**Exhibit4-hhhh**

 

 

**FIFTY-SIXTH SUPPLEMENTAL**

**INDENTURE**

 

**TO**

 

**INDENTURE DATED SEPTEMBER 1, 1939**

 

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**PSI ENERGY, INC**.

 

**(FORMERLY NAMED “PUBLIC SERVICE COMPANY OFINDIANA, INC.” AND**

**SUCCESSOR BY CONSOLIDATION TO PUBLIC SERVICECOMPANY OF INDIANA)**

 

**TO**

 

**LASALLE BANK NATIONAL ASSOCIATION**

**AS TRUSTEE**

 

(**FORMERLY NAMED “LASALLENATIONAL BANK” AND THE**

**SUCCESSOR TRUSTEE TO THE FIRST NATIONAL BANK OFCHICAGO)**

 

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**DATED AS OF DECEMBER 1, 2004**

 

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**CREATING FIRST MORTGAGE BONDS, SERIES III, DUEDECEMBER 1, 2039 AND**

**FIRST MORTGAGE BONDS, SERIES JJJ, DUE DECEMBER 1,2039**

 

**AND**

 

**OTHERWISE SUPPLEMENTING AND AMENDING THE INDENTURE**

 

 

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**TABLE OF CONTENTS**

 
| PARTIES:                                                                                                                                                                               |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Company (PSI Energy,  Inc. formerly named Public Service Company  of Indiana, Inc., successor by consolidation to Initial Mortgagor  (Public Service Company of Indiana)), and Trustee |   |
|                                                                                                                                                                                   |   |
| RECITALS:                                                                                                                                                                              |   |
| Indenture of the  Initial Mortgagor, dated September 1, 1939, and First  Supplemental Indenture thereto of the Initial Mortgagor, dated  as of March 1, 1941                           |   |
| Consolidation  of Initial Mortgagor (and four other companies) into the Company                                                                                                        |   |
| Execution  by Company of Second Supplemental Indenture to the original Indenture                                                                                                       |   |
| Company  substituted for Initial Mortgagor under Indenture                                                                                                                             |   |
| Execution  by Company of Third through the Fifty-Fifth Supplemental Indentures to the  original Indenture                                                                              |   |
| LaSalle  Bank National Association, successor to original Trustee                                                                                                                      |   |
| Change  of name of Company from Public Service Company of Indiana, Inc. to PSI  Energy, Inc.                                                                                           |   |
| Amount  of bonds presently outstanding under the Indenture                                                                                                                             |   |
| Fifty-Sixth  Supplemental Indenture and Bonds of Series III and JJJ authorized                                                                                                         |   |
| Conditions  precedent performed                                                                                                                                                        |   |
|                                                                                                                                                                                   |   |
| EXECUTING  CLAUSE                                                                                                                                                                      |   |

 

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| ARTICLE I.                                                                                                            |                                                                                        |
|-----------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                                                                                  |                                                                                        |
| FIRST MORTGAGE BONDS, SERIES III,  DUE DECEMBER 1, 2039, AND  FIRST MORTGAGE BONDS, SERIES JJJ, DUE DECEMBER 1, 2039. |                                                                                        |
|                                                                                                                  |                                                                                        |
| *Section 1.*                                                                                                          | Creation and  designation of Bonds of Series III and JJJ                                    |   |
| *Section 2.*                                                                                                          | Bonds of Series III  and JJJ to be in registered form only                                  |   |
|                                                                                                                  | Form of face of  the Series III Bond                                                        |   |
|                                                                                                                  | Form of  reverse of the Series III Bond and Trustee’s certificate                      |   |
|                                                                                                                  | Form of face of  the Series JJJ Bond                                                        |   |
|                                                                                                                  | Form of reverse  of the Series JJJ Bond and Trustee’s certificate                      |   |
| *Section 3.*                                                                                                          | Date of Bonds of  Series III and JJJ                                                        |   |
| *Section 4.*                                                                                                          | Maturity dates and  interest rates of Bonds of Series III and JJJ                           |   |
| *Section 5.*                                                                                                          | Place and manner of  payment of Bonds of Series III and JJJ                                 |   |
| *Section 6.*                                                                                                          | Denominations and  numbering of definitive Bonds of Series III and JJJ                      |   |
|                                                                                                                  | Temporary  Bonds of Series III and JJJ and exchange thereof for definitive bonds            |   |
| *Section 7*                                                                                                           | Maintenance and  Renewal Fund shall not apply to the Bonds of Series III and JJJ            |   |
| *Section 8.*                                                                                                          | Inspection  requirements shall not apply to the Bonds of Series III and JJJ                 |   |
| *Section 9.*                                                                                                          | Company’s right to  further amend the original Indenture                               |   |
|                                                                                                                  |                                                                                        |
| ARTICLE II.                                                                                                           |                                                                                        |
|                                                                                                                  |                                                                                        |
| ISSUANCE OF  BONDS OF SERIES III AND JJJ.                                                                             |                                                                                        |
|                                                                                                                  |                                                                                        |   |
| *Section 1.*                                                                                                          | Aggregate principal amount  of Bonds of Series III and Bonds of Series JJJ issuable at once |   |
|                                                                                                                  |                                                                                        |   |
| ARTICLE III.                                                                                                          |                                                                                        |
|                                                                                                                  |                                                                                        |
| INDENTURE AMENDMENTS.                                                                                                 |                                                                                        |
|                                                                                                                  |                                                                                        |   |
| *Section 1.*                                                                                                          | Amendments  to Article I of the original Indenture                                          |   |
| *Section  2.*                                                                                                         | Amendments  to Article VII of the original Indenture                                        |   |
| *Section 3.*                                                                                                          | No sinking fund for  the Bonds of Series III and JJJ                                        |   |

 

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| ARTICLE IV.                                                                                                              |                                                                                                                                                            |
|--------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                            |
| CONCERNING THE TRUSTEE.                                                                                                  |                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                            |
| Acceptance  of trust by Trustee                                                                                          |                                                                                                                                                            |
| Trustee  not responsible for validity or sufficiency of Fifty-Sixth Supplemental  Indenture, etc.                        |                                                                                                                                                            |
| Terms  and conditions of Article XVII of the original Indenture to be applied to the  Fifty-Sixth Supplemental Indenture |                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                            |
| ARTICLE V.                                                                                                               |                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                            |
| MISCELLANEOUS PROVISIONS.                                                                                                |                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                            |
| *Section 1.*                                                                                                             | References in  any article or section of the original Indenture refer to such article or  section as amended by all Fifty-Sixth Supplemental Indentures thereto |   |
| *Section 2.*                                                                                                             | Operation and  construction of amendments to the original Indenture                                                                                             |   |
| *Section 3.*                                                                                                             | All covenants,  etc., for sole benefit of parties to the Fifty-Sixth Supplemental Indenture  and holders of bonds                                               |   |
| *Section 4.*                                                                                                             | Table of  contents and headings of articles not part of Fifty-Sixth Supplemental  Indenture                                                                     |   |
| *Section 5.*                                                                                                             | Execution of  Fifty-Sixth Supplemental Indenture in counterparts                                                                                                |   |
| *Section 6.*                                                                                                             | Payments Due on  Legal Holidays                                                                                                                                 |   |
|                                                                                                                     |                                                                                                                                                            |
| ATTESTATION  CLAUSE                                                                                                      |                                                                                                                                                            |
| SIGNATURES                                                                                                               |                                                                                                                                                            |
| ACKNOWLEDGMENT  BY COMPANY                                                                                               |                                                                                                                                                            |
| ACKNOWLEDGMENT  BY TRUSTEE                                                                                               |                                                                                                                                                            |

 

