Exhibit 10.4


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                               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-

                    $55,000,000 Gas Facilities Revenue Bonds
(The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York Project),
                                  2005 Series B







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<PAGE>


<TABLE>
                                TABLE OF CONTENTS

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<CAPTION>
                                    ARTICLE I

                                   DEFINITIONS
<S>                 <C>                                                                                        <C>
Section 1.01.        Definitions of Specific Terms................................................................5
Section 1.02.        Definitions of General Terms................................................................25

                                   ARTICLE II

                             AUTHORIZATION OF BONDS

Section 2.01.        Limitation on Issuance of Bonds.............................................................26
Section 2.02.        Authorization of Bonds......................................................................26
Section 2.03.        Global Form; Securities Depository..........................................................27
Section 2.04.        [Reserved]..................................................................................29
Section 2.05.        Application of Bond Proceeds................................................................29
Section 2.06.        Delivery of the Bonds.......................................................................29

                                   ARTICLE III

                                INTEREST ON BONDS

Section 3.01.        Interest on Bonds-General...................................................................31
Section 3.02.        Commercial Paper Rate.......................................................................34
Section 3.03.        Auction Rate Period - Auction Period Rate: General..........................................35

                                   ARTICLE IV

                        CHANGES IN THE INTEREST RATE MODE

Section 4.01.        Optional Conversion to an Adjustable Rate by Authority......................................37
Section 4.02.        Optional Conversion to a Fixed Rate.........................................................40
Section 4.03.        Conversion Generally........................................................................42

                                    ARTICLE V

                        REDEMPTION AND PURCHASE OF BONDS

Section 5.01.        Optional Redemption.........................................................................44
Section 5.02.        [Reserved]..................................................................................45
Section 5.03.        Tender for and Purchase upon Election of Holder.............................................45

                                       i

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                               TABLE OF CONTENTS
                                   (continued)

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Section 5.04.        Mandatory Tender for Purchase upon Change in the Interest Rate Mode
                     or on Business Day Following Certain Calculation Periods....................................46
Section 5.05.        Special Tax Redemption Provisions...........................................................47
Section 5.06.        Redemption at Demand of the State...........................................................48
Section 5.07.        Mandatory Tender for Purchase Upon Expiration of any Support
                     Facility or Upon  Delivery of an Alternate Support Facility.................................49
Section 5.08.        Mandatory Tender Upon Occurrence of any Terminating Event...................................49
Section 5.09.        General Provisions Applicable to Mandatory and Optional Tenders for
                     Purchase of Bonds...........................................................................50
Section 5.10.        Selection of Bonds to be Redeemed...........................................................51
Section 5.11.        Notice of Redemption........................................................................51
Section 5.12.        Bonds purchased for account of Liquidity Facility Issuer....................................52
Section 5.13.        Effect of Redemption........................................................................53
Section 5.14.        Cancellation of Redeemed Bonds..............................................................53

                                   ARTICLE VI

                                SUPPORT FACILITY

Section 6.01.        Support Facility - General..................................................................54
Section 6.02.        Support Facility - Delivery of an initial Liquidity Facility and Alternate
                     Support Facility............................................................................54
Section 6.04.        Provisions with respect to the Bond Insurer.................................................55
Section 6.04.        Rights of Credit Facility Issuer............................................................57

                                   ARTICLE VII

                      GENERAL TERMS AND PROVISIONS OF BONDS

Section 7.01.        Execution and Authentication of Bonds.......................................................59
Section 7.02.        Books of Registry...........................................................................59
Section 7.03.        Transfer, Registration and Exchange of Bonds................................................59
Section 7.04.        Mutilated, Lost, Stolen, or Destroyed Bonds.................................................60
Section 7.05.        Temporary Bonds.............................................................................61
Section 7.06.        Disposition of Bonds........................................................................62

                                  ARTICLE VIII

                         CORPORATION OBLIGATION PAYMENTS

Section 8.01         Company Obligation Payments.................................................................62
Section 8.02         Credits on the Company Obligation...........................................................62

                                       ii


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                               TABLE OF CONTENTS
                                   (continued)

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                                   ARTICLE IX

                               THE PRIOR BOND FUND

SECTION 9.01.        Prior Bond Fundt..............................................................................


                                    ARTICLE X

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

Section 10.01.       Creation of Funds and Accounts..............................................................65
Section 10.02.       Deposit of Company Obligation Payments......................................................65
Section 10.03.       Application of Monies in the Bond Fund......................................................66
Section 10.04.       Investment of Funds.........................................................................68

                                   ARTICLE XI

                      PARTICULAR COVENANTS OF THE AUTHORITY

Section 11.01.       Payment of Principal of and Interest and Redemption Premium on Bonds........................69
Section 11.02.       Performance of Covenants....................................................................69
Section 11.03.       Further Instruments.........................................................................69
Section 11.04.       Inspection of Project Books.................................................................69
Section 11.05.       No Extension of Time of Payment of Interest.................................................69
Section 11.06.       Trustee's, Remarketing Agent's, Registrar and Paying Agent's and
                     Indexing Agent's Fees, Charges and Expenses.................................................69
Section 11.07.       Agreement of the State of New York..........................................................70
Section 11.08.       Recording and Filing........................................................................70
Section 11.09.       Rights Under the Participation Agreement....................................................70

                                   ARTICLE XII

       CONCERNING THE TRUSTEE; APPOINTMENT OF REGISTRAR AND PAYING AGENT,
              REMARKETING AGENT, BROKER-DEALERS AND INDEXING AGENT

Section 12.01.       Appointment of Trustee......................................................................71

                                      iii

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                               TABLE OF CONTENTS
                                   (continued)

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Section 12.02.       Indemnification of Trustee as Condition for Remedial Action.................................71
Section 12.03.       Trustee Not Liable for Failure of the Authority or Company to Act...........................71
Section 12.04.       Certain Duties and Responsibilities of the Trustee..........................................72
Section 12.05.       Limitations on Obligations and Responsibilities of Trustee and
                     Registrar and Paying Agent..................................................................74
Section 12.06.       Compensation and Indemnification of Trustee.................................................75
Section 12.07.       Statements from Trustee.....................................................................75
Section 12.08.       Notice of Default...........................................................................76
Section 12.09.       Trustee and Registrar and Paying Agent May Deal in Bonds....................................76
Section 12.10.       Trustee and Registrar and Paying Agent Not Responsible For Recitals.........................76
Section 12.11.       Qualification of the Trustee................................................................77
Section 12.12.       Resignation and Removal of Trustee..........................................................77
Section 12.13.       Successor Trustee...........................................................................78
Section 12.14.       Appointment of Remarketing Agent............................................................79
Section 12.15.       Appointment of Registrar and Paying Agent...................................................79
Section 12.16.       General Provisions Regarding Registrar and Paying Agent.....................................80
Section 12.17.       Payment of Registrar and Paying Agent; Indemnification......................................80
Section 12.18.       Registrar and Paying Agent's Performance; Duty of Care......................................81
Section 12.19.       Qualifications of Registrar and Paying Agent................................................81
Section 12.20.       Resignation or Removal of Registrar and Paying Agent and Successor
                     to Registrar and Paying Agent; Termination of Registrar and Paying Agent's Obligations......81
Section 12.21        Appointment of Auction Agent; Qualification of Auction Agent;
                     Resignation; Removal.....................................................................XI-11
Section 12.22.       Appointment of Broker-Dealers...............................................................83
Section 12.23.       Appointment of Additional Paying Agents; Each Paying Agent to Hold
                     Money in Trust..............................................................................83
Section 12.24.       Appointment and Duties of Indexing Agents...................................................83
Section 12.25.       Qualifications of Indexing Agents...........................................................84

                                  ARTICLE XIII

               EVENTS OF DEFAULT; REMEDIES UPON OCCURRENCE THEREOF

Section 13.01.       Events of Default...........................................................................85
Section 13.02.       Notice to Holders and Others Upon Occurrence of an Event of Default
                     or a Payment Default........................................................................85
Section 13.03.       Declaration of Principal and Interest As Due................................................86
Section 13.04.       Action by Trustee Upon Occurrence of Event of Default.......................................87
Section 13.05.       Powers of Trustee With Respect to Participation Agreement and Other
                     Agreements..................................................................................88

                                       iv

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                                TABLE OF CONTENTS
                                   (continued)

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Section 13.06.       Disposition of Monies in Event of Insufficiencies in Funds and Accounts.....................89
Section 13.07.       Effect of Delay or Omission; Waiver of Default; Direction of Remedial
                     Proceedings by the Holders..................................................................91
Section 13.08.       Suits or Actions by Holders; Any Holder May Enforce Overdue
                     Payment of His or Her Bond or Interest Thereon..............................................92
Section 13.09.       Remedies Not Exclusive......................................................................93
Section 13.10.       Effect of Abandonment of Proceedings on Default.............................................93
Section 13.11.       Interest on Overdue Amounts.................................................................93

                                   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.....................................94
Section 14.02.       Meetings of Holders.........................................................................95
Section 14.03.       Exclusion of Bonds Held by or for the Authority, the Company and of
                     Bonds No Longer Deemed Outstanding Hereunder................................................96

                                   ARTICLE XV

                    AMENDING AND SUPPLEMENTING THE INDENTURE,
         THE PARTICIPATION AGREEMENT, THE REMARKETING AGREEMENT, AUCTION
                      AGREEMENT, BROKER-DEALER AGREEMENTS,
                          BOND PURCHASE TRUST AGREEMENT

Section 15.01.       Amending and Supplementing Indenture Without Consent of Holders.............................97
Section 15.02.       Amending and Supplementing Indenture with Consent of Holders................................98
Section 15.03.       Notation upon Bonds; New Bonds Issued upon Amendments.......................................99
Section 15.04.       Effectiveness of Supplemental Indentures...................................................100
Section 15.05.       Supplemental Indenture Affecting Support Facility Provider.................................100
Section 15.06.       Supplemental Agreements Not Requiring the Consent of the Holders...........................100
Section 15.07.       Notice and Consent for Supplemental Agreements Requiring the
                     Consent of the Holders.....................................................................101
Section 15.08.       Effectiveness of Supplemental Agreement....................................................101
Section 15.09.       Supplemental Agreement Affecting Support Facility Provider.................................102


                                       v

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                               TABLE OF CONTENTS
                                   (continued)

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                                   ARTICLE XVI

                     DEFEASANCE; MONEYS HELD FOR PAYMENT OF
                                 DEFEASED BONDS

Section 16.01.       Discharge of Liens and Pledges; Bonds No Longer Deemed to be
                     Outstanding Hereunder......................................................................103
Section 16.02.       Release of Indenture, Termination of Right, Title and Interest of Trustee..................104
Section 16.03.       Bonds Not Presented for Payment When Due; Monies Held for the
                     Bonds after Due Date of Bonds..............................................................104

                                  ARTICLE XVII

             FORM OF BONDS AND ENDORSEMENT AND ASSIGNMENT PROVISIONS

Section 17.01.       Form of Bonds and Endorsement and Assignment Provisions....................................106

                                  ARTICLE XVIII

                                  MISCELLANEOUS

Section 18.01.       Benefits of Indenture Limited to Authority, Company, Trustee,
                     Registrar and Paying Agent, Support Facility Issuer, Remarketing
                     Agent, Auction Agent and Holders of the Bonds..............................................107
Section 18.02.       Indenture a Contract; Indenture Binding Upon Successors or Assigns
                     of the Authority...........................................................................107
Section 18.03.       Notice to Holders of Bonds.................................................................107
Section 18.04.       Waiver of Notice...........................................................................108
Section 18.05.       Effect of Saturdays, Sundays and Non-Business Days.........................................108
Section 18.06.       Partial Invalidity.........................................................................108
Section 18.07.       Law and Place of Enforcement of Indenture..................................................108
Section 18.08.       Requests, Approvals and Directions of Authority............................................108
Section 18.09.       Notices, Demands; Requests.................................................................108
Section 18.10.       Effect of Article and Section Headings and Table of Contents...............................110
Section 18.11.       Liability of Authority Limited to Revenues.................................................110
Section 18.12.       Waiver of Personal Liability...............................................................110
Section 18.13.       Indenture May be Executed in Counterparts; Effectiveness of Indenture......................110

Appendix A           Form of Bonds..............................................................................A-1
Appendix B           Auction Rate Provisions....................................................................B-1
</TABLE>


                                       vi


<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 Gas Facilities Revenue Bonds, Series C (The
Brooklyn  Union  Gas  Company  Project)  in the  aggregate  principal  amount of
$55,000,000  (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. 1094 adopted  September 19, 2005, the
Authority has determined to issue its Gas Facilities Revenue Bonds (The Brooklyn
Union Gas Company d/b/a KeySpan Energy Delivery New York Project), 2005 Series B
(the "Bonds") in an aggregate  principal amount not to exceed  $55,000,000,  for
the purpose of refunding the outstanding principal amount of the Prior 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  $55,000,000  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 B (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


                                       2
<PAGE>


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
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 Support 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 Support  Facility (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,


                                       3
<PAGE>


covenants,  agreements,  trusts, uses and purposes as hereinafter expressed, and
the  Authority  has agreed and  covenanted,  and does hereby agree and covenant,
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.

     "Adjustable  Rate" shall mean any of the following types of interest rates:
a Commercial  Paper Rate, an Auction Period Rate, a Daily Rate, a Weekly Rate, a
Monthly Rate, a Semi-annual Rate and a Term Rate.

     "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.

     "Agent  Member"  shall have the  meaning  given to such term in  Appendix B
hereto.

     "Alternate  Support  Facility" shall mean any Liquidity  Facility  obtained
pursuant  to the  provisions  of  Section  6.02 in  replacement  of an  existing
Liquidity Facility.

     "Auction  Agent"  shall have the  meaning  given to such term in Appendix B
hereto.

     "Auction Agreement" shall have the meaning given to such term in Appendix B
hereto.

     "Auction  Period"  shall have the meaning  given to such term in Appendix B
hereto.

     "Auction Period Rate" shall have the meaning given to such term in Appendix
B hereto.


                                       5
<PAGE>


     "Auction  Procedures" shall have the meaning given to such term in Appendix
B hereto.

     "Auction Rate Bonds" shall mean with respect to an Auction Rate Period, any
Bonds or series of Bonds which bear interest at the Auction Period Rate.

     "Auction  Rate Bonds Period  Record Date" shall mean,  with respect to each
Interest  Payment  Date  during  an  Auction  Rate  Period,   the  Business  Day
immediately preceding such Interest Payment Date.

     "Auction  Rate  Period"  shall mean any period  during which the Bonds bear
interest at an Auction Period Rate, which period shall commence on the effective
date of a Change in the Interest  Rate Mode to an Auction  Period Rate and shall
extend  through the day  immediately  preceding the earlier of (a) the effective
date of another Change in the Interest Rate Mode or (b) the Stated Maturity.

     "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  $55,000,000  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 B" 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  and  the  Trustee,  nationally  recognized  and
experienced in matters  relating to tax exemption of interest on bonds issued by
states and their political subdivisions.

     "Bond Fund" shall mean the Bond Fund created in Section 10.01.

     "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 Purchase Fund" shall mean the Bond Purchase Fund established pursuant
to the Bond Purchase Trust Agreement.


                                       6
<PAGE>


     "Bond  Purchase  Trust  Agreement"  shall  mean  the  Bond  Purchase  Trust
Agreement  dated as of the date hereof  between the  Authority and the Registrar
and Paying Agent, as from time to time amended or supplemented.

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

     "Bondholder,"  "Holder of a Bond" or  "Holder"  shall  mean any  registered
owner of a Bond.

     "Broker-Dealer"  shall have the  meaning  given to such term in  Appendix B
hereto.

     "Broker-Dealer  Agreement" shall mean an agreement among the Auction Agent,
the Company and a Broker-Dealer  pursuant to which such Broker-Dealer  agrees to
follow the  procedures  described in Appendix B, as such agreement may from time
to time be amended or supplemented with the consent of the Bond Insurer.

     "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,  the Bond Insurer,  the Auction  Agent,  the  Broker-Dealers,  the
Remarketing  Agents or the  office of an issuer of a Support  Facility  at which
demands for a draw on, or borrowing or payment under,  the Support Facility will
be made.

     "Calculation  Period"  shall  mean (a)  during  any  Commercial  Paper Rate
Period,  any Calculation Period established by the Remarketing Agent pursuant to
Section  3.02  which  shall  end on a day not  later  than  270  days  from  the
commencement  thereof;  (b) during any Daily Rate  Period,  the period  from and
including a Business Day to but not including the next succeeding  Business Day;
(c) during any Weekly Rate Period,  the period from and  including  Wednesday of
each week to and including the  following  Tuesday;  (d) during any Monthly Rate
Period,  each period from and including  the first  Business Day of the month to
but excluding  the first  Business Day of the  following  month;  (e) during any
Semi-annual  Rate Period,  each period from and  including the day following the
end of the last Calculation Period to but excluding the next succeeding Interest
Payment Date;  (f) during any Term Rate Period,  any period of not less than 365
days from and including a Business Day to and including any day  (established by
the Authority, at the direction of the Company,  pursuant to Section 4.01.1) not
later than the day prior to the Stated  Maturity;  and (g) during any Fixed Rate
Period  following a Change in the Interest Rate Mode to a Fixed Rate, the period
from and including  the  effective  date of the Change in the Interest Rate Mode
through the day  immediately  preceding the earlier of (x) the effective date of
another Change in the Interest Rate Mode, or (y) the Stated Maturity.

     "Change in the  Interest  Rate  Mode"  shall mean any change in the type of
interest rate borne by the Bonds pursuant to Section 4.01 or Section 4.02.

     "Change of  Preference  Law" shall mean any  amendment to the Code or other
statute enacted by the Congress of the United States or any temporary,  proposed
or final regulation  promulgated by the United States  Treasury,  after the date
hereof  which  (a)  changes  or would  change  any  deduction,  credit  or other


                                       7
<PAGE>


allowance  allowable in computing liability for any federal tax with respect to,
or (b) imposes,  or would impose, or increases or would increase any federal tax
(including,  but not limited to,  preference or excise taxes) upon, any interest
earned by any holder of bonds the  interest  on which is excluded  from  federal
gross income under Section 103 of the Code.

     "Closing  Date"  shall mean the date on which the Bonds are paid for by and
delivered to the original purchasers thereof.

     "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.

     "Commercial Paper Dealers" means Goldman, Sachs & Co., BNY Capital Markets,
Inc., Sovereign Securities Corporation, LLC and The Williams Capital Group, L.P.
or, in lieu thereof,  their respective  affiliates or successors,  provided that
any such entity is a commercial paper dealer, or any additional commercial paper
dealers named by the Company with the consent of the Authority.

     "Commercial  Paper  Period  Record  Date" shall mean,  with respect to each
Interest  Payment Date during a Commercial  Paper Rate Period,  the Business Day
next preceding such Interest Payment Date.

     "Commercial Paper Rate" shall mean with respect to each Calculation  Period
during a Commercial  Paper Rate Period, a rate or rates of interest equal to the
rate or rates of interest per annum  established and certified to the Trustee in
writing  (with a copy to the  Authority,  the Registrar and Paying Agent and the
Company) by the Remarketing  Agent no later than 12:30 noon (New York City time)
on and as of the Determination Date as the minimum rate or rates of interest per
annum which, in the opinion of the Remarketing  Agent, would be necessary on and
as of such day to remarket  Bonds in a secondary  market  transaction at a price
equal to the  principal  amount  thereof;  provided  that  such rate or rates of
interest shall not exceed the lesser of 110% of the Commercial  Paper Rate Index
on and as of such date and the Maximum Allowed Rate.

     "Commercial  Paper Rate Index" shall mean with respect to the Determination
Date of each  Calculation  Period  during a Commercial  Paper Rate  Period,  the
average of yield  evaluations  at par,  determined  by the  Indexing  Agent,  of
securities  (whether or not  actually  issued) all of which shall have a term as
near as practicable to such Calculation  Period or which are subject to optional
or  mandatory  tender  by the  owner  thereof  at the  end of a term  as near as
practicable to such Calculation Period, the interest on which is not included in
gross income for federal  income tax  purposes,  of no fewer than ten  Component
Issuers selected by the Indexing Agent,  including  issuers of commercial paper,
project notes, bond anticipation notes and tax anticipation  notes,  computed by
the  Indexing  Agent on and as of such  day.  If the Bonds are rated by a Rating
Agency in its highest note or commercial paper rating category or one of its two
highest  long-term debt rating  categories,  each Component Issuer must (a) have


                                       8
<PAGE>


outstanding  securities  rated  by a  Rating  Agency  in  its  highest  note  or
commercial paper rating category or (b) not have outstanding notes or commercial
paper rated by a Rating Agency but have outstanding securities rated by a Rating
Agency in one of its two highest long-term debt rating categories.  If the Bonds
are rated by a Rating Agency in a rating category that is lower than its highest
note or  commercial  paper  rating  category or its two highest  long-term  debt
rating  categories (and the Bonds are not rated in one of such categories by the
other Rating Agency), each Component Issuer must (a) have outstanding securities
rated by a Rating Agency in its note or commercial  paper rating  category which
is the same or correlative,  in the Indexing  Agent's  judgment,  to the note or
commercial  paper rating  category or the long-term debt rating  category of the
Bonds or (b) have  outstanding  securities  rated by a Rating Agency in the same
long-term debt rating  category as the Bonds are rated by that Rating Agency and
not have any outstanding  notes or commercial paper rated by such Rating Agency.
The  Indexing  Agent may change the  Component  Issuers from time to time in its
discretion,  subject to the foregoing requirements.  In addition, at the request
of the  Company and upon  delivery to the Trustee of an Opinion of Bond  Counsel
that such  action will not  adversely  affect the  exclusion  of interest on the
Bonds from gross income of the owners  thereof for federal  income tax purposes,
the  Authority,  with the consent of the Company,  may designate a new method of
setting the Commercial Paper Rate Index in the event any of the  above-described
methods are  determined by the  Authority to be  unavailable,  impracticable  or
unrealistic in the market place.

     "Commercial Paper Rate Period" shall mean any period during which the Bonds
bear interest at a Commercial  Paper Rate or Rates,  which period shall commence
on the  effective  date of a Change in the  Interest  Rate Mode to a  Commercial
Paper Rate or Rates,  as the case may be, and extend through the day immediately
preceding  the  earlier  of (a) the  effective  date of  another  Change  in the
Interest Rate Mode, (b) the Stated Maturity or (c) the expiration of 270 days.

     "Component Issuers" shall mean issuers of securities, the interest on which
is excluded from gross income for federal  income tax purposes,  selected by the
Indexing Agent.

     "Computation Date" shall mean each date which is one (1) Business Day prior
to any Determination Date.

     "Computation Period" shall have the meaning set forth in the Tax Regulatory
Agreement.

     "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 Section 5.10 of 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


                                       9
<PAGE>


Agreement  and the Company  Obligation to be applied to the payment of principal
of, premium, if any, and interest on the Bonds.

     "Credit  Facility"  shall mean any Support  Facility  which provides for or
insures the payments referred to in clause (ii) of the definition thereof.

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

     "Current  Adjustable  Rate"  shall  mean the  interest  rate borne by Bonds
immediately  prior to a Change in the Interest Rate Mode or the establishment of
a Fixed Rate.

     "Daily  Period  Record  Date" shall  mean,  with  respect to each  Interest
Payment Date during a Daily Rate Period,  the Business Day next  preceding  such
Interest Payment Date.

     "Daily Rate" shall mean with respect to each  Calculation  Period  during a
Daily Rate  Period,  a rate of interest  equal to the rate of interest per annum
established  and  certified to the Trustee  (with a copy to the  Authority,  the
Registrar  and Paying Agent and the Company) by the  Remarketing  Agent no later
than 10:00 a.m. (New York City time) on and as of the Determination  Date as the
minimum  rate of interest  per annum  which,  in the opinion of the  Remarketing
Agent, would be necessary on and as of such day to remarket Bonds in a secondary
market transaction at a price equal to the principal amount thereof plus accrued
interest  thereon;  provided  that such rate of  interest  shall not  exceed the
lesser of 110% of the  Daily  Rate  Index on and as of such day and the  Maximum
Allowed Rate.

     "Daily Rate Index"  shall mean with  respect to the  Determination  Date of
each Calculation Period during a Daily Rate Period, the average of one-day yield
evaluations at par,  determined by the Indexing Agent, of securities (whether or
not actually issued),  the interest on which is not included in gross income for
federal income tax purposes,  of no fewer than ten Component Issuers selected by
the Indexing Agent and which have redemption or tender provisions  comparable to
the then applicable  provisions of the Bonds,  computed by the Indexing Agent on
and as of the  Determination  Date.  If the Bonds are rated by a Rating  Agency,
each Component Issuer must have outstanding  securities rated by a Rating Agency
in a short-term  debt rating  category which is the same as the short-term  debt
rating category in which the Bonds are rated.  The specific  issuers included in
the Component  Issuers may be changed from time to time by the Indexing Agent in
its  discretion  and shall be issuers whose  securities,  in the judgment of the
Indexing Agent, have characteristics  similar to the Bonds. In addition,  at the
request of the  Company  and upon  delivery to the Trustee of an Opinion of Bond
Counsel that such action will not adversely  affect the exclusion of interest on
the Bonds  from  gross  income of the  owners  thereof  for  federal  income tax
purposes,  the Authority,  with the consent of the Company,  may designate a new
method of setting  the Daily Rate Index in the event any of the  above-described
methods are  determined by the  Authority to be  unavailable,  impracticable  or
unrealistic in the market place.


                                       10
<PAGE>


     "Daily Rate Period"  shall mean any period during which Bonds bear interest
at a Daily Rate which period shall  commence on the effective date of the Change
in the  Interest  Rate Mode to a Daily  Rate and shall  extend  through  the day
immediately preceding the earlier of (a) the effective date of another Change in
the Interest Rate Mode or (b) the Stated Maturity.

     "Default  Rate"  shall have the  meaning  given to such term in  Appendix B
hereto.

     "Determination  Date" shall mean,  for any  Calculation  Period,  the first
Business Day occurring during such Calculation Period;  provided,  however, with
respect to Bonds which bear interest at the Weekly Rate,  each  Wednesday or, if
such  Wednesday is not a Business  Day, the  Business  Day next  preceding  such
Wednesday.

     "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 Bankruptcy" shall mean the filing of a petition commencing a case
by or against the Company under the United  States  Bankruptcy  Code,  Title 11,
United  States  Code,  as the  same may be  amended  from  time to time,  or any
successor  law, or the filing of a petition or the seeking  relief by or against
the Company under any state bankruptcy or insolvency law.

     "Event of Default" shall mean Event of Default as defined in Section 13.01.

     "Existing  Owner"  shall have the meaning  given to such term in Appendix B
hereto.

     "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.

     "Fixed Rate" shall mean,  with respect to a Fixed Rate Period,  the rate of
interest per annum  established and certified to the Trustee (with a copy to the
Authority,  the Registrar  and Paying Agent and the Company) by the  Remarketing
Agent no later  than  12:00  noon (New York City time) on and as of such date as
the minimum rate of interest per annum which,  in the opinion of the Remarketing
Agent,  would be  necessary  on and as of such date to  remarket  the Bonds in a
secondary  market  transaction  at a price  equal  to  100%  of the  Outstanding
principal  amount thereof;  provided that such rate of interest shall not exceed
the  lesser  of 110% of the  Fixed  Rate  Index  on and as of such  date and the
Maximum Allowed Rate.

     "Fixed  Rate  Conversion  Date" shall have the meaning set forth in Section
4.02.


                                       11
<PAGE>


     "Fixed Rate Index" shall mean with respect to a Fixed Rate Conversion Date,
the average of the yield  evaluations  (on the basis of full  coupon  securities
trading  at par with a term  approximately  equal to the Fixed  Rate  Period) of
securities  (whether  or not  actually  issued),  the  interest  on which is not
included in gross income for federal  income tax purposes,  of no fewer than ten
Component  Issuers  selected  by the  Indexing  Agent and which have a long-term
rating by a Rating Agency in the same rating  category as the Bonds are rated at
the time by such Rating Agency or, if no such bonds are so rated,  shall be debt
which, in the judgment of the Indexing Agent, is of credit quality comparable to
that of the Bonds,  computed by the  Indexing  Agent on and as of the Fixed Rate
Conversion Date. In the event that the Indexing Agent fails to compute the Fixed
Rate Index and no other qualified municipal securities evaluation service can be
appointed  Indexing  Agent by the  Authority,  the  Fixed  Rate  Index  shall be
determined by the Remarketing  Agent and shall be 90% of the average yield shown
for the most recent  calendar  month for United States  Treasury  notes or bonds
having the same number of years to  maturity  as the number of 12-month  periods
(or  months if the Fixed  Rate  Period is less than one year) in the Fixed  Rate
Period,  as published in the Federal  Reserve  Bulletin in the last issue before
the Fixed Rate Conversion Date. If that issue does not contain such a yield, the
Fixed Rate Index will be determined by linear  interpolation  between the yields
shown in that issue for United States  Treasury  notes and bonds having the next
shorter and next longer number of years (or months) to maturity. In addition, at
the  request of the  Company  and upon  delivery to the Trustee of an Opinion of
Bond  Counsel  that such  action  will not  adversely  affect the  exclusion  of
interest on the Bonds from gross income of the owners thereof for federal income
tax purposes,  the Authority,  with the consent of the Company,  may designate a
new  method  of  setting   the  Fixed  Rate  Index  in  the  event  any  of  the
above-described  methods are  determined  by the  Authority  to be  unavailable,
impracticable or unrealistic in the market place.

     "Fixed Rate Period"  shall mean any period during which Bonds bear interest
at a Fixed Rate,  which period shall  commence on the effective date of a Change
in the  Interest  Rate Mode to a Fixed Rate,  and shall  extend  through the day
immediately preceding the Stated Maturity.

     "Fixed Rate Record Date" shall mean, with respect to each Interest  Payment
Date during a Fixed Rate Period,  the fifteenth day of the month next  preceding
such  Interest  Payment  Date,  or, if such day shall not be a Business Day, the
next preceding Business Day.

     "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;


                                       12
<PAGE>


          (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.

     "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.

"Indexing  Agent" shall mean the Indexing  Agent  appointed in  accordance  with
Section 12.24.

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

     "Interest Payment Date" shall mean:

          (a)  during  a  Commercial   Paper  Rate  Period,   the  Business  Day
     immediately succeeding the last day of any Calculation Period;

          (b) during an Auction Rate  Period,  each date that is specified as an
     "Interest Payment Date" in Appendix B hereto;

          (c) during a Daily Rate Period,  the first  Business Day of each month
     thereof;

          (d) during a Weekly Rate Period,  the first Business Day of each month
     thereof;

          (e) during a Monthly Rate Period, the first Business Day of each month
     thereof;

          (f) during a Semi-annual  Rate Period,  (i) the first  Business Day of
     the sixth calendar month following the month in which the first day of such
     Semi-annual  Rate Period  occurred,  (ii) each  anniversary  of the date so
     determined,  and (iii) each anniversary of the first day of the first month
     of such Semi-annual Rate Period;

          (g) during a Term Rate Period, the January 1 or July 1 next succeeding
     the  first  day of a  Calculation  Period  and  each  January  1 or  July 1
     thereafter;  provided,  however,  that  if  the  January  1 or  July 1 next
     succeeding  the  first  day  of  a  Calculation  Period  occurs  less  than


                                       13
<PAGE>


     twenty-one (21) days after the first day of such  Calculation  Period,  the
     first  Interest  Payment Date shall be the second such date  following  the
     first day of such Calculation Period;

          (h) the January 1 or July 1 next  succeeding  a Fixed Rate  Conversion
     Date and each January 1 or July 1 thereafter;  provided,  however,  that if
     the January 1 or July 1 next succeeding a Fixed Rate Conversion Date occurs
     less than twenty-one  (21) days after such Fixed Rate Conversion  Date, the
     first  Interest  Payment Date shall be the second such date  following such
     Fixed Rate Conversion Date;

          (i) a Fixed Rate Conversion Date;

          (j) any day on  which  Bonds  are  subject  to  mandatory  tender  for
     purchase pursuant to Section 5.04, 5.07 or 5.08 or redemption as a whole or
     in part pursuant to Section 5.01, 5.05 or 5.06; and

          (k) the Stated Maturity;

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.

     "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


                                       14
<PAGE>


          (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

          (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.


                                       15
<PAGE>


     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.

     "Liquidity  Facility" shall mean a Support  Facility which provides for the
payments referred to in clause (i) of the definition thereof, and which has been
consented to by the Bond Insurer.

     "Liquidity Facility Issuer" shall mean any bank or banks or other financial
institution or  institutions  acceptable to the Bond Insurer,  having issued any
Liquidity Facility.

     "Maximum  Allowed Rate" shall mean as of any date (i) during any Commercial
Paper Rate Period, Daily Rate Period,  Weekly Rate Period,  Monthly Rate Period,
Semi-annual  Rate Period or Term Rate Period,  15% per annum,  or if lower,  the
rate specified as such in any Support  Facility then in effect,  and (ii) during
any  Auction  Rate  Period,  Fixed Rate Period or during a bank bond rate period
during which the Bonds are owned by a Liquidity  Facility Issuer, 18% per annum,
provided,  however,  that such Maximum Allowed Rate shall not exceed the maximum
rate, if any, permitted by applicable law.

     "Maximum  Auction  Rate"  shall  have the  meaning  given  to such  term in
Appendix B hereto.

     "Monthly  Period  Record Date" shall mean,  with  respect to each  Interest
Payment Date during a Monthly Rate Period,  the Business Day next preceding such
Interest Payment Date.

     "Monthly Rate" shall mean with respect to each Calculation  Period during a
Monthly Rate Period,  a rate of interest equal to the rate of interest per annum
established  and  certified to the Trustee  (with a copy to the  Authority,  the
Registrar and Paying Agent,  and the Company) by the Remarketing  Agent no later
than 12:00 noon (New York City time) on and as of the Determination  Date as the
minimum  rate of interest  per annum  which,  in the opinion of the  Remarketing
Agent, would be necessary on and as of such day to remarket Bonds in a secondary
market  transaction at a price equal to the principal  amount thereof;  provided
that such rate of  interest  shall not exceed the lesser of 110% of the  Monthly
Rate Index on and as of such date and the Maximum Allowed Rate.

