  general  obligations  of the  Authority,  and shall not
constitute  indebtedness  of or a  charge  against  the  general  credit  of the
Authority  or  give  rise  to any  pecuniary  liability  of the  Authority.  The
liability  of the  Authority  under the Bonds shall be  enforceable  only to the
extent provided in the Indenture, and the Bonds shall be payable solely from the
monies and revenues  received from the payments made by the Company  pursuant to
the Company  Obligation  and the  Participation  Agreement and the other monies,
rights and  properties  pledged under the Indenture  including the proceeds of a
Credit  Facility  (other than a Policy),  if any, and not from any other fund or
source. Pursuant to the Indenture, the Authority has pledged and assigned to the
Trustee  its  right,  title  and  interest  (with  certain  exceptions)  in  the
Participation  Agreement to secure the payment of the  principal of and premium,
if any, and interest on the Bonds. The Bonds are and shall be secured by a prior
and paramount  lien and charge on said monies and revenues.  The Bonds shall not
be a debt of the  State of New  York,  and the  State of New York  shall  not be
liable  thereon.  The Bonds are payable  solely from the payments made under the
Company  Obligation  and the monies and revenues  pledged under the Indenture to
the  payment  thereof.  Neither  the  Authority  nor the  State  of New  York is
obligated to provide for the payment of the purchase  price of tendered Bonds or
payment of principal, premium, if any, or interest on the Bonds.

     This Bond shall not be entitled to any security, right or benefit under the
Indenture or become valid or obligatory for any purpose until it shall have been
authenticated   by  the  Trustee  by  its  execution  of  the   certificate   of
authentication endorsed hereon.

     No covenant or agreement  contained in this Bond or the Indenture  shall be
deemed to be a covenant or  agreement  of any  member,  agent or employee of the
Authority  in his or her  individual  capacity,  and  neither the members of the
Authority nor any officer thereof executing this Bond shall be liable personally
on this Bond or be subject to any personal liability or accountability by reason
of the issuance of this Bond.


                                       3
<PAGE>


     It is hereby certified,  recited and declared that all acts, conditions and
things  required by the  Constitution  and laws of the State of New York and the
Indenture to exist, to have happened and to have been performed precedent to and
in the  issuance  of this  Bond and the issue of which  this Bond is a part,  do
exist,  have  happened and have been  performed in due time,  form and manner as
required by such Constitution,  laws and the Indenture;  that the amount of this
Bond  and  the  issue  of  which  this  Bond  is a  part  does  not  exceed  any
constitutional or statutory limitations of indebtedness;  and that provision has
been made for the payment of the principal of and premium,  if any, and interest
on this Bond and the series of which it is a part as provided in the Indenture.

     EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.10 OF THE INDENTURE,  THIS GLOBAL
BOND MAY, AT THE REQUEST OF THE  COMPANY,  BE  TRANSFERRED,  IN WHOLE BUT NOT IN
PART,  ONLY  TO A  NOMINEE  OF  THE  SECURITIES  DEPOSITORY  OR  TO A  SUCCESSOR
SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY.

     The Bonds will bear interest at a Fixed Rate.  Anything in the Indenture to
the contrary  notwithstanding,  in no event shall the interest rate borne by any
Bond exceed the maximum rate allowable by applicable  law.  Interest  accrued on
the Bonds shall be computed on the basis of a 360-day year, consisting of twelve
(12) thirty (30) day months.

Redemption Provisions

     Optional Redemption. The Bonds shall be subject to redemption at the option
of the Authority  exercised at the direction of the Company,  at any time on and
after  February l, 2016, as a whole or in part at a price equal to the principal
amount thereof.

     Special Tax Redemption Provisions.  The Bonds shall be subject to mandatory
redemption as a whole  (provided,  however,  that the Bonds shall be redeemed in
part if the Company  obtains an Opinion of Bond Counsel to the effect  that,  by
redeeming  such portion of the Bonds,  the interest on the remaining  Bonds will
not be included for Federal income tax purposes in the gross income of any owner
of the Bonds (other than an owner who is a "substantial  user" of the Project or
a "related person" within the meaning of Section  147(a)(1) of the Code)) at any
time at a  redemption  price  equal  to 100% of the  principal  amount  thereof,
together with unpaid interest  accrued thereon to the redemption  date, if, in a
published  or  private  ruling of the  Internal  Revenue  Service or in a final,
nonappealable  judicial decision by a court of competent  jurisdiction (provided
that the Company has been afforded the  opportunity  to  participate  at its own
expense  in the  proceeding  resulting  in  such  ruling  or in  the  litigation
resulting in such  decision,  as the case may be), it is  determined  that, as a
result of a failure  by the  Company  to  observe  any  covenant,  agreement  or
representation in the Participation  Agreement or the Tax Regulatory  Agreement,
interest on the Bonds is included  for Federal  income tax purposes in the gross
income (as defined in Section 61 of the Code) of any owner of a Bond (other than
a "substantial  user" of the Project or a "related person" within the meaning of
Section  147(a)(1) of the Code),  and, in such event, the Bonds shall be subject
to such  mandatory  redemption not more than one hundred eighty (180) days after
receipt by the Trustee of notice of such published or private ruling or judicial
decision and a demand for  redemption of the Bonds.  The  occurrence of an event
requiring the  redemption of the Bonds under this  paragraph does not constitute


                                       4
<PAGE>


an event of default under the Company  Obligation or under the Indenture and the
sole  obligation  in such event  shall be for the  Company to prepay the Company
Obligation in an amount sufficient to redeem the Bonds to the extent required by
the Indenture.

