When recorded, return to:

                                 Greg R. Nielsen
                                 Snell a Wilmer
                             3100 Valley Bank Center
                             Phoenix, Arizona 85073


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


                TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND
                               ASSIGNMENT OF RENTS


                            Dated as of July 31, 1986


                                     between


                     THE FIRST NATIONAL BANK OF BOSTON, not
                     in its individual capacity, but solely
                         as Owner Trustee under a Trust
                         Agreement dated as of July 31,
                           1986, with chase Manhattan
                           Realty Leasing Corporation


                                       and


                                 CHEMICAL BANK,
                              as Indenture Trustee

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

   Sale and Leaseback of a 1.133333% Undivided Interest in Palo Verde Nuclear
                        Generating Station Unit 1 and a
                  .377777% Undivided Interest in Certain Common
                                   Facilities

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


<PAGE>


                                TABLE OF CONTENTS
                                                                        Page
                                                                        ----
                                    ARTICLE I

                   CONSTRUCTION, GOVERNING LAW, INTERPRETATION
                                 AND DEFINITIONS
SECTION 1.1    Governing Law ...........................................  2

SECTION 1.2    Headings and Table of Contents ..........................  2
SECTION 1.3    Definitions; Construction of
               References; Schedules ...................................  3

SECTION 1.4    Disclosure of Beneficiaries .............................  3


                                   ARTICLE II

                                    SECURITY



SECTION  2.1   Grant of Security Interest; Mortgage ....................  4

SECTION  2.2   Payments Under the Facility Lease .......................  7

SECTION  2.3   Release of Lien on Lease Indenture Estate ...............  7

SECTION  2.4   Power of Attorney ....................................... 10







                                       -i-



<PAGE>


                          TABLE OF CONTENTS (Continued)

                                   ARTICLE III

                   ISSUE, EXECUTION, AUTHENTICATION, FORM AND
                              REGISTRATION OF NOTES
                                                                        Page
                                                                        ----


SECTION 3.1   Limitation on Notes ....................................   11

SECTION 3.2   Execution of Notes .....................................   11

SECTION 3.3   Effect of Certificate of
              Authentication .........................................   12

SECTION 3.4   Creation of the Initial Series
              Note; Aggregate Principal Amount,
              Dating and Terms; Prerequisites to
              Authentication and Delivery of the Initial
              Series Note; Application of Proceeds ...................   12

SECTION 3.5   Additional Notes .......................................   13

SECTION 3.6   Security for and Parity of Notes .......................   16

SECTION 3.7   Source of Payments Limited .............................   17

SECTION 3.8   Place and Medium of Payment ............................   18

SECTION 3.9   Prepayment of Notes; Assumption by
              Lessee; Notice of Assumption or Prepayment .............   18

SECTION 3.10  Muti1ated, Destroyed, Lost or Stolen Notes .............   21

                                      -ii-



<PAGE>


                          TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----

SECTION  3.11  Allocation of Principal and Interest ..................   22


                                   ARTICLE IV

                        REGISTRATION, TRANSFER, EXCHANGE,
                       CANCELLATION AND OWNERSHIP OF NOTES

SECTION  4.1   Register of Notes .....................................   22

SECTION  4.2   Registration of Transfer or
               Exchange of Notes .....................................   22

SECTION  4.3   Cancellation of Notes .................................   23

SECTION 4.4    Limitation on Timing of Registration of Notes .........   24

SECTION 4.5    Restrictions on Transfer Resulting
               from Federal Securities Laws;
               Legend ................................................   24

SECTION 4.6    Charges upon Transfer or Exchange
               of Notes ..............................................   25

SECTION 4.7    Inspection of Register of Notes .......................   25

SECTION 4.8    Ownership of Notes ....................................   25







                                       iii


<PAGE>


                          TABLE OF CONTENTS (Continued)

                                                                        Page
                                                                        ----

                                    ARTICLE V

                    RECEIPT, DISTRIBUTION AND APPLICATION OF
                  INCOME AND PROCEEDS FROM THE LEASE INDENTURE
                                     ESTATE


SECTION 5.1    Basic Rent, Interest on Overdue
               Installments of Basic Rent and
               Prepayments of Interest ................................  26

SECTION 5.2    Amounts Received as Result of
               Event of Loss, Deemed Loss Event,
               Exercise of Option to Terminate,
               Exercise of Cure Option or
               Occurrence of Special Purchase
               Event ..................................................  28

SECTION 5.3    Amounts Received After, or Held 
               at Time of, Indenture Event of
               Default under Section 6.2 ..............................  28

SECTION 5.4    Amounts Received for Which
               Provision Is Made in a Transaction
               Document ...............................................  30

SECTION 5.5    Amounts Received for Which No
               provision Is Made ......................................  30

SECTION 5.5    Payments to Owner Trustee ..............................  31

SECTION 5.7    Excepted Payments ......................................  31




                                      -iv-



<PAGE>
                          TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----

                                   ARTICLE VI

                   REPRESENTATIONS, WARANTIES AND COVENANTS OF
                   OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES
                            OF THE INDENTURE TRUSTEE


SECTION 6.1    Representations, Warranties and
               Covenants of Owner Trustee .............................  32

SECTION 6.2    Indenture Events of Default ............................  33

SECTION 6.3    Enforcement of Remedies ................................  34

SECTION 6.4    Specific Remedies; Enforcement of
               Claims without possession of Notes .....................  35

SECTION 6.5    Rights and Remedies Cumulative .........................  37

SECTION 6.6    Restoration of Rights and
               Remedies ...............................................  37

SECTION 6.7    Waiver of Past Defaults ................................  38

SECTION 6.8    Right of Owner Trustee to Pay
               Rent; Note Purchase; Substitute
               Lessee .................................................  38

SECTION 6.9    Further Assurances .....................................  40

SECTION 6.10   Right of Indenture Trustee To
               Perform Covenants, etc. ................................  41

                                       -v-



<PAGE>


                          TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----

SECTION 6.11   Certain Other Rights of the Owner
               Trustee ................................................  41


                                   ARTICLE VII

                   CERTAIN DUTIES OF THE OWNER TRUSTEE AND THE
                                INDENTURE TRUSTEE



SECTION 7.1    Duties in Respect of Events of
               Default, Deemed Loss Events and
               Events of Loss; Acceleration of
               Maturity ...............................................  42

SECTION 7.2    Duties in Respect of Matters
               Specified in Directive .................................  44

SECTION 7.3    Indemnification ........................................  44

SECTION 7.4    Limitations on Duties; Discharge
               of Certain Liens Resulting from
               Claims Against Indenture Trustee .......................  44

SECTION 7.5    Restrictions on Dealing with Lease
               Indenture Estate .......................................  45

SECTION 7.6    Filing of Financing Statements and
               Continuation Statements ................................  45






                                       -vi-

<PAGE>


                          TABLE OF CONTENTS (Continued)


                                                                         Page
                                                                         ----

                                  ARTICLE VIII

                      CONCERNING THE OWNER TRUSTEE AND THE
                                INDENTURE TRUSTEE

SECTION 8.1   Acceptance of Trusts; Standard of
              Care ....................................................   47

SECTION 8.2   No Duties of Maintenance, Etc ...........................   48

SECTION 8.3   Representations and Warranties of
              Indenture Trustee and the Owner Trustee .................   48