     "Monthly Rate Index" shall mean with respect to the  Determination  Date of
each  Calculation  Period  during a Monthly Rate  Period,  the average of 30-day
yield  evaluations  at par,  determined  by the Indexing  Agent,  of  securities
(whether or not actually issued), the interest on which is not included in gross
income for federal income tax purposes,  of no fewer than ten Component  Issuers
selected by the Indexing Agent,  including issuers of commercial paper,  project


                                       16
<PAGE>


notes,  bond  anticipation  notes and tax  anticipation  notes,  computed by the
Indexing  Agent on and as of such day. If the Bonds are rated by a Rating Agency
in its  highest  note or  commercial  paper  rating  category  or one of its two
highest  long-term debt rating  categories,  each Component Issuer must (a) have
outstanding  securities  rated  by a  Rating  Agency  in  its  highest  note  or
commercial paper rating category or (b) not have outstanding notes or commercial
paper rated by a Rating Agency but have outstanding securities rated by a Rating
Agency in one of its two highest long-term debt rating categories.  If the Bonds
are rated by a Rating Agency in a rating category that is lower than its highest
note or  commercial  paper  rating  category or its two highest  long-term  debt
rating  categories (and the Bonds are not rated in one of such categories by the
other Rating Agency), each Component Issuer must (a) have outstanding securities
rated by a Rating Agency in its note or commercial  paper rating  category which
is the same or correlative,  in the Indexing  Agent's  judgment,  to the note or
commercial  paper rating  category or the long-term debt rating  category of the
Bonds or (b) have  outstanding  securities  rated by a Rating Agency in the same
long-term debt rating  category as the Bonds are rated by that Rating Agency and
not have any outstanding  notes or commercial paper rated by such Rating Agency.
The  Indexing  Agent may change the  Component  Issuers from time to time in its
discretion,  subject to the foregoing requirements.  In addition, at the request
of the  Company and upon  delivery to the Trustee of an Opinion of Bond  Counsel
that such  action will not  adversely  affect the  exclusion  of interest on the
Bonds from gross income of the owners  thereof for federal  income tax purposes,
the  Authority,  with the consent of the Company,  may designate a new method of
setting the Monthly Rate Index in the event any of the  above-described  methods
are determined by the Authority to be unavailable,  impracticable or unrealistic
in the market place.

     "Monthly  Rate  Period"  shall  mean any  period  during  which  Bonds bear
interest at a Monthly Rate which period shall  commence with the effective  date
of the  Change in the  Interest  Rate Mode to a  Monthly  Rate and shall  extend
through the day  immediately  preceding the earlier of (a) the effective date of
another Change in the Interest Rate Mode or (b) the Stated Maturity.

     "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.

     "Notice of Election to Tender"  shall mean the  written  notice  given by a
Holder of Bonds pursuant to Section 5.03.

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

     "Option to Convert" shall mean the Authority's  right and option to convert
the rate of  interest  payable on the Bonds from an  Adjustable  Rate to a Fixed
Rate as provided in Section 4.02.


                                       17
<PAGE>


     "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
6.03.1(b) hereof), except:

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

     2. a Bond in lieu of or in  substitution  for which  other Bonds shall have
been  authenticated and delivered under Section 5.09, 5.10, 7.03 , 7.04 or 7.05;
and

     3. a Bond or portion  thereof  deemed to have been paid in accordance  with
Section 16.01;

provided,  however,  that with respect to Auction Rate Bonds for the purposes of
the Auction  Procedures on any Auction Date,  Auction Rate Bonds as to which the
Company or any  person  known to the  Auction  Agent to be an  Affiliate  of the
Company is the Existing Owner thereof shall be disregarded  and deemed not to be
Outstanding.

     "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.

     "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  13.01 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.


                                       18
<PAGE>


     "Principal  Office" means,  with respect to the Auction  Agent,  the office
thereof  designated in the Auction  Agreement as the office of the Auction Agent
to which notices, requests or communications should be sent.

     "Prior Bonds" shall mean the  Authority's  Gas  Facilities  Revenue  Bonds,
Series C (The Brooklyn Union Gas Company Project), dated June 1, 1990.

     "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.

     "Purchase  Price" shall mean the purchase price of Bonds tendered or deemed
tendered for purchase  pursuant to Section 5.03, 5.04, 5.07 or 5.08,  consisting
of the  principal  amount of such Bonds  together  with any  accrued  and unpaid
interest plus, in the event Bonds bearing interest at a Term Rate are subject to
tender for purchase  pursuant to Section 5.04, any premium which would have been
required to be paid as part of redemption  price on any date on which such Bonds
are  subject to tender for  purchase  if such  Bonds  were  subject to  optional
redemption pursuant to Section 5.01 on such date. With respect to Bonds tendered
for  purchase on an Interest  Payment  Date,  Purchase  Price shall  include any
accrued  interest on such Bonds which is not  otherwise  being paid  pursuant to
Section 10.03(a).

     "Rate  Index"  means the  Daily  Rate  Index,  the Fixed  Rate  Index,  the
Commercial Paper Rate Index, the Monthly Rate Index, the Semi-annual Rate Index,
the Term Rate Index, or the Weekly Rate Index.

     "Rating Agency" means Moody's, if the Bonds are then rated by Moody's, S&P,
if the Bonds are then rated by S&P,  and  Fitch,  if the Bonds are then rated by
Fitch.

     "Rating  category"  shall mean one of the generic  rating  categories  of a
Rating  Agency,  without  regard to any  refinement  or gradation of such rating
category by a numerical modifier, plus or minus sign, or otherwise.

     "Record Date", at any time,  shall mean each Commercial Paper Period Record
Date during a  Commercial  Paper Rate  Period,  each  Auction  Rate Bonds Period
Record Date during an Auction Rate Period,  each Daily Period Record Date during
a Daily Rate Period, each Weekly Period Record Date during a Weekly Rate Period,
each Monthly Period Record Date during a Monthly Rate Period,  each  Semi-annual
Period  Record Date during a  Semi-annual  Rate Period,  each Term Period Record
Date  during a Term Rate  Period and each Fixed Rate  Record Date during a Fixed
Rate Period.

     "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.

     "Remarketing  Agent" shall mean the Remarketing Agent or Remarketing Agents
appointed pursuant to Section 12.14, its or their successors or assigns.


                                       19
<PAGE>


     "Remarketing Agreement" shall mean any agreement or agreements entered into
between  the Company and one or more  Remarketing  Agents,  as from time to time
amended,  pursuant  to which the  applicable  Remarketing  Agent  undertakes  to
perform its duties and obligations  hereunder  during a period of time specified
in such agreement.

     "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.

     "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.

     "SEC" shall mean the Securities and Exchange Commission.

     "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 2.03, 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, the Trustee, the Auction Agent, the
Broker-Dealer and the Remarketing Agent pursuant to Section 2.03.

     "Securities  Exchange Act" shall mean the Securities  Exchange Act of 1934,
as amended.

     "Semi-annual  Period Record Date" shall mean, with respect to each Interest
Payment Date during a Semi-annual Rate Period, the fifteenth day, whether or not
a Business Day, of the calendar month next preceding such Interest Payment Date.


                                       20
<PAGE>


     "Semi-annual  Rate"  shall  mean with  respect to each  Calculation  Period
during  a  Semi-annual  Rate  Period,  a rate of  interest  equal to the rate of
interest per annum  established and certified to the Trustee (with a copy to the
Authority,  the Registrar  and Paying Agent and the Company) by the  Remarketing
Agent  no  later  than  12:00  noon  (New  York  City  time)  on  and  as of the
Determination  Date as the minimum  rate of  interest  per annum  which,  in the
opinion of the  Remarketing  Agent,  would be necessary on and as of such day to
remarket  Bonds  in a  secondary  market  transaction  at a price  equal  to the
principal  amount thereof;  provided that such rate of interest shall not exceed
the lesser of 110% of the Semi-annual  Rate Index on and as of such date and the
Maximum Allowed Rate.

     "Semi-annual Rate Index" shall mean with respect to the Determination  Date
of each Calculation  Period during a Semi-annual Rate Period, the average of six
month yield evaluations at par,  determined by the Indexing Agent, of securities
(whether or not actually issued), the interest on which is not included in gross
income for federal income tax purposes,  of no fewer than ten Component  Issuers
selected by the Indexing Agent,  including issuers of commercial paper,  project
notes,  bond  anticipation  notes and tax  anticipation  notes,  computed by the
Indexing  Agent on and as of such day. If the Bonds are rated by a Rating Agency
in its  highest  note or  commercial  paper  rating  category  or one of its two
highest  long-term debt rating  categories,  each Component Issuer must (a) have
outstanding  securities  rated  by a  Rating  Agency  in  its  highest  note  or
commercial paper rating category or (b) not have outstanding notes or commercial
paper rated by a Rating Agency but have outstanding securities rated by a Rating
Agency in one of its two highest long-term debt rating categories.  If the Bonds
are rated by a Rating Agency in a rating category that is lower than its highest
note or  commercial  paper  rating  category or its two highest  long-term  debt
rating  categories (and the Bonds are not rated in one of such categories by the
other Rating Agency), each Component Issuer must (a) have outstanding securities
rated by a Rating Agency in its note or commercial  paper rating  category which
is the same or correlative,  in the Indexing  Agent's  judgment,  to the note or
commercial  paper rating  category or the long-term debt rating  category of the
Bonds or the other debt obligations  supported by support  facilities  issued by
the issuer of a Support Facility or (b) have  outstanding  securities rated by a
Rating Agency in the same long-term debt rating  category as the Bonds are rated
by that Rating Agency and not have any  outstanding  notes or  commercial  paper
rated by such Rating Agency. The Indexing Agent may change the Component Issuers
from time to time in its discretion,  subject to the foregoing requirements.  In
addition,  at the request of the Company and upon  delivery to the Trustee of an
Opinion of Bond Counsel that such action will not adversely affect the exclusion
of  interest  on the Bonds from gross  income of the owners  thereof for federal
income  tax  purposes,  the  Authority,  with the  consent of the  Company,  may
designate a new method of setting the Semi-annual Rate Index in the event any of
the  above-described  methods are determined by the Authority to be unavailable,
impracticable or unrealistic in the market place.

     "Semi-annual  Rate  Period"  shall mean any period  during which Bonds bear
interest at a  Semi-annual  Rate,  which period shall  commence on the effective
date of a Change in the  Interest  Rate Mode to a  Semi-annual  Rate,  and shall
extend  through the day  immediately  preceding the earlier of (a) the effective
date of another Change in the Interest Rate Mode, or (b) the Stated Maturity.


                                       21
<PAGE>


     "Special Rate Period" shall have the meaning given to such term in Appendix
B hereto.

     "Stated  Maturity," shall mean June 1, 2025,  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.

     "Statutory  Corporate Tax Rate" shall mean as of any date of  determination
the highest tax rate bracket (expressed in decimals) now or hereafter applicable
in each taxable year on the taxable income of every  corporation as set forth in
Section 11 of the Code or any successor  section  without  regard to any minimum
additional  tax  provision  or  provisions  regarding  changes in rates during a
taxable  year,  which on the date  hereof is .35.  Any  change in the  Statutory
Corporate Tax Rate shall be evidenced by a certificate of the Company.

     "Substitute  Commercial  Paper  Dealer"  shall mean the entity or  entities
named by the Company with the consent of the Authority.

     "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.

     "Support 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 (i) the Purchase
Price on Bonds tendered for purchase  pursuant to the provisions  hereof and the
Bond Purchase Trust Agreement and/or (ii) principal of and interest on all Bonds
coming due and payable during the term thereof.

     "Support  Facility Issuer" shall mean any bank or banks, or other financial
institution or institutions which is the issuer of any Support Facility.

     "Tax Regulatory Agreement" shall mean the Tax Regulatory  Agreement,  dated
the date of the original  issuance of the Bonds,  between the  Authority and the
Company, and any and all modifications,  alterations, amendments and supplements
thereto.

     "Term Period Record Date" shall mean, with respect to each Interest Payment
Date during a Term Rate Period,  the fifteenth  day of the month next  preceding
such Interest Payment Date, whether or not a Business Day.


                                       22
<PAGE>


     "Term Rate" shall mean with  respect to each  Calculation  Period  during a
Term Rate  Period,  a rate of interest  equal to the rate of interest  per annum
established  and  certified to the Trustee  (with a copy to the  Authority,  the
Registrar  and Paying Agent and the Company) by the  Remarketing  Agent no later
than 4:00 p.m. (New York City time) on and as of the  Determination  Date as the
minimum  rate of interest  per annum  which,  in the opinion of the  Remarketing
Agent,  would be  necessary  on and as of such day to  remarket  such Bonds in a
secondary  market  transaction at a price equal to the principal amount thereof;
provided  that such rate of interest  shall not exceed the lesser of 110% of the
Term Rate Index on and as of such date and the Maximum Allowed Rate.

     "Term Rate Index" shall mean with respect to the Determination Date of each
Calculation  Period  during  a Term  Rate  Period,  the  average  of  the  yield
evaluations at par,  determined by the Indexing Agent, of securities (whether or
not actually issued),  having a term approximately equal to the Term Rate Period
or which are subject to optional or mandatory tender by the owner thereof at the
end of a term approximately equal to the Term Rate Period, the interest on which
is not included in gross  income for federal  income tax  purposes,  of no fewer
than ten  Component  Issuers  selected by the  Indexing  Agent,  computed by the
Indexing  Agent on and as of such day. If the Bonds are rated by a Rating Agency
in one of its two highest  long-term  debt  rating  categories,  each  Component
Issuer must have  outstanding  securities rated by a Rating Agency in one of its
two highest long-term debt rating categories. If the Bonds are rated by a Rating
Agency in a rating  category that is lower than its two highest  long-term  debt
rating  categories  (and the Bonds are not rated in one of the two highest  such
categories  by the  other  Rating  Agency),  each  Component  Issuer  must  have
outstanding  securities  rated by a Rating  Agency  in the same  long-term  debt
rating category as the Bonds are rated by that Rating Agency. The Indexing Agent
may change the Component Issuers from time to time in its discretion, subject to
the foregoing requirements.  In addition, at the request of the Company and upon
delivery to the Trustee of an Opinion of Bond  Counsel that such action will not
adversely affect the exclusion of interest on the Bonds from gross income of the
owners thereof for federal income tax purposes, the Authority,  with the consent
of the Company, may designate a new method of setting the Term Rate Index in the
event any of the  above-described  methods are determined by the Authority to be
unavailable, impracticable or unrealistic in the market place.

     "Term Rate Period"  shall mean any period  during which Bonds bear interest
at a Term Rate which period shall commence with the effective date of the Change
in the  Interest  Rate  Mode to a Term  Rate and shall  extend  through  the day
immediately preceding the earlier of (a) the effective date of another Change in
the Interest Rate Mode or (b) the Stated Maturity.

     "Terminating  Event"  shall  mean any event or events  under the terms of a
Support  Facility or any  agreement  providing  for the issuance of such Support
Facility which would cause the  termination  of such Support  Facility but would
specifically  allow for the mandatory  tender of Bonds  pursuant to Section 5.08
with a draw on or borrowing or payment under such Support Facility prior to such
termination.

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


                                       23
<PAGE>


     "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 Section  12.13.
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.

     "Weekly  Period  Record  Date" shall mean,  with  respect to each  Interest
Payment Date during a Weekly Rate Period,  the Business Day next  preceding such
Interest Payment Date.

     "Weekly Rate" shall mean with respect to each  Calculation  Period during a
Weekly Rate Period,  a rate of interest  equal to the rate of interest per annum
established  and  certified to the Trustee  (with a copy to the  Authority,  the
Registrar  and Paying Agent and the Company) by the  Remarketing  Agent no later
than 12:00 noon (New York City time) on and as of the Determination  Date as the
minimum  rate of interest  per annum  which,  in the opinion of the  Remarketing
Agent, would be necessary on and as of such day to remarket Bonds in a secondary
market transaction at a price equal to the principal amount thereof plus accrued
interest  thereon;  provided  that such rate of  interest  shall not  exceed the
lesser of 110% of the Weekly  Rate Index on and as of such date and the  Maximum
Allowed Rate.

     "Weekly Rate Index" shall mean with  respect to the  Determination  Date of
each Calculation Period during a Weekly Rate Period, the average of 30-day yield
evaluations at par,  determined by the Indexing Agent, of securities (whether or
not actually issued),  the interest on which is not included in gross income for
federal income tax purposes,  of no fewer than ten Component Issuers selected by
the Indexing Agent,  including issuers of commercial paper,  project notes, bond
anticipation notes and tax anticipation notes, computed by the Indexing Agent on
and as of such day.  If the Bonds  are rated by a Rating  Agency in its  highest
note or  commercial  paper rating  category or one of its two highest  long-term
debt  rating  categories,  each  Component  Issuer  must  (a)  have  outstanding
securities  rated by a Rating  Agency in its highest  note or  commercial  paper
rating category or (b) not have outstanding notes or commercial paper rated by a
Rating Agency but have outstanding securities rated by a Rating Agency in one of
its two highest  long-term debt rating  categories.  If the Bonds are rated by a
Rating  Agency  in a rating  category  that is lower  than its  highest  note or
commercial  paper  rating  category  or its two  highest  long-term  debt rating
categories  (and the Bonds are not rated in one of such  categories by the other
Rating Agency), each Component Issuer must (a) have outstanding securities rated
by a Rating Agency in its note or commercial  paper rating category which is the
same or correlative, in the Indexing Agent's judgment, to the note or commercial
paper rating  category or the long-term debt rating category of the Bonds or (b)
have outstanding  securities rated by a Rating Agency in the same long-term debt
rating  category as the Bonds are rated by that  Rating  Agency and not have any
outstanding notes or commercial paper rated by such Rating Agency.  The Indexing
Agent may  change the  Component  Issuers  from time to time in its  discretion,
subject  to the  foregoing  requirements.  In  addition,  at the  request of the
Company and upon delivery to the Trustee of an Opinion of Bond Counsel that such
action will not  adversely  affect the  exclusion  of interest on the Bonds from
gross  income of the  owners  thereof  for  federal  income  tax  purposes,  the
Authority,  with the  consent  of the  Company,  may  designate  a new method of
setting  the Weekly Rate Index in the event any of the  above-described  methods
are determined by the Authority to be unavailable,  impracticable or unrealistic
in the market place.


                                       24
<PAGE>


     "Weekly  Rate  Period"  shall mean any period  during  which the Bonds bear
interest at a Weekly Rate; the first such period shall commence on the effective
date of a Change in the  Interest  Rate Mode to a Weekly  Rate and shall  extend
through the day immediately preceding the earlier of (a) the effective date of a
successive Change in the Interest Rate Mode or (b) the Stated Maturity.

     "Winning Bid Rate" shall mean with  respect to Auction Rate Bonds,  Winning
Bid Rate as defined in Appendix B hereto.

     Section 1.02.  Definitions of General Terms. 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
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.





                                       25
<PAGE>


                                   ARTICLE II

                             AUTHORIZATION OF BONDS

     Section 2.01. Limitation on Issuance of Bonds. No Bonds may be issued under
the  provisions of this  Indenture  except in accordance  with the provisions of
this Article.

     Section  2.02.  Authorization  of Bonds.  1.  There is hereby  created  and
established  under this  Indenture one issue of revenue bonds of the  Authority,
limited to $55,000,000 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  B." In order to  distinguish  between  Bonds  which are
subject to different interest rate determination  methods and other features and
to  distinguish  the  portion of the Bonds to be offered  or  remarketed  by any
particular  underwriter  or Remarketing  Agent,  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
B-1,  subSeries  B-2 or  subSeries  B-3,  as the case may be, or may be  further
redesignated as subSeries B-1-1, subSeries B-1-2 or subSeries B-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.

     2. 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.

     3. 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.

     4. 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.

     5. 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.

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


                                       26
<PAGE>


     7. The Bonds  bearing a Commercial  Paper Rate, a Daily Rate, a Weekly Rate
or a  Monthly  Rate  shall be fully  registered  Bonds  in the  denomination  of
$100,000 or any integral multiple  thereof.  The Bonds bearing an Auction Period
Rate  shall be fully  registered  Bonds in the  denomination  of  $25,000 or any
integral multiple thereof.  The Bonds bearing a Semi-annual Rate, a Term Rate or
a Fixed Rate shall be fully  registered  Bonds in the  denomination of $5,000 or
any integral multiple thereof.

     8. The Bonds  shall be numbered  consecutively  from  "2005B-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 on the Stated Maturity.

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

     Section 2.03. Global Form;  Securities  Depository.  1. Except as otherwise
provided in this Section 2.03, the Bonds in the form of one separate global bond
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  subsections  (3) and (4) of this Section 2.03 and in
Section 6.03, 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,  the Trustee,  the
Auction  Agent  (if any) and the  Remarketing  Agent,  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 6.03 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, the Registrar and Paying Agent,
the  Auction   Agent  (if  any)  and  the   Remarketing   Agent  shall  have  no
responsibility or obligation with respect to:

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

          (b) the delivery to any Agent Member, 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 Agent Member,  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;


                                       27
<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 or any Agent Members of
     any  beneficial  owners  to  receive  payment  in the  event  of a  partial
     redemption  of Bonds,  except for the Trustee's  obligations  under Section
     5.11.

          Except as otherwise provided in Sections 6.03 and 6.04 hereof, so long
     as the certificates for the Bonds issued under the Indenture are not issued
     pursuant  to  subsection  (4) of this  Section  2.03,  the  Authority,  the
     Company,  the Trustee,  the Auction Agent (if any), the  Broker-Dealer  (if
     any),  the  Remarketing  Agent (if any), 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.  (a)  The  Authority  may,  and  at the  request  of  the  Company  may,
discontinue  the use of a Securities  Depository  for the Bonds at the time of a
Change in the Interest Rate Mode.

          (b)  Registered  ownership  of the  Bonds  may be  transferred  on the
     registration books of the Authority  maintained by the Registrar and Paying
     Agent and the Bonds may be delivered in physical form to the following: (i)
     any successor Securities  Depository or its nominee;  (ii) any person, upon
     (A) the resignation of the Securities  Depository or (B) the termination by
     the Authority of the use of the Securities Depository from its functions as
     depository  as set  forth in this  section,  or (C) upon any  Change in the
     Interest  Rate Mode to any  Adjustable  Rate other  than an Auction  Period
     Rate,  or (iii) the Bond  Insurer,  in the  circumstances  contemplated  by
     Section 6.03.

          (c) Upon any Change in the  Interest  Rate Mode to an  Auction  Period
     Rate,  the Registrar and Paying Agent shall register the Auction Rate Bonds
     in the  name  of  the  Securities  Depository  or  its  nominee  and on the
     effective  date of  such  change  provide  the  Company  with a list of the
     Existing Owners of the Auction Rate 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


                                       28
<PAGE>


applicable  statute or regulation and a successor  Securities  Depository is not
appointed by the  Authority  with the consent of the Company,  the Trustee,  the
Auction Agent (if any) and the Remarketing Agent or  Broker-Dealer,  as the case
may be,  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 as provided below. In addition,
the Authority may determine at any time, at the request of the Broker-Dealer, if
any,  Remarketing Agent, if any, or 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 Bonds.  In any such event the  Authority
shall  execute  and the Trustee  shall  authenticate  and  deliver  certificates
representing  the Bonds as provided below.  Certificates for the 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 Agent Members or otherwise,  shall instruct the Authority
and the Trustee.  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.  The Trustee
shall  deliver such  certificates  representing  the Bonds of such series to the
Persons  in whose  names  such  Bonds  are so  registered  on the  Business  Day
immediately  preceding  the first day of an  Auction  Period  (with  respect  to
Auction Rate Bonds during any Auction Rate Period),  or the effective  date of a
Change  in the  Interest  Rate Mode  (with  respect  to any other  Change in the
Interest Rate Mode), as the case may be.

     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.

     Section 2.04. [Reserved].

     Section 2.05.  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 9.01.

     Section  2.06.  Delivery  of the 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;


                                       29
<PAGE>


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

          (d) a fully executed counterpart of the Remarketing Agreement, if any,
     and the Broker-Dealer Agreement, if any;

          (e) the fully executed Policy;

          (f) the fully executed Company Obligation;

          (g) a fully executed counterpart of the Bond Purchase Trust Agreement;

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

          (i)  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;

          (j) 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

          (k) 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 (k),  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.





                                       30
<PAGE>


                                  ARTICLE III

                                INTEREST ON BONDS

     Section 3.01.  Interest on  Bonds-General.  1.  Interest  accruing on Bonds
bearing  interest at a  Commercial  Paper Rate, a Daily Rate, a Weekly Rate or a
Monthly Rate,  shall be computed on the basis of a 365-day year, as  applicable,
for the number of days  actually  elapsed.  Interest  accruing on Bonds  bearing
interest at a Semi-Annual Rate, a Term Rate or a Fixed Rate shall be computed on
the basis of a 360-day  year,  consisting of twelve (12) thirty (30) day months.
Interest  accruing on Bonds bearing interest at an Auction Period Rate during an
Auction  Period of 180 days or less shall be  computed on the basis of a 360-day
year for the number of days actually elapsed. Interest accruing on Bonds bearing
interest at an Auction  Period  Rate  during an Auction  Period of over 180 days
shall be  computed  on the basis of a 360-day  year,  consisting  of twelve (12)
thirty (30) day  months.  Bonds  shall bear  interest  from the date of issuance
thereof payable in arrears on each Interest  Payment Date. The Bonds issued upon
registration  of transfers or  exchanges of Bonds shall bear  interest  from the
Interest  Payment Date next preceding their date of  authentication,  unless the
date of  authentication  is an  Interest  Payment  Date in which case such Bonds
shall bear  interest  from such date,  or unless the date of  authentication  is
after the Record Date next preceding the next succeeding  Interest Payment Date,
in which case such Bonds shall bear interest from such next succeeding  Interest
Payment Date.

     2. The Bonds shall  initially  bear  interest at an Auction  Period Rate in
accordance  with  Section  3.03 and  Appendix B hereto from and  including  such
Effective Date to and including the day immediately preceding the effective date
of a Change in the Interest Rate Mode pursuant to Section 4.01 or 4.02. From and
after any Change in the Interest Rate Mode pursuant to Section 4.01 or 4.02, the
Bonds with  respect  to which  such  change is  effective  shall  bear  interest
determined in accordance with the provisions of this Indenture pertaining to the
new  Adjustable  Rate or the Fixed  Rate,  as the case may be.  Bonds shall bear
interest for each Calculation  Period,  Auction Period or Fixed Rate Period,  as
the case may be, at the rate of interest per annum for such Calculation  Period,
Auction  Period  or Fixed  Rate  Period  established  in  accordance  with  this
Indenture.  Interest  shall be payable on each  Interest  Payment  Date by check
mailed  to the  registered  owner at his or her  address  as it  appears  on the
registration  books kept by the  Registrar  and  Paying  Agent  pursuant  to the
Indenture at the close of business on the applicable Record Date; provided, that
(i) while the Securities  Depository is the registered  owner of the Bonds,  all
payments of principal  of,  premium,  if any, and interest on the Bonds shall be
paid to the Securities Depository or its nominee by wire transfer, (ii) prior to
and  including  a Fixed Rate  Conversion  Date,  interest  on the Bonds shall be
payable to any registered owner of at least one million dollars  ($1,000,000) in
aggregate  principal  amount  of Bonds by wire  transfer,  upon  written  notice
received  by the  Registrar  and  Paying  Agent at least  five days prior to the
applicable  Record Date, from such registered owner containing the wire transfer
address  (which  shall  be in the  continental  United  States)  to  which  such
registered owner wishes to have such wire directed and (iii) during a Commercial
Paper Rate Period, interest shall be payable on the Bonds only upon presentation
and surrender  thereof to the  Registrar and Paying Agent upon purchase  thereof
pursuant to Section 5.03 and if such  presentation and surrender is made by 2:00
p.m. (New York City time) such payment shall be by wire transfer.  If and to the


                                       31
<PAGE>


extent that there shall be a default in the payment of the  interest  due on any
Interest  Payment Date, such interest shall cease to be payable to the person in
whose name each Bond of such series was  registered  on such  applicable  Record
Date and shall be  payable,  when and if paid to the  person in whose  name each
Bond of such  series is  registered  at the close of business on the record date
fixed  therefor  by the  Trustee,  which  shall be the fifth  Business  Day next
preceding the date of the proposed payment. Except as provided above, payment of
the  principal  of and  premium,  if any,  on all  Bonds  shall be made upon the
presentation  and  surrender  of  such  Bonds  at the  principal  office  of the
Registrar  and  Paying  Agent as the same  shall  become  due and  payable.  The
principal of and premium,  if any, and interest on the Bonds shall be payable in
lawful money of the United States of America.

     3. Not less than one  Business Day prior to each  Computation  Date and two
Business Days prior to a Fixed Rate  Conversion  Date,  the Indexing Agent shall
establish  and provide to the  Remarketing  Agent the related  rate index as set
forth in the  definition of such rate index in Section 1.01;  provided that, for
each  Calculation  Period during a Daily Rate Period,  the Indexing  Agent shall
establish  and provide the related rate index to the  Remarketing  Agent on each
Determination  Date;  and provided  further that,  for each  Calculation  Period
during a Monthly Rate Period, the Indexing Agent shall establish and provide the
related  rate index to the  Remarketing  Agent not later  than each  Computation
Date. Notwithstanding the foregoing, in the event that the Remarketing Agent, in
its sole judgment,  shall determine on a Determination  Date that any Daily Rate
Index,  Weekly Rate Index or any  Commercial  Paper Rate Index so established is
sufficiently  non-representative of current market conditions that the Bonds may
not be  remarketed at par if such rate is set at a rate not greater than 110% of
the  applicable  rate index,  the  Remarketing  Agent,  with the approval of the
Company and the  Authority,  may  establish a new rate index on a  Determination
Date in accordance with the procedures and standards described in the definition
of such rate  index and for  purposes  of such rate  index so  established,  all
references to Indexing Agent in this  Indenture  shall be deemed to refer to the
Remarketing  Agent.  On any date when any Weekly  Rate  Index or any  Commercial
Paper  Rate Index is  established  by the  Remarketing  Agent  pursuant  to this
paragraph,  such rate  index  shall  have the  respective  meaning  set forth in
Section 1.01 (except as otherwise provided in the preceding sentence);  provided
that for any Commercial  Paper Rate Index,  the  Remarketing  Agent shall select
securities (whether or not actually issued) having a term approximately equal to
the applicable  Commercial Paper Rate Period or which are subject to optional or
mandatory tender by the owner thereof at the end of a term  approximately  equal
to (or as close thereto as is practicably  available) the applicable  Commercial
Paper Rate Period.

     4. By 12:00  noon (New York City time) on each  Determination  Date (but by
12:30 p.m.  with respect to a Commercial  Paper Rate, by 10:00 a.m. with respect
to a Daily  Rate and by 4:00 p.m.  with  respect to a Term Rate) or by 1:00 p.m.
(New York City time) on each Auction  Date (but by 11:00 a.m.  with respect to a
daily Auction Rate  Period),  as the case may be, the  Remarketing  Agent or the
Auction  Agent,  as the case may be,  shall make  available,  by  electronic  or
telephonic means, promptly confirmed in writing, to the Authority,  the Trustee,
the Registrar and Paying Agent, any issuer of a Support  Facility,  the Company,
any  Broker-Dealer  or any registered owner of a Bond the interest rate or rates
determined on such Determination Date or Auction Date.


                                       32
<PAGE>


     5. If for any reason on any Determination Date (A) any rate of interest for
a  Calculation  Period  is not  determined  by  the  Remarketing  Agent,  (B) no
Remarketing  Agent is serving as such hereunder or (C) the rate so determined is
held to be invalid or  unenforceable by a final judgment of a court of competent
jurisdiction,  (i) during any Daily Rate Period,  the interest rate for the next
succeeding  Calculation Period shall be the last interest rate in effect, or, if
a Daily Rate is not determined by the  Remarketing  Agent  hereunder for five or
more  consecutive  Business Days on the next and each  succeeding  Determination
Date, the Daily Rate shall be a rate per annum equal to 80% of the latest 30-day
dealer taxable  commercial  paper rate published by the Federal  Reserve Bank of
New York on or  immediately  before  such  Determination  Date,  (ii) during any
Weekly Rate Period, the interest rate for the next succeeding Calculation Period
shall  be the  last  interest  rate  in  effect,  or,  if a  Weekly  Rate is not
determined  by the  Remarketing  Agent for two or more  consecutive  Calculation
Periods,  the  Weekly  Rate shall be equal to 85% of the  latest  30-day  dealer
taxable  commercial paper rate published by the Federal Reserve Bank of New York
on or before the day next preceding such  Determination  Date,  (iii) during any
Monthly Rate,  Semi-annual Rate or Term Rate Period, the interest rate per annum
for the next  succeeding  Calculation  Period  shall be equal to 85% of the rate
listed in the table  most  recently  circulated  by the United  States  Treasury
Department  known as "Table  [applicable  dates shown on the most recent Table],
Maximum  Interest  Rate  Payable  on  United  States  Treasury  Certificates  of
Indebtedness,  Notes and Bonds-State and Local Government  Series Subscribed for
During  Period  [applicable  dates  shown  on the  most  recent  Table]"  or any
substantially   equivalent  table  circulated  by  the  United  States  Treasury
Department for the maturity most closely  approximating the Calculation  Period,
and  (iv)  during  any  Commercial  Paper  Rate  Period,   the  next  succeeding
Calculation  Period shall be a  Calculation  Period  which shall  consist of the
period from and including the prior  Interest  Payment Date to but excluding the
first Business Day of the following calendar month and the Commercial Paper Rate
shall be equal to 85% of the interest  rate  applicable  to 90-day United States
Treasury Bills determined on the basis of the average per annum discount rate at
which  such  90-day  Treasury  Bills  shall  have been  sold at the most  recent
Treasury auction within the 30 days next preceding such Calculation  Period,  or
if there shall have been no such auction  within the 30 days next preceding such
Calculation  Period,  the  Commercial  Paper  Rate shall be equal to the rate of
interest  borne by such Bond during the next  preceding  Calculation  Period for
such Bond.  The rate of interest or  Calculation  Period and related  Commercial
Paper  Rate  shall  be  established  pursuant  to this  subsection  5 until  the
Remarketing Agent again determines the rates of interest or Calculation  Periods
and  related  Commercial  Paper Rates in  accordance  with this  Indenture.  The
Authority  shall  select any person  otherwise  meeting  the  qualifications  of
Section 12.14 to obtain,  calculate and prepare any of the information  required
by this subsection 5.