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FIFTY-SIXTHSUPPLEMENTAL INDENTURE dated as of the first day of December, 2004, made andentered into by and between PSI ENERGY, INC. (hereinafter commonly referred toas the “Company”), a corporation organized and existing under the laws of theState of Indiana, formerly named Public Service Company of Indiana, Inc., andthe successor by consolidation to Public Service Company of Indiana, an Indianacorporation, party of the first part, and LASALLE BANK NATIONAL ASSOCIATION, anational banking association organized and existing under the laws of theUnited States and having its office or place of business in the City ofChicago, State of Illinois, formerly named LaSalle National Bank, and thesuccessor trustee to The First National Bank of Chicago (hereinafter commonlyreferred to as the “Trustee”), party of the second part,

 

WITNESSETH:

 

WHEREAS,Public Service Company of Indiana (hereinafter commonly referred to as the “InitialMortgagor”), prior to its consolidation with certain other corporations to formthe Company, executed and delivered to the Trustee a certain indenture ofmortgage or deed of trust (hereinafter called the “original Indenture” whenreferred to as existing prior to any amendment thereto, and the “Indenture”when referred to as heretofore, now or hereafter amended), dated September 1,1939, and a First Supplemental Indenture thereto, dated as of March 1, 1941, tosecure the bonds of the Initial Mortgagor, its successors and assigns, issuedfrom time to time under the Indenture in series for the purposes of and subjectto the limitations specified in the Indenture; and

 

WHEREAS,the Company on September 6, 1941, became, through a consolidation, thesuccessor of the Initial Mortgagor (and four other companies) and succeeded toall the rights and became liable for all the obligations of the InitialMortgagor (and such other companies); and

 

WHEREAS,after said consolidation, the Company executed and delivered a SecondSupplemental Indenture, dated as of November 1, 1941, to the original Indenturefor the purposes, among others, of (i) the making by the Company of anagreement of assumption and adoption by it of the Indenture, (ii) theassumption by the Company of the bonds (and interest and premium, if any,thereon) issued or to be issued under the Indenture, and of all terms,covenants and conditions binding upon it under the Indenture, and the agreeingby the Company to pay, perform and fulfill the same, and (iii) the conveying tothe Trustee upon the trusts declared in the Indenture, but subject to anyoutstanding liens and encumbrances, all the property which the Company thenowned or which it might thereafter acquire, except property of a charactersimilar to the property of the Initial Mortgagor which is excluded from thelien of the Indenture; and

 

WHEREAS,all conditions have been met and all acts and things necessary have been doneand performed to make the Indenture the valid and binding agreement of theCompany and to substitute the Company for the Initial Mortgagor under theIndenture, and to vest the Company with each and every right and power of theInitial Mortgagor, including the right and power to issue bonds thereunder; and

 

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WHEREAS,the Company has subsequently executed and delivered, for purposes authorizedunder the Indenture, a Third Supplemental Indenture dated as of March 1, 1942,a Fourth Supplemental Indenture dated as of May 1, 1943, a Fifth SupplementalIndenture dated as of August 1, 1944, a Sixth Supplemental Indenture dated asof September 1, 1945, a Seventh Supplemental Indenture dated as of November 1,1947, an Eighth Supplemental Indenture dated as of January 1, 1949, a NinthSupplemental Indenture dated as of May 1, 1950, a Tenth Supplemental Indenturedated as of July 1, 1952, an Eleventh Supplemental Indenture dated as ofJanuary 1, 1954, a Twelfth Supplemental Indenture dated as of October 1, 1957,a Thirteenth Supplemental Indenture dated as of February 1, 1959, a FourteenthSupplemental Indenture dated as of July 15, 1960, a Fifteenth SupplementalIndenture dated as of June 15, 1964, a Sixteenth Supplemental Indenture datedas of January 1, 1969, a Seventeenth Supplemental Indenture dated as of March1, 1970, an Eighteenth Supplemental Indenture dated as of January 1, 1971, aNineteenth Supplemental Indenture dated as of January 1, 1972, a TwentiethSupplemental Indenture dated as of February 1, 1974, a Twenty-FirstSupplemental Indenture dated as of August 1, 1974, a Twenty-Second SupplementalIndenture dated as of August 1, 1975, a Twenty-Third Supplemental Indenturedated as of January 1, 1977, a Twenty-Fourth Supplemental Indenture dated as ofOctober 1, 1977, a Twenty-Fifth Supplemental Indenture dated as of September 1,1978, a Twenty-Sixth Supplemental Indenture dated as of September 1, 1978, aTwenty-Seventh Supplemental Indenture dated as of March 1, 1979, aTwenty-Eighth Supplemental Indenture dated as of May 1, 1979, a Twenty-NinthSupplemental Indenture dated as of March 1, 1980, a Thirtieth SupplementalIndenture dated as of August 1, 1980, a Thirty-First Supplemental Indenturedated as of February 1, 1981, a Thirty-Second Supplemental Indenture dated asof August 1, 1981, a Thirty-Third Supplemental Indenture dated as of December1, 1981, a Thirty-Fourth Supplemental Indenture dated as of December 1, 1982, aThirty-Fifth Supplemental Indenture dated as of March 30, 1984, a Thirty-SixthSupplemental Indenture dated as of November 15, 1984, a Thirty-SeventhSupplemental Indenture dated as of August 15, 1985, a Thirty-EighthSupplemental Indenture dated as of October 1, 1986, a Thirty-Ninth SupplementalIndenture dated as of March 15, 1987, a Fortieth Supplemental Indenture datedas of June 1, 1987, a Forty-First Supplemental Indenture dated as of June 15,1988, a Forty-Second Supplemental Indenture dated as of August 1, 1988, aForty-Third Supplemental Indenture dated as of September 15, 1989, aForty-Fourth Supplemental Indenture dated as of March 15, 1990, a Forty-FifthSupplemental Indenture dated as of March 15, 1990, a Forty-Sixth SupplementalIndenture dated as of June 1, 1990, a Forty-Seventh Supplemental Indenturedated as of July 15, 1991, a Forty-Eighth Supplemental Indenture dated as ofJuly 15, 1992, a Forty-Ninth Supplemental Indenture dated as of February 15,1993, a Fiftieth Supplemental Indenture dated as of February 15, 1993, aFifty-First Supplemental Indenture dated as of February 1, 1994, a Fifty-SecondSupplemental Indenture dated as of April 30, 1999, a Fifty-Third SupplementalIndenture dated as of June 15, 2001, a Fifty-Fourth Supplemental Indenturedated as of September 1, 2002, and a Fifty-Fifth Supplemental Indenture datedas of February 15, 2003, each supplementing and amending the Indenture; and

 

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WHEREAS,the Thirty-Fifth Supplemental Indenture authorized and appointed LaSalle BankNational Association, a national banking association duly organized andexisting under the law of the United States of America with its principaloffice in Chicago, Illinois and formerly named LaSalle National Bank, asSuccessor Trustee to The First National Bank of Chicago, which appointment wasaccepted, and all trust powers under the Indenture were thereby transferredfrom The First National Bank of Chicago to LaSalle Bank National Association;and

 

WHEREAS,the Forty-Sixth Supplemental Indenture amended the Indenture to reflect a changein the name of the Company from Public Service Company of Indiana, Inc. to PSIEnergy, Inc. effective as of April 20, 1990; and

 