     The Bonds may be redeemed  in whole or in part at any time at a  redemption
price equal to 100% of the principal  amount thereof,  together with accrued and
unpaid interest  thereon to the redemption  date, if the Company has determined,
on the basis of the advice of Bond Counsel that, as a result of any action taken
or expected to be taken,  or failure to take action,  a  reasonable  risk exists
that interest on the bonds will not be excludable  from gross income for federal
tax purposes.  Such conclusion and certification  shall be evidenced by delivery
to the Trustee of a written certificate of an Authorized Company  Representative
to the effect that the Company has reached such conclusion, together with a copy
of such  advice of Bond  Counsel.  The  occurrence  of an event  permitting  the
redemption  of the Bonds under this  paragraph  does not  constitute an event of
default under the Company  Obligation or under the Indenture and the sole option
in such event shall be for the Company to prepay the  Company  Obligation  in an
amount sufficient to redeem the Bonds to the extent required by the Indenture.

     The Bonds will also be  subject to  mandatory  redemption  at a  redemption
price equal to one hundred three percent (103%) of the principal  amount thereof
plus  unpaid  interest  accrued  thereon to the  redemption  date if the Company
reasonably  concludes and certifies to the Trustee in writing that the business,
properties, condition (financial or otherwise), operations or business prospects
of the Company will be  materially  and  adversely  affected  unless the Company
takes or omits to take a specified  action and that the Company has been advised
in writing by Bond Counsel that the specified action or omission would cause the
use of the Project to be such that,  pursuant  to Section  150 of the Code,  the
Company  would not be entitled to deduct the  interest on the Bonds for purposes
of determining the Company's  Federal  taxable income,  for a period of not less
than ninety  (90)  consecutive  or  nonconsecutive  days  during a  twelve-month
period.  Such conclusion and certification shall be evidenced by delivery to the
Trustee of a written certificate of an Authorized Company  Representative to the
effect that the Company has reached such  conclusion,  together with a certified
copy of a resolution  of the Board of Trustees of the Company  authorizing  such
certificate  and a copy of such  advice of Bond  Counsel.  In the event that the
Bonds become subject to redemption as provided in this paragraph, the Bonds will
be redeemed in whole  unless  redemption  of a portion of the Bonds  outstanding
would, in the opinion of Bond Counsel,  have the result that interest payable on
the Bonds remaining  outstanding  after such redemption  would be deductible for
purposes of determining the Federal taxable income of the Company,  and, in such
event,  the Bonds to be redeemed  shall be selected (in the principal  amount of
$5,000 or any integral  multiple thereof) by lot, in such amount as is necessary
to accomplish  that result.  The occurrence of an event requiring the redemption
of the Bonds under this  paragraph does not constitute an event of default under
the Company  Obligation or under the Indenture and the sole option in such event
shall  be for  the  Company  to  prepay  the  Company  Obligation  in an  amount
sufficient to redeem the Bonds to the extent required by the Indenture.

     Extraordinary  Redemption at demand of the State.  In  accordance  with the
provisions  of  Section  1864 of the  Act,  the  State  of New  York  may,  upon
furnishing  sufficient funds therefor,  require the Authority to redeem prior to
maturity,  as a whole, any issue of Bonds, on any interest payment date not less
than twenty years after the date of the Bonds of such issue.  The Trustee  shall


                                       5
<PAGE>


deposit  such funds in the Bond Fund and,  upon notice  given as provided in the
Indenture,  shall  apply  such  funds  to the  redemption  of such  Bonds,  at a
redemption price equal to the applicable  optional redemption price set forth in
the  Indenture  or 105 per  cent of the  principal  amount  of the  Bonds  to be
redeemed, whichever is less, together with accrued interest, if any, to the date
fixed for  redemption,  all in the manner  provided in the Indenture.  Upon such
redemption,  the Trustee  shall  assign the Company  Obligation  relating to the
Bonds to or as directed in writing by the Authority.

     Procedure  for  Redemption.  In the event any of the Bonds are  called  for
redemption,  the Trustee  shall give notice of the  redemption  of such Bonds in
accordance with the Indenture.