     6. The  determination of any rate of interest by the Remarketing  Agent, or
any  person  appointed  by the  Authority  pursuant  to  the  last  sentence  in
subsection 5 of this Section 3.01, in accordance  with this  Indenture or by the
Auction Agent in accordance  with the Auction  Procedures  applicable to Auction
Rate Bonds, or the  establishment  of Calculation  Periods or Auction Periods by
the  Remarketing  Agent or the Authority as provided in this Indenture  shall be
conclusive  and binding  upon the  Authority,  the  Company,  the  Trustee,  the
Registrar and Paying Agent, the Remarketing Agent, the Auction Agent, any issuer
of a Support  Facility,  all  Broker-Dealers  and the  registered  or beneficial


                                       33
<PAGE>


owners  of the  Bonds.  Failure  of the  Remarketing  Agent,  the  Trustee,  the
Registrar and Paying Agent,  the Auction Agent or the  Securities  Depository or
any Securities  Depository  participant to give any of the notices  described in
this Indenture,  or any defect therein, shall not affect the interest rate to be
borne by any of the  Bonds nor the  applicable  Calculation  Period  or  Auction
Period nor in any way change the rights of the registered owners of the Bonds to
tender their Bonds for purchase or to have them redeemed in accordance with this
Indenture.

     7. Except as otherwise  provided in this  subsection  8, the Trustee  shall
calculate  and notify the  Registrar  and Paying Agent of the amount of interest
due and payable on each Interest  Payment Date by 10:00 a.m. on the Business Day
next preceding such Interest  Payment Date,  unless such date is a date on which
the  interest  rate is  determined  or a date on  which  a Bond  is  subject  to
purchase,  in  which  case the  amount  of  interest  due and  payable  shall be
calculated by 12:15 p.m. on such date. In preparing such calculation the Trustee
may conclusively  rely on calculations or other services provided by the Auction
Agent,  the Remarketing  Agent, the Company or any person or persons selected by
the  Trustee in its  discretion.  During a  Commercial  Paper Rate  Period,  the
Remarketing  Agent shall notify the Trustee,  the Registrar and Paying Agent and
the Company of the amount of interest due and payable on each  Interest  Payment
Date by 10:00 a.m. on the  Business Day next  preceding  such  Interest  Payment
Date.

     8. Anything herein to the contrary  notwithstanding,  in no event shall the
interest rate borne by any Bond exceed the Maximum Allowed Rate.

     9. Notwithstanding anything in the Indenture to the contrary, if Bonds have
been in a Term Rate  Period  and there  has been a failure  to pay the  Purchase
Price of such Bonds on the  Business  Day  immediately  following a  Calculation
Period,  such Bonds shall  continue to bear interest at the  then-existing  Term
Rate until such Purchase Price has been paid.

     Section 3.02.  Commercial  Paper Rate. 1. During any Commercial  Paper Rate
Period,  at or prior to 12:30 p.m.  (New York City  time) on each  Determination
Date, the  Remarketing  Agent shall  establish  Calculation  Periods and related
Commercial  Paper Rates.  In determining  Calculation  Periods,  the Remarketing
Agent shall take the  following  factors into account:  (i) existing  short-term
taxable and tax-exempt  market rates and indices of such short-term  rates, (ii)
the existing  market  supply and demand for  short-term  tax-exempt  securities,
(iii) existing yield curves for short-term and long-term  tax-exempt  securities
or  obligations  having a credit rating that is  comparable  to the Bonds,  (iv)
general  economic  conditions,  (v) economic and  financial  factors  present or
anticipated in the  securities  industry that may affect or that may be relevant
to the  Bonds  and (vi)  any  information  available  to the  Remarketing  Agent
pertaining to the Company regarding any events or anticipated events which could
have a direct impact on the marketability of or interest rates on the Bonds. Any
Calculation  Period  established  hereunder  may not  extend  beyond  the second
Business Day next preceding the expiration  date of the Support  Facility or the
day prior to the Stated Maturity.

     2. The Authority, at the request of the Company, may place such limitations
upon the establishment of Calculation Periods pursuant to subsection 1 hereof as
may be set forth in a written direction from the Authority, which direction must
be received by the Remarketing Agent prior to 10:00 a.m. (New York City time) on
the day  prior to any  Determination  Date  (with a copy to the  Trustee)  to be
effective  on such date,  but only if the  Trustee  receives  an Opinion of Bond
Counsel to the effect  that such  action is  authorized  by this  Indenture,  is
permitted  under the Act and will not have an adverse effect on the exclusion of
interest on the Bonds from gross income for federal income tax purposes.


                                       34
<PAGE>


     Section 3.03.  Auction Rate Period - Auction Period Rate:  General.  During
any Auction Rate  Period,  the Bonds shall bear  interest at the Auction  Period
Rate for each Auction  Period  determined  as set forth in this Section 3.03 and
Appendix B hereto. The provisions of such Appendix B constitute an integral part
of this  Indenture  and have the same  force and  effect as if set forth in this
Indenture.

     The initial  Auction  Period for the Bonds shall  commence from and include
the Effective Date and shall expire on and include  November 3, 2005 (which will
be the day of the week on which  Auctions will  generally be conducted)  and the
Auction  Period Rate for the initial  Auction Period for such Bonds shall be the
rate of interest  determined  and  certified to the Authority and Trustee as the
minimum rate of interest which, in the opinion of the  Broker-Dealer  designated
by the Company, would be necessary as of such date to market Bonds in an Auction
Rate Period at a price equal to the principal amount thereof; provided that such
interest  rate shall not exceed the  Maximum  Allowed  Rate.  After the  initial
Auction Period, each Auction Period shall be a 7-day Auction Period, unless such
Auction  Period is  adjusted  or changed  to a daily,  14-day,  28-day,  35-day,
three-month,  six-month or a Special Rate Period in  accordance  with Appendix B
hereto.  For any other Auction Period that is not an initial Auction Period, the
Auction Period Rate shall be the rate of interest  determined in accordance with
Appendix B.

     To the extent that the Interest  Rate Mode that is  applicable to the Bonds
is changed to an Auction Rate Period,  the initial  Auction  Period  immediately
after such Change in the Interest Rate Mode shall  commence from and include the
effective  date of such Change in the Interest Rate Mode and shall expire on and
include the initial  Auction Date.  The initial  Auction Date (which will be the
day of the week on which Auctions will generally be conducted) immediately after
any Change in the Interest  Rate Mode to an Auction  Rate  Period,  shall be the
date determined and certified to the Trustee (with a copy to the Authority,  the
Remarketing  Agent,  the  Broker-Dealer(s),  the  Auction  Agent and the Support
Facility Issuer (if any)) by the Company on or before the effective date of such
Change in the  Interest  Rate Mode.  The  Auction  Period  Rate for any  initial
Auction  Period  immediately  after any Change in the  Interest  Rate Mode to an
Auction Rate  Period,  shall be the rate of interest  per annum  determined  and
certified to the Trustee (with a copy to the Authority,  the Remarketing  Agent,
the Auction Agent,  the other  Broker-Dealers,  if any, and the Support Facility
Issuer (if any)) by the  Broker-Dealer  designated  by the Company on a date not
later than the  effective  date of such Change in the Interest  Rate Mode as the
minimum rate of interest which, in the opinion of such  Broker-Dealer,  would be
necessary  as of such date to market  Bonds in an Auction Rate Period at a price
equal to the principal  amount  thereof;  provided that such interest rate shall
not exceed the Maximum  Allowed Rate.  After the initial  Auction  Period,  each
Auction Period shall be an Auction Period  certified to the Trustee (with a copy
to the Authority, the Remarketing Agent, the Broker-Dealer(s), the Auction Agent
and the  Support  Facility  Issuer  (if any)) by the  Company  on or before  the
effective  date of the Change in the  Interest  Rate  Period to an Auction  Rate
Period,  unless such  Auction  Period is adjusted or changed to a daily,  7-day,
14-day,  28-day,  35-day,  three-month,  six-month  or a Special  Rate Period in
accordance  with Appendix B hereto.  For any other Auction Period that is not an
initial  Auction  Period,  the Auction Period Rate shall be the rate of interest
determined in accordance with Appendix B.


                                       35
<PAGE>


     If the Auction  Rate on the Bonds shall be the Maximum  Allowed  Rate for a
period (A) in excess of  forty-five  (45) days,  the Company  agrees to take all
steps  necessary  to ensure that the Auction  Rate does not exceed the  interest
rate payable on similar  securities (taking into account the interest period and
enhanced/insured rating of the Bonds) or (B) in excess of seventy (70) days, the
Bond Insurer may in its discretion direct the Company to direct the Authority to
cause a Change in the  Interest  Rate Mode to a Fixed  Rate or to an  Adjustable
Rate, in each case at the lowest  interest rate that will permit the Remarketing
Agent to sell all the Bonds on the effective date of such Change in the Interest
Rate Mode at a price equal to 100% of the principal amount thereof, plus accrued
interest  thereon.  If an Event of Default shall have occurred and be continuing
under the  Indenture or the Company fails to cause a Change in the Interest Rate
Mode  applicable  to the Bonds to another  interest rate mode as required by the
foregoing sentence, the Bond Insurer may, in its discretion,  direct a Change in
the Interest Rate Mode to a Fixed Rate or any other interest rate mode.








                                       36
<PAGE>


                                   ARTICLE IV

                        CHANGES IN THE INTEREST RATE MODE

     Section 4.01. Optional Conversion to an Adjustable Rate by Authority. 1. At
the times specified below, the Bonds, in whole,  shall cease to bear interest at
the  Adjustable  Rate then  borne by the Bonds and shall bear  interest  at such
Adjustable  Rate as shall be specified by the  Authority,  at the request of the
Company,  in a written  notice  delivered at least 30 days prior to the proposed
effective  date of the  Change in the  Interest  Rate Mode to the  Trustee,  the
Remarketing  Agent,  the  Broker-Dealer,  the Registrar and Paying Agent and the
Company (and to the Auction Agent and the  Securities  Depository if such Change
in the Interest Rate Mode is to or from an Auction Period Rate) in substantially
the form  attached  hereto  as,  or  containing  substantially  the  information
contained in Exhibit A hereto.  A Change in the  Interest  Rate Mode may only be
effected on a day on which the  affected  Bonds may be redeemed at the option of
the  Authority.  A notice of Change in the Interest Rate Mode shall be effective
only if it is  accompanied  by the  consent of the Bond  Insurer and the form of
opinion  that Bond  Counsel  expects to be able to give to the  Authority on the
proposed  effective  date of such Change in the Interest Rate Mode to the effect
that such Change in the Interest Rate Mode is authorized by this  Indenture,  is
permitted  under the Act and will not have an adverse effect on the exclusion of
interest on such Bonds from gross income for federal income tax purposes.

     In the case of any Change in the  Interest  Rate Mode to a Term  Rate,  the
notice required by this Section 4.01 shall specify the length of the Calculation
Period and, unless otherwise specified, such Calculation Period shall thereafter
apply to the Bonds until a Change in the Interest Rate Mode effected pursuant to
this Section 4.01 or Section 4.02. Notwithstanding the foregoing, no Calculation
Period shall be  established  during a Term Rate Period unless the Trustee shall
receive by 2:00 p.m.,  New York City time, on the first day of such  Calculation
Period,  evidence satisfactory to it that on such date any nationally recognized
rating  agency has  determined  that the  ratings on the Bonds shall be at least
equal to the  ratings  assigned to the Bonds  before the Change in the  Interest
Rate Mode,  or, in the event the  Policy is no longer in effect,  that the Bonds
shall  be rated at  least  "A" by S&P or "A2" by  Moody's  or "A" by Fitch or an
equivalent  rating agency.  Any change in the  Calculation  Period during a Term
Rate Period shall be deemed an optional conversion pursuant to this Section 4.01
and may not be made unless all the requirements of a conversion pursuant to this
Section 4.01 are met.

     2. The Trustee shall mail, or cause the Registrar and Paying Agent to mail,
the notice  received  pursuant to subsection 1 of this Section 4.01 within three
(3) Business Days after receipt thereof to the Bondholders.

     3. A Change  in the  Interest  Rate  Mode to an  Adjustable  Rate  shall be
effective pursuant to Subsection 1 of this Section 4.01 only if

          (A) with  respect  to any  Change  in the  Interest  Rate Mode from an
     Auction Period Rate to an Adjustable Rate, the Trustee,  the Broker-Dealer,
     if any, and the Auction Agent (if any) shall receive:


                                       37
<PAGE>


               (i) a certificate  of an  Authorized  Company  Representative  in
          substantially the form attached hereto as, or containing substantially
          the information  contained in, Exhibit B hereto,  by no later than the
          tenth day prior to the  effective  date of such Change in the Interest
          Rate Mode stating that a written agreement between the Company and the
          Remarketing  Agent to remarket the Bonds on such  effective  date at a
          price of 100% of the principal  amount  thereof has been entered into,
          which  agreement  (x) may be  subject  to such  reasonable  terms  and
          conditions agreed to by the Remarketing Agent which in the judgment of
          the Remarketing Agent reflects the current market standards  regarding
          investment  banking  risk and (y) must  include a provision  requiring
          payment by the  Remarketing  Agent in same-day funds provided from the
          remarketing  of  such  Bonds  in  accordance   with  the   Remarketing
          Agreement,  from the proceeds of a Liquidity  Facility,  or from funds
          deposited with the Trustee or the Registrar and Paying Agent,  for any
          Bond tendered or deemed tendered;  and that a Liquidity Facility is in
          effect or has been  obtained by the Company  with respect to the Bonds
          if the Bonds are to bear interest at an Adjustable  Rate other than an
          Auction  Rate,  and  shall be in  effect  prior to such  Change in the
          Interest Rate Mode and thereafter for a period of at least 364 days;

               (ii) by 11:00 a.m.  (New York City  time) on the second  Business
          Day prior to the  effective  date of such Change in the Interest  Rate
          Mode  by  telecopy  or  other  similar   means,   a   certificate   in
          substantially the form attached hereto as, or containing substantially
          the information  contained in, Exhibit C hereto, from the Authority on
          behalf of the Company (y)  authorizing  the  establishment  of the new
          Adjustable  Rate and (z) confirming  that Bond Counsel has advised the
          Authority  that it  expects  to be able  to  give  an  opinion  on the
          effective  date of such Change in the Interest Rate Mode to the effect
          that such  Change in the  Interest  Rate  Mode is  authorized  by this
          Indenture,  is  permitted  under the Act and will not have an  adverse
          effect on the  exclusion of interest on the affected  Bonds from gross
          income for federal income tax purposes; and

          (B) with respect to any Change in the Interest Rate Mode,  the Trustee
     (and the Auction  Agent in the case of any Change in the Interest Rate Mode
     to or from an Auction  Period Rate),  shall receive by 4:00 p.m.,  New York
     City time, on the effective  date of such Change in the Interest Rate Mode,
     a certificate in  substantially  the form attached hereto as, or containing
     substantially  the  information  contained  in,  Exhibit D hereto,  from an
     Authorized Company  Representative that all of the Bonds tendered or deemed
     tendered  have been  purchased  at a price  equal to the  principal  amount
     thereof plus  premium,  if any,  plus any accrued and unpaid  interest with
     funds provided from the  remarketing  of such Bonds in accordance  with the
     Remarketing  Agreement or the  Broker-Dealer,  as the case may be, from the
     proceeds of a Liquidity Facility,  or from funds deposited with the Trustee
     or the Registrar and Paying Agent, as the case may be;

          (C) with respect to any Change in the Interest Rate Mode,  the Trustee
     (and the Auction  Agent in the case of any Change in the Interest Rate Mode
     to or  from an  Auction  Period  Rate)  shall  receive,  by  telephonic  or
     electronic  means,  promptly  confirmed in writing,  by 9:30 a.m. (New York
     City time) on the effective  date of such Change in the Interest Rate Mode,


                                       38
<PAGE>


     an Opinion of Bond Counsel  addressed to the  Authority  and the Trustee to
     the effect that such Change in the Interest Rate Mode is authorized by this
     Indenture,  is permitted  under the Act and will not have an adverse effect
     on the  exclusion  of interest on such Bonds from gross  income for federal
     income tax purposes;

          (D)  with  respect  to any  Change  in the  Interest  Rate  Mode to an
     Adjustable  Rate (other than to an Auction  Period Rate (subject to Section
     6.03.1(e) hereof)),  the Trustee shall receive a Liquidity Facility meeting
     the  requirements of this Indenture and the  Participation  Agreement on or
     prior to the effective  date of such Change in the Interest Rate Mode which
     is, by its terms, in effect on or prior to such effective date; and

          (E)  with  respect  to any  Change  in the  Interest  Rate  Mode to an
     Adjustable  Rate,  during  the time that the Bonds are  insured by the Bond
     Insurer,  the Bond Insurer and the Trustee shall receive by 2:00 p.m.,  New
     York City time, on the  effective  date of such Change in the Interest Rate
     Mode,  evidence  satisfactory  to them  that the  Bonds  shall  receive  an
     uninsured  rating of at least "A" by S&P or "A2" by Moody's or "A" by Fitch
     or an equivalent  rating by any nationally  recognized rating agency on the
     effective  date of such Change in the  Interest  Rate Mode and if the Bonds
     are not then insured by the Bond Insurer, the Trustee shall receive by 2:00
     p.m.,  New York City  time,  on the  effective  date of such  Change in the
     Interest  Rate Mode,  evidence  satisfactory  to it that the Bonds shall be
     rated  at  least  "A" by S&P or  "A2"  by  Moody's  or "A" by  Fitch  or an
     equivalent  rating  by  any  nationally  recognized  rating  agency  on the
     effective date of such Change in the Interest Rate Mode.

     If any of the conditions  referred to in (A) above are not met with respect
to any Change in the Interest Rate Mode from an Auction Period Rate, the Auction
Rate Bonds  shall not be  subject to  mandatory  tender for  purchase,  Existing
Owners shall  continue to hold their  Auction Rate Bonds and the Auction  Period
Rate for the next succeeding Auction Period shall be determined  pursuant to the
Auction  Procedures  applicable  to  the  Auction  Rate  Bonds.  If  any  of the
conditions  referred to in  (B),(C),(D)  or (E) above is not met with respect to
any Change in the Interest  Rate Mode from an Auction  Period Rate,  the Auction
Rate Bonds  shall not be  subject to  mandatory  tender for  purchase,  Existing
Owners  shall  continue to hold their Bonds and the Auction  Period Rate for the
next  succeeding  Auction  Period  shall  equal  the  Maximum  Auction  Rate  as
determined by the Auction Agent on the Auction Date for such Auction  Period and
the next succeeding Auction Period shall be a 7-day Auction Period.  Thereafter,
the Auction Period Rate for each  succeeding  Auction Period shall be determined
pursuant to the Auction  Procedures  applicable  to Auction  Rate Bonds and each
Auction  Period shall  continue to be a 7-day Auction Period until the length of
an Auction Period is changed  pursuant to Section  2.08(a) of Appendix B. If any
of the  conditions  referred  to in (B),  (C),  (D) or (E) above is not met with
respect to any  Change in the  Interest  Rate Mode from a Term  Rate,  the Bonds
shall  continue to bear  interest at the current Term Rate,  as the case may be,
and be subject to the provisions of this Indenture  applicable thereto while the
Bonds bear interest at such current Term Rate, as the case may be. If any of the
conditions  referred to in (B), (C), (D) or (E) above is not met with respect to
any Change in the  Interest  Rate Mode from an  Adjustable  Rate  (other than an
Auction  Period Rate or a Term Rate),  the Bonds shall continue to bear interest
at the  Current  Adjustable  Rate  and be  subject  to the  provisions  of  this
Indenture  applicable  thereto  while the Bonds bear  interest  at such  Current
Adjustable Rate;  provided,  however,  that  notwithstanding the failure to meet


                                       39
<PAGE>


such conditions, the Bonds shall remain subject to mandatory tender for purchase
on the date that would have been the  effective  date of the new  interest  rate
mode if all of such  conditions  were met on such date.  If any of the foregoing
conditions  for a Change in the Interest  Rate Mode from a Term Rate is not met,
the Trustee  shall mail,  or cause the Registrar and Paying Agent to mail to the
Authority,  the Company and the Holders notice thereof in substantially the form
attached hereto as, or containing  substantially  the information  contained in,
Exhibit E hereto  within 3 Business  Days after the  failure to meet any of such
conditions.

     Section  4.02.  Optional  Conversion  to a Fixed  Rate.  1.  The  Authority
reserves the right,  at the request of the Company,  to fix the rate of interest
per annum which Bonds will bear, in whole,  for the balance of the term thereof;
provided  however,  that the  Authority  shall not  exercise  such right and the
Company  shall not request the  Authority  to  exercise  such right  without the
consent of the Bond Insurer, and except on a day on which the affected Bonds may
be redeemed at the option of the Authority.  In the event the Authority,  at the
request of the Company, as herein provided, exercises its Option to Convert, the
Bonds so  converted  shall cease to bear  interest at the  Adjustable  Rate then
borne by the Bonds and shall  bear  interest  at a Fixed  Rate  until  maturity,
subject to the terms and conditions hereof (the date on which a Fixed Rate shall
take effect being herein called a "Fixed Rate Conversion  Date").  The Option to
Convert  may be  exercised  at any time  through a written  notice  given by the
Authority,  at the  direction of the Company,  not less than 30 nor more than 45
days  prior to the  proposed  Fixed Rate  Conversion  Date to the  Trustee,  the
Registrar and Paying Agent, the Remarketing Agent (and the Auction Agent and the
Securities  Depository in the case of any change to a Fixed Rate from an Auction
Period  Rate),  in  substantially  the form  attached  hereto as, or  containing
substantially  the  information  contained  in,  Exhibit A  hereto.  A notice of
conversion to a Fixed Rate shall be effective  only if it is  accompanied by the
form of opinion  that Bond Counsel  expects to give to the  Authority on a Fixed
Rate  Conversion  Date to the effect that the  establishment  of a Fixed Rate is
authorized by this  Indenture,  is permitted  under the Act and will not have an
adverse  effect on the exclusion of interest on such Bonds from gross income for
federal income tax purposes.

     2. The Trustee shall mail, or cause the Registrar and Paying Agent to mail,
the notice  received  pursuant to subsection 1 of this Section 4.02 within three
(3) Business Days after receipt thereof to the Holders.

     3. A Fixed Rate shall take effect only if

          (A) with  respect to a change to a Fixed  Rate from an Auction  Period
     Rate, the Trustee and the Auction Agent shall receive:

               (i) a certificate  of an  Authorized  Company  Representative  in
          substantially the form attached hereto as, or containing substantially
          the information  contained in, Exhibit B hereto,  by no later than the
          tenth day prior to a Fixed Rate Conversion Date stating that a written
          agreement  has been  entered  into by the Company and the  Remarketing
          Agent to remarket the Bonds affected on a Fixed Rate  Conversion  Date
          at a price of not less  than  100% of the  principal  amount  thereof,
          which written  agreement  (i) may be subject to  reasonable  terms and
          conditions  imposed by the Remarketing  Agent which in the judgment of


                                       40
<PAGE>


          the  Remarketing  Agent reflect  current  market  standards  regarding
          investment  banking risk and (ii) must  include a provision  requiring
          payment by the  Remarketing  Agent in same-day funds provided from the
          remarketing  of  such  Bonds  in  accordance   with  the   Remarketing
          Agreement,  from the proceeds of a Liquidity  Facility,  or from funds
          deposited with the Trustee or the Registrar and Paying Agent,  for any
          Auction Rate Bonds tendered or deemed tendered; and

               (ii) by 11:00 a.m.  (New York City  time) on the second  Business
          Day  prior to a Fixed  Rate  Conversion  Date,  by  telecopy  or other
          similar means, a certificate in substantially the form attached hereto
          as, or containing  substantially the information contained in, Exhibit
          C hereto,  from the Authority (y) authorizing the  establishment  of a
          Fixed Rate and (z) confirming  that Bond Counsel expects to be able to
          give an opinion on a Fixed Rate Conversion Date to the effect that the
          change to a Fixed Rate is authorized by this  Indenture,  is permitted
          under the Act and will not have an adverse  effect on the exclusion of
          interest  on the Bonds  from  gross  income  for  federal  income  tax
          purposes; and

          (B) with  respect to any change to a Fixed Rate the  Trustee  (and the
     Auction  Agent in the case of any  change to a Fixed  Rate from an  Auction
     Period Rate) receives on a Fixed Rate Conversion Date:

               (i) by 9:30 a.m.  (New York City time) an Opinion of Bond Counsel
          addressed  to the  Authority  and the  Trustee to the effect  that the
          conversion  to a  Fixed  Rate is  authorized  by  this  Indenture,  is
          permitted  under  the Act and will not have an  adverse  effect on the
          exclusion  of  interest  on such Bonds from gross  income for  federal
          income tax purposes;

               (ii)  by  4:00  p.m.  (New  York  City  time)  a  certificate  in
          substantially the form attached hereto as, or containing substantially
          the  information  contained in,  Exhibit D hereto,  from an Authorized
          Company  Representative  that  all of the  Bonds  tendered  or  deemed
          tendered have been purchased at a price equal to the principal  amount
          thereof plus  premium,  if any,  plus any accrued and unpaid  interest
          with funds  provided from the  remarketing of such Bonds in accordance
          with the  Remarketing  Agreement,  from the  proceeds  of a  Liquidity
          Facility,  or from funds  deposited  with the Trustee or the Registrar
          and Paying Agent; and

               (iii)  during  the time that the Bonds  are  insured  by the Bond
          Insurer,  the Bond Insurer and the Trustee shall receive by 2:00 p.m.,
          New York  City  time,  on the Fixed  Rate  Conversion  Date,  evidence
          satisfactory to them that the Bonds shall receive an uninsured  rating
          of at  least  "A" by S&P or  "A2" by  Moody's  or "A" by  Fitch  or an
          equivalent  rating by any nationally  recognized  rating agency on the
          Fixed Rate  Conversion  Date, and if the Bonds are not then insured by
          the Bond Insurer,  the Trustee  shall  receive by 2:00 p.m.,  New York
          City time, on the Fixed Rate Conversion Date, evidence satisfactory to
          it that the  Bonds  shall  be  rated  at  least  "A" by S&P or "A2" by
          Moody's  or "A" by Fitch or an  equivalent  rating  by any  nationally
          recognized rating agency on the Fixed Rate Conversion Date.


                                       41
<PAGE>


     In  addition,  by 2:00 p.m.  (New York City  time) the Bond  Insurer  shall
receive  evidence  satisfactory to it that the Bonds shall be rated at least "A"
by S&P or "A2"  by  Moody's  or "A" by  Fitch  or an  equivalent  rating  by any
nationally recognized rating agency on the Fixed Rate Conversion Date. If any of
the conditions referred to in (A) above is not met with respect to any Change in
the Interest Rate Mode from an Auction Period Rate, the Auction Rate Bonds shall
not be subject to mandatory tender for purchase,  Existing Owners shall continue
to hold  their  Auction  Rate  Bonds and the  Auction  Period  Rate for the next
succeeding Auction Period shall be determined pursuant to the Auction Procedures
applicable to the Auction Rate Bonds.  If any of the  conditions  referred to in
(B) above is not met with respect to any Change in the  Interest  Rate Mode from
an Auction Period Rate, the Auction Rate Bonds shall not be subject to mandatory
tender for purchase,  Existing Owners shall continue to hold their Bonds and the
Auction  Period  Rate for the next  succeeding  Auction  Period  shall equal the
Maximum  Auction Rate as determined on the Auction Date for such Auction  Period
and  the  next  succeeding  Auction  Period  shall  be a 7-day  Auction  Period.
Thereafter,  the Auction Period Rate for each succeeding Auction Period shall be
determined  pursuant to the Auction Procedures  applicable to Auction Rate Bonds
and each Auction  Period shall  continue to be a 7-day Auction  Period until the
length of an Auction Period is changed  pursuant to Section  2.08(a) of Appendix
B. If any of the conditions  referred to in (B) above is not met with respect to
any Change in the Interest Rate Mode from a Term Rate to a Fixed Rate, the Bonds
shall  continue to bear  interest at the current Term Rate and be subject to the
provisions of this Indenture applicable thereto while the Bonds bear interest at
such current Term Rate. If any of the conditions referred to in (B) above is not
met  with  respect  to any  other  Change  in the  Interest  Rate  Mode  from an
Adjustable  Rate (other  than an Auction  Period Rate or a Term Rate) to a Fixed
Rate, the Bonds shall continue to bear interest at the Current  Adjustable  Rate
and be subject to the provisions of this Indenture  applicable thereto while the
Bonds bear interest at such Current  Adjustable Rate;  provided,  however,  that
notwithstanding  the failure to meet such  conditions,  the Bonds  shall  remain
subject to  mandatory  tender for  purchase on the date that would have been the
effective  date of the  Fixed  Rate if all of such  conditions  were met on such
date. If any of the foregoing  conditions for a Change in the Interest Rate Mode
from a Term Rate to a Fixed Rate is not met,  the Trustee  shall mail,  or cause
the  Registrar  and Paying Agent to mail to the  Authority,  the Company and the
Holders  notice  thereof  in  substantially  the form  attached  hereto  as,  or
containing substantially the information contained in, Exhibit E hereto within 3
Business Days after the failure to meet any of such conditions.

     Section 4.03. Conversion Generally. 1. Upon any Change in the Interest Rate
Mode to an Auction  Period Rate,  the Authority and the Trustee,  shall take all
steps  necessary  to comply with any  agreement  entered  into with a Securities
Depository  or its nominee  pursuant  to Section  2.03(5)  with  respect to such
Change in the Interest Rate Mode,  including,  without limitation,  the purchase
and designation of sufficient  CUSIP numbers to comply with the  requirements of
such Securities Depository following any such Change in the Interest Rate Mode.

     2. The  interest  rate on less  than all Bonds  may be  converted  to a new
Adjustable  Rate pursuant to Section 4.01 or to a Fixed Rate pursuant to Section
4.02;  provided that the Bond Insurer consents to such partial  conversion,  and
that the particular Bonds to be converted shall be chosen by the Trustee by lot,
or the Trustee  shall direct the Registrar and Paying Agent to so choose by lot;
provided further, however, that the portion of any Bond to be converted shall be


                                       42
<PAGE>


in the  principal  amount of  $100,000 or any  integral  multiple of such amount
during a Commercial Paper Rate Period, a Daily Rate Period, a Weekly Rate Period
or a Monthly Rate Period,  $25,000 or any integral  multiple  thereof  during an
Auction Rate Period,  or $5,000 or any  integral  multiple  thereof at any other
time and that, in selecting Bonds for  conversion,  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 in excess of
$100,000 by $100,000 during a Commercial Paper Rate Period, a Daily Rate Period,
a Weekly Rate Period or a Monthly  Rate Period,  $25,000  during an Auction Rate
Period, and $5,000 at any other time (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 $100,000,  $25,000 or $5,000 units of principal  amount
represented  by any such Bond is to be converted,  then upon notice of intention
to convert such  $100,000,  $25,000 or $5,000 unit or units pursuant to Sections
4.01 or 4.02,  as the case may be, the  Holders of such  Bonds  shall  forthwith
surrender  such Bonds to the  Registrar  and Paying Agent for (1) payment of the
Purchase Price  (including the premium,  if any, and accrued and unpaid interest
to the date fixed for  conversion)  of the  $100,000,  $25,000 or $5,000 unit or
units of principal  amount called for conversion and (2) exchange for a new Bond
or Bonds in the  aggregate  principal  amount of the balance of the principal of
such  Bonds not  subject  to  conversion.  If the  Holders of any such Bond of a
denomination greater than $100,000, $25,000 or $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
conversion  to the extent of the  $100,000,  $25,000 or $5,000  unit or units of
principal amount subject to such conversion (and to that extent only).

     3.  Notwithstanding  anything  in  this  Article  IV to the  contrary,  the
Authority  may not effect a Change in the Interest Rate Mode pursuant to Section
4.01 and the  Authority  may not  exercise its option to convert to a Fixed Rate
pursuant  to Section  4.02:  (i) if such action  would  require the payment of a
premium upon purchase of Bonds  pursuant to Section 5.04 unless there shall have
been  deposited  the full amount of such premium in trust with the Trustee prior
to any  notification  of a change  pursuant to Section 4.01 or 4.02; and (ii) if
the  request  of the  Company  to convert  the Bonds is not  accompanied  by the
consent of the Bond Insurer.



                                       43
<PAGE>


                                   ARTICLE V

                        REDEMPTION AND PURCHASE OF BONDS

     Section  5.01.  Optional   Redemption.   The  Bonds  shall  be  subject  to
redemption,  in  whole or in  part,  at the  option  of the  Authority  upon the
direction of the Company,  from related payments made by the Company pursuant to
Section 4.02 of the Participation  Agreement and the Company  Obligation and any
other monies held by the Trustee in the Bond Fund and specifically  available to
be applied to the  redemption  of Bonds as  provided  in this  Section  5.01 and
Section 10.03 hereof:

          (a)  During any  Commercial  Paper Rate  Period,  such Bonds  shall be
     subject to redemption on each Interest Payment Date, as a whole or in part,
     at the principal amount thereof, at a redemption price equal to 100% of the
     principal amount.

          (b)  During any  Auction  Rate  Period,  Auction  Rate Bonds  shall be
     subject to  redemption  on the Business  Day  immediately  succeeding  each
     Auction Date, as a whole or in part, at a redemption price equal to 100% of
     the principal  amount thereof plus accrued and unpaid  interest to the date
     fixed for redemption;  provided, however, that not less than $10,000,000 in
     aggregate  principal  amount of the Bonds be outstanding  unless  otherwise
     consented to by the Broker-Dealers.

          (c)  During  any Daily Rate  Period,  such  Bonds  shall be subject to
     redemption  on any Business  Day, as a whole or in part,  at the  principal
     amount  thereof,  plus  accrued  and unpaid  interest to the date fixed for
     redemption, if any.