SECTION 8.4   Moneys Held in Trust;
              Non-Segregation of Moneys ...............................   48

SECTION 8.5   Reliance on Writings, Use of
              Agents, Etc.. ...........................................   49

SECTION 8.6   Indenture Trustee to Act Solely as
              Trustee .................................................   50

SECTION 8.7   Limitation on Rights Against
              Registered Holders, the Owner
              Trustee or Lease Indenture Estate .......................   51

SECTION 8.8   Investment of Certain Payments
              Held by the Indenture Trustee ............................  51

SECTION 8.9   No Responsibility for Recitals,
              etc. .....................................................  52






                                      -vii-



<PAGE>


                          TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----

SECTION 8.10  Indenture Trustee May Engage in
              Certain Transactions ....................................  52

SECTION 8.11  Construction of Ambiguous
              Provisions ..............................................  52


                                   ARTICLE IX

                               SUCCESSOR TRUSTEES



SECTION 9.1   Resignation and Removal of
              Indenture Trustee; Appointment of
              Successor ...............................................  53

                                    ARTICLE X

                  SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
                               AND OTHER DOCUNENTS

SECTION 10.1  Supplements, Amendments and
              Modifications to This Indenture
              Without Consent of Holders of
              Notes ...................................................  55

SECTION 10.2  Supplements and Amendments to this
              Indenture and the Facility Lease
              With Consent of Holders of Notes ........................  56

SECTION 10.3  Certain Limitations on Supplements
              and Amendments. .........................................  57




                                      -viii-


<PAGE>

                          TABLE OF CONTENTS (Continued)

                                                                        Page
                                                                        ----
SECTION 10.4   Directive Need Not Specify
               Particular Form of Supplement or
               Amendment ..............................................  58

SECTION 10.5   Trustee to Furnish Copies of
               Supplement or Amendment ................................  58


                                   ARTICLE XI

                                  MISCELLANEOUS

SECTION 11.1   Moneys for Payments in Respect of
               Notes to be Held in Trust ..............................  59

SECTION 11.2   Disposition of Moneys Held for
               Payments of Notes ......................................  59

SECTION 11.3   Transfers Not to Affect Indenture
               or Trusts ..............................................  60

SECTION 11.4   Binding Effect of Sale of Lease
               Indenture Estate .......................................  60

SECTION 11.5   Limitation as to Enforcement of
               Rights, Remedies and Claims ............................  60

SECTION 11.6   Notices ................................................  61

SECTION 11.7   Separability of Provisions .............................  61

SECTION 11.8   Benefit of Parties, Successors and
               Assigns ................................................  61

                                      -ix-
6091.50.2831.57:1


<PAGE>


                          TABLE OF CONTENTS (Continued)


                                                                        Page
 
SECTION 11.9   Survival of Representations and Warranties .............  62

SECTION 11.10  Bankruptcy of the Owner Trustee ........................  62

SECTION 11.11  Bankruptcy of the Owner Participant ....................  63

SECTION 11.12  Counterpart Execution ..................................  63

SECTION 11.13  Dating of Indenture ....................................  63


      Schedule 1  Undivided Interest Description

      Schedule 2  Real Estate Interest Description

      Exhibit A   Form of Initial Series Note

      Exhibit B   Form of Assumption Agreement

      Exhibit C   Form of Undivided Interest Indenture Supplement

      Appendix A  Definitions





                                       -x-




<PAGE>


         TRUST INDENTURE,  MORTGAGE,  SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
dated as of July 31, 1986, between THE FIRST NATIONAL BANK OF BOSTON, a national
banking association (FNB), not in its individual capacity, but solely as trustee
(the Owner  Trustee) under a Trust  Agreement  dated as of July 31, 1986 between
FNB, whose address is 100 Federal  Street,  Boston,  Massachusetts  02110,  with
Chase  Manhattan  Realty  Leasing  Corporation,  and  CHEMICAL  BANK, a New York
banking corporation (the Indenture  Trustee),  whole address is 55 Water Street,
New York, New York 10041.


                              W I T N E S S E T H:


         WHEREAS, the Owner Trustee has entered into a participation  Agreement,
dated as of July  31,  1986  among  the  Owner  Participant,  First  PV  Funding
Corporation, a Delaware corporation, Public Service Company of New Mexico, a New
Mexico corporation, and the Indenture Trustee;

         WHEREAS, the Owner Trustee,  acting on behalf of the Owner Participant1
pursuant to the Trust  Agreement and the  Participation  Agreement,  intend.  to
purchase the  Undivided  Interest  and the Real  Property  Interest  from Public
Service  Company  of New Mexico and lease the  Undivided  Interest  and the Real
Property  Interest  to Public  Service  Company  of New Mexico  pursuant  to the
Facility Lease;

         WHEREAS,  in order to  finance a portion of the  Purchase  Price of the
Undivided  Interest,  the Owner  Trustee  desires to issue its  promissory  note
hereunder with such promissory note to be substantially in the form of Exhibit A
hereto;

         WHEREAS,  in order to  finance  all or a  portion  of the  Supplemental
Financing  Amount of  Capital  Improvements  and to refund  Notes of any  series
previously issued,  the Owner Trustee may desire to issue additional  promissory
notes hereunder (the Additional  Notes) secured on a pari passu basis with other
Notes Outstanding from time to time;


6091.50.2831.57:1


<PAGE>


         WHEREAS,  in order to secure the  obligations  referred to herein,  the
Owner Trustee  desires to grant to the Indenture  Trustee the security  interest
herein provided and the parties hereto desire that this Indenture be regarded as
a  "security  agreement"  and  as a  "financing  statement"  for  such  security
agreement under the uniform commercial code;

         NOW, INEREFORE,  in consideration of the premises, of the acceptance by
the  Indenture  Trustee  of the  trusts  hereby  created  and of other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged the parties hereto agree as follows:



                                    ARTICLE I

                          CONSTRUCTION, GOVERNING LAW,
                         INTERPRETATION AND DEFINITIONS


                  SECTION 1.1.  Governing Law.

                This  Indenture (i) is being executed and delivered in the State
of flew York, (ii) shall be deemed to be a contract made in such State and (iii)
for all purposes shall be construed in accordance  with and governed by the laws
of the State of New York,  except  to the  extent  that the laws of the State of
Arizona are mandatorily applicable hereto.

                  SECTION 1.2.  Headings and Table of Contents.

                The division of this Indenture  into articles and sections,  the
provision  of a  table  of  contents  and  the  insertion  of  headings  are for
convenience  of  reference  only  and  shall  not  affect  the  construction  or
interpretation of this Indenture.







                                       -2-

6091.50.2831.57:1


<PAGE>


               SECTION 1.3.  Definitions; Construction of References; Schedules.

               In this Indenture, unless the context otherwise requires:

                  (a) the term this Indenture  means this  instrument,  together
with all exhibits,  appendices and schedules hereto, as originally  executed and
as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto pursuant to the provisions hereof;

                  (b) all references in this instrument to designated  Articles,
Sections and other subdivisions are to designated  Articles,  Sections and other
subdivisions of this instrument unless otherwise indicated;

                  (a) all  accounting  terms not otherwise  defined herein shall
have  the  meanings  assigned  to them in  accordance  with  generally  accepted
accounting principles; and

                  (d)  capitalized  terms used  herein  which are not  otherwise
defined  herein shall have the meanings set forth in Appendix A hereto,  and the
rules of construction set forth in Appendix A hereto shall be applicable hereto.