WHEREAS,as of December 1, 2004, the only bonds that have been heretofore issued underthe Indenture which are now outstanding are $7,500,000 aggregate principalamount of “PSI Energy, Inc. First Mortgage Bonds, Series VV, Due July 15, 2026”and $70,000,000 aggregate principal amount of “PSI Energy, Inc. First MortgageBonds, Series WW, Due August 15, 2027” and $50,000,000 aggregate principalamount of “PSI Energy, Inc. First Mortgage Bonds, Series ZZ, 5 3/4%, DueFebruary 15, 2028” and $30,000,000 aggregate principal amount of “PSI Energy,Inc. First Mortgage Bonds, Series AAA, 7 1/8%, Due February 1, 2024” and$124,665,000 aggregate principal amount of “PSI Energy, Inc. First Mortgage Bonds, Series BBB, 8%, Due July 15,2009” (such bonds being hereinafter referred to as “Bonds of Series BBB”) and$53,055,000 aggregate principal amount of “PSI Energy, Inc. First MortgageBonds, Series CCC, 8.85%, Due January 15, 2022” and $38,000,000 aggregateprincipal amount of “PSI Energy, Inc. First Mortgage Bonds, Series DDD, 8.31%,Due September 1, 2032” and $325,000,000 aggregate principal amount of “PSIEnergy, Inc. First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006” and$23,000,000 aggregate principal amount of “PSI Energy, Inc. First MortgageBonds, Series FFF, Due March 1, 2031” and $24,600,000 aggregate principalamount of “PSI Energy, Inc. First Mortgage Bonds, Series GGG, Due March 1, 2019”and $35,000,000 aggregate principal amount of “PSI Energy, Inc. First MortgageBonds, Series HHH, Due April 1, 2022”; and

 

WHEREAS,in accordance with the provisions of Section 1 of Article XVIII of theIndenture, the Board of Directors has authorized the execution and delivery bythe Company of a Fifty-Sixth Supplemental Indenture, substantially in the formof this Fifty-Sixth Supplemental Indenture, for the purpose of creating afifty-fourth and fifty-fifth series of bonds to be issued under the Indenture,to be known as, respectively, “PSI Energy, Inc. First Mortgage Bonds, SeriesIII, Due December 1, 2039” (such series to consist of a single bond beinghereinafter referred to as the “Series III Bond”) and “PSI Energy, Inc. FirstMortgage Bonds, Series JJJ, Due December 1, 2039”  (such series to consist of a single bondbeing hereinafter referred to as the “Series JJJ Bond”) (the Series III Bondand the Series JJJ Bond, when referred to collectively in this Fifty-SixthSupplemental Indenture, shall be hereinafter referred to as the “Bonds ofSeries III and JJJ”), and prescribing the form and substance of the Bonds ofSeries III and JJJ and the terms, provisions and characteristics thereof, andfor the purpose of adding to the covenants and agreements of the Company forthe protection of the bondholders and of

 

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thetrust estate and of making such changes in the Indenture as are deemednecessary or desirable and as are permitted by the Indenture; and

 

WHEREAS,all conditions and requirements necessary to make this Fifty-Sixth SupplementalIndenture a valid, binding and legal instrument have been done, performed andfulfilled and the execution and delivery hereof have been in all respects duly authorized:

 

NOW,THEREFORE, in consideration of the premises, and of the acceptance and purchaseof the Bonds of Series III and JJJ by the holders and registered ownersthereof, and of the sum of One Dollar ($1.00) duly paid by the Trustee to theCompany, the receipt whereof is hereby acknowledged, and in accordance with andsubject to the terms and provisions of the Indenture, the Company and theTrustee, respectively, have entered into, executed and delivered thisFifty-Sixth Supplemental Indenture for the uses and purposes hereinafterexpressed, that is to say:

 

ARTICLEI.

 

FIRSTMORTGAGE BONDS, SERIES III, DUE DECEMBER 1, 2039 ANDFIRST MORTGAGE BONDS, SERIES JJJ, DUE DECEMBER 1, 2039

 

*Section 1*. There are hereby created a fifty-fourth and fifty-fifth series of bondsto be issued under and secured by the Indenture, to be designated as “PSIEnergy, Inc. First Mortgage Bonds, Series III, Due December 1, 2039” (suchseries to consist of a single bond, which shall be the Series III Bondhereinbefore referred to) and “PSI Energy, Inc. First Mortgage Bonds, SeriesJJJ, Due December 1, 2039” (such series to consist of a single bond, whichshall be the Series JJJ Bond hereinbefore referred to), respectively.

 

*Section 2*.  The Series III Bond and Series JJJ Bond eachshall be issued only in the form of a separate, single, authenticated, fullyregistered bond which (i) need not be in the form of a lithographed or engravedcertificate, but may be typewritten or printed on ordinary paper or such paperas the Trustee may reasonably request, (ii) shall represent and be denominatedin a principal amount not to exceed seventy-seven million one hundredtwenty-five thousand dollars ($77,125,000) with respect to Series III Bond, anda principal amount not to exceed seventy-seven million one hundred twenty-fivethousand dollars ($77,125,000) with respect to the Series JJJ Bond, (iii) shallbe executed by the Company and authenticated by the Trustee in accordance withthe provisions of the Indenture, and (iv) shall be registered in the name of XLCapital Assurance Inc., or its permitted assigns (“XL Capital”).

 

TheSeries III Bond is being issued to XL Capital as security for the payment bythe Company of its obligations under the Insurance Agreement, dated asof December 1, 2004, between XLCapital and the Company, which wasentered into in connection with the delivery by XL Capital of its FinancialGuaranty Insurance Policy insuring certain payments of principal of, andinterest on, certain bonds (the “Series 2004B IDFA

 

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Bonds”) to be issued under aTrust Indenture, dated as of December 1, 2004, between the Indiana DevelopmentFinance Authority (“IDFA”) and Deutsche Bank National Trust Company, astrustee.  The proceeds of the Series2004B IDFA Bonds will be loaned to the Company pursuant to a Loan Agreement,dated as of December 1, 2004, between IDFA and the Company.

 

The Series JJJ Bond is being issued to XL Capital assecurity for the payment by the Company of its obligations under an InsuranceAgreement, dated as of December 1, 2004, between XL Capital and the Company,which was entered into in connection with the delivery by XL Capital of itsFinancial Guaranty Insurance Policy insuring certain payments of principal of,and interest on, certain bonds (the “Series 2004C IDFA Bonds”) to be issuedunder a Trust Indenture, dated as of December 1, 2004, between the IDFA andDeutsche Bank National Trust Company, as trustee.  The proceeds of the Series 2004C IDFA Bondswill be loaned to the Company pursuant to a Loan Agreement, dated as ofDecember 1, 2004, between IDFA and the Company.

 

The Series III Bond and the Series JJJ Bond each shallbe transferable only as required to effect an assignment thereof to asuccessor-in-interest of XL Capital under the applicable Insurance Agreementreferred to hereinabove, provided that the Trustee shall have received noticefrom the Company of such an assignment (which notice the Trustee may rely uponwithout further inquiry).

 

TheSeries III Bond and the Trustee’s certificate to be endorsed thereon, and theSeries JJJ Bond and the Trustee’s certificate to be endorsed thereon, shall besubstantially in the following forms, respectively:

 

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANKINTENTIONALLY.]

 

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(FORMOF FACE OF THE SERIES III BOND)

 

THEHOLDER OF THIS BOND BY ACCEPTANCE HEREOF AGREES TO RESTRICTIONS ON TRANSFER, TOWAIVERS OF CERTAIN RIGHTS OF EXCHANGE, AND TO INDEMNIFICATION PROVISIONS AS SETFORTH BELOW.  IN ADDITION, THE BONDREPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933 AND SUCH BOND MAY NOT BE TRANSFERRED WITHOUT COMPLIANCE WITHAPPLICABLE SECURITIES LAWS.

 

THISBOND IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR TO XL CAPITAL ASSURANCE INC.UNDER THE INSURANCE AGREEMENT DATED AS OF DECEMBER 1, 2004 BETWEEN XL CAPITALASSURANCE INC AND PSI ENERGY, INC.

 
| No.  III- |   | $          |
|-----------|--------|---------------------------------------------------------|

 

PSI ENERGY, INC.