     Notice of  redemption  shall be given by  mailing a copy of the  redemption
notice  by  first-class  mail at least  30 days  prior  to the  date  fixed  for
redemption to the registered owners of the Bonds to be redeemed at the addresses
shown on the  registration  books  maintained by the Registrar and Paying Agent;
provided,  however,  that  failure to give  notice or any defects in such notice
shall not  affect  the  proceedings  for the  redemption  of the Bonds for which
notice has been given.

     The Bonds may be transferred or exchanged by the registered owners thereof,
in  person  or by  his  or her  attorney  duly  authorized  in  writing,  at the
applicable  Principal  Corporate  Trust Office of the Registrar and Paying Agent
but only in the manner,  subject to limitations and upon payment of the charges,
if any,  provided  in the  Indenture  and  upon  the  surrender  thereof  to the
Registrar and Paying Agent for cancellation.  Upon such transfer or exchange,  a
new Bond or Bonds of authorized  denominations  and of like aggregate  principal
amount as the Bond surrendered will be issued in exchange therefor.

     All terms used herein which are defined in the  Indenture and not otherwise
defined herein shall have the respective meanings set forth in the Indenture.

     This Bond shall be governed by and construed in accordance with laws of the
State of New York.




                                       6
<PAGE>



     IN WITNESS WHEREOF,  the Authority has caused this Bond to be signed in its
name and on its behalf by the manual or facsimile  signature  of its  President,
Vice President or Treasurer and its seal or a facsimile thereof to be impressed,
imprinted or otherwise reproduced hereon and attested by the manual or facsimile
signature of its Secretary or an Assistant  Secretary,  as of the date set forth
in the Certificate of Authentication.

                                              NEW YORK STATE ENERGY RESEARCH
                                                AND DEVELOPMENT AUTHORITY

[SEAL]


                                              By
                                                ---------------------------
                                                       President

Attest:



-----------------------------------
      Assistant Secretary




                                       7
<PAGE>




                          CERTIFICATE OF AUTHENTICATION

     This Bond is one of an issue described in the Indenture mentioned herein.



                                                     Citibank, N.A.,
                                                     as Trustee



                                                     By:
                                                        ---------------------
                                                           Authorized Officer

Date of Authentication:





                                       8
<PAGE>



                             STATEMENT OF INSURANCE


     Financial  Guaranty Insurance Company  ("Financial  Guaranty") has issued a
policy  containing  the  following  provisions  with respect to the Bonds,  such
policy  being on file at the  applicable  Principal  Corporate  Trust  Office of
Citibank, N.A., as paying agent (the "Paying Agent"):

     Financial Guaranty hereby unconditionally and irrevocably agrees to pay for
disbursement to the Bondholders that portion of the principal of and interest on
the Bonds  which is then due for  payment  and which the  Authority  shall  have
failed to provide. Due for payment means, with respect to principal,  the stated
maturity  date  thereof  and the date on which  the Bonds  shall  have been duly
called for mandatory  redemption as a result of the interest on the Bonds having
been determined to have become subject to federal income taxation,  and does not
refer to any earlier  date on which the payment of principal of the Bonds is due
by reason of call for redemption, acceleration or other advancement of maturity,
and with respect to interest, the stated date for payment of such interest.

     Upon receipt of telephonic or telegraphic notice, subsequently confirmed in
writing, or written notice by registered or certified mail, from a Bondholder or
the Paying Agent to Financial Guaranty that the required payment of principal or
interest (as applicable) has not been made by the Authority to the Paying Agent,
Financial  Guaranty on the due date of such  payment or within one  business day
after  receipt of notice of such  nonpayment,  whichever  is later,  will make a
deposit of funds,  in an account with U.S. Bank Trust National  Association,  or
its successor as its agent (the "Fiscal Agent"),  sufficient to make the portion
of such payment not paid by the Authority. Upon presentation to the Fiscal Agent
of evidence satisfactory to it of the Bondholder's right to receive such payment
and any  appropriate  instruments  of  assignment  required  to vest all of such
Bondholder's right to such payment in Financial Guaranty,  the Fiscal Agent will
disburse such amount to the Bondholder.

     As used  herein  the term  "Bondholder"  means the  person  other  than the
Authority or the borrower(s) of bond proceeds who at the time of nonpayment of a
Bond is entitled under the terms of such Bond to payment thereof.

          The policy is non-cancellable for any reason.

                      FINANCIAL GUARANTY INSURANCE COMPANY



                                       9
<PAGE>



                              [FORM OF ASSIGNMENT]

                  For value received ____________________________ hereby sells,
assigns and transfers unto _____________________ the within mentioned Bond and
hereby irrevocably constitutes and appoints _______________________, Attorney,
to transfer the same on the registration books in the office of the Registrar
and Paying Agent with full power of substitution in the premises.



                                            ----------------------------




Dated: _________________________



               I hereby certify that the above signature is true and genuine.

                                               ---------------------------
                                               Authorized Officer


                                               ____________________________ Bank




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