                  (e)  Attached  as  Schedule 1 hereto is a  description  of the
Undivided  Interest  and attached as schedule 2 hereto is a  description  of the
Real Property Interest.

                  SECTION 1.4.  Disclosure of Beneficiaries.

                  Pursuant to Arizona Revised Statutes  Section 33-401,  (i) the
beneficiary  of  the  Trust   Agreement  is  chase   Manhattan   Realty  Leasing
Corporation, a New York corporation,  whose address is One Chase Manhattan Plaza
(20th Floor), New York, New York 10081,  Attention of Leasing  Administrator and
(ii) the  beneficiary  of this  Indenture  is the Holder of the Notes,  First PV



                                       -3-
6091.50.2831.57:1


<PAGE>


Funding  corporation,  whose address  isCorporation  Trust  Center,  1209 Orange
Street, Wilmington, Delaware 19601 and, by pledge and assignment, Chemical Bank,
as trustee  under the  Collateral  Trust  Indenture,  whose  address is 55 Water
Street, New York, New York 10041: Attention of Corporate Trustee Administration.
Copies of the Trust Agreement and this Indenture are available for inspection at
the Indenture Trustee's office.



                                   ARTICLE II

                                    SECURITY


                  SECTION 2.1.  Grant of Security Interests Mortgage.

                As security for the due and punctual payment of the principal of
and premium,  if any, and  interest on the Notes  according to their  respective
terms and effect and the  performance and observance by the Owner Trustee of all
the  covenants  and  agreements  made by it or on its behalf in the  Notes,  the
Participation  Agreement  and this  Indenture,  the  Owner  Trustee  does by its
execution  and delivery  hereof  hereby grant a security  interest in and grant,
bargain, convey, warrant, assign, transfer,  mortgage,  pledge and set over unto
the Indenture Trustee, and to its successors and assigns in trust, the following
(the Lease Indenture Estate):

                  (1) all right,  title and interest of the Owner Trustee in, to
                and  under  the  Facility  Lease  recorded  on August 1, 1986 as
                Instrument  No. 86-  ___________  , records of Maricopa  County,
                Arizona,  to the extent,  and only to the  extent,  constituting
                Rent (including, but without limitation, Basic Rent, payments of
                Casualty Value,  Termination  value and Special  Casualty value,
                and payments under and pursuant to Sections 13(c) and 16 of the



6091.50.2831.57:1
                                       -4-


<PAGE>


                 Facility Lease,  excluding all Excepted Payments) (the Assigned
                 Payments), together with all rights, powers and remedies on the
                 part of the Owner Trustee  arising under the Facility  Lease to
                 demand, collect or receive the Assigned Payments;

                 (2) all moneys  and  securities  deposited  or  required  to be
                 deposited  with the Indenture  Trustee  pursuant to any term of
                 this Indenture and held or required to be held by the Indenture
                 Trustee hereunder;

                 (3) all profits, revenues and other income of all property from
                 time to time subjected to the lien of this  Indenture,  and all
                 right,  title and  interest of every nature  whatsoever  of the
                 Owner Trustee in and to the same and every part thereof;

                 (4) all right,  title and interest of the Owner  Trustee in and
                 to any right to  restitution  from the Lessee in respect of any
                 determination of invalidity of the Facility Lease; and

                 (5) all proceeds of the foregoing;

but excluding,  however,  from the Lease  Indenture  Estate any and all Excepted
Payments;  and  subject,  however,  to (i)  the  terms  and  provisions  of this
Indenture and (ii) the rights of the Lessee under the Facility Lease.

                To the extent  that any  portion of the Lease  Indenture  Estate
constitutes  fixtures or real  property,  this  Indenture  constitutes  a realty
mortgage  and an  assignment  of rents  with  respect  to all such items of real
property  and in  addition  to all other  rights or  remedies  set forth in this
Indenture,  or otherwise  available under Applicable Law, the Indenture  Trustee
shall have all of the rights,  remedies  and  benefits  of a  mortgagee  of real
property under Applicable Law,  including,  without  limitation,  the rights and
remedies pursuant to Arizona Revised Statutes 5 33-702.3,  and the Owner Trustee
shall be deemed a mortgagor with respect to such items.




                                       -5-



<PAGE>


                TO HAVE AND TO HOLD all the  aforesaid  properties,  rights  and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust,  nevertheless,  for the use and purposes and with the power and authority
and  subject  to the  terms  and  conditions  mentioned  and set  forth  in this
Indenture.

                UPON  CONDITION  that,  unless and until an  indenture  Event of
Default  shall have  occurred  and be  continuing,  the Owner  Trustee  shall be
permitted,  to the  exclusion of the Indenture  Trustee,  to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the  foregoing;,  the Owner Trustee may exercise all of its rights
under the Facility Lease to the same extent as if its right,  title and interest
therein had not been assigned to the  Indenture  Trustee to the extent set forth
above,  except that the Indenture Trustee shall receive all payments of Assigned
Payments and all moneys and securities  required to be held by or deposited with
the Indenture Trustee hereunder.

                  It is expressly agreed that,  anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain obligated to the Lessee
under the  Facility  Lease to  perform  all of the Owner  Trustee's  obligations
thereunder in accordance with and pursuant to the terms and provisions  thereof,
and the  Indenture  Trustee  shall not be required or  obligated  in any manner,
except as expressly  provided  herein,  to perform or fulfill any obligations of
the Owner  Trustee under the Facility  Lease or to make any payment,  or to make
any inquiry as to the nature or sufficiency of any payment received by it, or to
present  or file any claim,  or to take any  action to  collect  or enforce  the
payment of any amounts  which may have been assigned to it or to which it may be
entitled at any time or times.

                The Owner Trustee hereby warrants and represents that it has not
assigned  or pledged  any of its right,  title or  interest  in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.




                                       -6-


<PAGE>


                  SECTION 2.2.  Payments Under the Facility Lease.

                The Facility Lease  provides that (i) all payments  constituting
Assigned  Payments  shall  be made to the  Indenture  Trustee  at the  Indenture
Trustee's Office, (ii) all other payment.  other than Excepted Payments shall be
made to the Lessor at such address as the Lessor may direct by notice in writing
to the  Lessee,  and (iii) all  Excepted  Payments  shall be made to the  Person
entitled to receive such payments. The Owner Trustee agrees that, so long as any
Notes shall be outstanding hereunder, all payments described in clause (i) above
shall be directed to be made to the Indenture  Trustee or in accordance with the
Indenture Trustee's  instruction and that if it should receive any such payments
or any proceeds for or with respect to the Lease  Indenture  Estate or otherwise
constituting  part of the Lease Indenture  Estate, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture  Trustee's
instructions.  The Indenture  Trustee agrees to apply payments from time to time
received by it (from the Lessee, the Owner Trustee or otherwise) with respect to
the Lease Indenture  Estate in the manner provided in section 3.11 and Article V
hereof.

                  SECTION 2.3.  Release of Lien an Lease Indenture Estate.