FIRST MORTGAGE BOND, SERIES III,

DUE DECEMBER 1, 2039

 

PSI Energy, Inc., anIndiana corporation (hereinafter called the “Company”), for value received,hereby promises to pay to XL CAPITAL ASSURANCE INC., or registered assigns, theprincipal sum of                                                     Dollars ($   ) on the first day ofDecember, 2039 and to pay interest on said principal sum, on each Interest Payment Date (hereinbelowdefined), until said principal sum is paid, at the rate from time totime borne by the Indiana Development Finance Authority Environmental RevenueBonds, Series 2004B (the “Series 2004B IDFA Bonds”) issued by the IndianaDevelopment Finance Authority (“IDFA”) under a Trust Indenture, dated as ofDecember 1, 2004, between IDFA and Deutsche Bank National Trust Company astrustee (the “IDFA Indenture”); provided, however, that in no event shall therate of interest borne by this Bond exceed 13% per annum.  Both the principal of and the interest onthis bond shall be payable in any coin or currency of the United States ofAmerica which at the time of payment is legal tender for the payment of publicand private debts at the office or agency of the Company in Plainfield,Indiana, or, at the option of the registered owner hereof, at the office oragency of the Company in the Borough of Manhattan, the City of New York, Stateof New York, except that interest on this bond may be paid, at the option ofthe Company, by check or draft mailed to the address of the person entitledthereto as it appears on the books of the Company maintained for that purpose.

 

Thisbond is issued to XL Capital Assurance Inc., or its permitted assigns (“XLCapital”) as security for the payment by the Company of its obligations underthat certain Insurance Agreement dated as of December 1, 2004 between theCompany and XL Capital (the “Insurance Agreement”).  The Insurance Agreement was entered into inconnection with the delivery by XL Capital of its Financial Guaranty InsurancePolicy insuring certain payments of principal of, and interest on, the Series2004B IDFA Bonds.

 

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Theproceeds of the Series 2004B IDFA Bonds have been loaned to the Companypursuant to a Loan Agreement, dated as of December 1, 2004, between IDFA andthe Company.

 

Notwithstandingany other provision of this bond, no principal shall be due and payable on thisbond unless and until an Event of Default shall have occurred under Section4.01 of the Insurance Agreement by reason of a failure by the Company to payits obligations under the Insurance Agreement and the Trustee shall havereceived notice from XL Captial or the Company of such an Event of Default(which notice the Trustee may rely upon without further inquiry).  If such an Event of Default under theInsurance Agreement shall occur, it shall be deemed to be a default, forpurposes of the Indenture, in the payment of an amount of principal of thisbond equal to the amount of such unpaid obligation.

 

REFERENCEIS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSEHEREOF.  SUCH FURTHER PROVISIONS SHALLFOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.

 

Thisbond shall not be valid or become obligatory for any purpose unless and untilit shall have been authenticated by the execution by the Trustee, or its successorin trust under the Indenture, of the certificate endorsed hereon.

 

INWITNESS WHEREOF, PSI Energy, Inc. has caused this bond to be executed in itsname by the manual or facsimile signature of its President or an Executive VicePresident or one of its Vice Presidents, and its corporate seal or a facsimilethereof to be hereto affixed and attested by the manual or facsimile signatureof its Secretary or one of its Assistant Secretaries.

 
| Dated  as of:                                                                                                                                                                                                         |                                                                                                                                                                                                      |
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|                                                                                                                                                                                                                  | PSI  ENERGY, INC.                                                                                                                                                                                         |
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|                                                                                                                                                                                                                  | By                                                                                                                                                                                                        |   |   |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                  |                                 President |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
| ATTEST:                                                                                                                                                                                                               |                                                                                                                                                                                                      |
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|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
|                                   Secretary |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                       |                                                                                                                                                                                                           |  |  |  |

 

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(FORMOF REVERSE OF THE SERIES III BOND)

 

Thisbond is one of the bonds of the Company issued and to be issued from time totime under and in accordance with and all secured by an indenture of mortgageor deed of trust, dated September 1, 1939, from Public Service Company ofIndiana (predecessor of the Company) to The First National Bank of Chicago, asTrustee, to which LaSalle Bank National Association is successor trustee,(which indenture as amended by all supplemental indentures is hereinafterreferred to as the “Indenture”). Said Trustee or its successor in trust underthe Indenture is hereinafter sometimes referred to as the “Trustee.” Referenceis hereby made to the Indenture for a description of the property mortgaged andpledged and the nature and extent of the security for said bonds. By the termsof the Indenture, the bonds secured thereby are issuable in series which mayvary as to date, amount, date of maturity, rate of interest and in otherrespects as in the Indenture provided.

 

Thisbond is designated as “PSI Energy, Inc. First Mortgage Bonds, Series III, DueDecember 1, 2039” (hereinafter referred to as the “Series III Bond”) of theCompany issued under and secured by the Indenture and created by a Fifty-SixthSupplemental Indenture, dated as of December 1, 2004  (the “Fifty-Sixth Supplemental Indenture”),which also amends the Indenture.

 

Therights and obligations of the Company and of the bearers and registered ownersof bonds may be modified or amended with the consent of the Company by anaffirmative vote of the bearers or registered owners entitled to vote of atleast seventy-five per centum (75%) in principal amount of the bonds thenoutstanding at a meeting of bondholders called for the purpose (and by anaffirmative vote of the bearers or registered owners entitled to vote of atleast seventy-five per centum (75%) in principal amount of bonds of any seriesaffected by such modification or amendment in case one or more, but less thanall, series of bonds are so affected), all in the manner and subject to thelimitations set forth in the Indenture, any consent by the bearer or registeredowner of any bond being conclusive and binding upon such bearer or registeredowner and upon all future bearers or registered owners of such bond,irrespective of whether or not any notation of such consent is made on suchbond; provided that no such modification or amendment shall, among otherthings, extend the maturity or reduce the amount of, or reduce the rate ofinterest on, or otherwise modify the terms of the payment of the principal of,or interest or premium (if any) on this bond, which obligations are absoluteand unconditional, or permit the creation of any lien ranking prior to or equalwith the lien of the Indenture on any of the mortgaged property.  The Fifty-Sixth Supplemental Indentureprovides that at any time when no bonds issued under the Indenture prior to theissuance of the “PSI Energy, Inc. First Mortgage Bonds, Series BBB, 8%, DueJuly 15, 2009” are outstanding, the Company reserves the right to amend theIndenture, without the consent or other action by the holders of the bondsoutstanding at that time, to decrease the seventy-five per centum (75%) voterequirement referred to above to sixty-six and two-thirds per centum (66-2/3%).

 

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The Series III Bond shall be transferable only as requiredto effect an assignment thereof to a successor-in-interest of XL Capital underthe Insurance Agreement, provided that the Trustee shall have received noticefrom the Company of such an assignment (which notice the Trustee may rely uponwithout further inquiry).

 

EachInterest Payment Date under the IDFA Indenture shall be an Interest PaymentDate for the Series III Bond.  If andwhen interest is paid on the Series 2004B IDFA Bonds for any given period oftime, then there is deemed to have been paid on this Series III Bond an amountof interest equal to such interest paid on the Series 2004B IDFA Bonds.  The Company shall promptly notify the Trusteeof the amounts and Interest Payment Dates if any interest becomes payable onthis Series III Bond.

 

TheSeries III Bond shall be deemed to have been paid and no longer outstandingunder the Indenture to the extent that Series 2004B IDFA Bonds are paid ordeemed to have been paid and are no longer outstanding under the IDFA Indentureand all amounts owed by the Company to XL Capital under the Insurance Agreementhave been indefeasibly paid in full, and the Trustee has received notice tosuch effect from the Company (which notice the Trustee may rely upon withoutfurther inquiry).

 

Notwithstandingthe foregoing, this bond shall be deemed to have been paid and redeemed at anytime if and to the extent that the Series 2004B IDFA Bonds are redeemedpursuant to the IDFA Indenture, in whole or in part, in an amount equal to 100%of the principal amount of the Series 2004B IDFA Bonds redeemed and all amountsowed by the Company to XL Capital under the Insurance Agreement have beenindefeasibly paid in full.  In such anevent, the Company shall notify XL Capital and the Trustee that a likeprincipal amount of this bond shall be deemed to have been paid andredeemed.  The Series III Bond is nototherwise redeemable prior to its maturity.