          (d) During  any Weekly  Rate  Period,  such Bonds  shall be subject to
     redemption  on any Business  Day, as a whole or in part,  at the  principal
     amount  thereof,  plus  accrued  and unpaid  interest to the date fixed for
     redemption, if any.

          (e) During any  Monthly  Rate  Period,  such Bonds shall be subject to
     redemption  on each  Interest  Payment  Date, as a whole or in part, at the
     principal amount thereof.

          (f) During any Semi-annual Rate Period, such Bonds shall be subject to
     redemption  on each  Interest  Payment  Date, as a whole or in part, at the
     principal amount thereof.

          (g)  During any Term Rate or Fixed Rate  Period,  such Bonds  shall be
     subject to  redemption  in whole at any time on any Business Day or in part
     on any Interest  Payment Date as follows:  after the No-Call Period,  which
     shall begin on the first day of the Calculation  Period  applicable to such
     Bonds  or on a Fixed  Rate  Conversion  Date,  as the  case  may  be,  at a
     redemption price equal,  initially, to the principal amount thereof, plus a
     premium equal to the percentage of the principal amount to be redeemed (the
     "Initial Premium"),  plus accrued and unpaid interest if paid on a Business
     Day other than an Interest  Payment Date. The premium  percentage,  if any,
     shall decline by the percentage shown in the Reduction in Premium column on
     each anniversary of the date on which such Bonds are first redeemable until
     the Bonds shall be redeemable without premium.


                                       44
<PAGE>

<TABLE>
<CAPTION>

         Calculation Period or Period to Maturity
         Applicable to Subject Bonds

   Equal to or                 But Less               No-Call                Initial               Reduction
   Greater Than                  Than                 Period                 Premium               in Premium
   ------------                  ----                 ------                 -------               ----------
<S>     <C>                 <C>                 <C>                           <C>                   <C>
        18 years                  N/A                 8 Years                  1 1/2%                1/2%
        12 years             18 Years                 6 Years                  1                     1/2
         7 Years             12 Years                 3 Years                  0                     0
         5 Years              7 Years                 2 Years                  0                     0
         4 Years              5 Years                 2 Years                  0                     0
         3 Years              4 Years                 2 Years                  0                     0
         0 Years              3 Years            Not callable
</TABLE>


If upon  establishment of a Term Rate Period or a Fixed Rate Period, as the case
may be, the  Remarketing  Agent  certifies to the Trustee,  Bond Counsel and the
Authority in writing that the schedule is not  consistent  with  then-prevailing
market  conditions,  the  Authority at the request of the Company may revise the
Initial Premium,  Reductions in Premium and No-Call Periods without the approval
of the Holders to reflect then-prevailing market conditions,  upon receipt of an
opinion of Bond  Counsel  to the  effect  that any  revisions  pursuant  to this
paragraph,  either by  itself  or in  conjunction  with the  establishment  of a
Calculation  Period or a Fixed Rate,  as the case may be, are made in accordance
with this Indenture,  is permitted  under the Act and will not adversely  affect
the exclusion of interest on the Bonds from gross income for federal  income tax
purposes.

     Section 5.02. [Reserved]

     Section 5.03.  Tender for and Purchase  upon Election of Holder.  1. During
any Daily Rate Period or Weekly Rate  Period,  any Bond or portion  thereof in a
principal  amount equal to an authorized  denomination (so long as the principal
amount not  purchased is an authorized  denomination)  shall be purchased on the
demand  of the  Holder  thereof  on any  Business  Day at a price  equal  to the
principal amount thereof plus accrued and unpaid  interest,  if any, to the date
of purchase, upon delivery to the Registrar and Paying Agent and the Remarketing
Agent at the Principal  Corporate Trust Office,  by the close of business on any
Business  Day of a Notice  of  Election  to  Tender  in  substantially  the form
attached hereto as, or containing  substantially  the information  contained in,
Exhibit  F hereto;  provided,  however,  that the  substance  of such  Notice of
Election to Tender must also be given in writing to the Remarketing  Agent prior
to or simultaneously  with delivery of such written Notice of Election to Tender
to the Remarketing  Agent. The date on which such Bond shall be purchased shall,
at the request of the Holder  thereof  (i) if the Bond then bears  interest at a
Daily Rate, be the date of delivery of such Notice of Election to Tender if such
Notice of Election to Tender is delivered to the  Registrar and Paying Agent and
the Remarketing  Agent by 10:00 a.m. (New York City time) on such date or may be
any  Business  Day  thereafter,  and (ii) if the Bond then bears  interest  at a
Weekly Rate,  shall be a Business  Day not prior to the 7th day next  succeeding
the date of the  delivery of such Notice of Election to Tender to the  Registrar
and Paying Agent and the Remarketing Agent.


                                       45
<PAGE>


     2. During any Monthly Rate Period or Semi-annual  Rate Period,  any Bond or
portion thereof in a principal  amount equal to an authorized  denomination  (so
long as the principal amount not purchased is an authorized  denomination) shall
be  purchased  on the demand of the Holder  thereof  on the first  Business  Day
following  each  Calculation  Period at a price  equal to the  principal  amount
thereof,  upon delivery to the  Registrar  and Paying Agent and the  Remarketing
Agent, at the Principal Corporate Trust Office of a Notice of Election to Tender
in  substantially  the form attached hereto as or containing  substantially  the
information  contained  in Exhibit F on or prior to a Business  Day which is not
less than 10 days, in the case of Bonds bearing interest at a Semi-annual  Rate,
or 7-days, in the case of Bonds bearing interest at a Monthly Rate, prior to the
proposed date of purchase;  provided, however, that the substance of such Notice
of  Election to Tender  must also be given in writing to the  Remarketing  Agent
prior to or  simultaneously  with delivery of such written Notice of Election to
Tender to the Remarketing Agent.

     3.  Immediately  upon  receipt of a Notice of Election to Tender  delivered
pursuant to the  provisions of this Section 5.03, the Registrar and Paying Agent
shall notify, or cause to be notified,  the Trustee,  the Company, the Authority
and the Remarketing Agent, by telephone,  promptly confirmed in writing, of such
receipt, specifying the contents thereof.

     4. Any Notice of Election to Tender shall be irrevocable. If a Holder fails
to deliver  the Bonds  referred to in such  notice to the  Registrar  and Paying
Agent,  such Bonds shall  nevertheless  be deemed to have been  purchased on the
date  established  for the purchase  thereof,  no interest  shall accrue on such
Bonds from and after the date of purchase  and such Holder shall have no rights,
benefit or security  hereunder  thereafter as the owner of such Bonds except the
right to receive the Purchase Price of such Bonds.

     5. A  Holder  may not  tender  a Bond to the  Registrar  and  Paying  Agent
pursuant to this  Section  while such Bond bears  interest at an Auction  Period
Rate, Commercial Paper Rate, Term Rate or Fixed Rate.

     6. In the  event  there  is a  failure  to pay  pursuant  to the  Liquidity
Facility by the Liquidity Facility Provider,  the Company may purchase the Bonds
with the consent of the Bond Insurer and the Authority.

     Section  5.04.  Mandatory  Tender for Purchase  upon Change in the Interest
Rate Mode or on Business Day Following Certain  Calculation  Periods.  1. Upon a
Change in the Interest Rate Mode, the Bonds shall be subject to mandatory tender
for purchase in accordance with the terms hereof,  on the effective date of such
Change in the Interest Rate Mode at the Purchase Price.

     2. During any Term Rate Period or Commercial  Paper Rate Period,  the Bonds
shall be subject to mandatory  tender for purchase in accordance  with the terms
hereof on the Business Day immediately  following each Calculation  Period, each
at a price equal to the Purchase Price.


                                       46
<PAGE>


     3. Notice of mandatory  tender for  purchase  upon a Change in the Interest
Rate Mode  shall be in  substantially  the form  attached  hereto as, or contain
substantially the information contained in, Exhibit A hereto.

     4. Any such  notice of  mandatory  tender  for  purchase  required  by this
Section 5.04 shall be given by the Trustee, in the name of the Authority, or the
Trustee  shall cause the  Registrar  and Paying  Agent to give such notice (with
copies thereof to be given to the  Remarketing  Agent,  the Registrar and Paying
Agent,  the Company,  and in the case of Auction Rate Bonds,  the Auction Agent,
the  Broker-Dealer  and the Authority) by first-class mail to the Holders of the
Bonds subject to purchase at their addresses shown on the books of registry.

     5.  Bonds  held by or for the  account  of the  Company  or the issuer of a
Support  Facility are not subject to mandatory  tender for purchase  pursuant to
this Section 5.04.

     Section  5.05.  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
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.  While  the  Bonds  bear
interest at an Auction  Period  Rate,  in any Auction  Period other than a daily


                                       47
<PAGE>


Auction  Period,  the  redemption  shall  occur  on the  Interest  Payment  Date
immediately  preceding such redemption date. When in a Special Rate Period,  the
Bonds  may be  redeemed  prior  to  the  end of the  Special  Rate  Period.  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
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  5.06.  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,  the  Bonds on any  Interest  Payment  Date not less than
twenty  years  after  the  Closing  Date.  Any  such  redemption  shall  be at a
redemption price equal to the optional  redemption price, if any,  applicable on
such date set forth in Section 5.01 or if no such optional  redemption  price is
applicable at a redemption  price of 105% of the principal  amount  thereof,  in
either  case,  together  with accrued and unpaid  interest,  if any, to the date
fixed  for  redemption,  all in the  manner  provided  in this  Article  V.  The
Authority  shall  deposit any such funds  received by it with the Trustee.  Upon
such redemption and notwithstanding  anything to the contrary in this Indenture,
the Trustee shall assign the Company  Obligation  relating to the Bonds to or as
directed by the Authority.


                                       48
<PAGE>


     Section 5.07.  Mandatory Tender for Purchase Upon Expiration of any Support
Facility  or Upon  Delivery  of an  Alternate  Support  Facility.  1.  Except as
otherwise  set forth in the last  sentence  of this  subsection  1, on the third
Business Day next preceding the date of expiration of any Support Facility,  the
Bonds shall be subject to mandatory purchase at the Purchase Price, unless on or
prior to the 35th day prior to such date of expiration  the Company on behalf of
the  Authority  has  furnished  to the  Trustee  an  extension  of such  Support
Facility.  The Bonds shall also be subject to mandatory purchase at the Purchase
Price, on the date there is delivered an Alternate  Support Facility meeting the
requirements  of Section  6.02.  No tender for  purchase  of any Bonds  shall be
required pursuant to this Section 5.07 during any Auction Rate Period or a Fixed
Rate Period.

     2. Notice of the  mandatory  tender for  purchase  pursuant to this Section
5.07 shall be given on or prior to the 30th day before  the  expiration  date of
the  expiring  Liquidity  Facility  or on or prior to the  30th day  before  the
delivery of any Alternate  Support  Facility meeting the requirements of Section
6.02,  as the case may be, by the  Trustee  in the name of the  Authority  (with
copies thereof given to the Authority,  the Remarketing  Agent,  the issuer of a
Liquidity  Facility,  the  Company  and  the  Registrar  and  Paying  Agent)  by
first-class  mail to the Holders of the Bonds  subject to  mandatory  tender for
purchase at their addresses shown on the books of registry. Such notice shall be
in  substantially  the form  attached  hereto as, or contain  substantially  the
information contained in, Exhibit G hereto.

     3.  Bonds  held by or for the  account  of the  Company  or the issuer of a
Liquidity  Facility are not subject to mandatory tender for purchase pursuant to
this Section 5.07.

     Section 5.08. Mandatory Tender Upon Occurrence of any Terminating Event. 1.
Except as otherwise  set forth in the last  sentence of this  subsection 1, upon
the occurrence of any Terminating Event, the Bonds shall be subject to mandatory
tender for  purchase at the  Purchase  Price on a Business  Day  selected by the
Trustee; provided, however, that (i) such mandatory tender shall not occur later
than the 5th day after receipt of notice of the Terminating Event by the Trustee
and (ii) such mandatory  tender date shall be a Business Day. The Bonds will not
be subject to mandatory tender for purchase pursuant to this Section 5.08 during
any Auction Rate Period or a Fixed Rate Period.

     2. Notice of the  mandatory  tender for  purchase  required by this Section
5.08  shall  be in  substantially  the  form  attached  hereto  as,  or  contain
substantially the information  contained in, Exhibit G hereto and shall be given
to the Holders of the Bonds  subject to  mandatory  tender for purchase at their
addresses  shown on the books of  registry on or before the first  Business  Day
after receipt of notice of a Terminating  Event from the issuer of the Liquidity
Facility by the  Trustee,  in the name of the  Authority,  or the Trustee  shall
cause the Registrar and Paying Agent to give such notice, by first-class mail to
the Holders of the Bonds subject to purchase at their address shown on the books
of registry (with copies thereof given to the Authority,  the Remarketing Agent,
the Company and the Registrar and Paying Agent).

     3.  Bonds  held by or for the  account  of the  Company  or the issuer of a
Liquidity  Facility are not subject to mandatory tender for purchase pursuant to
this Section 5.08.


                                       49
<PAGE>


     Section  5.09.  General  Provisions  Applicable  to Mandatory  and Optional
Tenders for Purchase of Bonds.  1. If interest has been paid on the Bonds, or an
amount  sufficient to pay interest  thereon has been deposited in the Bond Fund,
or an amount  sufficient to pay accrued interest  thereon,  if any, has been set
aside in the Bond Purchase Fund held under the Bond  Purchase  Trust  Agreement,
and the Purchase  Price shall be available in the Bond Purchase Fund for payment
of Bonds subject to tender for purchase  pursuant to Section 5.03, 5.04, 5.07 or
5.08, and if any Holder fails to deliver or does not properly  deliver the Bonds
to the  Registrar  and Paying Agent for which a Notice of Election to Tender has
been properly filed or which are subject to mandatory tender for purchase on the
purchase date therefor,  such Bonds shall  nevertheless  be deemed  tendered and
purchased on the date  established for the purchase  thereof,  no interest shall
accrue on such Bonds from and after the date of purchase and such former Holders
shall have no rights, benefits or security hereunder as the registered owners of
such Bonds,  except the right to receive the  Purchase  Price of and interest to
the purchase date, if any, on such Bonds upon delivery  thereof to the Registrar
and Paying Agent in accordance with the provisions  hereof. The purchaser of any
such Bonds  remarketed by the  Remarketing  Agent,  or the issuer of any Support
Facility,  to the extent Bonds are purchased  with the proceeds of a draw on, or
borrowing  or  payment  under,  the  Support  Facility,  shall be treated as the
registered owner thereof for all purposes of the Indenture. The payment of Bonds
pursuant  to  Section  5.03  shall be  subject  to  delivery  of such Bonds duly
endorsed  in blank for  transfer or  accompanied  by an  instrument  of transfer
thereof in form satisfactory to the Registrar and Paying Agent executed in blank
for transfer at the Principal Corporate Trust Office of the Registrar and Paying
Agent at or prior to 10:00 a.m.  (11:30 a.m. for Bonds  bearing  interest at the
Weekly  Rate and 12:00 noon for Bonds  bearing  interest at the Daily Rate) (New
York City time),  on a specified  purchase  date. The Registrar and Paying Agent
may refuse to make  payment  with  respect to any Bonds  tendered  for  purchase
pursuant to Section 5.03,  5.04, 5.07 or 5.08 not endorsed in blank or for which
an instrument of transfer satisfactory to the Registrar and Paying Agent has not
been provided.

     2. The Purchase  Price of Bonds subject to tender for purchase  pursuant to
Section 5.03,  5.04, 5.07 or 5.08 in an aggregate  principal  amount of at least
one million dollars ($1,000,000) shall be payable in immediately available funds
or by wire transfer upon written notice from the Holder  thereof  containing the
wire transfer address (which shall be in the continental United States) to which
such  Holder  wishes to have  such  wire  directed,  if such  written  notice is
received by the  Registrar and Paying Agent not less than five days prior to the
related purchase date.

     3. Bonds subject to mandatory tender for purchase  pursuant to Section 5.07
or 5.08 shall not be remarketed  unless and until an Alternate  Support Facility
meeting the  requirements  of Section 6.02 of the Indenture is in full force and
effect;  provided,  however,  that Bonds may be remarketed and no such Alternate
Support  Facility  is  required  to be in  effect  if, at the time the Bonds are
sought to be remarketed,  the Bonds bear interest at an Auction Period Rate or a
Fixed Rate.

     4. In the event Bonds  tendered  for  purchase  pursuant to Section 5.03 or
5.04 shall be paid from a drawing under a Liquidity  Facility,  such Bonds shall
not be remarketed unless and until the Trustee or the Registrar and Paying Agent
has been  notified by the  Liquidity  Facility  Issuer and, upon receipt of such
notice,  the  Trustee  or the  Registrar  and  Paying  Agent  has  notified  the
Remarketing  Agent that the amount  available for a drawing under such Liquidity
Facility has been restored.


                                       50
<PAGE>


     Section  5.10.  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 Support Facility  pursuant to any Support  Facility,  (b)
second, from Bonds for which the Registrar and Paying Agent has received,  prior
to such  selection,  a Notice of Election to Tender  requiring the Registrar and
Paying  Agent to  purchase  such  Bonds on the date on  which  the  Bonds  being
selected  are  to  be  redeemed  and  (c)  third,  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  $100,000 or any  integral
multiple  thereof during a Commercial  Paper Rate Period, a Daily Rate Period, a
Weekly Rate Period or a Monthly  Rate Period,  $25,000 or any integral  multiple
thereof  during an  Auction  Rate  Period,  or $5,000 or any  integral  multiple
thereof at any other  time 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 in excess of $100,000 by $100,000 during a Commercial Paper Rate
Period,  a Daily Rate  Period,  a Weekly Rate Period or a Monthly  Rate  Period,
$25,000  during an  Auction  Rate  Period,  and  $5,000 at any other  time (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 $100,000,
$25,000 or $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 $100,000,
$25,000 or $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  $100,000,  $25,000 or $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 $100,000,  $25,000 or $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 $100,000,  $25,000 or $5,000 unit or units of principal amount
called for redemption (and to that extent only).

     Section 5.11.  Notice of  Redemption.  1. Notice of redemption  pursuant to
this Article V 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. A copy of
such notice of redemption  shall be given by the Trustee to the Auction Agent at
least 30 days  prior to the date fixed for  redemption.  Any  redemption  may be
conditioned  on  the  receipt  of  moneys  by the  Registrar  and  Paying  Agent


                                       51
<PAGE>


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.

     2. 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
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.

     3. If less  than  all of the  Auction  Rate  Bonds  of a  Series  are to be
redeemed and such Auction Rate Bonds are held by the Securities Depository,  the
Trustee shall include in the notice of  redemption  delivered to the  Securities
Depository: (i) under an item entitled "Publication Date for Security Depository
Purposes," a date that is three Business Days after the Auction Date immediately
preceding  such  redemption  date;  and (ii) an  instruction  to the  Securities
Depository to (x) determine on such  Publication  Date after the Auction held on
the immediately  preceding Auction Date has settled,  the Securities  Depository
participants  whose  Security  Depository  positions  will be  redeemed  and the
principal  amount  of such  Auction  Rate  Bonds to be  redeemed  from each such
position (the "Securities  Depository Redemption  Information"),  and (y) notify
the  Trustee  immediately  after  such  determination  of the  positions  of the
Securities  Depository  participants  in such  Auction  Rate  Bonds  immediately
following  such Auction  settlement,  and the Securities  Depository  Redemption
Information.  Immediately  upon receipt of the notice  referred to in (x) of the
preceding sentence,  the Trustee shall send a copy of such notice to the Auction
Agent.

     Section 5.12.  Bonds  purchased for account of Liquidity  Facility  Issuer.
Bonds subject to mandatory purchase pursuant to Section 5.03, 5.04, 5.07 or 5.08
shall be  deemed  to be  purchased  by the  Company  except  to the  extent  the
Liquidity  Facility expressly provides that the Bonds are to be purchased by the
issuer of the Liquidity Facility in which event such Bonds shall be deemed to be
purchased by the issuer of the Liquidity Facility in a principal amount equal to
the amount of a draw on, or borrowing or payment under,  the Liquidity  Facility
for the  payment  of  Bonds  subject  to  purchase,  upon the  deposit  with the
Registrar  and Paying  Agent of the  proceeds of such draw on, or  borrowing  or
payment  under,  the  Liquidity  Facility in an amount equal to the principal of
such Bonds plus accrued  interest  thereon to the purchase  date, and such Bonds
shall not be deemed paid and shall remain outstanding hereunder until the issuer
of the Liquidity  Facility has been  reimbursed for such draws on, or borrowings
or payments  under,  the Liquidity  Facility to pay such principal and interest.
Unless the issuer of any Liquidity  Facility shall otherwise  direct,  any Bonds


                                       52
<PAGE>


purchased  by  the  issuer  of  the  Liquidity  Facility  shall  be  immediately
registered  in the  name of the  Company  except  to the  extent  the  Liquidity
Facility  expressly provides that the Bonds are to be purchased by the issuer of
the Liquidity Facility in which event such Bonds shall be registered in the name
of the  issuer  of the  Liquidity  Facility  as a Holder  and the  issuer of the
Liquidity  Facility  shall  have all  rights  of a Holder  of Bonds  under  this
Indenture.

     Section 5.13. 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 5.14.  Cancellation  of Redeemed  Bonds.  Any Bonds  surrendered or
redeemed  pursuant to the  provisions  of this Article shall be cancelled by the
Registrar and Paying Agent.








                                       53
<PAGE>


                                   ARTICLE VI

                                SUPPORT FACILITY

     Section 6.01.  Support  Facility - General.  Pursuant to the  Participation
Agreement,  as long as the Policy is in effect,  the  Company  has agreed not to
request that the interest  rate mode  applicable  to the Bonds be adjusted to an
Adjustable  Rate or a Fixed Rate unless on the effective  date of the applicable
Change in the Interest Rate Mode the Bonds shall  receive a long-term  rating of
at least "AAA" by S&P and "AAA" by Moody's,  and a short-term rating of at least
"A-1+" by S&P and "VMIG 1" by Moody's, or an equivalent rating by any nationally
recognized  rating agency,  as applicable.  If the Policy is not in effect,  the
Company may  request  that the  interest  rate mode  applicable  to the Bonds be
adjusted to an Adjustable  Rate or a Fixed Rate unless on the effective  date of
the  applicable  Change in the  Interest  Rate Mode the  Bonds  shall  receive a
long-term  rating of at least "A" by S&P and "A2" by  Moody's or "A" by Fitch or
an equivalent rating by any nationally  recognized rating agency, as applicable.
Such rating of the Bonds may, but is not required to, be achieved by obtaining a
Support  Facility which meets the  requirements  of this Article VI. The Company
has further agreed to maintain a Liquidity  Facility meeting the requirements of
the Participation  Agreement with respect to the Bonds at all times, except with
respect to Bonds bearing  interest at an Auction  Period Rate or a Fixed Rate. A
Liquidity  Facility also must be in effect on or prior to the effective  date of
any Change in the Interest Rate Mode to an Adjustable  Rate (other than a Change
in the Interest Rate Mode to an Auction Rate Period). Bond Insurer consent shall
be required for the  selection of the issuer of any  Liquidity  Facility and the
terms  thereof.  The Trustee  shall be  furnished  with a certified  copy of any
Support Facility obtained pursuant to this Section 6.01.

     Any Support Facility Issuer not located in New York State shall provide the
Trustee  with a list  of  holidays  on  which  it is  closed  through  the  next
succeeding  January 1 at the beginning of the term of such Support  Facility and
by January 1 of each year thereafter.

     Section 6.02.  Support Facility - Delivery of an initial Liquidity Facility
and  Alternate  Support  Facility.  1. At any time,  the  Authority  may, at the
request of the  Company,  provide for the  delivery to the Trustee of an initial
Liquidity  Facility or an Alternate  Support  Facility.  The termination date of
such initial Liquidity Facility or such Alternate Support Facility,  as the case
may be,  shall be a date not  earlier  than 364 days from its date of  issuance,
subject to earlier termination upon the occurrence of (i) a Terminating Event or
another  event of default  under the related  reimbursement  agreement  or other
corresponding agreement relating to such initial Liquidity Facility or Alternate
Support  Facility,  as the  case  may be,  (ii)  the  issuance  of an  alternate
Liquidity Facility or a subsequent  Alternate Support Facility,  as the case may
be,  (iii)  payment in full of the  Outstanding  Bonds or (iv) in the case of an
alternate Liquidity  Facility,  a Change in the Interest Rate Mode to an Auction
Rate Period or to a Fixed Rate. Any Liquidity Facility shall specifically allow,
in the case of  occurrence  of any event or events which under the terms of such
Liquidity  Facility or any agreement  providing  for the issuance  thereof would
cause  the  termination  or  expiration  of  such  Liquidity  Facility,  for the
mandatory  tender of Bonds  pursuant to Section 5.08 with a draw on or borrowing
or  payment  under  such  Liquidity   Facility  prior  to  such  termination  or
expiration.  At least 15 days  prior to the date of the  delivery  of an initial
Liquidity Facility or an Alternate Support Facility to the Trustee,  the Company
shall  furnish to the Trustee on behalf of the  Authority (a) an opinion of Bond


                                       54
<PAGE>


Counsel  addressed  to the Trustee  stating  that the  delivery of such  initial
Liquidity  Facility or Alternate  Support  Facility,  as the case may be, to the
Trustee is  authorized  under this  Indenture and complies with the terms hereof
and (b) in the case of an Alternate Support Facility,  confirmation from S&P, if
the Bonds are then rated by S&P,  from  Moody's,  if the Bonds are then rated by
Moody's,  or another rating  agency,  if the Bonds are then rated by such rating
agency,  to the  effect  that such  rating  agency  has  reviewed  the  proposed
Alternate  Support Facility and that the substitution of the proposed  Alternate
Support  Facility  for the Support  Facility  will not,  by itself,  result in a
reduction or withdrawal of its long or short-term  rating of the Bonds below the
rating  category of S&P or Moody's or such other rating agency,  as the case may
be, then in effect with respect to the Bonds.

     2. The  Authority may obtain an additional  Credit  Facility  Issuer if the
Bond  Insurer  receives a long-term  rating of less than "AA" by S&P and "AA" by
Moody's.

     3. Nothing contained herein shall prevent the Authority,  at the request of
the  Company  and with the  consent  of the Bond  Insurer,  from  delivering  an
Alternate  Support  Facility in substitution  for a Support  Facility which will
result in a decline in the  short-term  assigned to such Bonds by Moody's or S&P
or such  other  rating  agency as a result of the  Alternate  Support  Facility;
provided,  that (i) the opinion of Bond  Counsel  referred  to in the  preceding
paragraph is obtained;  provided  that such opinion  shall also be to the effect
that delivery of such Alternate  Support  Facility will not adversely affect the
exclusion  from gross  income of interest  on the Bonds for  federal  income tax
purposes  and (ii) all  Outstanding  Bonds are subject to  mandatory  tender for
purchase  pursuant to Section 5.07 (unless the Bonds bear interest at an Auction
Period Rate or a Fixed  Rate).  The  Authority,  or the Company on behalf of the
Authority,  shall  deliver  notice  to the  Trustee  of the  substitution  of an
Alternate  Support  Facility which will result in a decline in the short-term or
long-term ratings assigned to the Bonds pursuant to this subsection 2 of Section
6.02 at least forty-five (45) days before the date of substitution.

     Section   6.03.   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  6.04  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


                                       55
<PAGE>


          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.

          (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.


                                       56
<PAGE>


          (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 18.09.

     Section 6.04. 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 Section  15.02 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 clauses (a), (b) or (e)
of Section 15.02), 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


                                       57
<PAGE>


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.











                                       58
<PAGE>


                                  ARTICLE VII

                      GENERAL TERMS AND PROVISIONS OF BONDS

     Section 7.01.  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.

     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 7.02. 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 7.03. 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  7.02 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.


                                       59
<PAGE>


     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.

     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 7.04. 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.


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<PAGE>


     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.

     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 7.05. 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
principal  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.


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<PAGE>


     Nothing in this Indenture shall prevent the Authority from delivering,  and
the Authority is hereby  expressly  permitted to deliver,  Auction Rate Bonds in
typewritten form to the Securities Depository as registered owner thereof.

     Section 7.06.  Disposition of Bonds.  Any Bond surrendered to the Registrar
and  Paying  Agent for  payment  shall be  cancelled  upon such  payment  by the
Trustee. The Trustee shall dispose of any cancelled Bond which has been paid and
which  bears  any  date  two (2)  years  prior  to the  date of  disposition  in
accordance  with the  Trustee's  procedures  in effect  for the  disposition  of
cancelled securities as of the date of such disposition.  When the Trustee shall
dispose of any Bond, it shall deliver a certificate  of such  disposition to the
Authority and, at the written request of the Company, the Company.







                                       62
<PAGE>


                                  ARTICLE VIII
                         CORPORATION OBLIGATION PAYMENTS

     Section 8.01.  Company Obligation  Payments.  The Company will make Company
Obligation Payments pursuant to this Indenture and the Participation Agreement.

     Section  8.02.  Credits on the Company  Obligation  . The Company  shall be
entitled to receive a credit  against its  obligation  to pay the  principal 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.





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<PAGE>


                                   ARTICLE IX

                               THE PRIOR BOND FUND

     Section 9.01. 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 B
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.




                                       64
<PAGE>


                                   ARTICLE X

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

     Section  10.01.  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 B," 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  10.02.   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)(i)  During an Auction Rate  Period,  no later than 12:00 noon (New York
City time) on the Business Day next preceding each Interest  Payment Date,  into
the Bond Fund for credit to the Interest  Account an  aggregate  amount of funds
available  on the  next  Business  Day in The  City  of New  York  equal  to the
aggregate amount required for the payment of the interest payable on the Auction
Rate Bonds, on such Interest Payment Date.

     (ii) No later than 12:00 noon (New York City time) on each Interest Payment
Date, other than during an Auction Rate Period, 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.


                                       65
<PAGE>


     (b)(i)  During an Auction Rate  Period,  no later than 12:00 noon (New York
City time) on the second Business Day next preceding each Auction Date, into the
Bond Fund for  credit to the  Redemption  Account an  aggregate  amount of funds
available  on the  next  Business  Day in The  City  of New  York  equal  to the
aggregate  amount  required to pay the  principal  of and  premium,  if any, and
accrued  interest on any Auction Rate Bonds,  called for  redemption;  provided,
however if the scheduled date of such deposit to the  Redemption  Account by the
Company is not a Business Day then the date for such  deposit to the  Redemption
Account by the Company shall be the first Business Day immediately preceding the
scheduled date of such deposit to the Redemption Account by the Company.

     (ii) Other than during an Auction  Rate  Period,  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.

     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  13.03,  into the Bond Fund for credit to the  Acceleration
Account,  the amount  required to pay principal of and accrued  interest on such
Bonds.

     Section  10.03.  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  13.03.  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,


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<PAGE>


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 10.02(b).

     Upon the  retirement of any portion of the Bonds by redemption  pursuant to
the  provisions of this Section  10.03,  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 13.03 from funds  described in
Section 10.02(c).

     2. Bond  Purchase  Fund.  Pursuant  to  Section  4.12 of the  Participation
Agreement,  the Company  has agreed that the Company  shall pay an amount to the
Trustee  for  payment to, or directly  to, the  Registrar  and Paying  Agent for
deposit in the Bond  Purchase  Fund and credit to the  Company  Account  therein
established under the Bond Purchase Trust Agreement to be applied to the payment
of the Purchase Price of any Bond pursuant to the Bond Purchase Trust  Agreement
to the extent not  otherwise  provided  from the sources  described  in the Bond
Purchase Trust Agreement.

     In the event sufficient funds are not available under Section 2.03(a)(i) of
the Bond  Purchase  Trust  Agreement to pay such  Purchase  Price on the date of
purchase of any Bonds pursuant to Section 5.03,  5.04, 5.07 or 5.08 hereof,  the
Registrar  and  Paying  Agent  on or prior  to the  time  specified  in the Bond
Purchase Trust  Agreement  shall direct the Trustee to request a draw or payment
under the Liquidity  Facility in accordance with the terms thereof in the amount
required,  together with amounts,  if any, available under Section 2.03(a)(i) of
the Bond Purchase  Trust  Agreement,  to pay the Purchase Price of such Bonds on
such date of purchase.  The Trustee  shall on or prior to the time  specified in
the Bond  Purchase  Trust  Agreement  request  such  draw or  payment  under the
Liquidity Facility in accordance with the terms thereof and shall on or prior to
the time specified in the Bond Purchase Trust Agreement transfer the proceeds of
such draw or payment to the  Registrar  and Paying  Agent,  who shall  cause the
proceeds of such draw or payment to be deposited in the Bond Purchase Fund under
the Bond  Purchase  Trust  Agreement  and  credited  to the  Liquidity  Facility
Proceeds  Account  therein.  The  Registrar  and Paying  Agent shall  notify the
Company of the amount and date of such request.

     The  Remarketing  Agent shall notify the Registrar and Paying Agent and the
Trustee,  at or prior to 12:00 p.m. (New York City time) on a specified purchase
date,  of the  amount of the  proceeds  of the  related  remarketing,  and shall
specify  whether  remarketing  proceeds  (excluding  any such  proceeds from the
Company,  the  Authority or an affiliate of either)  equal to the full amount of


                                       67
<PAGE>


the Purchase  Price payable on such  purchase  date are held by the  Remarketing
Agent  and will be  available  on such  purchase  date for the  payment  of such
Purchase  Price,  and, if the amount of such  remarketing  proceeds that will be
available on such purchase date for the payment of such Purchase Price shall not
be equal to the full amount of the Purchase Price payable on such purchase date,
such notice shall specify the amount of the deficiency.  By 12:15 a.m. (New York
City  time) on such  purchase  date,  the  Remarketing  Agent  shall  pay to the
Registrar and Paying Agent,  for deposit in the Bond Purchase Fund and credit to
the  Remarketing  Proceeds  Account,  an  aggregate  amount of such  remarketing
proceeds  equal to the  amount  stated in such  notice to be  available  on such
purchase date for the payment of such Purchase Price.