                  (a) Upon  receiving  evidence  satisfactory  to the  Indenture
Trustee that (i) it has received,  or provision has been made in accordance with
paragraph (C) hereof for, full payment of all principal of and premium,  if any,
and  interest on the Notes and any other sums payable to the  Indenture  Trustee
and the Holders of the Notes under this  Indenture  or the Facility  Lease,  and
(ii)  all  Trustee's  Expenses  shall  have  been  paid  in  full  or  provision
satisfactory to the Indenture Trustee shall have been made for such payment,

                (A) the  security  interest  and all  other  estate  and  rights
         granted by this Indenture  shall cease and become null and void and all
         of the property,  rights and interests  included in the Lease Indenture
         Estate  shall  revert to and revest in the owner  Trustee  without  any
         other act or formality whatsoever, and


                                       -7-


<PAGE>

                  (B) the Indenture  Trustee shall,  at the request of the Owner
        Trustee,  execute  and  deliver to the Owner  Trustee  such  termination
        statements,  releases or other  instruments  presented to the  Indenture
        Trustee  by or at the  direction  of  the  Owner  Trustee  as  shall  be
        requisite to evidence the  satisfaction  and discharge of this Indenture
        and the lien hereby created with respect to the Lease Indenture  Estate,
        to release or reconvey to the Owner  Trustee or as directed by the Owner
        Trustee all the Lease  Indenture  Estate,  freed and discharged from the
        provisions  herein  contained with respect  thereto,  and to release the
        Owner Trustee from its covenants herein contained.

                  (b) upon receipt by the  Indenture  Trustee of the  Assumption
Agreement and other  documents and opinions  described in Section 3.9(b) hereof,
(i) the  security  interest  and all other  estate  and  rights  granted by this
Indenture by or on behalf of the Owner  Trustee  shall cease and become null and
void  and all of the  property,  rights  and  interests  included  in the  Lease
Indenture  Estate  shall revert to and revest in the Owner  Trustee  without any
other act or formality  whatsoever and (ii) the Indenture  Trustee shall, at the
request of the Owner  Trustee,  execute  and deliver to the Owner  Trustee  such
termination statements, releases or other instruments presented to the Indenture
Trustee by or at the  direction  of the Owner  Trustee as shall be  requisite to
evidence  the  satisfaction  and  discharge  of this  Indenture  as to the Owner
Trustee and the lien hereby created with respect to the Lease Indenture  Estate,
to release or reconvey to the Owner  Trustee or as directed by the Owner Trustee
all the Lease Indenture Estate,  freed and discharged from the provisions herein
contained  with  respect  thereto,  and to release  the Owner  Trustee  from its
covenants herein contained.



                                       -8-



<PAGE>
                  (c) Any Note shall,  prior to the maturity or redemption  date
thereof,  be deemed to have been paid  within  the  meaning  and with the effect
expressed  in this Section 2.3 if (i) there shall have been  deposited  with the
Indenture  Trustee  either  moneys in an amount  which shall be  sufficient,  or
direct  obligations of or obligations the principal of and interest on which are
unconditionally guaranteed by the united States of America or certificates of an
ownership  interest  in  the  principal  of or  interest  on  obligations  of or
guaranteed as to principal and interest by the united States of America (Federal
Securities),  in each case which shall not  contain  provisions  permitting  the
redemption  thereof  at the  option  of the  issuer,  the  principal  of and the
interest on which when due, and without any reinvestment  thereof,  will provide
moneys in an amount which shall be sufficient, together with the moneys, if any,
deposited  with  or  held  by the  Indenture  Trustee  at the  same  time  (such
sufficiency  to be  established  by the delivery to the  Indenture  Trustee of a
certificate of an independent public accountant),  to pay when due the principal
of and  premium,  if any, and interest due and to become due on said Note on and
prior to the redemption  date or maturity date thereof,  as the case may be, and
(ii) in the event said Note does not mature or is not to be redeemed  within the
next  45  days,  the  Indenture   Trustee  shall  have  been  given  irrevocable
instructions to give, as soon as practicable,  a notice to the registered Holder
of such Note that the  deposit  required  by sub  clause (i) above has been made
with the  Indenture  Trustee  and that  said Note is deemed to have been paid in
accordance  with this section 2.3 and stating such maturity or  redemption  date
upon which  moneys are to be available  for the payment of the  principal of and
premium,  if any, and interest on said Note.  Neither the Federal Securities nor
moneys  deposited  with the  Indenture  Trustee  pursuant to this Section 2.3 or
principal or interest payments on any such Federal Securities shall be withdrawn
or used for any purpose other than,  and shall be held in trust for, the payment
of the  principal of and premium,  if any, and interest on said Note;  provided,
however, that any cash received from such principal or interest payments on such
Federal  Securities  deposited with the Indenture  Trustee,  shall be reinvested
pursuant to Section 8.8 hereof in Federal  Securities.  At such time as any Note



                                       -9-


<PAGE>

shall be deemed paid as aforesaid,  it shall no longer be secured by or entitled
to the benefits of the Lease  Indenture  Estate or this  Indenture,  except that
such  Note  shall be  entitled  to the  benefits  of the  portions  of the Lease
Indenture  Estate described in Granting clauses (2), (3) and (5) , to the extent
such portions  relate to such moneys or Federal  securities  deposited  with the
Indenture Trustee.

                  (d) So long as any Note as to which  this  Indenture  has been
discharged remains unpaid,  this Indenture shall continue in effect with respect
to such Note solely with respect to rights of registration of transfer, exchange
or replacement of such Note,  rights to receive payment of the principal thereof
and premium,  if any, and interest  thereon in accordance with the terms of this
Indenture  from such  deposited  funds or the  proceeds  of or  interest on such
Federal  securities  and the  correlative  rights  and  responsibilities  of the
Indenture Trustee;  provided,  however, that, following such discharge, no claim
for payment of principal  of or premium,  if any, or interest on such Note shall
be made against the Owner  Trustee or the Lease  Indenture  Estate other than as
provided in this Section;  provided,  further, that the Owner Trustee, following
such discharge,  shall be released from any further duties or obligations  under
this Indenture and, except as expressly provided therein,  any other Transaction
Document.

                  SECTION 2.4.  Power of Attorney.

                Subject to the other terms of this Indenture,  the Owner Trustee
hereby  appoints the Indenture  Trustee the Owner  Trustee's  attorney  in-fact,
irrevocably,  with full power of substitution, to collect, ask, require, demand,
receive  and give  acquittance  for any and all moneys and claims for moneys due
and to  become  due to the  Owner  Trustee  under or  arising  out of the  Lease
Indenture  Estate,  to  endorse  any  checks or other  instruments  or orders in
connection therewith,  and to take any action (including the filing of financing
statements or other documents) or institute any proceedings  which the Indenture



                                      -10-



<PAGE>

Trustee may deem to be  necessary  or  appropriate  to protect and  preserve the
interest of the Indenture  Trustee in the Lease Indenture  Estate.  Prior to any
exercise by it (acting as attorney-in-fact for the Owner Trustee) of the powers,
authority or rights granted by this section 2.4, the Indenture Trustee will give
three  Business  Day's prior  written  notice to the Owner Trustee and the Owner
Participant.



                                   ARTICLE III

                        ISSUE, EXECUTION, AUTHENTICATION,
                         FORM AND REGISTRATION OF NOTES


                  SECTION 3.1.  Limitation on Notes,

                  No Notes may be  issued  under  the  provisions  of1 or become
secured by, this  Indenture  except in  accordance  with the  provisions of this
Article  III.  No Note shall be issued in an original  principal  amount of less
than $5,000.