 

XLCapital shall surrender this bond to the Company for cancellation and dischargeby the Trustee upon the expiration of the Insurance Agreement or in the eventthat the Release Test (as defined in the Insurance Agreement) issatisfied.  The Trustee may cancel anddischarge the Series III Bond upon presentment thereof by the Company withoutmaking further inquiry.

 

Inthe case of any of certain events of default specified in the Indenture, theprincipal of this bond may be declared or may become due and payable prior tothe stated date of maturity hereof in the manner and with the effect providedin the Indenture.

 

Norecourse shall be had for the payment of the principal of or interest on thisbond, or for any claim based hereon, or otherwise in respect hereof or of theIndenture, to or against any incorporator, shareholder, officer or director,past, present or future, of the Company or of any predecessor or successorcompany, either directly or through the Company or such predecessor orsuccessor company, under any constitution or statute or rule of law, or by theenforcement of any assessment or penalty, or otherwise, all such liability ofincorporators, shareholders, directors and officers being waived and released

 

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bythe registered owner hereof by the acceptance of this bond and being likewisewaived and released by the terms of the Indenture.

 

(FORM OF TRUSTEE’S CERTIFICATE)

 

TRUSTEE’S CERTIFICATE

 

Thisbond is the Series III Bond designated therein referred to and described in thewithin mentioned Indenture and Fifty-Sixth Supplemental Indenture.

 
|   | LASALLE BANK NATIONAL  ASSOCIATION,  AS TRUSTEE, |
|--------|--------------------------------------------------|
|   |                                             |
|   |                                             |
|   | By                                               |   |   |
|   | *Authorized Officer*                             |

 

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANKINTENTIONALLY.]

 

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(FORMOF FACE OF THE SERIES JJJ BOND)

 

THEHOLDER OF THIS BOND BY ACCEPTANCE HEREOF AGREES TO RESTRICTIONS ON TRANSFER, TOWAIVERS OF CERTAIN RIGHTS OF EXCHANGE, AND TO INDEMNIFICATION PROVISIONS AS SETFORTH BELOW.  IN ADDITION, THE BONDREPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933 AND SUCH BOND MAY NOT BE TRANSFERRED WITHOUT COMPLIANCE WITHAPPLICABLE SECURITIES LAWS.

 

THISBOND IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR TO XL CAPITAL ASSURANCE INC.UNDER THE INSURANCE AGREEMENT DATED AS OF DECEMBER 1, 2004 BETWEEN XL CAPITALASSURANCE INC. AND PSI ENERGY, INC.

 
| No.  JJJ- |   | $          |
|-----------|--------|---------------------------------------------------------|

 

PSI ENERGY, INC.

FIRST MORTGAGE BOND, SERIES JJJ,

DUE DECEMBER 1, 2039

 

PSI Energy, Inc., anIndiana corporation (hereinafter called the “Company”), for value received,hereby promises to pay to XL CAPITAL ASSURANCE INC., or registered assigns, theprincipal sum of                                             Dollars ($   ) on the first day ofDecember, 2039 and to pay interest on said principal sum, on each Interest Payment Date (hereinbelowdefined), until said principal sum is paid, at the rate from time totime borne by the Indiana Development Finance Authority Environmental RevenueBonds, Series 2004C (the “Series 2004C IDFA Bonds”) issued by the IndianaDevelopment Finance Authority (“IDFA”) under a Trust Indenture, dated as ofDecember 1, 2004, between IDFA and Deutsche Bank National Trust Company astrustee (the “IDFA Indenture”); provided, however, that in no event shall therate of interest borne by this Bond exceed 13% per annum.  Both the principal of and the interest onthis bond shall be payable in any coin or currency of the United States ofAmerica which at the time of payment is legal tender for the payment of publicand private debts at the office or agency of the Company in Plainfield,Indiana, or, at the option of the registered owner hereof, at the office oragency of the Company in the Borough of Manhattan, the City of New York, Stateof New York, except that interest on this bond may be paid, at the option ofthe Company, by check or draft mailed to the address of the person entitledthereto as it appears on the books of the Company maintained for that purpose.

 

Thisbond is issued to XL Capital Assurance Inc., or its permitted assigns (“XLCapital”) as security for the payment by the Company of its obligations underthat certain Insurance Agreement dated as of December 1, 2004, between theCompany and XL Capital (the “Insurance Agreement”).  The Insurance Agreement was entered into inconnection with the delivery by XL Capital of its Financial Guaranty InsurancePolicy insuring certain payments of principal of, and interest on, the Series2004C IDFA Bonds.

 

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Theproceeds of the Series 2004C IDFA Bonds have been loaned to the Companypursuant to a Loan Agreement, dated as of December 1, 2004, between IDFA andthe Company.

 

Notwithstandingany other provision of this bond, no principal shall be due and payable on thisbond unless and until an Event of Default shall have occurred under Section4.01 of the Insurance Agreement by reason of a failure by the Company to payits obligations under the Insurance Agreement and the Trustee shall havereceived notice from XL Capital or the Company of such an Event of Default(which notice the Trustee may rely upon without further inquiry).  If such an Event of Default under theInsurance Agreement shall occur, it shall be deemed to be a default, forpurposes of the Indenture, in the payment of an amount of principal of thisbond equal to the amount of such unpaid obligation.

 

REFERENCEIS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSEHEREOF.  SUCH FURTHER PROVISIONS SHALLFOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.

 

Thisbond shall not be valid or become obligatory for any purpose unless and untilit shall have been authenticated by the execution by the Trustee, or itssuccessor in trust under the Indenture, of the certificate endorsed hereon.

 

INWITNESS WHEREOF, PSI Energy, Inc. has caused this bond to be executed in itsname by the manual or facsimile signature of its President or an Executive VicePresident or one of its Vice Presidents, and its corporate seal or a facsimilethereof to be hereto affixed and attested by the manual or facsimile signatureof its Secretary or one of its Assistant Secretaries.

 
| Dated  as of:                                                                                                                                                                                                         |                                                                                                                                                                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                  | PSI  ENERGY, INC.                                                                                                                                                                                         |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                  | By                                                                                                                                                                                                        |   |   |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                  |                                 President |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
| ATTEST:                                                                                                                                                                                                               |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                      |
|                                   Secretary |                                                                                                                                                                                                      |
|                                                                                                                                                                                                                       |                                                                                                                                                                                                           |  |  |  |

 

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(FORMOF REVERSE OF THE SERIES JJJ BOND)

 

Thisbond is one of the bonds of the Company issued and to be issued from time totime under and in accordance with and all secured by an indenture of mortgageor deed of trust, dated September 1, 1939, from Public Service Company ofIndiana (predecessor of the Company) to The First National Bank of Chicago, asTrustee, to which LaSalle Bank National Association is successor trustee,(which indenture as amended by all supplemental indentures is hereinafter referredto as the “Indenture”). Said Trustee or its successor in trust under theIndenture is hereinafter sometimes referred to as the “Trustee.” Reference ishereby made to the Indenture for a description of the property mortgaged andpledged and the nature and extent of the security for said bonds. By the termsof the Indenture, the bonds secured thereby are issuable in series which mayvary as to date, amount, date of maturity, rate of interest and in otherrespects as in the Indenture provided.

 

Thisbond is designated as “PSI Energy, Inc. First Mortgage Bonds, Series JJJ, DueDecember 1, 2039” (hereinafter referred to as the “Series JJJ Bond”) of theCompany issued under and secured by the Indenture and created by a Fifty-SixthSupplemental Indenture, dated as of December 1, 2004  (the “Fifty-Sixth Supplemental Indenture”),which also amends the Indenture.