     Section  10.04.  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 12.07,  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.





                                       68
<PAGE>


                                   ARTICLE XI

                      PARTICULAR COVENANTS OF THE AUTHORITY

     Section 11.01.  Payment of Principal of and Interest and Redemption Premium
on 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 2.02.3.

     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 2.02(3).

     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, Remarketing Agent's, Registrar and Paying Agent's
and Indexing Agent's Fees,  Charges and Expenses.  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,  the Registrar and


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Paying Agent, Indexing Agent and Remarketing 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,  the Registrar  and Paying Agent,  the Indexing
Agent and the Remarketing Agent.

     Section 11.07.  Agreement of the State of New York. 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.





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                                  ARTICLE XII

                     CONCERNING THE TRUSTEE; APPOINTMENT OF
                 REGISTRAR AND PAYING AGENT, REMARKETING AGENT,
                        BROKER-DEALERS AND INDEXING AGENT

     Section 12.01.  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 IX and X.

     Section 12.02. 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;  provided,  however,  that  the  proceeds  of a  Support  Facility  or of
remarketing of Bonds shall be applied solely as set forth  elsewhere  herein and
in such Support Facility and shall not be applied to the reimbursement set forth
in this Section 12.02.  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  pursuant to this Indenture
and of the Purchase Price of the Bonds in accordance with this Indenture.

     Section  12.03.  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.


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<PAGE>


     Section 12.04.  Certain  Duties and  Responsibilities  of the Trustee.  (a)
Except during the continuance of an Event of Default  specified in Section 13.01
of which a Responsible Officer of the Trustee has actual knowledge,

          (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  13.01  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


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<PAGE>


          (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.

          (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.


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<PAGE>


          (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.

          (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, and none of the provisions contained in this Indenture shall
     in any event  require  the Trustee to perform,  or be  responsible  for the
     manner of  performance  of, any of the  obligations of the Auction Agent or
     Broker-Dealer  under this Indenture except during such time, if any, as the
     Trustee shall be the  successor to, and be vested with the rights,  duties,
     powers and privileges of, the Auction Agent or  Broker-Dealer in accordance
     with the terms of this Indenture.

          (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 12.05.  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


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<PAGE>


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, the Remarketing Agreement, the Auction
Agreement,  the Broker-Dealer Agreement or any Support Facility imposed upon the
Authority,  the Company, the issuer of any Support 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).

     Section 12.06. 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  12.07.  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:


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<PAGE>


          (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 V and  Section  10.03  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 12.08. Notice of Default. Except upon the happening of any Event of
Default specified in clauses (a) through (c),  inclusive,  of Section 13.01, the
Trustee  shall not be obliged to take  notice or be deemed to have notice of any
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
Support Facility, the Authority, the Company, the Remarketing Agent, the Auction
Agent or the Holders of not less than  twenty-five  percent  (25%) in  aggregate
principal  amount of the Bonds  Outstanding  and such written notice shall state
that it is a "notice of default."

     Section  12.09.  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 12.10.  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


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<PAGE>


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 Support Facility or of the Bonds.

     Section 12.11.  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 12.11, it shall resign  immediately in the manner
and with the effect specified in Section 12.12.

     Section  12.12.  Resignation  and Removal of Trustee.  1. 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 12.13.

          (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.

          (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  12.11 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


                                       77
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          (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 Support 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.

          (e) The Authority shall give notice to the Trustee,  the Company,  the
     Remarketing  Agent,  the Registrar and Paying Agent, the Auction 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 6.03 with respect to
     the Bond  Insurer,  and  Section  18.09 with  respect to the  Company,  the
     Auction Agent and the Remarketing Agent. 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  12.13.   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 12.02
and 12.06,  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


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and preference  provided for in Sections 12.02 and 12.06.  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 12.14.  Appointment of Remarketing Agent.  Goldman,  Sachs & Co. is
hereby  appointed by the  Authority at the request of the Company as the initial
Remarketing  Agent of the  Bonds  and to  serve  as such  under  the  terms  and
provisions  hereof and of the  Remarketing  Agreement.  The  Remarketing  Agent,
including  any successor  appointed  pursuant  hereto,  shall be a member of the
National  Association of Securities  Dealers,  Inc. having  capitalization of at
least  $25,000,000,  and be authorized by law to perform all the duties  imposed
upon it by this Indenture, the Bond Purchase Trust Agreement and the Remarketing
Agreement.  The Remarketing  Agent for any series of Bonds may be removed at any
time by the  Authority,  upon  thirty (30) days'  notice,  acting at the written
direction of the Company,  by an  instrument  signed by the  Authority and filed
with the  Trustee,  the  Registrar  and  Paying  Agent,  the Bond  Insurer,  the
Remarketing  Agent  and  the  Company.  If  there  shall  not  be at  least  one
Remarketing  Agent serving as such for the Bonds following the effective date of
a proposed  removal of a  Remarketing  Agent,  no such removal shall take effect
until the appointment of a successor  Remarketing  Agent. The Remarketing  Agent
for any Bonds may resign upon 30 days written  notice  delivered to the Company,
the Authority, the Trustee, the Registrar and Paying Agent, the Bond Insurer and
the issuer of any  Support  Facility.  The  Company  shall use its  commercially
reasonable  efforts to cause the  Authority  to appoint a successor  Remarketing
Agent that is a qualified institution,  effective as of the effectiveness of any
such  resignation  or  removal.  Each  successor  Remarketing  Agent  shall be a
qualified institution selected and appointed by the Authority,  upon the written
request and with the  approval of the  Company.  If there shall be more than one
Remarketing  Agent serving as such for the Bonds, the Authority,  at the request
of the Company,  shall  designate  one such  Remarketing  Agent as  "Remarketing
Representative"  to act on behalf of all Remarketing  Agents for the Bonds,  and
each other Remarketing Agent shall agree in writing to accept the determinations
of such Remarketing Representative.

     Section 12.15. 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
12.19 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.


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     Section 12.16. 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 Remarketing Agent,
     the Authority and the Company at all reasonable times;

          (iv) perform the duties and undertake the obligations assigned to them
     in Sections 7.02 through 7.06;

          (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 Support  Facility.  To the extent that any other certificate to be submitted
by the Trustee to an issuer of a Support  Facility in connection  with a drawing
under the Support 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.

     Section 12.17. 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


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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 12.18. 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 12.19.  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  12.20.  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 and under the Bond
Purchase Trust Agreement by giving at least sixty days' notice to the Authority,
the Bond Insurer, the Company, the Trustee, the Bond Insurer and the Remarketing
Agent.  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,  and the Company,  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


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<PAGE>


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
Support Facility is in effect, approved by the issuer of a Support 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  12.21.  Appointment  of Auction  Agent;  Qualification  of Auction
Agent;  Resignation;  Removal.  The Bank of New York is hereby  appointed as the
Auction  Agent for the Bonds.  The Auction  Agent shall  designate its Principal
Office and signify its acceptance of the duties and obligations  imposed upon it
hereunder by an Auction Agreement delivered to the Authority,  the Company,  the
Trustee and each  Broker-Dealer  which shall set forth such procedural and other
matters  relating to the  implementation  of the Auction  Procedures as shall be
satisfactory to the Company and the Trustee.

     Subject to any applicable governmental restrictions,  the Auction Agent may
be or  become  the  owner of or trade in Bonds  with the same  rights as if such
entity were not the Auction Agent.

     The Auction Agent shall be (a) a bank or trust company  organized under the
laws of the United  States or any state or territory  thereof  having a combined
capital stock,  surplus and undivided profits of at least $50,000,000,  or (b) a
member of National  Association of Securities Dealers having a capitalization of
at least  $50,000,000 and, in either case,  authorized by law to perform all the
duties imposed upon it by the Indenture and a member of or a participant in, the
Securities  Depository.  The  Auction  Agent  may  at  any  time  resign  and be
discharged of the duties and  obligations  created by the Indenture by giving at
least ninety (90) days notice to the Authority,  the Company,  the Bond Insurer,
each Broker-Dealer and the Trustee. The Auction Agent may be removed at any time
by the Authority by written notice acting at the written request of the Company,
delivered  to  the  Auction  Agent,   the  Company,   the  Bond  Insurer,   each
Broker-Dealer and the Trustee at least thirty (30) days before the effectiveness
of such removal.  Upon any such resignation or removal, the Trustee shall at the
written  direction of the Authority acting at the written request of the Company
appoint a successor  Auction Agent meeting the requirements of this Section.  In
the event of the resignation or removal of the Auction Agent,  the Auction Agent
shall pay over,  assign  and  deliver  any  moneys  and Bonds held by it in such
capacity  to its  successor.  The Auction  Agent  shall  continue to perform its
duties  hereunder and under the Auction  Agreement  until its successor has been
appointed by the Trustee;  provided,  however, that if a successor Auction Agent
has not accepted its appointment within thirty (30) days of the effectiveness of
the  resignation  or removal of the Auction  Agent,  the Auction  Agent shall be
entitled to petition a court of competent  jurisdiction  to appoint a successor.
In the event that the Auction Agent has not been  compensated  for its services,


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the Auction  Agent may resign  after giving  forty-five  (45) days notice to the
Authority,  the Company,  the Bond Insurer,  each Broker-Dealer and the Trustee,
and if it has not been  compensated  within such  forty-five (45) day period may
cease performing its duties hereunder and under the Auction Agreement, even if a
successor Auction Agent has not been appointed.

     Section 12.22. Appointment of Broker-Dealers.  Goldman, Sachs & Co. and BNY
Capital Markets, Inc. are hereby appointed as the initial Broker-Dealers for the
Bonds by the  Authority  at the request of the  Company.  The  Company  with the
consent  of the  Authority  and  the  Bond  Insurer  shall  appoint  an  initial
Broker-Dealer  and may appoint any additional  initial  Broker-Dealers.  After a
subsequent  Change in the  Interest  Rate Mode to an Auction  Rate  Period,  the
Company may select, with the consent of the Authority, from time to time, one or
more  additional  persons  to  serve  as  Broker-Dealers   under   Broker-Dealer
Agreements.

     Section 12.23.  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.

     Section 12.24.  Appointment  and Duties of Indexing  Agents.  The Authority
hereby appoints Standard & Poor's Securities Evaluations,  Inc. (as successor to
Kenney  Information  Systems,  Inc.) as  Indexing  Agent  for the  Bonds for the
purpose of  calculating  each rate index defined in Section 1.01.  The Authority
may, with the approval of the Company,  appoint additional or successor Indexing
Agents,  subject  to the  conditions  set  forth in this  Section.  There may be
separate  Indexing Agents for the purpose of calculating each rate index defined
in Section 1.01. The Indexing Agent shall designate to the Trustee its principal
office and signify its acceptance of the duties and obligations  imposed upon it
hereunder by a written instrument of acceptance delivered to the Authority,  the
Trustee,  the Company and the  Remarketing  Agent under which the Indexing Agent
will agree, particularly:

          (a) to compute the Daily Rate Index,  the Commercial Paper Rate Index,
     the Weekly Rate Index,  the Monthly Rate Index, the Semi-annual Rate Index,
     the Term Rate Index or the Fixed Rate Index,  as the case may be,  pursuant
     to and in accordance  with Section 3.01, and to give notice to the Trustee,
     the Registrar and Paying Agent,  the  Remarketing  Agent and the Company of
     such rate index on the date of the  computation  thereof in accordance with
     Section 3.01; and

          (b) to keep such books and records as shall be consistent with prudent
     industry  practice  and to  make  such  books  and  records  available  for
     inspection by the Authority,  the Trustee,  the Registrar and Paying Agent,
     the Remarketing Agent and the Company at all reasonable times.

     The Indexing  Agent shall perform the duties  provided for in Section 3.01.
Whenever the Indexing  Agent makes a  computation  under that  Section,  it will
promptly notify the Trustee, the Registrar and Paying Agent, the Authority,  the
Remarketing Agent (and during any Auction Rate Period,  the Auction Agent),  and


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the Company of the results and date of  computation.  The  Indexing  Agent shall
keep adequate records  pertaining to the performance of its duties and allow the
Trustee,  Registrar and Paying Agent, the Authority,  the Remarketing  Agent and
the Company (and, if  appropriate,  the Auction Agent) to inspect the records at
reasonable times.

     Section 12.25. Qualifications of Indexing Agents. Each Indexing Agent shall
be a  commercial  bank,  a member  of the  National  Association  of  Securities
Dealers, Inc. or a nationally recognized municipal securities evaluation service
authorized  by law to perform all the duties  imposed upon it by the  Indenture.
Any Indexing  Agent may at any time resign and be  discharged  of the duties and
obligations  created by the Indenture by giving at least sixty (60) days' notice
to the  Authority,  the Company,  the  Remarketing  Agent and the  Trustee.  The
Indexing  Agent may be  removed at any time,  at the  written  direction  of the
Company, by an instrument,  signed by the Authority, filed with the Company, the
Indexing Agent,  the Remarketing  Agent,  the Trustee,  the Registrar and Paying
Agent and the issuer of a Support Facility, if any.





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                                  ARTICLE XIII

                        EVENTS OF DEFAULT; REMEDIES UPON
                               OCCURRENCE THEREOF

     Section 13.01.  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) In the event that the Policy is not in effect,  the Trustee  shall
     receive  written  notice  from the issuer of the  Support  Facility  of the
     occurrence  of  a  Terminating  Event  under  the  Support   Facility,   if
     applicable, or the agreement providing for the issuance thereof; or

          (d) 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

          (e) 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
     13.08;  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

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

     Section 13.02.  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


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<PAGE>


thereof as provided  in Section  12.08,  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  13.01(a) or (c),  the
Trustee shall give notice to the Bond Insurer immediately. Upon request from the
Company,  the Broker-Dealers  shall provide the Trustee with a list of the names
of its customers that it believes are Existing  Owners of Auction Rate Bonds and
the principal amount of Auction Rate Bonds held by each of such customers.

     2. So long  as  ownership  of the  Auction  Rate  Bonds  is  maintained  in
book-entry form by the Securities Depository, upon the occurrence of an Event of
Default,  the  Trustee  shall send a notice  thereof in  substantially  the form
required by the Auction  Agreement  to the Auction  Agent and to the  registered
Holders of each series of Bonds.

     3. So long as the  ownership  of the Auction  Rate Bonds is  maintained  in
book-entry form by the Securities Depository, the Trustee shall immediately send
a notice in  substantially  the form  required by the Auction  Agreement  to the
Auction Agent and to the registered  Holders of Bonds if an Event of Default has
been cured or waived in accordance with this Article XIII.

     4. Upon the occurrence of a Payment  Default,  or in the event such Payment
Default is cured,  the Trustee shall give the Auction Agent the notices referred
to in Section 6.03 hereof.

     Section   13.03.   Declaration   of   Principal   and   Interest   As  Due.
Notwithstanding  the pendency of a mandatory tender under Section 5.08, upon the
occurrence  of an Event of  Default  specified  in clause  (b) or (c) of Section
13.01 of which the  Trustee  has been  notified  by the  issuer  of the  Support
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 6.04
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 6.04 hereof) notwithstanding.
Upon the  occurrence  and  continuation  of any Event of Default,  except for an
Event of Default  specified in clause (b) or (c) of Section 13.01,  of which the
Trustee  has been  notified  or is deemed to have  notice as provided in Section
12.08,  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


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<PAGE>


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
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; provided,
however,  that  notwithstanding  any such  rescission  and  annulment  during an
Auction Rate Period,  the Bonds shall  continue to bear  interest at the Default
Rate for the applicable period of time pursuant to and to the extent provided in
Appendix B. 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 13.04. Action by Trustee Upon Occurrence of Event of Default.  Upon
the occurrence and continuation of an Event of Default,  subject to Section 6.04
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


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<PAGE>


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
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 13.05.  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 13.01, 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.


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<PAGE>


     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.

     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 13.06.  Disposition of Monies in Event of  Insufficiencies in Funds
and Accounts.  All monies (other than proceeds of any Support 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


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<PAGE>


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  XIII 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 13.03, 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  13.03,  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.

          (c) If the principal of all the Bonds shall have been declared due and
     payable   pursuant  to  the  provisions  of  Section  13.03,  and  if  such
     declaration  shall thereafter have been rescinded and annulled  pursuant to
     the  provisions of such Section 13.03,  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 13.03,  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 X.


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<PAGE>


     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 13.07. 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  6.04,  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
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 (which,  in
the case of Auction  Rate Bonds and to the extent  provided in Appendix B, shall
be the Default  Rate),  and all fees and expenses of the Trustee shall have been
paid or provided for; provided,  however,  that notwithstanding any such waiver,
any Auction Rate Bonds shall,  to the extent provided in Appendix B, continue to
bear interest at the Default Rate in accordance  with Appendix B. 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  6.04,  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


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<PAGE>


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 13.08. 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 Section 12.08, 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 6.04  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  6.04  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 Section
12.02, 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.

     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.


                                       92
<PAGE>


     Section  13.09.  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 13.10. 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 13.11. 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; provided, however, that during any Auction Rate Period all amounts
which are due and owing but unpaid hereunder as a result of a Payment Default by
the Bond Insurer shall bear interest at the Default Rate until paid pursuant to
and to the extent provided in Appendix B.





                                       93
<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.


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<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.


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     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 Section 16.01, 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.





                                       96
<PAGE>


                                   ARTICLE XV

                    AMENDING AND SUPPLEMENTING THE INDENTURE,
             THE PARTICIPATION AGREEMENT, THE REMARKETING AGREEMENT,
                  AUCTION AGREEMENT, BROKER-DEALER AGREEMENTS,
                          BOND PURCHASE TRUST 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 Support  Facility or an
     Alternate  Support Facility,  other credit,  liquidity or support facility,


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<PAGE>


     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.

     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 X 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


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<PAGE>


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
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.

     Notwithstanding  anything in this Indenture to the contrary, the consent of
the  Holders of the  required  amount of Bonds,  but not the consent of the Bond
Insurer,  shall be deemed  given with  respect to a  Supplemental  Indenture  as
follows:

          (a) while the Bonds are in a Commercial Paper Rate Period,  an Auction
     Rate  Period,  a Daily Rate Period,  a Weekly Rate  Period,  a Monthly Rate
     Period, a Term Rate Period or a Fixed Rate Period,  if (i) the Supplemental
     Indenture  takes  effect  on a date on  which  all of the  Bonds  that  are
     affected by such Supplemental Indenture are subject to mandatory tender for
     purchase  in  accordance  with this  Indenture,  (ii) any  modification  or
     amendment  effected  thereby is consented to in writing by the  Remarketing
     Agent for such Bonds on or prior to such effective date and (iii) the Bonds
     so tendered are purchased;

          (b) while the Bonds are in a Daily Rate Period or Weekly Rate  Period,
     if (i) not less than 30 days before the effective date of the  Supplemental
     Indenture,  the  Trustee  sends a notice of the  proposed  modification  or
     amendment   to  the  Holders  of  the  Bonds  that  are  affected  by  such
     Supplemental  Indenture  and the  Holders  of such  Bonds have the right to
     tender their Bonds for purchase pursuant to Section 5.03 hereof before such
     effective date,  (ii) any  modification  or amendment  effected  thereby is
     consented  to in  writing  by the  Remarketing  Agent  for  Bonds  tendered
     pursuant  to Section  5.03  herein on or prior to such  effective  date and
     (iii) the Bonds so tendered are purchased; or

          (c) while the Bonds are in an Auction Rate Period,  in accordance with
     Section  2.07(b) of  Appendix B hereto,  to the  extent  described  in such
     Section 2.07(b).

          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.


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<PAGE>


     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 Section  12.04,
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 Support Facility Provider.
No  Supplemental  Indenture  affecting the rights or  obligations of the Support
Facility  Issuer which takes effect while any Support  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 Support Facility Issuer.  So long as the
conditions  set  forth in  Section  6.04 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
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;

          (c) to provide  for any new  administrative,  security  or  procedural
     provisions  necessitated by the issuance of an Alternate  Support Facility;
     or

          (d) 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;


                                      100
<PAGE>


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 Support Facility is in effect shall be effective prior to the receipt by
such parties of the written consent of each Support 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 Support Facility (so long as such Support Facility is in
effect)  shall be effective  prior to the receipt by such parties of the written
consent of the issuer of such Support Facility.

     Notwithstanding  anything in this Indenture to the contrary, the consent of
the  Holders of the  required  amount of Bonds,  but not the consent of the Bond
Insurer,  shall be deemed  given with respect to any  Supplemental  Agreement or
amendment to the Participation Agreement as follows:

          (a) while the Bonds are in a Commercial Paper Rate Period,  an Auction
     Rate  Period,  a Daily Rate Period,  a Weekly Rate  Period,  a Monthly Rate
     Period, a Term Rate Period or a Fixed Rate Period,  if (i) the Supplemental
     Agreement  or amendment to the  Participation  Agreement  takes effect on a
     date on which  all of the  Bonds  that are  affected  by such  Supplemental
     Agreement  or  amendment  to the  Participation  Agreement  are  subject to
     mandatory  tender for purchase in accordance with this Indenture,  (ii) any
     modification  or amendment  effected  thereby is consented to in writing by
     the Remarketing Agent for Bonds tendered pursuant to Section 5.03 herein on
     or prior to such  effective  date  and  (iii)  the  Bonds so  tendered  are
     purchased;

          (b) while the Bonds are in a Daily Rate Period or Weekly Rate  Period,
     if (i) not less than 30 days before the effective date of the  Supplemental
     Agreement or amendment to the Participation  Agreement, the Trustee sends a
     notice of the  proposed  modification  or  amendment  to the Holders of the
     Bonds that are affected by such  modification  or amendment and the Holders
     of such Bonds have the right to tender their Bonds for purchase pursuant to
     Section 5.03 hereof before such effective  date,  (ii) any  modification or
     amendment  effected  thereby is consented to in writing by the  Remarketing
     Agent for such Bonds on or prior to such effective date and (iii) the Bonds
     so tendered are purchased; or

          (c) while the Bonds are in an Auction Rate Period,  in accordance with
     Section  2.07(b) of  Appendix B hereto,  to the  extent  described  in such
     Section 2.07(b).

     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


                                      101
<PAGE>


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 Section 12.04, 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 Support Facility Provider.
No Supplemental Agreement or amendments to the Participation Agreement affecting
the rights or obligations of the Support Facility Issuer which take effect while
any Support  Facility is in effect may be entered  into by the  Authority  or be
consented to by the Holders  without  written  consent of each Support  Facility
Issuer.  So long as the conditions set forth in Section 6.04 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.





                                      102
<PAGE>


                                  ARTICLE XVI

                     DEFEASANCE; MONEYS HELD FOR PAYMENT OF
                                 DEFEASED BONDS

     Section 16.01. Discharge of Liens and Pledges; Bonds No Longer Deemed to be
Outstanding  Hereunder.  Bonds purchased pursuant to Section 5.03, 5.04, 5.07 or
5.08 shall  continue  to be  Outstanding  hereunder  until  such Bonds  shall be
cancelled  in  accordance  with  Section  5.14 or paid at  maturity  or redeemed
pursuant to Article V 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,  (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 (z) in the
     case of Bonds  bearing  interest at a Daily Rate, a Weekly Rate, an Auction
     Period Rate, a Monthly Rate and a Semi-annual  Rate,  written  confirmation
     from S&P and Moody's,  if the Bonds are then rated by S&P and  Moody's,  to
     the effect that the  deposit  made  pursuant to (1)(ii)  above will not, by
     itself,  result in a reduction or withdrawal of its short-term or long-term
     rating  of  the  Bonds  below  the  rating  category  of S&P  and  Moody's,
     respectively,  then  in  effect  with  respect  to the  Bonds,  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.


                                      103
<PAGE>


     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 and except, in the case of
Auction Rate Bonds,  to the extent  provided in the definition of Outstanding in
Article I shall no longer be  secured by or  entitled  to the  benefits  of this
Indenture.

     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 and  credited to the  Principal  Account as and when
realized and collected,  for use and application as are other monies credited to
such Account.

     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 Support  Facility (if appropriate
for the type of instrument or instruments  then serving as Support  Facility) to
the issuer of such Support  Facility for  cancellation  or shall  otherwise take
appropriate  action  to  terminate  the  Support  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  Sections  12.02,
12.06 and 12.17 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


                                      104
<PAGE>


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 10.04,  any 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
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.





                                      105
<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.











                                      106
<PAGE>


                                 ARTICLE XVIII

                                  MISCELLANEOUS

     Section  18.01.  Benefits  of  Indenture  Limited  to  Authority,  Company,
Trustee, Registrar and Paying Agent, Support Facility Issuer, Remarketing Agent,
Auction Agent 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 Support  Facility  Issuer,  the Remarketing
Agent,  the Auction  Agent 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 Support Facility  Issuer,  the Remarketing  Agent, the Auction Agent,
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 Article VII. 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.


                                      107
<PAGE>


     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.

     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:


                                      108
<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 Auction Agent             at the address specified in
                                               the Auction Agreement

(e)        As to the Broker-Dealers            at the address specified in the
                                               Broker-Dealer Agreement

(f)        As to the Remarketing Agent         at the address specified in the
                                               Remarketing Agreement

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

(h)        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.


                                      109
<PAGE>


     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
the Indenture,  Participation Agreement, Bond Purchase Trust Agreement, and each
Support  Facility of which it has  knowledge,  (ii)  notice of the  termination,
extension or expiration of any Support 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


                                      110
<PAGE>


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]











                                      111
<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_____________________________












      [Signature Page of Indenture relating to Gas Facilities Revenue Bonds
(The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York Project),
                                 2005 Series B]

                                      S-1


<PAGE>


                                    EXHIBIT A

                  (For use in change in the Interest Rate Mode)

            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 B

                              CUSIP NO. ___________

                   NOTICE OF CHANGE IN THE INTEREST RATE MODE


     Notice is hereby given to the Trustee,  Remarketing  Agent,  Registrar  and
Paying Agent,  the Company,  [the  Broker-Dealer  and the Auction Agent] and the
registered owners of $[__________] of the above-captioned issue (the "Bonds") of
New York State Energy Research and Development Authority (the "Authority") that:

     1. In  accordance  with the  Indenture of Trust  relating to the Bonds (the
"Indenture"),  dated as of November 1, 2005 between the  Authority and Citibank,
N.A., as trustee (the  "Trustee"),  subject to the  conditions  hereinafter  set
forth, if any, the interest rate on the Bonds (or such lesser  principal  amount
thereof  as may be  specified  in an  attachment  hereto)  will be  changed to a
_________Rate.  Capitalized  terms used herein and not otherwise  defined herein
shall have the  meanings  given to such terms in the  Indenture.  The  following
statements  are summaries of certain  provisions  of the Indenture  which do not
purport to be complete and are  qualified in their  entirety by reference to the
Indenture.

     2. The _________ Rate will be effective from and after  ______________ (the
"Effective Date").

     3. The Bonds are subject to  mandatory  tender on the  Effective  Date at a
purchase price equal to the principal amount thereof [plus premium in the amount
of _____] (the "Purchase  Price").  Accrued interest on the Bonds is anticipated
to be paid separately in accordance with Section  10.03(a) of the Indenture.  In
the event the  interest is not so paid,  the  Purchase  Price  shall  include an
amount equal to the accrued and unpaid interest.

     4. The proposed  Change in the Interest Rate Mode shall take effect only if
the  applicable  conditions  set forth in Article IV of the Indenture  have been
satisfied.

     5.  Registered  owners of Bonds are required to deliver  their Bonds to the
Registrar and Paying Agent at Citibank,  N.A., 111 Wall Street,  15th Floor, New
York, NY 10005,  Attention:  15th Floor  Window,  no later than  [Registrar  and
Paying Agent to insert proper time],  New York City time, on the Effective  Date
at the office of the Registrar and Paying Agent  referred to above,  endorsed in
blank by the  registered  owner  thereof  or  accompanied  by an  instrument  of
transfer thereof in form satisfactory to the Registrar and Paying Agent executed
for transfer in blank by the registered  owner thereof (the Registrar and Paying
Agent  being able to refuse to make  payment  with  respect to any such Bond not
endorsed in blank or for which an instrument of transfer  satisfactory to it has
not been provided).


<PAGE>


     6. Each registered  owner of Bonds who has properly  tendered such Bonds in
accordance with the above provisions will be paid the Purchase Price therefor on
the Effective Date, and if such Purchase Price is paid,  such  registered  owner
shall have no further rights with respect to said Bonds.

     7.  Holders of Bonds  subject to  mandatory  tender  shall have no right to
retain  such  Bonds  and shall be  required  to  tender  such  Bonds on the date
established for the mandatory tender for purchase thereof.

     8. With  respect  to any  registered  owner of Bonds  who has not  properly
tendered such Bonds in accordance with the above provisions of this notice,  (A)
such  registered  owner's  Bonds will be deemed  tendered  and  purchased on the
Effective Date at the Purchase  Price,  (B) such  registered  owner will be paid
interest on such Bonds on the  Effective  Date as provided in the  Indenture and
will be paid such Purchase Price for such Bonds upon the tender of such Bonds to
the  Registrar and Paying Agent and (C) interest on such Bonds shall cease to be
payable to such  registered  owner from and after the Effective  Date, and after
the  Effective  Date such  registered  owner will have no rights with respect to
such Bonds except to receive  payment of the Purchase  Price upon tender of such
Bonds to the Registrar and Paying Agent.


Dated: ____________





                                       NEW YORK STATE ENERGY RESEARCH AND
                                        DEVELOPMENT AUTHORITY




                                       By:________________________________
                                               Authorized Officer



                                       2

<PAGE>



                                    EXHIBIT B


            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 B

                              CUSIP NO. ___________

         CERTIFICATE PURSUANT TO SECTION [4.01.3(A)(i) or 4.02.3(A)(i)]
                                OF THE INDENTURE

     NOTICE IS HEREBY  GIVEN to the Trustee [the  Broker-Dealer  and the Auction
Agent]  that New York State  Energy  Research  and  Development  Authority  (the
"Authority")  at the request of The  Brooklyn  Union Gas Company  d/b/a  KeySpan
Energy Delivery New York (the "Company")  hereby authorizes the establishment of
a Rate.

     Notice is also HEREBY GIVEN that a written  agreement has been entered into
by the  Company and the  Remarketing  Agent to  remarket  the Bonds  affected on
__________  at a price of not less than 100% of the  principal  amount  thereof,
which written  agreement (i) may be subject to reasonable  terms and  conditions
imposed by the Remarketing  Agent which in the judgment of the Remarketing Agent
reflect current market standards regarding investment banking risk and (ii) must
include a provision requiring payment by the Remarketing Agent in same-day funds
provided from the  remarketing of such Bonds in accordance  with the Remarketing
Agreement,  from the proceeds of a Liquidity  Facility,  or from funds deposited
with the Trustee or the Registrar and Paying  Agent,  for any Bonds  tendered or
deemed  tendered[;  and  that a  Liquidity  Facility  is in  effect  or has been
obtained by the Company with respect to the Bonds,  and shall be in effect prior
to such Change in the Interest Rate Mode and thereafter for a period of at least
364 days].

     Capitalized  terms used herein and not otherwise  defined herein shall have
the  meanings  given to such terms in the  Indenture  of Trust  relating  to the
above-captioned  Bonds,  dated  as of  November  1,  2005,  by and  between  the
Authority and Citibank, N.A., as Trustee.

                                         NEW YORK STATE ENERGY RESEARCH AND
                                          DEVELOPMENT AUTHORITY




                                         By:_______________________________
                                             Authorized Officer

<PAGE>



                                    EXHIBIT C


            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 B

                              CUSIP NO. ___________

        CERTIFICATE PURSUANT TO SECTION [4.01.3(A)(ii) or 4.02.3(A)(ii)]
                                OF THE INDENTURE

     NOTICE IS HEREBY  GIVEN to the Trustee [the  Broker-Dealer  and the Auction
Agent]  that New York State  Energy  Research  and  Development  Authority  (the
"Authority")  at the request of The  Brooklyn  Union Gas Company  d/b/a  KeySpan
Energy Delivery New York (the "Company")  hereby authorizes the establishment of
a Rate.

     Notice is also HEREBY GIVEN that the Authority has obtained confirmation on
behalf of the Company that Bond  Counsel  expects to be able to give its opinion
on the effective date of the Change in the Interest Rate Mode to the effect that
the change to the  ________  Rate is  authorized  by the  Indenture  referred to
below,  is  permitted  under the Act and will not have an adverse  effect on the
exclusion  of  interest on the Bonds from gross  income for  federal  income tax
purposes.

     Capitalized  terms used herein and not otherwise  defined herein shall have
the  meanings  given to such terms in the  Indenture  of Trust  relating  to the
above-captioned  Bonds,  dated  as of  November  1,  2005,  by and  between  the
Authority and Citibank, N.A., as Trustee.



                                       NEW YORK STATE ENERGY RESEARCH AND
                                        DEVELOPMENT AUTHORITY




                                       By:________________________________
                                           Authorized Officer





<PAGE>



                                    EXHIBIT D


            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 B

                              CUSIP NO. ___________

       CERTIFICATE PURSUANT TO SECTION [4.01.3(B) or 4.02.3(B)(ii)] OF THE
                                   INDENTURE

     NOTICE IS HEREBY  GIVEN to the Trustee [the  Broker-Dealer  and the Auction
Agent]  that with  respect to a Change in the  Interest  Rate Mode  pursuant  to
Section  4.01  or 4.02 of the  Indenture  referred  to  below  all of the  Bonds
referred to above  tendered or deemed  tendered  have been  purchased at a price
equal to the principal amount thereof plus premium, if any, plus any accrued and
unpaid  interest  with  funds  provided  from the  remarketing  of such Bonds in
accordance  with the  Remarketing  Agreement,  from the  proceeds  of a  Support
Facility,  or from other funds  deposited  with the Trustee or the Registrar and
Paying Agent.

     Capitalized  terms used herein and not otherwise  defined herein shall have
the  meanings  given to such terms in the  Indenture  of Trust  relating  to the
above-captioned  Bonds, dated as of November 1, 2005 by and between the New York
State Energy Research and Development Authority and Citibank, N.A., as Trustee.