                  SECTION 3.2.  Execution of Notes.

                  All Notes  shall be  manually  executed on behalf of the Owner
Trustee by one of its Responsible  Officers.  In case any Responsible Officer of
the Owner  Trustee  who shall have  executed  any of the Notes shall cease to be
such a  Responsible  Officer  before  such  Notes so  executed  shall  have been
authenticated by the Indenture Trustee and delivered or disposed of by the Owner
Trustee,  such Notes nevertheless may be authenticated and delivered or disposed
of as though  the  person  who  executed  such Notes had not ceased to be such a
Responsible Officer of the Owner Trustee; and any Note may be executed on behalf
of the Owner  Trustee by such person as, at the actual time of execution of such
Note, shall be a Responsible Officer of the Owner Trustee,  although at the date
of such Note any such person was not such a Responsible Officer.




                                      -11-



<PAGE>

                  SECTION 3.3.   Effect of certificate of Authentication

                  Only  such  Notes as  shall  bear  thereon  a  certificate  of
authentication  substantially  in the following  form  manually  executed by the
Indenture  Trustee  shall be entitled to the  benefits of this  Indenture  or be
valid or obligatory for any purpose.  Such certificate of  authentication of the
Indenture  Trustee  upon  any  Note  executed  by the  Owner  Trustee  shall  be
conclusive   evidence   that  the  Note  so   authenticated   was  duly  issued,
authenticated and delivered under this Indenture:

                  This Note is one of the  series of Notes  referred  to therein
and in the within mentioned Indenture.

                              CHEMICAL BANK,
                              as Indenture Trustee


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

                  SECTION 3.4.  Creation of the Initial  Series Note;  Aggregate
Principal Amount, Dating and Terms; prerequisites to Authentication and Delivery
of the Initial Series Note; Application of Proceeds.

                  (a) There is hereby created and  established a separate series
of Notes of the Owner Trustee designated:  "Nonrecourse Promissory Note, Initial
Series",  which will be  substantially  in the form of Exhibit A hereto,  and is
herein referred to as the Initial Series Note.

                  (b) Subject to the  provisions  of Section  3.10  hereof,  the
aggregate  principal  amount  of the  Initial  Series  Note  issued by the Owner
Trustee and authenticated and delivered by the Indenture Trustee hereunder shall
not exceed $40,000,000



                                      -12-



<PAGE>
                  (c) The Initial Series Note,  subject to paragraph (e) of this
section 3.4, shall be executed and issued by the Owner Trustee and authenticated
and delivered by the Indenture  Trustee on the date and to the Person  specified
by the Owner Trustee in its request and  authorization  for  issuance,  shall be
dated the date  specified by the Owner Trustee in its request and  authorization
for  issuance,  and shall be in the form of a  registered  Note  payable  to the
Person  designated in the Owner Trustee's request and authorization for issuance
or its registered assigns.

                  (d)  The  Initial  series  Note  shall  bear  interest  on the
principal  amount  thereof from time to time  outstanding  from the date thereof
until  paid at the rate or the  rates of  interest  set forth in the form of the
Initial  Series Note.  The principal  amount of the Initial Series Note shall be
payable as set forth in the schedule of  principal  payments  attached  thereto.
Installments  of interest on and  principal of the Initial  Series Note shall be
due and payable on the dates specified in the form of Initial Series Note.

                  (e) The  Indenture  Trustee  shall  authenticate  the  Initial
series Note and deliver the Initial Series Note to the Person  designated by the
Owner  Trustee in the request and  authorization  for issuance in respect of the
Initial series Note in accordance with the provisions of this section 3.4.

                  (f) Upon receipt of the  proceeds of the Initial  series Note,
the Indenture Trustee shall immediately transfer the same to, or pursuant to the
direction  of,  the  Owner  Trustee,  all  as  set  forth  in  the  request  and
authorization  for  issuance  submitted  by the Owner  Trustee to the  Indenture
Trustee.

                  SICTION 3.5.  Additional Notes.

                  (1)  Subject to section 3.6  hereof1  Additional  Notes of the
Owner Trustee may be issued under and secured by this Indenture,  at any time or
from time to time,  in addition  to the  Initial  Series Note and subject to the
conditions  hereinafter  provided in this Section, for cash in the amount of the


                                      -13-



<PAGE>

original  principal  amount of such  Additional  Notes,  for the  purpose of (i)
refunding any previously issued series of Notes, in whole or in part and/or (ii)
providing  funds  for the  payment  of all or any  portion  of the  Supplemental
Financing Amount relating to Capital Improvements made or installed from time to
time pursuant to the Facility Lease; provided,  however, that (x} in the case of
Notes  issued for the  purposes set forth in clause (ii) of this section 3.5, no
Note shall be issued by the Owner  Trustee  pursuant to this  Section 3.5 unless
such Notes may be pledged in accordance  with Section  2.15(b) of the collateral
Trust Indenture and serve as the basis for Additional  Bonds and (y) in the case
of Notes issued for the  purposes set forth in clause (i) of this.  section 3.5,
no Note shall be issued by the Owner Trustee pursuant to this section 3.5 unless
section 2(c) of the  participation  Agreement  (if  applicable)  shall have been
complied with.

                  (2)  Before any  Additional  Notes  shall be issued  under the
provisions  of this Section 3.5, the owner  Trustee shall have received from the
Owner  participant,  and  delivered  to the  Indenture  Trustee  not less than 2
Business  Days nor more than 30  Business  Days  prior to the  proposed  date of
issuance of such Additional  Notes as set forth in the below  mentioned  request
and authorization,  a request and authorization to issue Additional Notes, which
request and authorization shall include the amount of such Additional Notes, the
date of issuance of such Additional Notes and details with respect thereto which
are  not  inconsistent  with  this  section.   Additional  Notes  shall  have  a
designation so as to distinguish  such Additional  Notes from the Initial series
Note but otherwise shall be substantially similar in terms to the Initial Series
Note,  shall  specify  maturity  dates,  rank pari  passu  with all  Notes  then
Outstanding, be dated their respective dates of authentication, bear interest at
such  rates  (which  may be fixed or  floating)  as  shall be  indicated  in the
aforementioned  request and authorization,  and shall be stated to be payable by
their terms not later than the last day of the Basic Lease Term.




                                      -14-



<PAGE>

                  (3) Except as to any  differences  in the  maturity  dates and
amortization  schedules of the Additional Notes or the rate or rates of interest
thereon  and the date or dates such  interest is payable or the  provisions  for
redemption with respect  thereto,  if any, such  Additional  Notes shall be on a
parity  with,  and shall be entitled to the same  benefits  and security of this
Indenture as, other Notes issued pursuant to the terms hereof.