 

Therights and obligations of the Company and of the bearers and registered ownersof bonds may be modified or amended with the consent of the Company by anaffirmative vote of the bearers or registered owners entitled to vote of atleast seventy-five per centum (75%) in principal amount of the bonds thenoutstanding at a meeting of bondholders called for the purpose (and by anaffirmative vote of the bearers or registered owners entitled to vote of atleast seventy-five per centum (75%) in principal amount of bonds of any seriesaffected by such modification or amendment in case one or more, but less thanall, series of bonds are so affected), all in the manner and subject to thelimitations set forth in the Indenture, any consent by the bearer or registeredowner of any bond being conclusive and binding upon such bearer or registeredowner and upon all future bearers or registered owners of such bond, irrespectiveof whether or not any notation of such consent is made on such bond; providedthat no such modification or amendment shall, among other things, extend thematurity or reduce the amount of, or reduce the rate of interest on, orotherwise modify the terms of the payment of the principal of, or interest orpremium (if any) on this bond, which obligations are absolute andunconditional, or permit the creation of any lien ranking prior to or equalwith the lien of the Indenture on any of the mortgaged property.  The Fifty-Sixth Supplemental Indentureprovides that at any time when no bonds issued under the Indenture prior to theissuance of the “PSI Energy, Inc. First Mortgage Bonds, Series BBB, 8%, DueJuly 15, 2009” are outstanding, the Company reserves the right to amend theIndenture, without the consent or other action by the holders of the bondsoutstanding at that time, to decrease the seventy-five per centum (75%) voterequirement referred to above to sixty-six and two-thirds per centum (66-2/3%).

 

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The Series JJJ Bond shall be transferable only asrequired to effect an assignment thereof to a successor-in-interest of XLCapital under the Insurance Agreement, provided that the Trustee shall have receivednotice from the Company of such an assignment (which notice the Trustee mayrely upon without further inquiry).

 

EachInterest Payment Date under the IDFA Indenture shall be an Interest PaymentDate for the Series JJJ Bond.  If andwhen interest is paid on the Series 2004C IDFA Bonds for any given period oftime, then there is deemed to have been paid on this Series JJJ Bond an amountof interest equal to such interest paid on the Series 2004C IDFA Bonds.  The Company shall promptly notify the Trusteeof the amounts and Interest Payment Dates if any interest becomes payable onthis Series JJJ Bond.

 

TheSeries JJJ Bond shall be deemed to have been paid and no longer outstandingunder the Indenture to the extent that Series 2004C IDFA Bonds are paid or deemedto have been paid and are no longer outstanding under the IDFA Indenture andall amounts owed by the Company to XL Capital under the Insurance Agreementhave been indefeasibly paid in full, and the Trustee has received notice tosuch effect from the Company (which notice the Trustee may rely upon withoutfurther inquiry).

 

Notwithstandingthe foregoing, this bond shall be deemed to have been paid and redeemed at anytime if and to the extent that the Series 2004C IDFA Bonds are redeemedpursuant to the IDFA Indenture, in whole or in part, in an amount equal to 100%of the principal amount of the Series 2004C IDFA Bonds redeemed and all amountsowed by the Company to XL Capital under the Insurance Agreement have beenindefeasibly paid in full.  In such anevent, the Company shall notify XL Capital and the Trustee that a likeprincipal amount of this bond shall be deemed to have been paid andredeemed.  The Series JJJ Bond is nototherwise redeemable prior to its maturity.

 

XLCapital shall surrender this bond to the Company for cancellation and dischargeby the Trustee upon the expiration of the Insurance Agreement or in the eventthat the Release Test (as defined in the Insurance Agreement) issatisfied.  The Trustee may cancel anddischarge the Series JJJ Bond upon presentment thereof by the Company withoutmaking further inquiry.

 

Inthe case of any of certain events of default specified in the Indenture, theprincipal of this bond may be declared or may become due and payable prior tothe stated date of maturity hereof in the manner and with the effect providedin the Indenture.

 

Norecourse shall be had for the payment of the principal of or interest on thisbond, or for any claim based hereon, or otherwise in respect hereof or of theIndenture, to or against any incorporator, shareholder, officer or director,past, present or future, of the Company or of any predecessor or successorcompany, either directly or through the Company or such predecessor orsuccessor company, under any constitution or statute or rule of law, or by theenforcement of any assessment or penalty, or otherwise, all such liability ofincorporators, shareholders, directors and officers being waived and released

 

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bythe registered owner hereof by the acceptance of this bond and being likewisewaived and released by the terms of the Indenture.

 

(FORM OF TRUSTEE’S CERTIFICATE)

 

TRUSTEE’S CERTIFICATE

 

Thisbond is the Series JJJ Bond designated therein referred to and described in thewithin mentioned Indenture and Fifty-Sixth Supplemental Indenture.

 
|   | LASALLE BANK NATIONAL  ASSOCIATION,  AS TRUSTEE, |
|--------|--------------------------------------------------|
|   |                                             |
|   |                                             |
|   | By                                               |   |   |
|   | *Authorized Officer*                             |

 

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANKINTENTIONALLY.]

 

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*Section 3**.*  Each Bond of SeriesIII and JJJ issued prior to the first interest payment date shall be dated asof December 7, 2004, and otherwise shall be dated as provided in Section 1 ofArticle II of the Indenture.

 

*Section 4**.*  The Series III Bondshall be due and payable on December 1, 2039, and shall bear interest fromDecember 7, 2004, at the rate from time to time borne by the Series 2004B IDFABonds (as referred to in the form of the bond hereinabove set forth).  The Series JJJ Bond shall be due and payableon December 1, 2039, and shall bear interest from December 7, 2004, at the ratefrom time to time borne by the Series 2004C IDFA Bonds (as referred to in theform of the bond hereinabove set forth).

 

Ifand when interest is paid on the Series 2004B IDFA Bonds for any given periodof time, then there is deemed to have been paid on the Series III Bond anamount of interest equal to such interest paid on the Series 2004B IDFABonds.  If and when interest is paid onthe Series 2004C IDFA Bonds for any given period of time, then there is deemedto have been paid on the Series JJJ Bond an amount of interest equal to suchinterest paid on the Series 2004C IDFA Bonds. The Company shall promptly notify the Trustee of the amounts andInterest Payment Dates if any interest becomes payable on the Series III Bondor the Series JJJ Bond.

 

Forpurposes of the calculation required by the first paragraph of Section 5 ofArticle IV of the Indenture, annual interest in respect of:

 

(a)       theSeries III Bond shall be equal to the sum of (i) the sum of the amountsdetermined by multiplying the principal amount of the Series 2004B IDFA, ifany, outstanding on the date of such calculation which bear a fixed rate ofinterest *by* such fixedrate, plus (ii) the amount determined by multiplying the aggregate principalamount of the Series 2004B IDFA Bonds, if any, outstanding on the date of suchcalculation which bear interest at rates which may fluctuate or may fluctuatefrom time to time in accordance with methods specified in such Series 2004BIDFA Bonds *by* 13% perannum; and

 

(b)       theSeries JJJ Bond shall be equal to the sum of (i) the sum of the amountsdetermined by multiplying the principal amount of the Series 2004C IDFA, ifany, outstanding on the date of such calculation which bear a fixed rate ofinterest *by* such fixedrate, plus (ii) the amount determined by multiplying the aggregate principalamount of the Series 2004C IDFA Bonds, if any, outstanding on the date of suchcalculation which bear interest at rates which may fluctuate or may fluctuatefrom time to time in accordance with methods specified in such Series 2004CIDFA Bonds *by* 13% perannum.

 

*Section 5**.*  Both the principalof and the interest on the Bonds of Series III and JJJ shall be payable in anycoin or currency of the United States of America which at the time of paymentis legal tender for the payment of public and private debts, at the office oragency of the Company in Plainfield, Indiana, or, at the option of the holderthereof, at the office or agency of the Company in the Borough of Manhattan,the City of New York,

 

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Stateof New York, except that interest on the Bonds of Series III and JJJ may bepaid, at the option of the Company, by check or draft mailed to the address ofthe person entitled thereto as it appears on the books of the Companymaintained for that purpose.