                                          THE BROOKLYN UNION GAS COMPANY d/b/a
                                          KEYSPAN ENERGY DELIVERY NEW YORK



                                          By:_________________________________
                                             Authorized Company Representative



<PAGE>



                                    EXHIBIT E


            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 B

                              CUSIP NO. ___________

                         NOTICE OF FAILURE OF CONDITIONS


     NOTICE IS HEREBY  GIVEN to the  Authority,  the Company and the  registered
owners of the above  captioned  issue that the conditions for effecting a Change
in the Interest Rate Mode from a Term Rate to a _____Rate have not been met.


     The  above-captioned  Bonds will  continue to bear  interest at the current
Term Rate and be subject to the  provisions of the  Indenture  referred to below
applicable while such Bonds bear interest at the current Term Rate.

     Capitalized  terms used herein and not otherwise  defined herein shall have
the  meanings  given to such terms in the  Indenture  of Trust  relating  to the
above-captioned  Bonds, dated as of November 1, 2005 by and between the New York
State Energy Research and Development Authority and Citibank, N.A., as Trustee.



                                                  CITIBANK, N.A., as Trustee



                                                  By:







<PAGE>



                                    EXHIBIT F


            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 B

                              CUSIP NO. ___________

                          NOTICE OF ELECTION TO TENDER


     Note: The  substance  of this  Notice  must be given to the  Registrar  and
          Paying Agent and the Remarketing Agent by telephone at or prior to the
          time this Notice must be delivered.

     1. The undersigned, ______________, owner of the following Bonds:

Cusip Number(1)                                              Principal Amount



hereby  notifies  you of its election to tender such Bonds for purchase on [ _ ,
__ ], (which  date shall be a Business  Day).  If this Bond bears  interest at a
Daily Rate as defined in the Indenture  referred to below,  the date of purchase
shall be the date of delivery of this Notice to the  Registrar  and Paying Agent
and the Remarketing  Agent if received by 10:00 a.m., New York City time, or may
be any Business Day thereafter.  If this Bond bears interest at a Weekly Rate as
defined in the Indenture the date of purchase  shall be a Business Day not prior
to the  seventh  (7th) day  immediately  following  the date of delivery of this
Notice to the Registrar and Paying Agent and the Remarketing Agent.

     2. If only a portion of a Bond is being tendered, both the tendered portion
and  untendered  portion  must  be  authorized  denominations  ($100,000  or any
integral multiple thereof) for Bonds bearing a Daily Rate or Weekly Rate.

     3. After its execution and delivery by the undersigned, this notice will be
irrevocable.

___________
(1)Bond Number, if Bonds are no longer held by Securities Depository.


<PAGE>


     4. The  person or  persons to whom or to whose  order the  proceeds  of the
purchase of the above-referenced Bonds are to be paid, such person's or persons'
taxpayer  identification  number or numbers and the address or addresses of such
payee or payees is _________________;  which information the undersigned,  under
the penalties of perjury, certifies to be true, correct and complete.

     5. The undersigned hereby undertakes to deliver the Bonds to Citibank, N.A.
(the "Registrar and Paying Agent") no later than 11:30 a.m., New York City time,
for Bonds  bearing  interest at the Weekly Rate,  and 12:00 noon,  New York City
time, for Bonds bearing interest at a Daily Rate, at the office of the Registrar
and Paying Agent  located at 111 Wall Street,  15th Floor,  New York,  NY 10005,
Attention:  15th Floor Window,  endorsed in blank for transfer or accompanied by
an instrument of transfer  executed in blank for transfer and acknowledges  that
any instrument of transfer must be in a form  satisfactory  to the Registrar and
Paying Agent and that the  Registrar and Paying Agent may refuse to make payment
with  respect to any Bond not  endorsed in blank or for which an  instrument  of
transfer satisfactory to the Registrar and Paying Agent has not been provided.

     6. The  undersigned  hereby  also  assigns  and  transfers  and directs the
Registrar  and  Paying  Agent to  transfer  the Bonds  delivered  in  connection
herewith to the  appropriate  party under the terms and conditions  contained in
the Indenture.

     7. The undersigned  acknowledges  that in the event of a failure to deliver
the Bonds or in the event  such  Bonds are not  properly  delivered,  such Bonds
shall  nevertheless  be deemed tendered and purchased on the date referred to in
(1) above,  no interest shall accrue thereon to the  undersigned  from and after
such date of purchase  and that the  undersigned  shall have no rights under the
Bonds or under the Indenture  except the right to receive the Purchase  Price of
the Bonds.

     8.  Capitalized  terms used herein and not otherwise  defined  herein shall
have the meanings  given to such terms in the Indenture of Trust relating to the
above-captioned Bonds, dated as of November 1, 2005, by and between the New York
State Energy Research and Development  Authority and Citibank,  N.A., as Trustee
(the  "Indenture").  The  statements  contained  herein are summaries of certain
provisions  of the  Indenture  which  do not  purport  to be  complete  and  are
qualified in their entirety by reference to the Indenture.

Dated: _________________


                        Name  of  Owner  as  it  is  written  on  the  face
                        of  the above-listed Bonds in every particular,
                        without alteration, enlargement or any change
                        whatsoever

__________
Witness




                                       2


<PAGE>



                                    EXHIBIT G

            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 B

                              CUSIP NO. ___________

                  NOTICE OF MANDATORY TENDER UPON EXPIRATION OF
                     ANY SUPPORT FACILITY, UPON DELIVERY OF
                        AN ALTERNATE SUPPORT FACILITY OR
                    UPON OCCURRENCE OF ANY TERMINATING EVENT


     Notice  is hereby  given to the  registered  owners of the  above-captioned
issue (the "Bonds") of New York State Energy Research and Development  Authority
(the "Authority") that:

     1. In  accordance  with the  Indenture of Trust  relating to the Bonds (the
"Indenture")  dated as of November 1, 2005,  between the Authority and Citibank,
N.A.,  as trustee  (the  "Trustee"),  notice is hereby  given that [the  Support
Facility issued by __________ with respect to the Bonds (the "Support Facility")
will expire on ___________ , an Alternate  Support  Facility will be substituted
therefor on ____ , or a Terminating Event with respect to a Support Facility has
occurred] and that all Bonds, other than Bonds held by or for the account of the
Company or the Liquidity  Facility Issuer, are subject to mandatory tender under
the  circumstances  set  forth in  [Section  5.08 or 5.09] of the  Indenture  as
hereinafter set forth at a purchase price equal to the principal  amount thereof
[plus premium in the amount of  ___________]  (the  "Purchase  Price").  Accrued
interest on the Bonds is  anticipated to be paid  separately in accordance  with
Section 10.03(a) of the Indenture. In the event the interest is not so paid, the
Purchase Price shall include an amount equal to the accrued and unpaid interest.

     2. The Bonds are subject to mandatory tender for purchase on _________ (the
"Mandatory Tender Date").

     3. From and after the  Mandatory  Tender Date the Bonds will  [continue to]
bear  interest  [insert  information  on  interest  rate to be  effective  after
mandatory  tender  date,  including  method  of  determining  interest  rate and
Interest Payment Dates].  [Insert information whether any letter of credit, line
of credit,  insurance policy,  surety bond,  standby bond purchase  agreement or
other  instrument will be available for the payment of the principal or purchase
price of, or interest on, such Bonds and, if so, describing such instrument].

<PAGE>


     4. On and after the Mandatory  Tender Date,  the  [short-term]  [long-term]
rating on the Bonds by [Registrar  and Paying Agent to insert,  as  appropriate:
(i)  Moody's  and/or S&P will be ______  and/or (ii)  Moody's  and/or S&P may be
reduced or withdrawn].

     5.  Registered  owners of Bonds are required to deliver  their Bonds to the
Registrar  and Paying  Agent on the  Mandatory  Tender Date at the office of the
Registrar  and Paying Agent  located at Citibank,  N.A.,  111 Wall Street,  15th
Floor, New York, NY 10005,  Attention:  15th Floor Window,  endorsed in blank by
the registered owner thereof or accompanied by an instrument of transfer thereof
in form  satisfactory to the Registrar and Paying Agent executed in blank by the
registered owner thereof (the Registrar and Paying Agent being able to refuse to
make payment with respect to any such Bond not endorsed in blank or for which an
instrument of transfer satisfactory to it has not been provided).

     6. Each registered  owner of Bonds who has properly  tendered such Bonds in
accordance with the above  provisions  will be paid the Purchase  Price,  and if
such Purchase Price is paid, such registered  owner shall have no further rights
with respect to said Bonds.

     7.  Holders  of Bonds  subject to  mandatory  tender  for  purchase  on the
Mandatory  Tender  Date shall have no right to retain  their  Bonds and shall be
required  to  tender  such  Bonds no later  than the  Mandatory  Tender  Date as
provided herein.

     8. With  respect  to any  registered  owner of Bonds  who has not  properly
tendered such Bonds in accordance  with the above  provisions of this notice (A)
such registered owner's Bonds will nevertheless be deemed tendered and purchased
on the Mandatory  Tender Date at the Purchase Price,  (B) such registered  owner
will be paid interest on such Bonds on the Mandatory  Tender Date as provided in
the  Indenture  and will be paid such  Purchase  Price for such  Bonds  upon the
tender of such Bonds to the  Registrar and Paying Agent and (C) interest on such
Bonds  shall  cease to be  payable to such  registered  owner from and after the
Mandatory Tender Date, and after the Mandatory Tender Date such registered owner
will have no rights with respect to such Bonds except to receive  payment of the
Purchase Price upon tender of such Bonds to the Registrar and Paying Agent.

                                       2


<PAGE>




     9.  Capitalized  terms used herein and not otherwise  defined  herein shall
have the meanings given to such terms in the Indenture. The statements contained
herein are summaries of certain provisions of the Indenture which do not purport
to be  complete  and  are  qualified  in  their  entirety  by  reference  to the
Indenture.


Dated: _____________




                                          NEW YORK STATE ENERGY RESEARCH AND
                                           DEVELOPMENT AUTHORITY




                                          By:________________________________
                                              Authorized Officer





                                       3



<PAGE>


                                                                      APPENDIX A


         [Form of Bonds other than Bonds bearing an Auction Period Rate]

     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 B


No. 2005 BR-                                                        $55,000,000


<TABLE>
<CAPTION>
 INTEREST RATE
OR INTEREST RATE
MODE ON DATE OF                                                  ORIGINAL
AUTHENTICATION                   MATURITY DATE                   ISSUE DATE                   CUSIP
--------------                   -------------                   ----------                   -----
<S>                              <C>                         <C>
                                  June 1, 2025                November 1, 2005
</TABLE>

REGISTERED OWNER:

PRINCIPAL SUM:  FIFTY-FIVE MILLION DOLLARS

     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 such date shall not be an Interest Payment Date (as
hereinafter  defined) from the next preceding  Interest  Payment Date or, if the
date of  authentication  is  after  the  Record  Date  next  preceding  the next


<PAGE>


succeeding Interest Payment Date, from the next succeeding Interest Payment Date
until the payment of such principal  amount in full, at the rate of interest per
annum specified above, such interest being payable on each Interest Payment Date
in each  year,  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,  (ii)
prior to and including  any Fixed Rate  Conversion  Date,  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,  and (iii) during
a Commercial Paper Rate Period, interest on this Bond shall be payable only upon
presentation  and  surrender  hereof to the  Registrar  and  Paying  Agent  upon
purchase  thereof  pursuant  to the  Indenture,  and if  such  presentation  and
surrender  is made by 2:00 p.m.  (New York City time) such  payment  shall be by
wire transfer. If interest is in default it shall be paid to the person in whose
name this Bond is  registered  as of 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 B", issued in the
aggregate  principal  amount of fifty-five  million dollars  ($55,000,000)  (the
"Bonds").  In order to distinguish  between Bonds which are subject to different
interest rate  determination  methods and other features and to distinguish  the
portion of the Bonds to be offered or remarketed by any  particular  underwriter
or Remarketing  Agent, 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


                                       2
<PAGE>


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.

     The terms and provisions pertaining to Bonds bearing an Auction Period Rate
are set forth in a separate bond certificate.

     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.


                                       3
<PAGE>


     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.

     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 2.03 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 one of the  following  interest  rates:  a
"Commercial  Paper Rate",  an "Auction  Period Rate",  a "Daily Rate," a "Weekly
Rate," a "Monthly  Rate," a  "Semi-annual  Rate" or a "Term  Rate"  (each of the
foregoing  referred  to  as  an  "Adjustable  Rate")  or a  "Fixed  Rate".  Each
Adjustable  Rate other than an Auction  Period Rate shall be equal to the lesser
of (i) the Maximum Allowed Rate (as defined in the Indenture),  (ii) 110% of the
rate  index  for such  rate on the  applicable  determination  date and (iii) an
adjustable rate which, with respect to the first day of each Calculation  Period
(as herein defined)  applicable to such Adjustable  Rate,  shall be equal to the
rate or rates of interest per annum  established and certified to the Trustee by
the  Remarketing  Agent (as herein  defined)  no later than 12:00 noon (New York
City  time)  (except  that such  rate or rates of  interest  per  annum  must be
established  and  certified to the Trustee by the  Remarketing  Agent (as herein
defined) no later than 10:00 a.m.  (New York City time) with  respect to a Daily
Rate,  12:30 (New York City time) with respect to a Commercial  Paper Rate,  and
4:00 p.m. with respect to a Term Rate), on and as of the Determination  Date (as
defined in the  Indenture)  as the minimum rate of interest per annum which,  in
the opinion of the Remarketing  Agent,  would be necessary on and as of the date
of such certification to remarket Bonds at a price equal to the principal amount
thereof plus accrued interest thereon,  if any, except as otherwise  provided in
the Indenture. 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.


                                       4
<PAGE>


     During any  Commercial  Paper Rate  Period,  at or prior to 12:30 noon (New
York  City  time)  on each  Determination  Date,  the  Remarketing  Agent  shall
establish Calculation Periods and related Commercial Paper Rates. In determining
Calculation  Periods,  the  Remarketing  Agent shall take into  account  certain
factors set forth in the  Indenture.  The  Remarketing  Agent  shall  select the
Calculation  Periods and the applicable  Commercial  Paper Rates that,  together
with all other  Calculation  Periods and related  Commercial Paper Rates, in the
sole  judgment  of the  Remarketing  Agent,  will  result in the lowest  overall
borrowing cost on the Bonds or are otherwise in the best financial  interests of
the Company,  as determined in  consultation  with the Company.  Any Calculation
Period established under the Indenture may not extend beyond the second Business
Day next preceding the expiration date of the Support  Facility or the day prior
to the maturity date of the Bonds. The Authority, at the request of the Company,
may place  limitations  upon the  establishment  of the  Calculation  Periods in
accordance with the Indenture.

     While the Bonds bear  interest at a Commercial  Paper Rate, a Daily Rate, a
Weekly Rate or a Monthly Rate,  interest accrued on such Bonds shall be computed
on the basis of a 365-day year, as  applicable,  for the number of days actually
elapsed.  While the Bonds bear  interest at a Semi-annual  Rate,  Term Rate or a
Fixed Rate,  interest  accrued on such Bonds shall be computed on the basis of a
360-day year, consisting of twelve (12) thirty (30) day months.

     The Bonds shall cease to bear  interest at the  Adjustable  Rate or a Fixed
Rate,  as the case may be,  then borne by the Bonds and shall bear  interest  at
such  different  Adjustable  Rate or Fixed  Rate as shall  be  specified  by the
Authority,  at the request of the Company,  in accordance  with the terms of the
Indenture.

     Fixed Rate. On a Fixed Rate Conversion  Date, the Bonds shall cease to bear
interest at the Adjustable  Rate then borne by the Bonds and shall bear interest
at a Fixed  Rate upon the  election  by the  Authority,  at the  request  of the
Company, to exercise its Option to Convert (as defined in the Indenture).  Fixed
Rate means the lesser of (i) 18%, (ii) 110% of the Fixed Rate Index on such date
and (iii)  the rate of  interest  per annum  established  and  certified  to the
Trustee by the  Remarketing  Agent no later than 12:00 noon (New York City time)
on and as of such date as the minimum rate of interest  per annum which,  in the
opinion of the Remarketing  Agent,  would be necessary on and as of such date to
remarket the Bonds in a secondary market transaction at a price equal to 100% of
the outstanding  principal amount thereof.  A Fixed Rate shall be established in
accordance  with the  terms  and  subject  to the  conditions  set  forth in the
Indenture.  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.

Redemption Provisions

     Optional Redemption. The Bonds shall be subject to redemption at the option
of the Authority upon the request of the Company:

     During any  Commercial  Paper Rate  Period,  the Bonds  shall be subject to
redemption  on each  Interest  Payment  Date,  as a  whole  or in  part,  at the
principal amount thereof.


                                       5
<PAGE>


     During any Daily Rate Period,  the Bonds shall be subject to  redemption on
any Business Day, as a whole or in part, at the principal  amount thereof,  plus
accrued and unpaid interest to the date fixed for redemption, if any.

     During any Weekly Rate Period,  the Bonds shall be subject to redemption on
any Business Day, as a whole or in part, at the principal  amount thereof,  plus
accrued and unpaid interest to the date fixed for redemption, if any.

     During any Monthly Rate Period, the Bonds shall be subject to redemption on
each Interest  Payment  Date,  as a whole or in part,  at the  principal  amount
thereof.

     During  any  Semi-annual  Rate  Period,  the  Bonds  shall  be  subject  to
redemption  on each  Interest  Payment  Date,  as a  whole  or in  part,  at the
principal amount thereof.

     During any Term Rate or Fixed Rate  Period,  such Bonds shall be subject to
redemption  in whole at any time on any  Business Day or in part on any Interest
Payment  Date as  follows:  after the No-Call  Period,  which shall begin on the
first day of the Calculation  Period applicable to such Bonds or on a Fixed Rate
Conversion Date, as the case may be, at a redemption price equal,  initially, to
the principal  amount  thereof,  plus a premium  equal to the  percentage of the
principal amount to be redeemed (the "Initial Premium"), plus accrued and unpaid
interest if paid on a Business  Day other than an  Interest  Payment  Date.  The
premium  percentage,  if any,  shall  decline  by the  percentage  shown  in the
Reduction in Premium column on each  anniversary of the date on which such Bonds
are first redeemable until the Bonds shall be redeemable without premium.

<TABLE>
         Calculation Period or Period to Maturity
         Applicable to Subject Bonds
         ---------------------------
<CAPTION>
   Equal to or                 But Less               No-Call                Initial               Reduction
   Greater Than                  Than                 Period                 Premium               in Premium
   ------------                  ----                 ------                 -------               ----------
      <S>                   <C>                 <C>                           <C>                   <C>
       18 years                   N/A                 8 Years                  1 1/2%                1/2%
       12 years              18 Years                 6 Years                  1                     1/2
        7 Years              12 Years                 3 Years                  0                     0
        5 Years               7 Years                 2 Years                  0                     0
        4 Years               5 Years                 2 Years                  0                     0
        3 Years               4 Years                 2 Years                  0                     0
        0 Years               3 Years            Not callable
</TABLE>

     If upon  establishment of a Term Rate Period or a Fixed Rate Period, as the
case may be, the Remarketing  Agent  certifies to the Trustee,  Bond Counsel and
the   Authority   in  writing  that  the   schedule  is  not   consistent   with
then-prevailing  market conditions,  the Authority at the request of the Company
may revise the  Initial  Premium,  Reductions  in Premium  and  No-Call  Periods
without  the  approval  of  the  Holders  to  reflect   then-prevailing   market
conditions,  upon  receipt of an opinion of Bond  Counsel to the effect that any
revisions  pursuant to this paragraph,  either by itself or in conjunction  with
the  establishment of a Calculation  Period or a Fixed Rate, as the case may be,
are made in accordance  with the Indenture,  is permitted under the Act and will
not  adversely  affect the  exclusion of interest on the Bonds from gross income
for federal income tax purposes.


                                       6
<PAGE>


     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
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.  While the Bonds bear  interest  at an Auction
Period  Rate,  in any Auction  Period  other than a daily  Auction  Period,  the
redemption shall occur on the Interest  Payment Date immediately  preceding such
redemption  date.  When in a  Special  Auction  Rate  Period,  the  Bonds may be
redeemed prior to the end of the Special Auction Rate Period.  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.

     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 that the business, properties,


                                       7
<PAGE>


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 this paragraph.

     Mandatory Redemption Upon State Furnishing Funds.  Pursuant to 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,  the
Bonds on any Interest  Payment Date not less than twenty years after the date of
initial  delivery of the Bonds.  Any such  redemption  shall be at a  redemption
price equal to the optional redemption price, if any, applicable on such date or
if no such optional redemption price is applicable at a redemption price of 105%
of the  principal  amount  thereof,  in either case,  together  with accrued and
unpaid  interest,  if any, to the date fixed for  redemption,  all in the manner
provided in the Indenture.

     Purchase  Upon  Election of Holder.  During any Daily Rate Period or Weekly
Rate  Period,  any Bond or portion  thereof in a  principal  amount  equal to an
authorized  denomination  (so long as the  principal  amount not purchased is an
authorized  denomination)  shall be  purchased  on the demand of the  registered
owner thereof,  on any Business Day at the Purchase Price,  upon delivery to the
Registrar and Paying Agent at the applicable  Principal  Corporate  Trust Office
and to the Remarketing Agent at its principal office by the close of business on
any  Business  Day of a Notice of  Election to Tender  (the  substance  of which
notice must also be given  telephonically  to the Remarketing  Agent prior to or
simultaneously with such notice). The date on which such Bond shall be purchased
shall,  at the  request  of the  registered  owner,  (i) if the Bond then  bears
interest at a Daily Rate,  be the date of delivery of such notice if such notice
is delivered to the  Registrar  and Paying  Agent and the  Remarketing  Agent by
10:00  a.m.  (New  York  City  time)  on such  date or may be any  Business  Day
thereafter,  and (ii) if the Bond then bears interest at a Weekly Rate, shall be
a Business Day not prior to the 7th day next succeeding the date of the delivery
of such notice to the Registrar and Paying Agent and the Remarketing Agent.


                                       8
<PAGE>


     During any Monthly Rate Period or  Semi-annual  Rate  Period,  this Bond or
portion  hereof in a principal  amount equal to an authorized  denomination  (so
long as the principal amount not purchased is an authorized  denomination) shall
be purchased on the demand of the registered owner thereof on the first Business
Day following each  Calculation  Period at a price equal to the principal amount
thereof,  upon  delivery to the  Registrar  and Paying  Agent at the  applicable
Principal  Corporate Trust Office and to the Remarketing  Agent at its principal
office of a Notice of  Election to Tender (the  substance  of which  notice must
also be given telephonically to the Remarketing Agent prior to or simultaneously
with the  delivery  of such  notice) on or prior to a Business  Day which is not
less than 10 days, in the case of Bonds bearing interest at a Semi-annual  Rate,
or 7 days, in the case of Bonds bearing interest at a Monthly Rate, prior to the
proposed date of purchase. No tender may occur pursuant to the above without the
consent of the Bond Insurer unless a Liquidity Facility is in effect.

     Mandatory Tender for Purchase Upon a Change in the Interest Rate Mode. Upon
a Change in the  Interest  Rate Mode,  the Bonds  shall be subject to  mandatory
tender for purchase in accordance  with the  Indenture on the effective  date of
such Change in the Interest  Rate Mode at the Purchase  Price (as defined in the
Indenture).

     Mandatory  Tender  for  Purchase  on  Business  Day  following  Calculation
Periods.  Bonds bearing a Commercial  Paper Rate or a Term Rate shall be subject
to  mandatory  tender for  purchase  in  accordance  with the  Indenture  on the
Business Day immediately  following each Calculation  Period at a price equal to
the Purchase Price.

     Mandatory  Tender For Purchase Upon  Expiration of any Support  Facility or
Upon Delivery of an Alternate Support  Facility.  On the third Business Day next
preceding  the date of expiration  of any Support  Facility,  the Bonds shall be
subject to mandatory  purchase at the Purchase Price,  unless on or prior to the
35th day prior to such date of expiration the Company on behalf of the Authority
has furnished to the Trustee an agreement to extend such Support  Facility.  The
Bonds shall also be subject to mandatory  purchase at the Purchase  Price on the
date there is delivered an Alternate  Support  Facility meeting the requirements
of the  Indenture.  No tender for  purchase  of any Bonds shall be required if a
Fixed Rate  Conversion Date shall have occurred with respect to such Bonds or if
such Bonds have been  converted to bear interest at an Auction  Period Rate on a
date prior to such date of expiration.

     Mandatory  Tender  Upon  Occurrence  of any  Terminating  Event.  Upon  the
occurrence  of any  Terminating  Event,  the Bonds shall be subject to mandatory
tender for  purchase  on a  Business  Day  selected  by the  Trustee;  provided,
however,  such mandatory tender shall not occur later than the 5th day after the
receipt of notice thereof by the Trustee at the Purchase  Price.  The Bonds will
not be subject to such mandatory  tender for purchase  during any Auction Period
Rate Period or any Fixed Rate Period.

     Procedure  for  Redemption.  In the event any of the Bonds are  called  for
redemption,  the Trustee  shall give notice,  or cause the  Registrar and Paying
Agent to give notice in the name of the  Authority,  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


                                       9
<PAGE>


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.

     General  Provisions  Applicable  to  Mandatory  and  Optional  Tenders  for
Purchase  of  Bonds.  If  interest  has been  paid on the  Bonds,  or an  amount
sufficient to pay interest  thereon has been deposited in the Bond Fund Account,
or an amount  sufficient to pay accrued interest  thereon,  if any, has been set
aside in the Bond Purchase Fund under the Bond Purchase Trust Agreement, and the
Purchase  Price shall be available  under the Bond  Purchase Fund for payment of
Bonds subject to tender for purchase in  accordance  with the Indenture and if a
registered  owner fails to deliver or does not properly deliver the Bonds to the
Registrar  and Paying  Agent for which a Notice of  Election  to Tender has been
properly  filed or which are  subject to  mandatory  tender for  purchase on the
purchase date therefor,  such Bonds shall  nevertheless  be deemed  tendered and
purchased on the date  established for the purchase  thereof,  no interest shall
accrue  on such  Bonds  from and  after  the date of  purchase  and such  former
registered  owners shall have no rights,  benefits or security  hereunder as the
registered owners of such Bonds,  except the right to receive the Purchase Price
of and accrued and unpaid  interest to the purchase  date, if any, on such Bonds
upon delivery  thereof to the Registrar and Paying Agent in accordance  with the
provisions hereof. The purchaser of any such Bonds remarketed by the Remarketing
Agent, or the issuer of any Support Facility,  to the extent Bonds are purchased
with the  proceeds  of a draw on, or  borrowing  or payment  under,  the Support
Facility,  shall be treated as the registered  owner thereof for all purposes of
the Indenture. The payment of Bonds tendered upon the election of the registered
owner  shall be subject to  delivery  of such Bonds duly  endorsed  in blank for
transfer  or  accompanied   by  an  instrument  of  transfer   thereof  in  form
satisfactory to the Registrar and Paying Agent executed in blank for transfer at
the  applicable  Principal  Corporate  Trust Office of the  Registrar and Paying
Agent at or prior to 10:00 a.m.  (11:30 a.m. for Bonds  bearing  interest at the
Weekly Rate and 12:00 noon,  for Bonds bearing  interest at the Daily Rate) (New
York City time),  on a specified  purchase  date. The Registrar and Paying Agent
may refuse to make payment  with respect to any Bonds  tendered for purchase not
endorsed in blank or for which an  instrument  of transfer  satisfactory  to the
Registrar and Paying Agent has not been provided.

     The Purchase  Price of Bonds subject to tender for purchase in an aggregate
principal amount of at least one million dollars  ($1,000,000)  shall be payable
in immediately  available funds or by wire transfer upon written notice from the
registered owner thereof 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 such written  notice is received by the  Registrar  and
Paying Agent not less than five days prior to the related purchase date.

     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.


                                       10
<PAGE>


     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.












                                       11
<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




                                       12
<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:







                                       13
<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



                                       14
<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




                                       15
<PAGE>



                  [Form of Bond Bearing an Auction Period Rate]

     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 B


No. 2005 BR-                                                       $55,000,000


<TABLE>
<CAPTION>
 INTEREST RATE
OR INTEREST RATE
 MODE ON DATE OF                                                  ORIGINAL
 AUTHENTICATION                   MATURITY DATE                   ISSUE DATE                   CUSIP
 --------------                   -------------                   ----------                   -----
<S>                               <C>                         <C>
                                   June 1, 2025                November 1, 2005
</TABLE>

REGISTERED OWNER:

PRINCIPAL SUM:  FIFTY-FIVE MILLION DOLLARS

     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 such date shall not be an Interest Payment Date (as
hereinafter  defined) from the next preceding  Interest  Payment Date, or if the
date of  authentication  is  after  the  Record  Date  next  preceding  the next
succeeding  Interest Payment Date from the next succeeding Interest Payment Date
until the payment of such  principal  amount in full, at the Auction Period Rate
hereinafter described, such interest being payable on each Interest Payment Date
in each year,  by check  mailed to the  registered  owner hereof at such owner's


                                       16
<PAGE>


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,  (ii)
prior to any Fixed Rate Conversion Date, 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,  all as set forth in such
registration  books at the close of  business  on the  appropriate  Record  Date
preceding an Interest  Payment  Date. If interest is in default it shall be paid
to the  person  in  whose  name  this  bond is  registered  as set  forth on the
registration  books as of the 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  Principle  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 B", issued in the
aggregate  principal  amount of fifty-five  million dollars  ($55,000,000)  (the
"Bonds").  In order to distinguish  between Bonds which are subject to different
interest rate  determination  methods and other features and to distinguish  the
portion of the Bonds to be offered or remarketed by any  particular  underwriter
or Remarketing  Agent, 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  Account  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.


                                       17
<PAGE>


     The terms  and  provisions  pertaining  to Bonds  bearing  a Fixed  Rate or
another Adjustable Rate are set forth in a separate bond certificate.

     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  premium,  if  any,  and  interest  on and the
principal of 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


                                       18
<PAGE>


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.

     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 2.03 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.

Interest Rate Provisions

     THE AUCTION PERIOD, THE AUCTION PERIOD RATE, THE SELECTION OF THE METHOD OF
DETERMINING  THE  AUCTION  PERIOD  RATE AND DATES OF PAYMENT OF  INTEREST ON THE
BONDS AND THE AUCTION  PROCEDURES  RELATED  THERETO WILL BE DETERMINED  UPON THE
TERMS  AND  CONDITIONS,  INCLUDING  REQUIRED  NOTICES  THEREOF  TO  THE  OWNERS,
DESCRIBED IN THE INDENTURE,  INCLUDING  APPENDIX B THERETO,  TO WHICH PROVISIONS
SPECIFIC  REFERENCE  IS  HEREBY  MADE AND ALL OF  WHICH  PROVISIONS  ARE  HEREBY
SPECIFICALLY INCORPORATED HEREIN BY REFERENCE.

     During any  Auction  Rate  Period,  the Bonds  shall bear  interest  at the
Auction Period Rate as provided in the Indenture, including, without limitation,
Appendix B thereto.

     The Bonds may also bear interest at one of the following  interest rates at
the times and in the  manner set forth in the  Indenture:  a  "Commercial  Paper
Rate," a "Daily Rate," a "Weekly Rate," a "Monthly Rate," a "Semi-annual  Rate",
a "Term Rate" or a "Fixed Rate".

Redemption Provisions

     Optional  Redemption.  The Bonds  shall be  subject to  redemption,  at the
option of the  Authority  upon the request of the  Company,  on the Business Day
immediately  succeeding  each  Auction  Date,  as a  whole  or in  part,  at the
principal amount thereof plus accrued interest to the date fixed for redemption.

     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


                                       19
<PAGE>


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
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 this paragraph.

     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 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


                                       20
<PAGE>


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 this paragraph.

     Mandatory Redemption Upon State Furnishing Funds.  Pursuant to 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,  the
Bonds on any Interest  Payment Date not less than twenty years after the date of
initial  delivery of the Bonds.  Any such  redemption  shall be at a  redemption
price equal to the optional redemption price, if any, applicable on such date or
if no such optional redemption price is applicable at a redemption price of 105%
of the  principal  amount  thereof,  in either case,  together  with accrued and
unpaid  interest,  if any, to the date fixed for  redemption,  all in the manner
provided in the Indenture.

     Procedure  for  Redemption.  In the event any of the Bonds are  called  for
redemption,  the Trustee  shall give notice,  or cause the  Registrar and Paying
Agent to give notice in the name of the  Authority,  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  such  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 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 given.

     Mandatory  Tender for Purchase  Upon a Change in the  Interest  Rate Mode .
Upon a Change in the Interest Rate Mode, the Bonds shall be subject to mandatory
tender for purchase in accordance  with the  Indenture on the effective  date of
such Change in the Interest Rate Mode at the Purchase Price.

     General  Provisions  Applicable to Mandatory Tenders for Purchase of Bonds.
If interest has been paid on the Bonds, or an amount  sufficient to pay interest
thereon has been deposited in the Bond Fund Account,  or an amount sufficient to
pay accrued  interest  thereon,  if any, has been set aside in the Bond Purchase
Fund held under the Bond Purchase Trust Agreement,  and the Purchase Price shall
be available under the Bond Purchase Fund for payment of Bonds subject to tender
for purchase upon a Change in the Interest  Rate Mode and if a registered  owner
fails to deliver or does not properly  deliver such Bonds to the  Registrar  and
Paying Agent on the purchase date  therefor,  such Bonds shall  nevertheless  be


                                       21
<PAGE>


deemed tendered and purchased on the date established for the purchase  thereof,
no interest  shall  accrue on such Bonds from and after the date of purchase and
such  former  registered  owners  shall have no  rights,  benefits  or  security
hereunder as the  registered  owners of such Bonds,  except the right to receive
the Purchase  Price of and interest to the purchase  date, if any, on such Bonds
upon delivery  thereof to the Registrar and Paying Agent in accordance  with the
provisions hereof. The purchaser of any such Bonds remarketed by the Remarketing
Agent, or the issuer of any Support Facility,  to the extent Bonds are purchased
with the  proceeds  of a draw on, or  borrowing  or payment  under,  the Support
Facility,  shall be treated as the registered  owner thereof for all purposes of
the Indenture. The payment of Bonds tendered upon the election of the registered
owner  shall be subject to  delivery  of such Bonds duly  endorsed  in blank for
transfer  or  accompanied   by  an  instrument  of  transfer   thereof  in  form
satisfactory to the Registrar and Paying Agent executed in blank for transfer at
the  applicable  Principal  Corporate  Trust Office of the  Registrar and Paying
Agent at or prior to 10:00 a.m.  (New York City time),  on a specified  purchase
date.  The Registrar and Paying Agent may refuse to make payment with respect to
any Bonds tendered for purchase not endorsed in blank or for which an instrument
of  transfer  satisfactory  to the  Registrar  and  Paying  Agent  has not  been
provided.