                  (4) The terms,  conditions and designations of such Additional
Notes (which shall be consistent with this  Indenture)  shall be set forth in an
indenture  supplemental to this Indenture  executed by the Owner Trustee and the
Indenture  Trustee.  Such  Additional  Notes  shall be  executed  as provided in
section 3.2 and deposited  with the Indenture  Trustee for  authentication,  but
before  such  Additional  Notes  shall be  authenticated  and  delivered  by the
Indenture Trustee there shall be filed with the Indenture  Trustee,  in addition
to the other  documents  and  certificates  required by this  section  3.5,  the
following,  all of which  shall  be  dated  as of the  date of the  supplemental
indenture:

                  (a) a copy of such supplemental indenture (which shall include
the form of such series of Notes in respect thereof);

                  (b) a  certificate  of a  Responsible  Officer  of  the  Owner
Trustee (i)  stating  that to the best of his  knowledge  no Default or Event of
Default or  Indenture  Event of Default has  occurred  and is  continuing,  (ii)
stating that the conditions in respect of the issuance of such additional series
of Notes contained in this Section 3.5 have been  satisfied,  (iii) stating that
payments pursuant to the Facility Lease of Basic Rent,  Casualty value,  Special
Casualty value and  Termination  value and of amounts in respect of the exercise
of the Cure Option and the  occurrence of special  Purchase Event are sufficient
to pay all the Outstanding Notes, after taking into account the issuance of such
Additional  Notes  and any  related  redemption,  and (iv)1 in the case of Notes
issued for the purpose set forth in clause (ii) of Section 3.5(1),  stating that
all  conditions  to the related  supplemental  Financing as set forth in Section
8(f) of the Facility Lease have been satisfied or waived in accordance with such
Section 8(f);


                                       -15-



<PAGE>


                  (c) such additional  documents,  certificates  and opinions as
shall be reasonably  requested by, and  acceptable to, the Owner Trustee and the
Indenture Trustee.

                  (d) a request and authorization to the Indenture Trustee by or
on behalf of the Owner Trustee to authenticate and deliver such Additional Notes
to or upon the  order of the  Person or  Persons  noted in such  request  at the
address set forth therein,  and in such principal amounts as are stated therein,
upon payment to the Indenture Trustee, but for the account of the Owner Trustee,
of the sum or sums specified in such request and authorization; and

                  (e) an opinion of  counsel to the effect  that the  conditions
precedent  required  under this  Indenture  for the issuance of such  Additional
Notes have been complied with.

                When the  documents  referred  to in the  foregoing  clauses (a)
through (e) above shall have been filed with the Indenture  Trustee and when the
Additional Notes described in the above-mentioned  order and authorization shall
have  been  executed  and  authenticated  as  required  by this  Indenture,  the
Indenture Trustee shall deliver such Additional Notes in the manner described in
clause (d) above,  but only upon payment to the Indenture  Trustee of the sum or
sums specified in such request and authorization.

                  SECTION 3.6.  Security for and Parity of Notes.

                  All Notes  issued and  outstanding  hereunder  shall rank on a
parity with each other and shall as to each other be secured equally and ratably
by this Indenture,  without  preference,  priority or distinction of any thereof
over any other by reason of  difference  in time of issuance or  otherwise.  The
maximum  principal  amount of Notes  outstanding  and secured by this  Indenture
shall be $100,000,000.



                                      -16-



<PAGE>

                  SECTION 3.7.  Source of Payments Limited.

                  All  payments  to be  made by the  Owner  Trustee  under  this
Indenture or on the Notes shall be made only from the Lease Indenture Estate and
the Trust Estate. Each Holder of a Note, by its acceptance of such Note, and the
Indenture  Trustee  agree that they will look solely to the Trust Estate and the
income and proceeds from the Lease Indenture  Estate to the extant available for
distribution to such Holder or the Indenture Trustee as herein provided and that
neither  the  Owner  Participant  nor,  except  as  expressly  provided  in this
Indenture,  the Owner  Trustee nor the  Indenture  Trustee,  shall be personally
liable to such Holder of a Mote or the  Indenture  Trustee,  as the case may be,
for any amounts payable hereunder or under such Note; provided, however, that in
the event that the Lessee shall assume all the  obligations  and  liabilities of
the Owner Trustee hereunder and under the Notes pursuant to section 3.9(b), then
all payments to be made under this  Indenture  and the Notes shall be mad.  only
from  payments  made by the  Lessee  under  the  Notes  in  accordance  with the
Assumption Agreement referred to in section 3.9(b) and each Holder of a Note and
the  Indenture  Trustee  agree that in such  event they will look  solely to the
Lessee for such  payment.  Nothing  herein  contained  shall be  interpreted  as
affecting  the duties and  obligations  of the  Indenture  Trustee  set forth in
section 7.4 hereof.

                  In  furtherance  of  the  foregoing,  to  the  fullest  extent
permitted by law, each Holder of a Note (and each  assignee of such Person),  by
its acceptance  thereof,  and the Indenture Trustee agree, as a condition to the
Notes being  secured  under this  Indenture,  that  neither  such Holder nor the
Indenture Trustee will exercise any statutory right to negate the agreements set
forth in this Section 3.7.





                                      -17-



<PAGE>


                  SECTION 3.8.  Place and Medium of Payment.

                  The  principal  of and  premium,  if any, and interest on each
Note shall be payable at the Indenture Trustee's Office in immediately available
funds in such coin or currency of the United States of America as at the time of
payment  shall be legal  tender for the  payment of public  and  private  debts.
Notwithstanding  the foregoing or any provision in any Note to the contrary,  if
so  requested  by the  Holder of any Note,  by written  notice to the  Indenture
Trustee, all amounts (other than the final payment) payable with respect to such
obligation  shall be paid by  crediting  the  amount to be  distributed  to such
Holder to an account  maintained by such Holder with the Indenture Trustee or by
the  Indenture  Trustee's  transferring  such  amount  by wire,  with  such wire
transfer to be initiated by such time as to permit,  to the extent  practicable,
oral confirmation thereof (specifying the wire number) to be given no later than
12:00 noon New York City time on the date scheduled for payment, but only to the
extent of funds  available  for such wire  transfer,  to such  other bank in the
United States having wire transfer facilities, including a Federal Reserve lank,
as shall have been  specified in such notice,  for credit to the account of such
Holder  maintained  at such bank,  any such credit or transfer  pursuant to this
Section 3.8 to be in immediately  available  funds,  without any  presentment or
surrender  of such  Note.  Final  payment  of any such  Note  shall be made only
against surrender of such Note at the Indenture Trustee's Office.

                  SECTION 3.9. Prepayment of Notes; Assumption by Lessee; Notice
of Assumption or Prepayment.

                  (a) Notes shall be subject to  prepayment  (other than through
application of the installment payments on such Notes) from time to time only as
provided in this Indenture and as otherwise specifically provided,  with respect
to Notes of a particular series, in such Notes.