 

*Section 6*. A single Series III Bond shall be issued and shall be numbered “III-1.”  A single Series JJJ Bond shall be issued andshall be numbered “JJJ-1.”

 

TheBonds of Series III and JJJ shall be executed on behalf of the Company by themanual or facsimile signature of its President or an Executive Vice Presidentor one of its Vice Presidents and shall have affixed thereto the seal of theCompany or a facsimile thereof attested by the manual or facsimile signature ofits Secretary or one of its Assistant Secretaries and shall be authenticated bythe execution by the Trustee of the certificate endorsed on said bonds.

 

Noservice charge will be made by the Company for the transfer or for the exchangeof Bonds of Series III and JJJ except, in the case of transfer, a chargesufficient to reimburse the Company for any tax or other governmental chargepayable in connection therewith.

 

Pursuantto the provisions of Section 11 of Article II of the Indenture, Bonds of SeriesIII and JJJ may be issued in temporary form, and if temporary bonds be issued,the Company shall, with all reasonable dispatch, at its own expense and withoutcharge to the holders of the temporary bonds, prepare and execute definitiveBonds of Series III and JJJ and exchange the temporary bonds for suchdefinitive bonds in the manner provided for in said section, provided, however,no presentation or surrender of temporary Bonds of Series III and JJJ shall benecessary in order for the holders entitled to interest thereon to receive suchinterest.

 

*Section 7**.*  Article IX of theIndenture, “Maintenance and Renewal Fund and Sinking Fund Provisions” asheretofore amended or supplemented shall not apply to the Bonds of Series BBBor to any subsequently created series of bonds (which includes the Bonds ofSeries III and JJJ) from and after the date on which no series of bonds createdunder the Indenture prior to the Bonds of Series BBB are outstanding.

 

*Section 8**.*  Section 22 ofArticle V of the Indenture as heretofore amended or supplemented which, amongother things, requires an inspection of the mortgaged property every two yearsby an independent engineer, shall not apply to the Bonds of Series BBB or toany subsequently created series of bonds (which includes the Bonds of SeriesIII and JJJ), from and after the date in which no series of bonds created underthe Indenture prior to the Bonds of Series BBB are outstanding.

 

*Section 9**.*  The Company reservesthe right, without consent or other action by the holders of the Bonds ofSeries BBB or of any subsequently created series of bonds (which includes theBonds of Series III and JJJ), to amend the Indenture, as heretofore amended orsupplemented, at any time after all bonds of any series created prior to theBonds of Series BBB are no longer outstanding under the Indenture, as follows:

 

17

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(a)  by substituting for the words “in principalamount not greater than sixty per centum (60%) of” in Section 3 of Article IVthereof the following:

 

“inprincipal amount not greater than sixty-six and two-thirds per centum (66-2/3%)of “.

 

(b)  by substituting for the words “shall exceedsixty per centum (60%) of the value of bondable property so acquired” inSection 9 of Article V thereof the following:

 

“shallexceed sixty-six and two-thirds per centum (66-2/3%) of the value of bondableproperty so acquired”.

 

(c)  by substituting for the words “shall bedeemed to be paid within the meaning of this article; *provided*,that the date for the payment or redemption of such bonds shall be not morethan one (1) year after such moneys shall have been so set apart or paid.” inthe first paragraph of Article XIV thereof the following:

 

“shallbe deemed to be paid within the meaning of this article.”.

 

(d)  by substituting for the words “with theconsent of holders of at least seventy-five per centum (75%) in aggregateprincipal amount of the bonds at the time outstanding;” in sub-section (a) ofSection 3 of Article XVIII thereof the following:

 

“withthe consent of holders of at least sixty-six and two-thirds per centum(66-2/3%) in aggregate principal amount of the bonds at the time outstanding;”.

 

(e)  by substituting for the words “holders (orpersons entitled to vote the bonds) of not less than seventy-five per centum(75%) in aggregate principal amount of the bonds entitled to be voted” insub-section (l) of Section 3 of Article XVIII thereof the following:

 

“holders(or persons entitled to vote the bonds) of not less than sixty-six andtwo-thirds per centum (66-2/3%) in aggregate principal amount of the bondsentitled to be voted”.

 

(f)  by substituting for the words “holders (orpersons entitled to vote the bonds) of at least seventy-five per centum (75%)in principal amount of the bonds outstanding” in sub-section (m) of Section 3of Article XVIII thereof the following:

 

18

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“holders(or persons entitled to vote the bonds) of at least sixty-six and two-thirdsper centum (66-2/3%) in principal amount of the bonds outstanding”.

 

ARTICLEII.

 

ISSUANCEOF BONDS OF SERIES III AND JJJ.

 

* Section 1*.  The Series III Bond, in the principal amountnot exceeding seventy-seven million one hundred twenty-five thousand dollars($77,125,000) and the Series JJJ Bond in the principal amount not exceedingseventy-seven million one hundred twenty-five thousand dollars ($77,125,000),may be executed by the Company and delivered to the Trustee for authentication,and shall be authenticated and delivered by the Trustee to or upon the order ofthe Company (which authentication and delivery may be made without awaiting thefiling or recording of this Fifty-Sixth Supplemental Indenture), upon receiptby the Trustee of the resolutions, certificates, orders, opinions and otherinstruments required by the provisions of Section 3 of Article IV of theIndenture to be received by the Trustee as a condition to the authentication anddelivery by the Trustee of bonds pursuant to said Section 3.

 

ARTICLEIII.

 

INDENTUREAMENDMENTS.

 

*Section 1.* Article I of the Indenture, as heretofore amended,is hereby further amended (i) by adding immediately after subdivision “(95)”thereof an additional subdivision numbered “(96)” and reading as follows:

 

 “(94) The term ‘Fifty-Sixth SupplementalIndenture’ shall mean the Fifty-Sixth Supplemental Indenture executed by theCompany and the Trustee, dated as of December 1, 2004, supplementing and amendingthe Indenture, and the terms ‘Series III Bond’ shall mean the ‘PSI Energy, Inc.First Mortgage Bonds, Series III, Due December 1, 2039,’ and ‘Series JJJ Bond’shall mean the ‘PSI Energy, Inc. First Mortgage Bonds, Series JJJ, Due December1, 2039,’, created by the Fifty-Sixth Supplemental Indenture.”

 

and(ii) by changing the numbering of the present subdivision “(96)” thereof to “(97)”.

 

*Section 2.* Article VII of the Indenture, as heretofore amended,is hereby further amended by inserting therein immediately after Section 40thereof, a new section designated “Section 41” and reading as follows:

 

“Section 41. The Series III Bond shall be deemed to have been paid and redeemed atany time if and to the extent that the Series 2004B IDFA Bonds are

 

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redeemedpursuant to the IDFA Indenture relating thereto, in whole or in part, in anamount equal to 100% of the principal amount of the Series 2004B IDFA Bondsredeemed and all amounts owed by the Company to XL Capital under the InsuranceAgreement have been indefeasibly paid in full. In such an event, the Company shall notify XL Capital and the Trusteethat a like principal amount of the Bonds of Series III shall be deemed to havebeen paid and redeemed.

 

The Series JJJ Bond shall be deemed to have beenpaid and redeemed at any time if and to the extent that the Series 2004C IDFABonds are redeemed pursuant to the IDFA Indenture relating thereto, in whole orin part, in an amount equal to 100% of the principal amount of the Series 2004CIDFA Bonds redeemed and all amounts owed by the Company to XL Capital under theInsurance Agreement have been indefeasibly paid in full.  In such an event, the Company shall notify XLCapital and the Trustee that a like principal amount of the Bonds of Series JJJshall be deemed to have been paid and redeemed.