     The Purchase  Price of Bonds subject to tender for purchase in an aggregate
principal amount of at least one million dollars  ($1,000,000)  shall be payable
in immediately  available funds or by wire transfer upon written notice from the
registered owner thereof 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 such written  notice is received by the  Registrar  and
Paying Agent not less than five days prior to the related purchase date.

     Registered  owners of Auction Rate Bonds  subject to  mandatory  tender for
purchase  upon a Change in the Interest  Rate Mode to or from an Auction  Period
Rate  Period  shall have no right to retain  such Bonds and shall be required to
tender such Auction Rate Bonds on the date  established for the mandatory tender
for purchase thereof.

     The Bonds may be transferred  or exchanged by the registered  owner hereof,
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 hereof 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  herefor.  Transfer of Bonds bearing
an Auction  Period  Rate is  subject to the  provisions  of the  Indenture.  The
Indenture is available for inspection at the office of the Trustee.

     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.




                                       22
<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




                                       23
<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:




                                       24
<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





                                       25
<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




                                       26
<PAGE>



                                                                      APPENDIX B

                             AUCTION RATE PROVISIONS

                                   ARTICLE I

                                   Definitions

Section 1.01. Definitions.  In addition to the words and terms elsewhere defined
in the Indenture,  the following  words and terms as used in this Appendix B and
elsewhere in the Indenture have the following  meanings with respect to Bonds in
an Auction Rate Period unless the context or use indicates  another or different
meaning or intent:

     "Agent  Member"  means a member  of,  or  participant  in,  the  Securities
Depository who shall act on behalf of a Bidder.

     "All Hold Rate" means, as of any Auction Date, 45% of the Reference Rate in
effect on such Auction Date.

     "Applicable  Percentage"  means,  as of any Auction Date, the Percentage of
Reference  Rate (in effect on such Auction Date)  determined as set forth below,
based on the  Prevailing  Rating of Bonds in effect at the close of  business on
the Business Day immediately preceding such Auction Date:

                                                          Percentage
                   Prevailing Rating                  of Reference Rate
                   -----------------                  -----------------

                   AAA/AAA/Aaa                                175%
                   AA/AA/Aa                                   200
                   A/A/A                                      250
                   BBB/BBB/Baa                                275
                   Below BBB/BBB/Baa                          300



     "Auction" means each periodic implementation of the Auction Procedures.

     "Auction  Agent" means the auctioneer  appointed in accordance with Section
2.01 or 2.02 of this Appendix B.

     "Auction  Agreement"  means an agreement  between the Company,  the Auction
Agent and the Trustee  pursuant to which the Auction  Agent agrees to follow the
procedures specified in this Appendix B, with respect to the Bonds in an Auction
Rate Period, as such agreement may from time to time be amended or supplemented.

                                  Appendix B-1


<PAGE>


     "Auction Date" means during any period in which the Auction  Procedures are
not suspended in accordance with the provisions hereof:

     (a) if the Bonds are in a daily Auction Period, each Business Day;

     (b) if the Bonds are in a Special Rate Period, the last Business Day of the
Special Rate Period; and

     (c) if the Bonds are in any other  Auction  Period,  the  Business Day next
preceding  each Interest  Payment Date for such Bonds (whether or not an Auction
shall be conducted on such date);

provided,  however,  that the last  Auction  Date  with  respect  to Bonds in an
Auction Period other than a daily Auction Period or Special Rate Period shall be
the earlier of (i) the Business  Day next  preceding  the Interest  Payment Date
next  preceding  the effective  date of a Change in the Interest Rate Mode,  and
(ii) the Business Day next  preceding the Interest  Payment Date next  preceding
the Stated Maturity for such Bonds; and provided, further, that if the Bonds are
in a daily Auction Period, the last Auction Date shall be the earlier of (x) the
Business Day next  preceding the effective date of a Change in the Interest Rate
Mode and (y) the Business Day next preceding the Stated Maturity for the Bonds.

     The last  Business  Day of a Special  Rate Period shall be the Auction Date
for the Auction Period which begins on the next succeeding Business Day, if any.
On the Business Day preceding  the  conversion  from a daily  Auction  Period to
another  Auction  Period,  there shall be two  Auctions,  one for the last daily
Auction Period and one for the first Auction Period following the conversion.

     "Auction Period" means:

     (a) a Special Rate Period;

     (b) with respect to Bonds in a daily Auction Period,  a period beginning on
each  Business  Day and  extending  to but not  including  the  next  succeeding
Business Day;

     (c) with respect to Bonds in a seven-day  Auction  Period and with Auctions
generally  conducted on (i) Fridays,  a period of generally seven days beginning
on a Monday (or the day following  the last day of the prior  Auction  Period if
the prior  Auction  Period  does not end on a Sunday)  and  ending on the Sunday
thereafter  (unless such Sunday is not followed by a Business Day, in which case
on the next succeeding day which is followed by a Business Day), (ii) Mondays, a
period of generally  seven days beginning on a Tuesday (or the day following the
last day of the prior Auction Period if the prior Auction Period does not end on
a Monday)  and  ending  on the  Monday  thereafter  (unless  such  Monday is not
followed by a Business  Day, in which case on the next  succeeding  day which is
followed by a Business Day),  (iii)  Tuesdays,  a period of generally seven days
beginning on a Wednesday (or the day following the last day of the prior Auction
Period if the prior Auction  Period does not end on a Tuesday) and ending on the
Tuesday  thereafter  (unless such Tuesday is not followed by a Business  Day, in


                                  Appendix B-2
<PAGE>


which case on the next succeeding day which is followed by a Business Day), (iv)
Wednesdays, a period of generally seven days beginning on a Thursday (or the day
following the last day of the prior Auction  Period if the prior Auction  Period
does not end on a Wednesday) and ending on the Wednesday thereafter (unless such
Wednesday  is not  followed  by a  Business  Day,  in  which  case  on the  next
succeeding day which is followed by a Business Day), and (v) Thursdays, a period
of generally seven days beginning on a Friday (or the day following the last day
of the  prior  Auction  Period  if the prior  Auction  Period  does not end on a
Thursday)  and ending on the Thursday  thereafter  (unless such  Thursday is not
followed by a Business  Day, in which case on the next  succeeding  day which is
followed by a Business Day);

     (d) with  respect to Bonds in a 14-day  Auction  Period  and with  Auctions
generally conducted on (i) Fridays, a period of generally 14 days beginning on a
Monday (or the last day of the prior Auction  Period if the prior Auction Period
does not end on a Sunday)  and ending on the second  Sunday  thereafter  (unless
such  Sunday  is not  followed  by a  Business  Day,  in which  case on the next
succeeding day which is followed by a Business Day),  (ii) Mondays,  a period of
generally 14 days  beginning on a Tuesday (or the last day of the prior  Auction
Period if the prior  Auction  Period does not end on a Monday) and ending on the
second Monday thereafter  (unless such Monday is not followed by a Business Day,
in which case on the next  succeeding  day which is followed by a Business Day),
(iii)  Tuesdays,  a period of generally 14 days beginning on a Wednesday (or the
last day of the prior Auction Period if the prior Auction Period does not end on
a Tuesday) and ending on the second Tuesday  thereafter  (unless such Tuesday is
not followed by a Business Day, in which case on the next  succeeding  day which
is followed by a Business Day), (iv)  Wednesdays,  a period of generally 14 days
beginning  on a  Thursday  (or the last day of the prior  Auction  Period if the
prior  Auction  Period  does not end on a  Wednesday)  and  ending on the second
Wednesday  thereafter  (unless such Wednesday is not followed by a Business Day,
in which case on the next  succeeding  day which is followed by a Business Day),
and (v)  Thursdays,  a period of generally 14 days beginning on a Friday (or the
last day of the prior Auction Period if the prior Auction Period does not end on
a Thursday) and ending on the second Thursday  thereafter  (unless such Thursday
is not  followed  by a Business  Day, in which case on the next  succeeding  day
which is followed by a Business Day);

     (e) with  respect to Bonds in a 28-day  Auction  Period  and with  Auctions
generally conducted on (i) Fridays, a period of generally 28 days beginning on a
Monday (or the last day of the prior Auction  Period if the prior Auction Period
does not end on a Sunday)  and ending on the fourth  Sunday  thereafter  (unless
such  Sunday  is not  followed  by a  Business  Day,  in which  case on the next
succeeding day which is followed by a Business Day),  (ii) Mondays,  a period of
generally 28 days  beginning on a Tuesday (or the last day of the prior  Auction
Period if the prior  Auction  Period does not end on a Monday) and ending on the
fourth Monday thereafter  (unless such Monday is not followed by a Business Day,
in which case on the next  succeeding  day which is followed by a Business Day),
(iii)  Tuesdays,  a period of generally 28 days beginning on a Wednesday (or the
last day of the prior Auction Period if the prior Auction Period does not end on
a Tuesday) and ending on the fourth Tuesday  thereafter  (unless such Tuesday is
not followed by a Business Day, in which case on the next  succeeding  day which
is followed by a Business Day), (iv)  Wednesdays,  a period of generally 28 days
beginning  on a  Thursday  (or the last day of the prior  Auction  Period if the
prior  Auction  Period  does not end on a  Wednesday)  and  ending on the fourth

                                  Appendix B-3
<PAGE>


Wednesday  thereafter  (unless such Wednesday is not followed by a Business Day,
in which case on the next  succeeding  day which is followed by a Business Day),
and (v)  Thursdays,  a period of generally 28 days beginning on a Friday (or the
last day of the prior Auction Period if the prior Auction Period does not end on
a Thursday) and ending on the fourth Thursday  thereafter  (unless such Thursday
is not  followed  by a Business  Day, in which case on the next  succeeding  day
which is followed by a Business Day);

     (f) with  respect to Bonds in a 35-day  Auction  Period  and with  Auctions
generally conducted on (i) Fridays, a period of generally 35 days beginning on a
Monday (or the last day of the prior Auction  Period if the prior Auction Period
does not end on Sunday) and ending on the fifth Sunday  thereafter  (unless such
Sunday is not followed by a Business  Day, in which case on the next  succeeding
day which is followed by a Business Day), (ii) Mondays, a period of generally 35
days  beginning on a Tuesday (or the last day of the prior Auction Period if the
prior  Auction  Period  does not end on Monday)  and ending on the fifth  Monday
thereafter  (unless such Monday is not followed by a Business Day, in which case
on the next succeeding day which is followed by a Business Day), (iii) Tuesdays,
a period of generally 35 days  beginning on a Wednesday  (or the last day of the
prior Auction  Period if the prior  Auction  Period does not end on Tuesday) and
ending on the fifth Tuesday thereafter (unless such Tuesday is not followed by a
Business  Day, in which case on the next  succeeding  day which is followed by a
Business  Day),  (iv)  Wednesdays,  a period of generally 35 days beginning on a
Thursday  (or the last day of the prior  Auction  Period  if the  prior  Auction
Period does not end on Wednesday) and ending on the fifth  Wednesday  thereafter
(unless such  Wednesday is not followed by a Business  Day, in which case on the
next  succeeding day which is followed by a Business Day), and (v) Thursdays,  a
period of generally 35 days  beginning on a Friday (or the last day of the prior
Auction  Period if the prior Auction Period does not end on Thursday) and ending
on the fifth  Thursday  thereafter  (unless  such  Thursday is not followed by a
Business  Day, in which case on the next  succeeding  day which is followed by a
Business Day);

     (g) with  respect to Bonds in a  three-month  Auction  Period,  a period of
generally three months (or shorter period upon a conversion from another Auction
Period)  beginning on the day following the last day of the prior Auction Period
and  ending  on the first day of the  month  that is the  third  calendar  month
following the beginning  date of such Auction  Period  (unless such first day of
the  month  is not  followed  by a  Business  Day,  in  which  case on the  next
succeeding day which is followed by a Business Day); and

     (h) with  respect  to Bonds in a  six-month  Auction  Period,  a period  of
generally six months (or shorter period upon a conversion  from another  Auction
Period)  beginning on the day following the last day of the prior Auction Period
and ending on the next succeeding April 30 or October 31;

provided, however, that
--------  -------

     (a) if there is a conversion of Bonds with Auctions generally  conducted on
Fridays (i) from a daily Auction Period to a seven-day Auction Period,  the next
Auction  Period  shall begin on the date of the  conversion  (i.e.  the Interest
Payment Date for the prior Auction  Period) and shall end on the next succeeding


                                  Appendix B-4
<PAGE>


Sunday  (unless such Sunday is not followed by a Business  Day, in which case on
the next  succeeding day which is followed by a Business Day), (ii) from a daily
Auction Period to a 14-day Auction  Period,  the next Auction Period shall begin
on the date of the  conversion  (i.e.  the  Interest  Payment Date for the prior
Auction  Period) and shall end on the Sunday (unless such Sunday is not followed
by a Business Day, in which case on the next succeeding day which is followed by
a  Business  Day)  which is more than  seven days but not more than 14 days from
such date of  conversion,  (iii) from a daily Auction Period to a 28-day Auction
Period,  the next Auction Period shall begin on the date of the conversion (i.e.
the  Interest  Payment Date for the prior  Auction  Period) and shall end on the
Sunday  (unless such Sunday is not followed by a Business  Day, in which case on
the next  succeeding day which is followed by a Business Day) which is more than
21 days but not more than 28 days from such date of conversion,  and (iv) from a
daily Auction Period to a 35-day Auction  Period,  the next Auction Period shall
begin on the date of the  conversion  (i.e.  the  Interest  Payment Date for the
prior  Auction  Period)  and  shall  end on Sunday  (unless  such  Sunday is not
followed by a Business  Day, in which case on the next  succeeding  day which is
followed by a Business  Day) which is more than 28 days but no more than 35 days
from such date of conversion;

     (b) if there is a conversion of Bonds with Auctions generally  conducted on
Mondays (i) from a daily Auction Period to a seven-day Auction Period,  the next
Auction  Period  shall begin on the date of the  conversion  (i.e.  the Interest
Payment Date for the prior Auction  Period) and shall end on the next succeeding
Monday  (unless such Monday is not followed by a Business  Day, in which case on
the next  succeeding day which is followed by a Business Day), (ii) from a daily
Auction Period to a 14-day Auction  Period,  the next Auction Period shall begin
on the date of the  conversion  (i.e.  the  Interest  Payment Date for the prior
Auction  Period) and shall end on the Monday (unless such Monday is not followed
by a Business Day, in which case on the next succeeding day which is followed by
a  Business  Day)  which is more than  seven days but not more than 14 days from
such date of  conversion,  (iii) from a daily Auction Period to a 28-day Auction
Period,  the next Auction Period shall begin on the date of the conversion (i.e.
the  Interest  Payment Date for the prior  Auction  Period) and shall end on the
Monday  (unless such Monday is not followed by a Business  Day, in which case on
the next  succeeding day which is followed by a Business Day) which is more than
21 days but not more than 28 days from such date of conversion,  and (iv) from a
daily Auction Period to a 35-day Auction  Period,  the next Auction Period shall
begin on the date of the  conversion  (i.e.  the  Interest  Payment Date for the
prior  Auction  Period)  and  shall  end on Monday  (unless  such  Monday is not
followed by a Business  Day, in which case on the next  succeeding  day which is
followed by a Business  Day) which is more than 28 days but no more than 35 days
from such date of conversion;

     (c) if there is a conversion of Bonds with Auctions generally  conducted on
Tuesdays (i) from a daily Auction Period to a seven-day Auction Period, the next
Auction  Period  shall begin on the date of the  conversion  (i.e.  the Interest
Payment Date for the prior Auction  Period) and shall end on the next succeeding
Tuesday (unless such Tuesday is not followed by a Business Day, in which case on
the next  succeeding day which is followed by a Business Day), (ii) from a daily
Auction Period to a 14-day Auction  Period,  the next Auction Period shall begin
on the date of the  conversion  (i.e.  the  Interest  Payment Date for the prior
Auction  Period)  and shall  end on the  Tuesday  (unless  such  Tuesday  is not


                                  Appendix B-5
<PAGE>


followed by a Business  Day, in which case on the next  succeeding  day which is
followed  by a Business  Day) which is more than seven days but not more than 14
days from such date of conversion, (iii) from a daily Auction Period to a 28-day
Auction  Period,  the  next  Auction  Period  shall  begin  on the  date  of the
conversion  (i.e.  the Interest  Payment Date for the prior Auction  Period) and
shall end on the Tuesday (unless such Tuesday is not followed by a Business Day,
in which case on the next  succeeding  day which is followed by a Business  Day)
which  is more  than 21  days  but not  more  than  28 days  from  such  date of
conversion, and (iv) from a daily Auction Period to a 35-day Auction Period, the
next Auction Period shall begin on the date of the conversion (i.e. the Interest
Payment Date for the prior Auction Period) and shall end on Tuesday (unless such
Tuesday is not followed by a Business Day, in which case on the next  succeeding
day which is followed by a Business  Day) which is more than 28 days but no more
than 35 days from such date of conversion;

     (d) if there is a conversion of Bonds with Auctions generally  conducted on
Wednesdays (i) from a daily Auction Period to a seven-day  Auction  Period,  the
next Auction Period shall begin on the date of the conversion (i.e. the Interest
Payment Date for the prior Auction  Period) and shall end on the next succeeding
Wednesday  (unless such  Wednesday  is not followed by a Business  Day, in which
case on the next  succeeding day which is followed by a Business Day), (ii) from
a daily Auction Period to a 14-day Auction Period, the next Auction Period shall
begin on the date of the  conversion  (i.e.  the  Interest  Payment Date for the
prior Auction  Period) and shall end on the Wednesday  (unless such Wednesday is
not followed by a Business Day, in which case on the next  succeeding  day which
is followed  by a Business  Day) which is more than seven days but not more than
14 days from such date of  conversion,  (iii) from a daily  Auction  Period to a
28-day  Auction  Period,  the next Auction Period shall begin on the date of the
conversion  (i.e.  the Interest  Payment Date for the prior Auction  Period) and
shall end on the Wednesday  (unless such Wednesday is not followed by a Business
Day,  in which case on the next  succeeding  day which is followed by a Business
Day)  which is more  than 21 days but not more  than 28 days  from  such date of
conversion, and (iv) from a daily Auction Period to a 35-day Auction Period, the
next Auction Period shall begin on the date of the conversion (i.e. the Interest
Payment Date for the prior  Auction  Period) and shall end on Wednesday  (unless
such  Wednesday  is not  followed  by a Business  Day, in which case on the next
succeeding  day which is followed by a Business  Day) which is more than 28 days
but no more than 35 days from such date of conversion; and

     (e) if there is a conversion of Bonds with Auctions generally  conducted on
Thursdays (i) from a daily Auction  Period to a seven-day  Auction  Period,  the
next Auction Period shall begin on the date of the conversion (i.e. the Interest
Payment Date for the prior Auction  Period) and shall end on the next succeeding
Thursday  (unless such Thursday is not followed by a Business Day, in which case
on the next  succeeding  day which is followed by a Business  Day),  (ii) from a
daily Auction Period to a 14-day Auction  Period,  the next Auction Period shall
begin on the date of the  conversion  (i.e.  the  Interest  Payment Date for the
prior Auction Period) and shall end on the Thursday (unless such Thursday is not
followed by a Business  Day, in which case on the next  succeeding  day which is
followed  by a Business  Day) which is more than seven days but not more than 14
days from such date of conversion, (iii) from a daily Auction Period to a 28-day
Auction  Period,  the  next  Auction  Period  shall  begin  on the  date  of the
conversion  (i.e.  the Interest  Payment Date for the prior Auction  Period) and


                                  Appendix B-6
<PAGE>


shall end on the Thursday  (unless  such  Thursday is not followed by a Business
Day,  in which case on the next  succeeding  day which is followed by a Business
Day)  which is more  than 21 days but not more  than 28 days  from  such date of
conversion, and (iv) from a daily Auction Period to a 35-day Auction Period, the
next Auction Period shall begin on the date of the conversion (i.e. the Interest
Payment  Date for the prior  Auction  Period) and shall end on Thursday  (unless
such  Thursday  is not  followed  by a Business  Day,  in which case on the next
succeeding  day which is followed by a Business  Day) which is more than 28 days
but no more than 35 days from such date of conversion.

     "Auction  Period  Rate" means the rate of interest to be borne by the Bonds
during each Auction  Period  determined in accordance  with Section 2.03 of this
Appendix B;  provided,  however,  in no event may the Auction Period Rate exceed
the Maximum Allowed Rate.

     "Auction Procedures" means the procedures for conducting Auctions for Bonds
in an Auction Rate Period set forth in this Appendix B.

     "Auction Rate" means for each Auction  Period,  (i) if Sufficient  Clearing
Bids exist, the Winning Bid Rate,  provided,  however,  if all of such Bonds are
the subject of  Submitted  Hold  Orders,  the All Hold Rate with respect to such
Bonds and (ii) if  Sufficient  Clearing Bids do not exist,  the Maximum  Auction
Rate with respect to such Bonds,  provided,  however,  if the preceding  Auction
Period was a period of 35 days or less, the new Auction Period shall be the same
as the  preceding  Auction  Period,  and if the preceding  Auction  Period was a
period of greater  than 35 days,  the new  Auction  Period  shall be a seven-day
Auction Period.

     "Authorized Denominations" means $25,000 and integral multiples thereof, so
long as the Bonds bear interest at an Auction Period Rate.

     "Available  Bonds"  means on each Auction  Date,  the  aggregate  principal
amount of such Bonds that are not the subject of Submitted Hold Orders.

     "Bid" has the meaning  specified in subsection  (a) of Section 2.01 of this
Appendix B.

     "Bidder" means each Existing Owner and Potential Owner who places an Order.

     "Broker-Dealer"  means any entity that is  permitted  by law to perform the
function  required of a  Broker-Dealer  described  in this  Appendix B that is a
member of, or a direct participant in, the Securities Depository,  that has been
selected by the Company with the consent of the  Authority,  and that is a party
to a Broker-Dealer Agreement with the Auction Agent.

     "Broker-Dealer  Agreement"  means an agreement among the Auction Agent, the
Company  and a  Broker-Dealer  pursuant  to which such  Broker-Dealer  agrees to
follow the  procedures  described in this Appendix B, as such agreement may from
time to time be amended or supplemented.


                                  Appendix B-7
<PAGE>


     "Business  Day" in  addition  to any other  definition  of  "Business  Day"
included in the  Indenture  while the Bonds bear  interest at an Auction  Period
Rate, the term Business Day shall not include days on which the Auction Agent or
any Broker-Dealer are not open for business.

     "Default  Rate" means,  in respect of any Auction Period other than a daily
Auction  Period,  a per annum rate equal to three hundred  percent (300%) of the
Reference  Rate  determined on the Auction Date next  preceding the first day of
such Auction  Period or in the case of Bonds in a daily  Auction  Period,  three
hundred  percent  (300%) of the  Reference  Rate  determined on the Auction Date
which was the first day of such Auction Period,  provided,  however, the Default
Rate shall not exceed the Maximum Allowed Rate.

     "Existing  Owner"  means (a) with respect to and for the purpose of dealing
with the  Auction  Agent  in  connection  with an  Auction,  a  Person  who is a
Broker-Dealer listed in the Auction Agent's registry at the close of business on
the Business Day immediately preceding the Auction Date for such Auction and (b)
with  respect  to and  for  the  purpose  of  dealing  with a  Broker-Dealer  in
connection with an Auction, a Person who is a beneficial owner of the Bonds.

     "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 if  Fitch  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,  "Fitch"  shall be  deemed  to refer to such  other  nationally
recognized  rating  agency  designated  by the  Authority  at the request of the
Company.

     "Hold Order" has the meaning specified in subsection (a) of Section 2.01 of
this Appendix B.

     "Interest Payment Date" means:

     (a) when used with  respect to any Auction  Period  (including  the initial
Auction  Period  commencing on and including the Effective Date or the effective
date of a Change in the Interest  Rate Mode, as the case may be, and expiring on
and  including  the  initial  Auction  Date  specified  in  Section  3.03 of the
Indenture or  determined  and certified by the Company in writing to the Trustee
on or prior to the effective  date of a Change in the Interest Rate Mode (or, if
such initial  Auction Date is not followed by a Business Day, the next day which
is followed by a Business  Day)) other than a daily Auction  Period or a Special
Rate Period, the Business Day immediately following such Auction Period; and

     (b) when used with respect to a daily Auction  Period,  the first  Business
Day of the month immediately succeeding such Auction Period; and

     (c) when used with  respect to a Special Rate Period of (i) more than seven
but fewer than 92 days, the Business Day immediately following such Special Rate
Period,  or  (ii) 92 or more  days,  (A) in the  case  of  Bonds  with  Auctions
generally  conducted on Fridays,  each thirteenth  Monday after the first day of
such  Special  Rate  Period  or the next  Business  Day if such  Monday is not a


                                  Appendix B-8
<PAGE>


Business  Day and on the Business Day  immediately  following  such Special Rate
Period, (B) in the case of Bonds with Auctions  generally  conducted on Mondays,
each  thirteenth  Tuesday after the first day of such Special Rate Period or the
next  Business Day if such Tuesday is not a Business Day and on the Business Day
immediately  following  such Special Rate Period,  (C) in the case of Bonds with
Auctions generally  conducted on Tuesdays,  each thirteenth  Wednesday after the
first day of such Special Rate Period or the next Business Day if such Wednesday
is not a Business Day and on the Business Day immediately following such Special
Rate Period,  (D) in the case of Bonds with  Auctions  conducted on  Wednesdays,
each thirteenth  Thursday after the first day of such Special Rate Period or the
next Business Day if such Thursday is not a Business Day and on the Business Day
immediately following such Special Rate Period and (E) in the case of Bonds with
Auctions  generally  conducted on Thursdays,  each  thirteenth  Friday after the
first day of such Special Rate Period or the next Business Day if such Friday is
not a Business Day and on the Business Day  immediately  following  such Special
Rate Period.

     "LIBOR" on any date of determination for any Auction Period,  means (i) for
any Auction  Period of fewer than 49 days, the offered rate for deposits in U.S.
dollars  for a  one-month  period  which  appears on the  Telerate  Page 3750 at
approximately  11:00 A.M.,  London time,  on such date, or if such date is not a
date on which dealings in U.S.  dollars are  transacted in the London  interbank
market, then on the next preceding day on which such dealings were transacted in
such market (the  "calculation  date") and (ii) for any Auction Period of (A) 49
or more but fewer than 70 days,  such rates for  deposits in U.S.  dollars for a
two-month period,  (B) 70 or more but fewer than 85 days, the arithmetic average
of such rates for deposits in U.S. dollars for two and three-month  periods, (C)
85 or more but fewer than 120 days, such rate for deposits in U.S. dollars for a
three-month  period,  (D) 120 or more but fewer  than 148 days,  the  arithmetic
average of such  rates for  deposits  in U.S.  dollars  for three and  six-month
periods, (E) 148 or more but fewer than 180 days, such rate for deposits in U.S.
dollars for a  six-month  period,  (F) 180 or more but fewer than 225 days,  the
arithmetic  average  of such  rates for  deposits  in U.S.  dollars  for six and
nine-month  periods,  (G) 225 or more but  fewer  than 290  days,  such rate for
deposits in U.S. dollars for a nine-month period, (H) 290 or more but fewer than
325 days, the arithmetic  average of such rates for deposits in U.S. dollars for
nine-month  and  one-year  periods  and (I) 325 or more but fewer than 365 days,
such rate for deposits in U.S. dollars for a one-year period.

     "Maximum  Auction  Rate" means as of any Auction  Date,  the product of the
Reference Rate multiplied by the Applicable Percentage;  provided, however, that
in no event shall the Maximum  Auction  Rate  exceed the Maximum  Allowed  Rate,
anything herein to the contrary notwithstanding.

     "Moody's"  shall  mean  Moody's  Investors  Service  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.


                                  Appendix B-9
<PAGE>


     "Order" means a Hold Order, Bid or Sell Order.

     "Potential  Owner" means (a) with respect to and for the purpose of dealing
with the  Auction  Agent  in  connection  with an  Auction,  a  Person  who is a
Broker-Dealer listed in the Auction Agent's registry at the close of business on
the Business Day immediately preceding the Auction Date for such Auction and (b)
with  respect  to and  for  the  purpose  of  dealing  with a  Broker-Dealer  in
connection with an Auction, a Person who is or will be a beneficial owner of the
Bonds.

     "Prevailing Rating" means (a) AAA/AAA/Aaa, if the Bonds shall have a rating
of AAA by S&P and Fitch and a rating of Aaa by Moody's,  (b) if not AAA/AAA/Aaa,
AA/AA/Aa  if the Bonds shall have a rating of AA- or better by S&P and Fitch and
a rating of Aa3 or better by Moody's, (c) if not AAA/AAA/Aaa or AA/AA/Aa,  A/A/A
if the Bonds  shall  have a rating of A- or better by S&P and Fitch and a rating
of A3 or  better  by  Moody's,  (d)  if  not  AAA/AAA/Aaa,  AA/AA/Aa  or  A/A/A,
BBB/BBB/Baa  if the Bonds shall have a rating of BBB- or better by S&P and Fitch
and a rating of Baa3 or better by Moody's, and (e) if not AAA/AAA/Aaa, AA/AA/Aa,
A/A/A or BBB/BBB/Baa, then below BBB/BBB/Baa, whether or not the Bonds are rated
by any Rating Agency. For purposes of this definition,  S&P's and Fitch's rating
categories  of "AAA,"  "AA-," "A-" and "BBB-" and Moody's  rating  categories of
"Aaa,"  "Aa3,"  "A3" and  "Baa3"  shall be  deemed to refer to and  include  the
respective  rating  categories  correlative  thereto  in the event that any such
Rating  Agencies shall have changed or modified their generic rating  categories
or if any successor thereto appointed in accordance with the definitions thereof
shall use different  rating  categories.  If the Bonds are not rated by a Rating
Agency,  the requirement of a rating by such Rating Agency shall be disregarded.
If the ratings for the Bonds are split  between the  foregoing  categories,  the
lowest rating shall determine the Prevailing Rating.

     "Reference  Rate" shall have the meaning  specified in Section 2.06 of this
Appendix B.

     "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.

     "Sell Order" has the meaning specified in subsection (a) of Section 2.01 of
this Appendix B.

     "Special  Rate  Period"  means any  period of more than seven days but less
than five years  which is not  another  Auction  Period  and which  begins on an
Interest Payment Date and ends (i) in the case of Bonds with Auctions  generally
conducted  on  Fridays,  on a Sunday  unless  such  Sunday is not  followed by a
Business  Day, in which case on the next  succeeding  day which is followed by a


                                       Appendix B-10
<PAGE>


Business  Day, (ii) in the case of Bonds with  Auctions  generally  conducted on
Mondays,  on a Monday  unless such Monday is not followed by a Business  Day, in
which case on the next succeeding day which is followed by a Business Day, (iii)
in the case of Bonds with Auctions generally conducted on Tuesdays, on a Tuesday
unless such Tuesday is not followed by a Business Day, in which case on the next
succeeding  day which is followed by a Business  Day,  (iv) in the case of Bonds
with Auctions  generally  conducted on  Wednesdays,  on a Wednesday  unless such
Wednesday  is not  followed  by a  Business  Day,  in  which  case  on the  next
succeeding day which is followed by a Business Day, and (v) in the case of Bonds
with  Auctions  generally  conducted  on  Thursdays,  on a Thursday  unless such
Thursday is not followed by a Business Day, in which case on the next succeeding
day which is followed by a Business Day.

     "Submission  Deadline" means 1:00 p.m., New York City time, on each Auction
Date for Bonds not in a daily Auction Period and 11:00 a.m., New York City time,
on each Auction Date for Bonds in a daily Auction Period,  or such other time on
such date as shall be specified  from time to time by the Auction Agent pursuant
to the Auction  Agreement  as the time by which  Broker-Dealers  are required to
submit Orders to the Auction Agent.

     "Submitted Bid" has the meaning specified in subsection (b) of Section 2.03
of this Appendix B.

     "Submitted  Hold  Order" has the meaning  specified  in  subsection  (b) of
Section 2.03 of this
Appendix B.

     "Submitted  Order" has the meaning  specified in subsection  (b) of Section
2.03 of this Appendix B.

     "Submitted  Sell  Order" has the meaning  specified  in  subsection  (b) of
Section 2.03 of this Appendix B.

     "Sufficient  Clearing  Bids"  means with  respect to Bonds,  an Auction for
which the aggregate  principal amount of Bonds that are the subject of Submitted
Bids by  Potential  Owners  specifying  one or more  rates not  higher  than the
Maximum  Auction Rate is not less than the aggregate  principal  amount of Bonds
that are the subject of Submitted  Sell Orders and of Submitted Bids by Existing
Owners specifying rates higher than the Maximum Auction Rate.

     "United States Treasury  Securities" means direct obligations issued by the
United States government.

     "Winning Bid Rate" means with respect to Bonds the lowest rate specified in
any  Submitted  Bid for such Bond which if selected by the Auction  Agent as the
Auction Period Rate would cause the aggregate principal amount of Bonds that are
the subject of Submitted Bids specifying a rate not greater than such rate to be
not less than the aggregate principal amount of Available Bonds.

     Section 1.02.  Rules of  Construction.  (a) This Appendix B constitutes  an
integral part of the Appendix A and,  except to the extent  provided in the next
sentence,  has the same force and effect as if set forth in  Appendix  A. In the
event of any conflict  between this  Appendix B and Appendix A, Appendix A shall
control.


                                  Appendix B-11
<PAGE>


     (b)  References  in this  Appendix B to Articles  or  Sections  are to such
Article or Section of this Appendix B.