                                      -18-



<PAGE>

                  (b) In the event of the  occurrence  of a Deemed Loss Event or
Event of Loss or exercise of the Cure Option,  and upon receipt by the Indenture
Trustee of the documents  listed below,  all the  obligations and liabilities of
the Owner  Trustee  hereunder and under the Notes shall be assumed by the Lessee
and the Owner Trustee shall be released and  discharged  without  further act or
formality  whatsoever from all  obligations and liabilities  hereunder and under
the Notes:

                  (1) A duly executed Assumption Agreement  substantially in the
                  form of Exhibit a to this Indenture;

                 (2) an  opinion  of counsel  to the  Lessee,  addressed  to the
                 Indenture Trustee and the Holders of the outstanding  Notes, to
                 the  effect  that the  conditions  precedent  required  by this
                 Indenture for such assumption have been complied with, that the
                 Assumption  Agreement  has been duly  authorized,  executed and
                 delivered on behalf of the Lessee,  that no Governmental Action
                 is necessary  or required in  connection  therewith  (or if any
                 such  governmental  Action is necessary  or required,  that the
                 same has been duly  obtained  and is in full force and effect),
                 and that the Assumption Agreement is a legal, valid and binding
                 agreement  and   obligation  of  the  Lessee,   enforceable  in
                 accordance  with its terms  (except as  limited by  bankruptcy,
                 insolvency or similar law. of general application affecting the
                 enforcement  of  creditors'   rights  generally  and  equitable
                 principles);

                 (3)  copies of all  governmental  Actions  referred  to in such
                 opinion;

                 (4) an indenture  supplemental  to this Indenture  which shall,
                 among other  things,  confirm the release of the Owner  Trustee
                 and the Lease  Indenture  Estate  thereby  effected and contain
                 provisions  appropriately  amending  references to the Facility
                 Lease in this Indenture;





                                      -19-



<PAGE>


                 (5) a  certificate  of a  Responsible  officer  of  the  Lessee
                 stating  that,  to  the  best  of  his  knowledge,  ( i  )  the
                 conditions  precedent  required  by  this  Indenture  for  such
                 assumption  have been complied with, (ii) no Indenture Event of
                 Default has occurred and is continuing,  (iii) such  assumption
                 is permitted  by the  provisions  of the  Lessee's  Articles of
                 Incorporation  and By-Laws and (iv) the Lessee is not insolvent
                 within the  meaning of any  applicable  preferential  transfer,
                 fraudulent conveyance or bankruptcy law; and

                 (6) a certificate of a Responsible Officer of the Owner Trustee
                 stating that, to the best of his knowledge,  no Indenture Event
                 of Default has occurred and is continuing.

                  (C) Notice of any  assumption  or prepayment of Notes shall be
given to the  registered  Holders of the Notes which have been assumed or are to
be  prepaid  (and any  assignee  of a  registered  Holder  which  has  given the
Indenture  Trustee written notice of such assignment) as promptly as practicable
after the Indenture Trustee is notified thereof, and, in the case of prepayment,
in no  event  later  than  (i) 30 days  before  the date  fixed  for  prepayment
(provided  the  Indenture  Trustee  receives  such  notification  at least three
Business  flays  before such 30th day) in the event of the exercise by the Owner
Trustee of its option to  terminate  the Facility  Lease  pursuant to section 14
thereof or (ii) one day before the date fixed for prepayment in the event of the
exercise by the Lessee of the special  Purchase  Event pursuant to Section 13(c)
of the Facility Lease.

                  (d) If the assumption described in paragraph (b) above has not
occurred, then, as required by Section 9(j) of the Facility Lease, not less than
2 Business  flays  prior to the date on which the Lessee is required to make the
payments  specified  in Section 9(c) or 9(d) of the  Facility  Lease,  the Owner
Trustee will cause the undivided  Interest and the Real Property  Interest to be
subjected  to the lien of this  Indenture  by executing  and  delivering  to the
Indenture Trustee an undivided Interest Indenture supplement substantially in



                                      -20-



<PAGE>


the form of Exhibit C to this  Indenture.  Subject to Section 10.3  hereof,  the
Indenture  Trustee shall  execute and accept  delivery from the Owner Trustee of
the undivided Interest Indenture supplement.

                  SECTION 3.10.  Mutilated, Destroyed, Lost or Stolen Notes.

                  If any Note shall become mutilated or shall be destroyed, lost
or stolen,  the Owner Trustee shall,  upon the written  request of the Holder of
such Note, execute,  and the Indenture Trustee shall authenticate and deliver in
replacement  thereof,  a new Note, payable in the same original principal amount
and  dated  the  same  date  and of the same  series  as the Note so  mutilated,
destroyed,  lost or stolen.  The Indenture Trustee shall make a notation on each
new Note of the amount of all payments of principal theretofore made on the Note
so mutilated,  destroyed,  lost or stolen and the date to which interest on such
old Note has been paid. If the Note being replaced has been mutilated, such Note
shall be delivered to the Indenture Trustee who shall then deliver a certificate
of  destruction  of the type  required by section 4.3 hereof.  If the Note being
replaced  has been  destroyed,  lost or  stolen,  the  Holder of such Note shall
furnish to the Lessee,  the Owner  Trustee and the  Indenture  Trustee a bond or
surety  agreement  of such Holder as shall be  satisfactory  to them to save the
Lessee, the Owner Trustee, the Indenture Trustee, the Trust Estate and the Lease
Indenture  Estate harmless from any loss,  however remote,  including claims for
principal of, and premium,  if any, and interest on the  purportedly  destroyed,
lost or stolen Note,  together with  evidence  satisfactory  to the Lessee,  the
Owner Trustee and the  Indenture  Trustee of the  destruction,  loss or theft of
such Note and of the ownership thereof, provided, however, that if the Holder of
such Note is the Collateral Trust Trustee,  the unsecured written undertaking of
the Collateral Trust Trustee,  in its individual  capacity,  shall be sufficient
indemnity for purposes of this Section.







                                      -21-



<PAGE>


                  SECTION 3.11.  Allocation of Principal and Interest.

                  in the case of each Note,  each payment of  principal  thereof
and  interest  thereon  shall be applied,  first,  to the payment of accrued but
unpaid  interest on such Note (as well as any interest on overdue  principal or,
to the extent permitted by law,  interest) to the date of such payment,  second,
to the payment of the  principal  amount of, and  premium,  if any, on such Note
then due (including any overdue installment of principal)  thereunder and third,
the balance, if any, remaining thereafter,  to the balance of the payment of the
principal amount of, and premium, if any, on such Note.



                                   ARTICLE IV

                        REGISTRATION, TRANSFER. EXCHANGE,
                          CANCELLATION AND OWNERSHIP OF
                                      NOTES


                  SECTION 4.1.  Register of Notes.

                The  Indenture  Trustee  on behalf of the  Owner  Trustee  shall
maintain  at the  Indenture  Trustee's  Office a  register  for the  purpose  of
registration,  and registration of transfer and exchange, of the Notes by series
and in which  shall be  entered  the names and  addresses  of the owners of such
Notes and the principal  amounts of the Notes owned by them,  respectively.  For
these purposes,  the Indenture  Trustee is hereby  appointed  transfer agent and
registrar for the Notes.

                  SECTION 4.2.  Registration of Transfer or Exchange of Notes.

                  A Holder of a Note  intending  to register the transfer of any
outstanding  Note held by such Holder  (including  any transfer in the form of a



                                      -22-



<PAGE>

pledge or  assignment) or to exchange any  outstanding  Note held by such Holder
for a new Note or Notes of the same series may surrender such  Outstanding  Note
at the Indenture  Trustee's  Office,  together with the written  request of such
Holder,  or of its  attorney  duly  authorized  in  writing,  in each  case with
signatures  guaranteed,  for the  registration  of such  Note in the name of any
pledgee  or  assignee  (in the case of a  transfer  in the  form of a pledge  or
assignment)  or for the  issuance  of a new Note or  Notes  of the same  series,
specifying the authorized denomination or denominations of any new Note or Notes
to be issued and the name and  address of the Person or Persons in whose name or
names the Note or Notes are to be  registered  (either as pledgee or assignee or
as owner).  Promptly upon receipt by the Indenture  Trustee of the foregoing and
satisfaction of the  requirements of sections 4.5 and 4.6 hereof,  the Indenture
Trustee shall  register such Note or Notes in the name or names of the Person or
Persons as shall be specified in the written request and, in the case in which a
new Note or Notes are to be issued,  the Owner  Trustee  shall  execute  and the
Indenture  Trustee shall  authenticate and deliver such new Note or Notes of the
same series,  in the same aggregate  principal amount and dated the same date as
the  Outstanding   Note   surrendered,   in  such  authorized   denomination  or
denominations  as shall be  specified  in the  written  request.  The  Indenture
Trustee  shall make a notation on each new Note of the amount of all payments of
principal  theretofore made on the old Note or Notes in exchange or transfer for
which any new Note has been  issued and the date to which  interest  on such old
Note or Notes has been paid.