 

The Bonds of Series III and JJJ are nototherwise redeemable prior to their maturity. For clarity, the Bonds of Series III and/or Series JJJ may also becancelled and discharged at the election of the Company upon theexpiration of the Insurance Agreement or in the event that the ReleaseTest (as defined in the Insurance Agreement) is satisfied.  TheTrustee may cancel and discharge the Series III and Series JJJ Bonds uponpresentment thereof by the Company without making further inquiry.  The terms “Series 2004B IDFA Bonds”, “Series2004C IDFA Bonds”, “IDFA Indenture”, “XL Capital” and “Insurance Agreement”shall have the respective meanings specified in the Fifty-Sixth SupplementalIndenture.

 

*Section 3.*  The Bonds ofSeries III and JJJ shall not be entitled to the benefit of a sinking fund.

 

ARTICLEIV.

 

CONCERNINGTHE TRUSTEE.

 

TheTrustee hereby accepts the trusts hereby declared and agrees to perform thesame upon the terms and conditions in the Indenture and in this Fifty-SixthSupplemental Indenture set forth.  TheTrustee shall not be responsible in any manner whatsoever for or in respect ofthe validity or sufficiency of this Fifty-Sixth Supplemental Indenture or thedue execution hereof by the Company or for or in respect of the recitalscontained herein, all of which recitals are made by the Company solely. Ingeneral, each and every term and condition contained in Article XVII of theIndenture shall apply to this Fifty-Sixth Supplemental Indenture.

 

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ARTICLEV.

 

MISCELLANEOUSPROVISIONS.

 

*Section 1.* Wherever in the original Indenture or in any ofthe fifty-six supplemental indentures thereto reference is made to any articleor section of the original Indenture, such reference shall be deemed to referto such article or section as amended by such supplemental indentures.

 

*Section 2.* Upon the execution and delivery hereof, theIndenture shall thereupon be deemed to be amended as hereinabove set forth asfully and with the same effect as if the amendments made hereby were set forthin the original Indenture and each of the fifty-six supplemental indentures tothe Indenture shall henceforth be read, taken and construed as one and the sameinstrument; but such amendments shall not operate so as to render invalid orimproper any action heretofore taken under the original Indenture or saidsupplemental indentures.

 

*Section 3.* All the covenants,stipulations and agreements in this Fifty-Sixth Supplemental Indenturecontained are and shall be for the sole and exclusive benefit of the partieshereto, their successors and assigns, and of the holders from time to time ofthe bonds.

 

*Section 4.* The table of contents to, and the headings of thedifferent articles of, this Fifty-Sixth Supplemental Indenture are inserted forconvenience of reference, and are not to be taken to be any part of theprovisions hereof, nor to control or affect the meaning, construction or effectof the same.

 

*Section 5.* This Fifty-Sixth Supplemental Indenture may besimultaneously executed in any number of counterparts, and all suchcounterparts shall constitute but one and the same instrument.

 

*Section 6.* Whenever a payment of principal or interest in respectof the Bonds of Series III and JJJ are due on any day other than a business day(as hereinafter defined), such payment shall be payable on the first businessday next following such date, and, in the case of a principal payment, intereston such principal payment shall accrue to the date of such principal payment.For the purposes of this Section 6 the term business day shall mean any dayother than a day on which the Trustee is authorized by law to close.

 

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANKINTENTIONALLY.]

 

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IN WITNESS WHEREOF, said PSI Energy, Inc. has caused this instrument tobe executed in its corporate name by its President or one of its VicePresidents and to be attested by its Secretary or one of its AssistantSecretaries and said LaSalle Bank National Association has caused thisinstrument to be executed in its corporate name by one of its First VicePresidents and to be attested by one of its Assistant Secretaries, in several counterparts,all as of the day and year first above written.

 
|                                                           | PSI  ENERGY, INC.              |
|----------------------------------------------------------------|--------------------------------|
|                                                           |                           |
|                                                           |                           |
| (CORPORATE  SEAL)                                              | By                             |   |   |
|                                                           | James L. Turner                |   |
|                                                           | *Executive Vice President and* |   |
| * *                                                       | *Chief Financial Officer*      |   |
|                                                           |                           |
| ATTEST:                                                        |                           |
|                                                           |                           |
|                                                           |                           |   |
| Richard  G. Beach, *Assistant**Secretary*                      |                           |
|                                                           |                           |
| Signed and delivered  by PSI Energy, Inc.  in the presence of: |                           |
|                                                           |                           |
|                                                           |                           |   |
| Deborah  L. Gates, *Witness*                                   |                           |
|                                                           |                           |
|                                                           |                           |   |
| Julie  M. Thompson, *Witness*                                  |                           |
|                                                                |                                |  |  |  |

 

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|                                                                            | LASALLE  BANK NATIONAL ASSOCIATION |   |
|---------------------------------------------------------------------------------|------------------------------------|--------|
|                                                                            |                               |   |
|                                                                            |                               |   |
| (CORPORATE  SEAL)                                                               | By                                 |   |   |   |
|                                                                            | Victoria Y. Douyon                 |   |   |
|                                                                            | *First Vice President*             |   |   |
|                                                                            |                               |
| ATTEST:                                                                         |                               |
|                                                                            |                               |
|                                                                            |                               |   |
| Kristine  Brutsman, *Assistant Secretary*                                       |                               |
|                                                                            |                               |
| Signed and delivered  by LaSalle Bank National  Association in the presence of: |                               |
|                                                                            |                               |
|                                                                            |                               |   |
| Debra  Donaldson, *Witness*                                                     |                               |
|                                                                            |                               |
|                                                                            |                               |   |
| Alvita  Griffin, *Witness*                                                      |                               |
|                                                                                 |                                    |        |  |  |  |

 

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| STATE OF OHIO       | )     |
|---------------------|-------|
|                |
|                | ) ss: |
|                |
| COUNTY  OF HAMILTON | )     |

 

BEIT REMEMBERED, that on this 30th day of November, before me, theundersigned, a notary public in and for the County and State aforesaid, dulycommissioned and qualified, personally appeared James L. Turner and Richard G.Beach, personally known to me to be the same persons whose names are subscribedto the foregoing instrument, and personally known to me to be the ExecutiveVice President and Chief Financial Officer, and an Assistant Secretary,respectively, of PSI Energy, Inc., an Indiana corporation, and acknowledgedthat they signed and delivered said instrument as their free and voluntary actas such Executive Vice President and Chief Financial Officer, and AssistantSecretary, respectively, and as the free and voluntary act of said PSI Energy,Inc., for the uses and purposes therein set forth; in pursuance of the powerand authority granted to them by resolution of the Board of Directors of saidCompany.

 

INWITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal theday and year aforesaid.

 
| (NOTARIAL  SEAL) |            |
|------------------|-----------------|
|             |            |
|             |            |   |
|             | *Notary Public* |

 

Mycommission expires 9-28-08.

 

Countyof residence: Hamilton

 

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| STATE OF ILLINOIS | )     |
|-------------------|-------|
|              |
|              | ) ss: |
|              |
| COUNTY  OF COOK   | )     |

 

BEIT REMEMBERED, that on this 29th day of November, 2004, before me, theundersigned, a notary public in and for the County and State aforesaid, dulycommissioned and qualified, personally appeared Victoria Y. Douyon and KristineBrutsman personally known to me to be the same persons whose names aresubscribed to the foregoing instrument, and personally known to me to be aFirst Vice President and an Assistant Secretary, respectively, of LaSalle BankNational Association, a national banking association, and acknowledged thatthey signed and delivered said instrument as their free and voluntary act assuch First Vice President and Assistant Secretary, respectively, and as thefree and voluntary act of said LaSalle Bank National Association, for the usesand purposes therein set forth; in pursuance of the power and authority grantedto them by the bylaws of said association.

 

INWITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal theday and year aforesaid.

 
| (NOTARIAL  SEAL) |            |
|------------------|-----------------|
|             |            |
|             |            |   |
|             | *Notary Public* |

 

 

Mycommission expires 12-1-05.

 

Countyof residence: Cook

 

25

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