                                   ARTICLE II

                               Auction Procedures

     Section 2.01. Orders by Existing Owners and Potential Owners.  (a) Prior to
the Submission Deadline on each Auction Date:

     (i) each  Existing  Owner may submit to a  Broker-Dealer,  in writing or by
such  other  method as shall be  reasonably  acceptable  to such  Broker-Dealer,
information as to:

          (A) the principal amount of Bonds, if any, held by such Existing Owner
     which such Existing Owner  irrevocably  commits to continue to hold for the
     next succeeding Auction Period without regard to the rate determined by the
     Auction Procedures for such Auction Period,

          (B) the principal amount of Bonds, if any, held by such Existing Owner
     which such Existing Owner  irrevocably  commits to continue to hold for the
     next  succeeding  Auction  Period  if the rate  determined  by the  Auction
     Procedures  for such  Auction  Period  shall  not be less than the rate per
     annum then  specified by such Existing Owner (and which such Existing Owner
     irrevocably offers to sell on the next succeeding Interest Payment Date (or
     the same day in the case of a daily Auction  Period) if the rate determined
     by the Auction  Procedures for the next succeeding  Auction Period shall be
     less than the rate per annum then specified by such Existing Owner), and/or

          (C) principal  amount of Bonds,  if any,  held by such Existing  Owner
     which such Existing Owner irrevocably offers to sell on the next succeeding
     Interest  Payment  Date (or on the same day in the case of a daily  Auction
     Period) without regard to the rate determined by the Auction Procedures for
     the next succeeding Auction Period; and

     (ii) for the purpose of  implementing  the  Auctions and thereby to achieve
the lowest possible interest rate on the Bonds, the Broker-Dealers shall contact
Potential  Owners,  including Persons that are Existing Owners, to determine the
principal  amount of Bonds, if any, which each such Potential Owner  irrevocably
offers to purchase if the rate determined by the Auction Procedures for the next
succeeding  Auction Period is not less than the rate per annum then specified by
such Potential Owner.


                                  Appendix B-12
<PAGE>


     For the purposes hereof, an Order containing the information referred to in
clause (i)(A) above is herein referred to as a "Hold Order", an Order containing
the information referred to in clause (i)(B) or (ii) above is herein referred to
as a "Bid", and an Order containing the information referred to in clause (i)(C)
above is herein referred to as a "Sell Order."

     (b) (i) A Bid by an Existing Owner shall constitute an irrevocable offer to
sell:

          (A) the  principal  amount of Bonds  specified in such Bid if the rate
     determined  by the Auction  Procedures  on such  Auction Date shall be less
     than the rate specified therein; or

          (B) such principal  amount or a lesser principal amount of Bonds to be
     determined as described in subsection  (a)(v) of Section 2.04 hereof if the
     rate  determined  by the Auction  Procedures  on such Auction Date shall be
     equal to such specified rate; or

          (C) a lesser  principal  amount of Bonds to be determined as described
     in subsection  (b)(iv) of Section 2.04 hereof if such  specified rate shall
     be higher than the Maximum Auction Rate and Sufficient Clearing Bids do not
     exist.

     (ii) A Sell Order by an Existing  Owner  shall  constitute  an  irrevocable
offer to sell:

          (A) the principal amount of Bonds specified in such Sell Order; or

               (B) such principal  amount or a lesser  principal amount of Bonds
          as  described  in  subsection   (b)(iv)  of  Section  2.04  hereof  if
          Sufficient Clearing Bids do not exist.

     (iii) A Bid by a Potential Owner shall  constitute an irrevocable  offer to
purchase:

          (A) the  principal  amount of Bonds  specified in such Bid if the rate
     determined  by the Auction  Procedures on such Auction Date shall be higher
     than the rate specified therein; or

          (B) such  principal  amount or a lesser  principal  amount of Bonds as
     described  in  subsection  (a)(vi)  of  Section  2.04  hereof  if the  rate
     determined by the Auction Procedures on such Auction Date shall be equal to
     such specified rate.

          (c) Anything herein to the contrary notwithstanding:

     (i) for  purposes of any  Auction,  any Order which  specifies  Bonds to be
held,  purchased  or  sold in a  principal  amount  which  is not  equal  to the
Authorized  Denomination  for Bonds or an  integral  multiple  thereof  shall be
rounded down to the nearest amount that is equal to the Authorized  Denomination
for Bonds, and the Auction Agent shall conduct the Auction Procedures as if such
Order had been submitted in such lower amount;


                                       Appendix B-13
<PAGE>


     (ii) for purposes of any Auction other than during a daily Auction  Period,
any portion of an Order of an Existing  Owner which  relates to a Bond which has
been  called  for  redemption  on or prior to the  Interest  Payment  Date  next
succeeding  such  Auction  shall be invalid with respect to such portion and the
Auction  Agent shall  conduct the Auction  Procedures as if such portion of such
Order had not been submitted;

     (iii) for purposes of any Auction other than during a daily Auction Period,
no  portion of a Bond which has been  called for  redemption  on or prior to the
Interest  Payment Date next  succeeding  such  Auction  shall be included in the
calculation of Available Bonds for such Auction; and

     (iv) the Auction  Procedures  shall be suspended  with respect to the Bonds
during the  period  commencing  on the date of the  Auction  Agent's  receipt of
notice from the Trustee of the occurrence of a Payment  Default but shall resume
two Business Days after the date on which the Auction Agent receives notice from
the Trustee  that such Payment  Default has been waived or cured,  with the next
Auction  to  occur  on the  next  regularly  scheduled  Auction  Date  occurring
thereafter.

     Section 2.02.  Submission  of Orders by  Broker-Dealers  to Auction  Agent.

     (a) Each  Broker-Dealer  shall submit to the Auction Agent in writing or by
such  other  method as shall be  reasonably  acceptable  to the  Auction  Agent,
including such electronic  communication acceptable to the parties, prior to the
Submission   Deadline  on  each  Auction  Date,  all  Orders  obtained  by  such
Broker-Dealer and, if requested, specifying with respect to each Order:

          (i) the name of the Bidder placing such Order;

          (ii) the  aggregate  principal  amount of Bonds,  if any, that are the
     subject of such Order;

          (iii) to the extent that such Bidder is an Existing Owner:

               (A) the principal  amount of Bonds,  if any,  subject to any Hold
          Order placed by such Existing Owner;

               (B) the  principal  amount of Bonds,  if any,  subject to any Bid
          placed by such Existing Owner and the rate specified in such Bid; and

               (C) the principal  amount of Bonds,  if any,  subject to any Sell
          Order placed by such Existing Owner;

          (iv)  to the  extent  such  Bidder  is a  Potential  Owner,  the  rate
     specified in such Bid.


                                       Appendix B-14
<PAGE>


               (b) If any rate  specified  in any Bid  contains  more than three
          figures to the right of the decimal  point,  the  Auction  Agent shall
          round such rate up to the next highest one  thousandth  of one percent
          (0.001%).

               (c)  If an  Order  or  Orders  covering  all of  the  Bonds  of a
          particular  Series held by an Existing  Owner is not  submitted to the
          Auction  Agent prior to the  Submission  Deadline,  the Auction  Agent
          shall  deem a Hold  Order to have  been  submitted  on  behalf of such
          Existing  Owner  covering the  principal  amount of Bonds held by such
          Existing  Owner and not  subject to Orders  submitted  to the  Auction
          Agent;  provided,  however,  that if  there is a  conversion  from one
          Auction   Period  to  another   Auction  Period  or  an  amendment  or
          modification  to the  Indenture  pursuant  to Section  2.07(b) of this
          Appendix B and Orders have not been  submitted  to the  Auction  Agent
          prior to the  Submission  Deadline  covering the  aggregate  principal
          amount of Bonds of the Series held by such Existing Owner, the Auction
          Agent shall deem a Sell Order to have been submitted on behalf of such
          Existing  Owner  covering the  principal  amount of Bonds held by such
          Existing  Owner and not  subject to Orders  submitted  to the  Auction
          Agent.

               (d) If one or more Orders covering in the aggregate more than the
          principal  amount of Outstanding  Bonds held by any Existing Owner are
          submitted to the Auction Agent,  such Orders shall be considered valid
          as follows:

               (i) all Hold Orders shall be considered Hold Orders,  but only up
          to and including in the  aggregate the principal  amount of Bonds held
          by such Existing Owner;

               (ii) (A) any Bid of an Existing  Owner shall be considered  valid
          as a Bid of an Existing  Owner up to and  including  the excess of the
          principal  amount  of  Bonds  held by such  Existing  Owner  over  the
          principal  amount of the Bonds  subject to Hold Orders  referred to in
          paragraph (i) above;

               (B) subject to clause (A) above,  all Bids of an  Existing  Owner
          with the same rate shall be aggregated  and considered a single Bid of
          an  Existing  Owner up to and  including  the excess of the  principal
          amount of Bonds held by such Existing Owner over the principal  amount
          of Bonds held by such Existing  Owner subject to Hold Orders  referred
          to in paragraph (i) above;

               (C)  subject  to  clause  (A)  above,  if more  than one Bid with
          different  rates is submitted on behalf of such Existing  Owner,  such
          Bids shall be  considered  Bids of an Existing  Owner in the ascending
          order of their  respective rates up to the amount of the excess of the
          principal  amount  of  Bonds  held by such  Existing  Owner  over  the
          principal  amount of Bonds held by such Existing Owner subject to Hold
          Orders referred to in paragraph (i) above; and

               (D) the principal  amount,  if any, of such Bonds subject to Bids
          not  considered to be Bids of an Existing  Owner under this  paragraph
          (ii) shall be treated as the subject of a Bid by a Potential Owner;


                                       Appendix B-15
<PAGE>


     (iii) all Sell Orders shall be considered  Sell Orders,  but only up to and
including  a  principal  amount of Bonds  equal to the  excess of the  principal
amount of Bonds held by such Existing Owner over the sum of the principal amount
of the Bonds  considered to be subject to Hold Orders  pursuant to paragraph (i)
above and the principal amount of Bonds considered to be subject to Bids of such
Existing Owner pursuant to paragraph (ii) above.

     (e) If more than one Bid is  submitted  on behalf of any  Potential  Owner,
each Bid  submitted  with the same rate shall be  aggregated  and  considered  a
single Bid and each Bid  submitted  with a different  rate shall be considered a
separate Bid with the rate and the principal amount of Bonds specified therein.

     (f) Neither the Authority,  the Company,  the Trustee nor the Auction Agent
shall be responsible for the failure of any  Broker-Dealer to submit an Order to
the Auction Agent on behalf of any Existing Owner or Potential Owner.

     Section 2.03. Determination of Auction Period Rate. (a) Not later than 9:30
a.m.,  New York City time,  on each Auction Date in an Auction Rate Period,  the
Auction  Agent shall advise the  Broker-Dealers  and the Trustee by telephone or
other electronic  communication  acceptable to the parties of the All Hold Rate,
the Maximum Auction Rate and the Reference Rate for the Bonds.

     (b)  Promptly  after the  Submission  Deadline on each  Auction  Date in an
Auction Rate Period,  the Auction Agent shall  assemble all Orders  submitted or
deemed  submitted to it by the  Broker-Dealers  (each such Order as submitted or
deemed  submitted  by  a  Broker-Dealer  being  hereinafter  referred  to  as  a
"Submitted  Hold Order," a "Submitted  Bid" or a "Submitted  Sell Order," as the
case may be, and  collectively  as a "Submitted  Order") and shall determine (i)
the Available Bonds, (ii) whether there are Sufficient  Clearing Bids, and (iii)
the Auction Rate.

     (c) Promptly after the Auction Agent has made the  determinations  pursuant
to subsection (b) above, the Auction Agent shall advise the Trustee by telephone
(promptly  confirmed  in  writing),  telex or  facsimile  transmission  or other
electronic  communication  acceptable to the parties of the Auction Rate for the
next  succeeding  Auction  Period  and the  Trustee  shall  promptly  notify the
Securities Depository of such Auction Rate.

     (d) In the event the Auction  Agent fails to  calculate,  or for any reason
fails to timely  provide,  the Auction Rate for any Auction  Period,  (i) if the
preceding Auction Period was a period of 35 days or less, the new Auction Period
shall be the same as the preceding  Auction  Period and the Auction Rate for the
new  Auction  Period  shall be the same as the  Auction  Rate for the  preceding
Auction Period, and (ii) if the preceding Auction Period was a period of greater
than 35 days, the new Auction Period shall be a seven-day Auction Period and the
Auction  Rate for the new Auction  Period  shall be the same as the Auction Rate
for the  preceding  Auction  Period;  provided,  however,  that  if the  Auction
Procedures are suspended pursuant to paragraph (iv) of subsection (c) of Section
2.01 of this  Appendix B with respect to any Bond,  the Auction  Period Rate for
the next succeeding Auction Period shall be the Default Rate.


                                  Appendix B-16
<PAGE>


     (e) In the event that the  conditions  referred to in (B),(C),(D) or (E) of
Section  4.01.3 of the  Indenture or in (B) of Section  4.02.3 of the  Indenture
have not been met with  respect  to a Change in the  Interest  Rate Mode from an
Auction Rate Period to any other interest rate mode or in the event of a failure
to change the length of the current Auction Period due to the lack of Sufficient
Clearing  Bids at the  Auction  on the  Auction  Date for the first new  Auction
Period, the Auction Period Rate for the next Auction Period shall be the Maximum
Auction Rate and the Auction Period shall be a seven-day Auction Period.

     (f) If on any Auction Date the Bonds are no longer maintained in book-entry
form  by the  Securities  Depository,  then  the  Auction  Period  Rate  for the
subsequent  Auction  Period  shall be the Maximum  Auction Rate and such Auction
Period shall be a seven-day Auction Period.

     Section 2.04. Allocation of Bonds.

     (a) In the event of  Sufficient  Clearing  Bids for  Bonds,  subject to the
further  provisions of subsections (c) and (d) below,  Submitted Orders for such
Series  shall be  accepted  or  rejected  as follows in the  following  order of
priority:

     (i) the Submitted Hold Order of each Existing Owner shall be accepted, thus
requiring  each such  Existing  Owner to continue to hold the Bonds that are the
subject of such Submitted Hold Order;

     (ii) the Submitted  Sell Order of each Existing Owner shall be accepted and
the Submitted Bid of each Existing Owner specifying any rate that is higher than
the Winning Bid Rate shall be rejected,  thus requiring each such Existing Owner
to sell the Bonds that are the subject of such Submitted Sell Order or Submitted
Bid;

     (iii) the Submitted Bid of each Existing Owner  specifying any rate that is
lower than the  Winning Bid Rate shall be  accepted,  thus  requiring  each such
Existing  Owner to  continue  to hold the  Bonds  that are the  subject  of such
Submitted Bid;

     (iv) the Submitted Bid of each Potential Owner  specifying any rate that is
lower than the  Winning Bid Rate shall be  accepted,  thus  requiring  each such
Potential  Owner to purchase  the Bonds that are the  subject of such  Submitted
Bid;

     (v) the  Submitted  Bid of each  Existing  Owner  specifying a rate that is
equal to the  Winning  Bid Rate  shall be  accepted,  thus  requiring  each such
Existing  Owner to  continue  to hold the  Bonds  that are the  subject  of such
Submitted  Bid,  but only up to and  including  the  principal  amount  of Bonds
obtained by multiplying (A) the aggregate  principal amount of Outstanding Bonds
which are not the subject of Submitted  Hold Orders  described in paragraph  (i)
above or of Submitted Bids described in paragraphs  (iii) or (iv) above by (B) a
fraction the  numerator of which shall be the  principal  amount of  Outstanding
Bonds  held  by such  Existing  Owner  subject  to  such  Submitted  Bid and the
denominator  of which shall be the  aggregate  principal  amount of  Outstanding
Bonds  subject to such  Submitted  Bids made by all such  Existing  Owners  that
specified a rate equal to the Winning Bid Rate,  and the  remainder,  if any, of
such Submitted Bid shall be rejected, thus requiring each such Existing Owner to
sell any excess amount of Bonds;


                                       Appendix B-17
<PAGE>


     (vi) the Submitted Bid of each  Potential  Owner  specifying a rate that is
equal to the  Winning  Bid Rate  shall be  accepted,  thus  requiring  each such
Potential  Owner to purchase  the Bonds that are the  subject of such  Submitted
Bid, but only in an amount equal to the  principal  amount of Bonds  obtained by
multiplying (A) the aggregate  principal  amount of Outstanding  Bonds which are
not the subject of Submitted Hold Orders  described in paragraph (i) above or of
Submitted  Bids  described  in  paragraphs  (iii),  (iv) or (v)  above  by (B) a
fraction the  numerator of which shall be the  principal  amount of  Outstanding
Bonds subject to such  Submitted Bid and the  denominator  of which shall be the
sum of the  aggregate  principal  amount of  Outstanding  Bonds  subject to such
Submitted Bids made by all such Potential  Owners that specified a rate equal to
the Winning Bid Rate, and the remainder of such Submitted Bid shall be rejected;
and

     (vii) the Submitted Bid of each Potential Owner specifying any rate that is
higher than the Winning Bid Rate shall be rejected.

     (b) In the event there are not Sufficient Clearing Bids for Bonds,  subject
to the further provisions of subsections (c) and (d) below, Submitted Orders for
each Bond shall be accepted or  rejected  as follows in the  following  order of
priority:

     (i) the Submitted Hold Order of each Existing Owner shall be accepted, thus
requiring  each such  Existing  Owner to continue to hold the Bonds that are the
subject of such Submitted Hold Order;

     (ii) the Submitted Bid of each Existing  Owner  specifying any rate that is
not  higher  than the  Maximum  Auction  Rate with  respect  to Bonds,  shall be
accepted,  thus requiring each such Existing Owner to continue to hold the Bonds
that are the subject of such Submitted Bid;

     (iii) the Submitted Bid of each Potential Owner specifying any rate that is
not  higher  than the  Maximum  Auction  Rate with  respect  to Bonds,  shall be
accepted,  thus requiring  each such Potential  Owner to purchase the Bonds that
are the subject of such Submitted Bid;

     (iv) the Submitted  Sell Orders of each Existing Owner shall be accepted as
Submitted Sell Orders and the Submitted  Bids of each Existing Owner  specifying
any rate that is higher than the  Maximum  Auction  Rate with  respect to Bonds,
shall be deemed to be and shall be accepted as Submitted  Sell  Orders,  in both
cases  only up to and  including  the  principal  amount  of Bonds  obtained  by
multiplying  (A) the  aggregate  principal  amount of Bonds subject to Submitted
Bids described in paragraph  (iii) of this  subsection (b) by (B) a fraction the
numerator of which shall be the principal  amount of  Outstanding  Bonds held by
such Existing  Owner subject to such  Submitted Sell Order or such Submitted Bid
deemed to be a Submitted  Sell Order and the  denominator  of which shall be the
principal amount of Outstanding  Bonds subject to all such Submitted Sell Orders
and such Submitted Bids deemed to be Submitted Sell Orders, and the remainder of
each such  Submitted Sell Order or Submitted Bid shall be deemed to be and shall
be  accepted as a Hold Order and each such  Existing  Owner shall be required to
continue to hold such excess amount of Bonds; and


                                  Appendix B-18
<PAGE>


     (v) the Submitted Bid of each Potential  Owner  specifying any rate that is
higher  than the  Maximum  Auction  Rate  with  respect  to the  Bonds  shall be
rejected.

     (c) If, as a result of the  procedures  described in subsection  (a) or (b)
above,  any Existing  Owner or Potential  Owner would be required to purchase or
sell an aggregate principal amount of Bonds which is not an integral multiple of
the  Authorized  Denomination  for Bonds on any Auction Date,  the Auction Agent
shall by lot, in such manner as it shall determine in its sole discretion, round
up or down the principal amount of Bonds to be purchased or sold by any Existing
Owner or Potential  Owner on such Auction Date so that the  aggregate  principal
amount of Bonds  purchased or sold by each Existing Owner or Potential  Owner on
such Auction Date shall be an integral  multiple of the Authorized  Denomination
for Bonds or such Series, even if such allocation results in one or more of such
Existing Owners or Potential  Owners not purchasing or selling any Bonds on such
Auction Date.

     (d) If, as a result of the  procedures  described in subsection  (a) above,
any  Potential  Owner would be required to purchase a principal  amount of Bonds
that is less than the Authorized Denomination for Bonds on any Auction Date, the
Auction  Agent shall by lot, in such  manner as it shall  determine  in its sole
discretion,  allocate such Bonds for purchase among Potential Owners so that the
principal  amount of Bonds purchased on such Auction Date by any Potential Owner
shall be an integral multiple of the Authorized  Denomination for Bonds, even if
such allocation  results in one or more of such Potential  Owners not purchasing
such Bonds on such Auction Date.

     Section 2.05.  Notice of Auction Period Rate. (a) On each Auction Date, the
Auction  Agent shall notify by telephone  or other  telecommunication  device or
other  electronic  communication  acceptable  to the parties or in writing  each
Broker-Dealer  that participated in the Auction held on such Auction Date of the
following  with  respect to Bonds for which an Auction was held on such  Auction
Date:

     (i) the  Auction  Period  Rate  determined  on such  Auction  Date  for the
succeeding Auction Period;

     (ii) whether Sufficient  Clearing Bids existed for the determination of the
Winning Bid Rate;

     (iii) if such Broker-Dealer submitted a Bid or a Sell Order on behalf of an
Existing Owner,  whether such Bid or Sell Order was accepted or rejected and the
principal amount of Bonds, if any, to be sold by such Existing Owner;

     (iv) if such Broker-Dealer  submitted a Bid on behalf of a Potential Owner,
whether such Bid was accepted or rejected and the principal  amount of Bonds, if
any, to be purchased by such Potential Owner;


                                  Appendix B-19
<PAGE>


     (v) if the  aggregate  principal  amount  of the  Bonds  to be  sold by all
Existing Owners on whose behalf such Broker-Dealer submitted Bids or Sell Orders
is different from the aggregate principal amount of Bonds to be purchased by all
Potential Owners on whose behalf such Broker-Dealer submitted a Bid, the name or
names of one or more  Broker-Dealers (and the Agent Member, if any, of each such
other Broker Dealer) and the principal  amount of Bonds to be (A) purchased from
one or more Existing Owners on whose behalf such other Broker-Dealers  submitted
Bids or Sell Orders or (B) sold to one or more Potential  Owners on whose behalf
such Broker-Dealer submitted Bids; and

     (vi) the immediately succeeding Auction Date.

     (b) On each  Auction  Date,  with respect to Bonds for which an Auction was
held on such Auction Date, each  Broker-Dealer that submitted an Order on behalf
of any Existing Owner or Potential  Owner shall:  (i) advise each Existing Owner
and Potential Owner on whose behalf such Broker-Dealer  submitted an Order as to
(A) the Auction Period Rate determined on such Auction Date, (B) whether any Bid
or Sell Order  submitted  on behalf of each such Owner was  accepted or rejected
and (C) the  immediately  succeeding  Auction Date; (ii) instruct each Potential
Owner on whose behalf such Broker-Dealer  submitted a Bid that was accepted,  in
whole or in part, to instruct such Existing  Owner's Agent Member to pay to such
Broker-Dealer (or its Agent Member) through the Securities Depository the amount
necessary  to  purchase  the  principal  amount  of such  Bonds to be  purchased
pursuant to such Bid  (including,  with respect to such Bonds in a daily Auction
Period,  accrued  interest if the purchase date is not an Interest  Payment Date
for such Bond) against  receipt of such Bonds;  and (iii) instruct each Existing
Owner on  whose  behalf  such  Broker-Dealer  submitted  a Sell  Order  that was
accepted  or a Bid that was  rejected,  in whole or in part,  to  instruct  such
Existing  Owner's  Agent Member to deliver to such  Broker-Dealer  (or its Agent
Member) through the Securities  Depository the principal amount of such Bonds to
be sold pursuant to such Bid or Sell Order against payment therefor.

     Section 2.06.  Reference  Rate.  (a) The Reference Rate on any Auction Date
with  respect to Bonds in any Auction  Period of less than 180 days shall be the
greater of LIBOR or the Thirty-Day "AA" Composite  Commercial Paper Rate on such
date. The Reference Rate with respect to Bonds in any Auction Period of 180 days
or more but less  than one year  shall be the  greater  of LIBOR or the yield on
United  States  Treasury   Securities  having  a  maturity  which  most  closely
approximates  the length of the Auction  Period,  as last  published in The Wall
Street  Journal.  The Reference Rate with respect to Bonds in any Auction Period
of one year or more but less than five years shall be the yield on United States
Treasury Securities having a maturity which most closely approximates the length
of the Auction Period, as last published in The Wall Street Journal. If any such
rate is  unavailable,  the Reference  Rate will be an index or rate agreed to by
all Broker-Dealers and consented to by the Issuer.

     "Thirty-Day   `AA'  Composite   Commercial  Paper  Rate"  on  any  date  of
determination,   means  the  interest  equivalent  of  the  Thirty-Day  rate  on
commercial paper placed on behalf of non financial issuers whose corporate bonds
are rated AA by S&P, or the  equivalent of such rating by S&P, as made available
on a discount basis or otherwise by (A) the Federal Reserve Bank of New York for


                                  Appendix B-20
<PAGE>


the Business Day immediately preceding such date of determination, or (B) if the
Federal Reserve Bank of New York does not make available any such rate, then the
arithmetic average of such rates, as quoted on a discount basis or otherwise, by
Merrill Lynch,  Pierce,  Fenner & Smith  Incorporated and J.P. Morgan Securities
Inc. or, in lieu of any thereof, their respective affiliates or successors which
are commercial  paper dealers (the "Commercial  Paper Dealers"),  to the Auction
Agent  before the close of business on the Business  Day  immediately  preceding
such date of determination.

     For purposes of the  definitions of Thirty-Day  "AA"  Composite  Commercial
Paper Rate, the "interest  equivalent"  means the equivalent  yield on a 360-day
basis of a  discount-basis  security  to an  interest-bearing  security.  If any
Commercial  Paper  Dealer  does not quote a  commercial  paper rate  required to
determine the Thirty-Day  "AA" Composite  Commercial  Paper Rate, the Thirty-Day
"AA"  Composite  Commercial  Paper Rate will be  determined  on the basis of the
quotation or quotations  furnished by the remaining  Commercial  Paper Dealer or
Commercial Paper Dealers and any substitute commercial paper dealer not included
within the definition of Commercial Paper Dealer above,  which may be the entity
or  entities  named  by  the  Company  with  the  consent  of the  Authority  (a
"Substitute Commercial Paper Dealer") selected by the Trustee (who will be under
no liability for such selection) to provide such commercial  paper rate or rates
not being supplied by any Commercial  Paper Dealer or Commercial  Paper Dealers,
as the case  may be,  or if the  Trustee  does not  select  any such  Substitute
Commercial Paper Dealer or Substitute Commercial Paper Dealers, by the remaining
Commercial Paper Dealer or Commercial Paper Dealers.

     (b) If for any reason on any Auction Date the  Reference  Rate shall not be
determined as hereinabove  provided in this Section, the Reference Rate shall be
the Reference Rate for the Auction Period ending on such Auction Date.

     (c) The  determination  of the  Reference  Rate  by the  Auction  Agent  as
provided herein shall be conclusive and binding upon the Authority, the Company,
the Trustee, the Broker-Dealers, the Auction Agent and the Holders of the Bonds.

     Section 2.07. Miscellaneous Provisions Regarding Auctions.

     (a) In this Appendix B, each reference to the purchase,  sale or holding of
"Bonds"  shall refer to beneficial  interests in such Bonds,  unless the context
clearly requires otherwise.

     (b) During an Auction  Rate Period  only,  with  respect to the Bonds,  the
provisions  of the  Indenture,  including  this  Appendix B and the  definitions
contained in this Appendix B, including,  without limitation, the definitions of
Maximum Auction Rate, All Hold Rate,  Reference Rate,  Default Rate,  Applicable
Percentage  and the Auction  Period Rate,  may be modified or amended,  with the
consent of the Bond  Insurer,  pursuant  to the  Indenture  by  obtaining,  when
required by the Indenture,  the consent of the Holders of all Outstanding  Bonds
as follows;  provided,  however,  that no such  modification  or amendment  that
adversely  affect the rights,  duties or obligations of the Auction Agent or the


                                  Appendix B-21
<PAGE>


Trustee  shall be made without the consent of the Auction  Agent or the Trustee,
respectively.  If on the first Auction Date occurring at least 20 days after the
date on which  the  Trustee  mailed  notice  of such  proposed  modification  or
amendment to the registered  owners of the Outstanding  Bonds as required by the
Indenture,  the  Auction  Period  Rate which is  determined  on such date is the
Winning Bid Rate, the proposed modification or amendment shall be deemed to have
been consented to by the Holders of all affected Outstanding Bonds.

     (c)  If  the  Securities  Depository  notifies  the  Authority  that  it is
unwilling  or  unable to  continue  as Holder of the Bonds or if at any time the
Securities  Depository  shall no longer be registered or in good standing  under
the Securities  Exchange Act of 1934, as amended, or other applicable statute or
regulation and a successor to the Securities  Depository is not appointed by the
Authority within 90 days after the Authority receives notice or becomes aware of
such condition,  as the case may be, the Authority shall execute and the Trustee
shall authenticate and deliver  certificates  representing the Bonds. Such Bonds
shall be authorized in such names and authorized denominations as the Securities
Depository,  pursuant to instructions from the Agent Members or otherwise, shall
instruct the Authority and the Trustee.

     (d) During an Auction Rate Period, so long as the ownership of the Bonds is
maintained in book-entry form by the Securities Depository, an Existing Owner or
a  beneficial  owner may sell,  transfer  or  otherwise  dispose  of a Bond only
pursuant to a Bid or Sell Order in accordance with the Auction  Procedures or to
or through a Broker-Dealer, provided that (i) in the case of all transfers other
than pursuant to Auctions such Existing Owner or its  Broker-Dealer or its Agent
Member  advises the Auction Agent of such transfer and (ii) a sale,  transfer or
other  disposition of Bonds from a customer of a Broker-Dealer  who is listed on
the  records  of  that  Broker-Dealer  as the  holder  of  such  Bonds  to  that
Broker-Dealer or another customer of that  Broker-Dealer  shall not be deemed to
be a sale,  transfer or other disposition for purposes of this paragraph if such
Broker-Dealer  remains  the  Existing  Owner of Bonds  so sold,  transferred  or
disposed of immediately after such sale, transfer or disposition.

     Section 2.08. Changes in Auction Period or Auction Date.

     (a) Changes in Auction Period. (i) During any Auction Rate Period, and with
the consent of the Bond Insurer for changes to Auction Periods over 35 days, the
Authority,  at the request of the Company, may from time to time on any Interest
Payment Date, change the length of the Auction Period with respect to all of the
Bonds among daily,  seven-days,  14-days,  28-days,  35-days,  three months, six
months and a Special Rate Period in order to accommodate  economic and financial
factors  that may affect or be relevant to the length of the Auction  Period and
the interest rate borne by such Bonds.  The Authority  shall initiate the change
in the  length  of the  Auction  Period  by  giving  written  notice to the Bond
Insurer,  the Auction Agent, the Broker-Dealers,  the Trustee and the Securities
Depository  that the Auction  Period  shall change if the  conditions  described
herein are satisfied and the proposed  effective date of the change, at least 10
Business  Days prior to the  Auction  Date for such  Auction  Period;  provided,
however,  that in the case of a change from a Special  Rate Period of 92 or more
days,  the date of such change  shall be the Interest  Payment Date  immediately
following the last day of such Special Rate Period.  The Bond Insurer may direct
a change in the length of the Auction Period following an Event of Default.


                                  Appendix B-22
<PAGE>


     (ii) Any such  changed  Auction  Period  shall be for a period  of one day,
seven-days,  14-days,  28-days,  35-days,  three months, six months or a Special
Rate Period and shall be for all of the Bonds in an Auction Rate Period.

     (iii) The change in the length of the Auction Period for Bonds shall not be
allowed unless  Sufficient  Clearing Bids existed at both the Auction before the
date on which the notice of the  proposed  change was given as  provided in this
subsection (a) and the Auction immediately preceding the proposed change.

     (iv) The change in length of the Auction Period for Bonds shall take effect
only if (A) the Trustee and the Auction Agent  receive,  by 11:00 a.m., New York
City  time,  on the  Business  Day before  the  Auction  Date for the first such
Auction Period, a certificate  from the Company  consenting to the change in the
length of the Auction Period  specified in such  certificate  and (B) Sufficient
Clearing  Bids exist at the Auction on the Auction  Date for such first  Auction
Period.  For purposes of the Auction for such first  Auction  Period only,  each
Existing Owner shall be deemed to have submitted Sell Orders with respect to all
of its  Bonds for which  there is to be a change  in the  length of the  Auction
Period except to the extent such Existing Owner submits an Order with respect to
such Bonds.  If the  condition  referred to in (A) above is not met, the Auction
Rate for the next  Auction  Period shall be  determined  pursuant to the Auction
Procedures and the Auction Period shall be the Auction Period determined without
reference to the proposed change. If the condition referred to in (A) is met but
the condition referred to in (B) above is not met, the Auction Rate for the next
Auction Period shall be the Maximum Auction Rate and the Auction Period shall be
a seven-day Auction Period.

     (v) On the  conversion  date for Bonds from one Auction  Period to another,
any Bonds  which are not the  subject of a  specific  Hold Order or Bid shall be
deemed to be subject to a Sell Order.

     (b) Changes in Auction  Date.  During any Auction Rate Period,  the Auction
Agent, with the written consent of the Authority and the Company, may specify an
earlier  Auction  Date for Bonds (but in no event more than five  Business  Days
earlier) than the Auction Date that would  otherwise be determined in accordance
with the  definition  of "Auction  Date" in order to conform  with then  current
market  practice with respect to similar  securities or to accommodate  economic
and  financial  factors  that may affect or be  relevant  to the day of the week
constituting  an Auction  Date and the  interest  rate borne on such Bonds.  The
Auction Agent shall provide  notice of its  determination  to specify an earlier
Auction  Date for an Auction  Period by means of a written  notice  delivered at
least 45 days prior to the proposed  changed  Auction  Date to the Trustee,  the
Authority,  the Company, the Bond Insurer, the Broker-Dealers and the Securities
Depository.




                                  Appendix B-23