                  SECTION 4.3.  Cancellation of Notes.

                All Notes  surrendered  to the Indenture  Trustee for payment in
full,  prepayment  in full or  registration  of transfer  or  exchange  shall be
cancelled  by it;  and no Notes  shall  be  issued  in lieu  thereof  except  as
expressly  permitted by any of the provisions of this  Indenture.  The Indenture
Trustee shall destroy cancelled Notes held by it in a manner satisfactory to the
Owner Trustee and deliver a certificate of destruction to the Owner Trustee.  If
the Owner Trustee shall acquire any of the Notes, such acquisition shall not


                                      -23-



<PAGE>


operate as a redemption of or the satisfaction of the  indebtedness  represented
by such  Notes  unless and until the same shall be  delivered  to the  Indenture
Trustee for cancellation.

                  SECTION 4.4.  Limitation on Timing of Registration of Notes.

                  The  Indenture  Trustee  shall  not be  required  to  register
transfers or exchanges of Notes on any date fixed for the payment or  prepayment
of principal  of or interest on the Notes or during the fifteen  days  preceding
any such date.

                  SECTION 4.5.  Restrictions on Transfer  Resulting from Federal
                  Securities Laws; Legend.

                If not  prohibited  by the  Securities  Act,  each Note shall be
delivered to the initial Holder thereof without  registration of such Note under
the securities Act and without  qualification  of this Indenture under the Trust
Indenture  Act.  Prior to any transfer of any Note,  in whole or in part, to any
Person other than the collateral Trust Trustee, the Holder thereof shall furnish
to the  Lessee,  the  Indenture  Trustee  and the Owner  Trustee  an  opinion of
counsel, which opinion and which counsel shall be reasonably satisfactory to the
Indenture  Trustee,  the Owner  Trustee and the Lessee,  to the effect that such
transfer will not violate the  registration  provisions of the Securities Act or
require  qualification  of this Indenture under the Trust Indenture Act, and all
Notes  issued  hereunder  shall be  endorsed  with a  legend  which  shall  read
substantially as follows:

                 This Note has not been  registered  under the securities Act of
                 1933 and may not be  transferred,  sold or offered  for sale in
                 violation of such Act.







                                      -24-



<PAGE>


                  SECTION 4.6.  Charges upon Transfer or Exchange of Notes.

                  As a further condition to registration of transfer or exchange
of any Note,  the Indenture  Trustee and the Owner Trustee may charge the Holder
thereof for any stamp  taxes or  governmental  charges  required to be paid with
respect to such registration of transfer or exchange.

                  SECTION 4.7.  Inspection of Register of Notes.

                  The  register  of the  Holders  of the  Notes  referred  to in
section 4.1 shall at all  reasonable  times be open for inspection by any Holder
of a Note.  upon  request by any Holder of a Note,  or the Owner  Trustee or the
Lessee,  the Indenture Trustee shall furnish such Person, at the expense of such
Person,  with a list of the names and  addresses of all Holders of Notes entered
on the register kept by the Indenture Trustee  indicating the series,  principal
amount and number of each Note held by each such Holder.

                  SECTION 4.8.  Ownership of Notes.

                (a) Prior to due presentment for registration of transfer of any
Note, the Owner Trustee and the Indenture  Trustee may deem and treat the Holder
of record of such Note as the  absolute  owner of such Mote for the  purpose  of
receiving  payment of all amounts  payable with respect to such Note and for all
other purposes, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary.

                  (b) The Owner Trustee and the Indenture  Trustee may, in their
discretion,  treat the Holder of record of any Note as the owner thereof without
actual production of such Note for any purpose hereunder,  except as provided in
the last sentence of section 3.8 hereof.



                                      -25-



<PAGE>
                  (c) Neither the Owner Trustee nor the Indenture  Trustee shall
be bound to take notice of or carry out the execution of any trust in respect of
any Note,  and may  register  the  transfer of the same on the  direction of the
Holder of record thereof,  whether named as trustee or otherwise, as though such
Holder were the beneficial owner thereof.

                  (d) The  receipt  by the  Holder  of record of any Note of any
payment of principal, premium or interest shall be a good discharge to the Owner
Trustee and the Indenture Trustee for the same and neither the Owner Trustee nor
the  Indenture  Trustee  shall be bound to  inquire  into the  title of any such
Holder.



                                    ARTICLE V

                            RECEIPT, DISTRISUTION AND
                     APPLICATION OF INCOME AND PROCEEDS FROM
                           THE LEASE INDENTURE ESTATE


                  SECTION 5.1.  Basic Rent Interest on Overdue  Installments  of
Basic Rent and prepayments of Interest.

                  Except as  otherwise  provided  in Section  5.3 or 5.7 hereof,
each  payment  of  Basic  Rent,  as well as any  payment  of  supplemental  Rent
representing  interest on overdue  installments  of Basic Rent,  received by the
Indenture  Trustee at any time, shall be distributed by the Indenture Trustee in
the  following  order of  priority:  first,  so much of such payment as shall be
required  to pay in full the  aggregate  amount of the  payment or  payments  of
principal  and/or interest (as well as any interest on overdue  principal or, to
the extent permitted by law, interest) then due and unpaid on all Notes shall be
distributed  to the Holders of the Notes ratably,  without  priority of one over
the  other,  in the  proportion  that the  aggregate  amount of such  payment or
payments  then due and unpaid on all Notes held by each such Holder on such date
bears to the aggregate amount of such payment or payments then due and unpaid on
all Notes outstanding on such date,  without priority of interest over principal



                                      -26-



<PAGE>

or principal over  interest;  and second,  the balance,  if any, of such payment
remaining  thereafter shall be distributed,  concurrently  with any distribution
pursuant to clause first  hereof,  to the Owner  Trustee or as the Owner Trustee
may direct.  If there shall not otherwise have been  distributed on any date (or
within any applicable  period of grace),  pursuant to this Section 5.1, the full
amount then  distributable  pursuant to clause  first of this  Section  5.1, the
Indenture  Trustee shall distribute  other payments  referred to in sections 5.4
and 5.5 then  held by it or  thereafter  received  by it,  except  as  otherwise
provided in section 5.3, to the Holders of all Notes to the extent  necessary to
enable it to make all the distributions  then due pursuant to such clause first;
provided that to the extent any  distribution is made from amounts held pursuant
to section  5.4 hereof and the Lessee  subsequently  makes the  payment of Basic
Rent or supplemental  Rent in respect of which such  distribution was made, such
payment of Basic Rent or supplemental Rent shall, unless an Indenture Default or
an Indenture Event of Default shall have occurred and be continuing,  be applied
to the purpose for which such amount held pursuant to section 5.4 had been held,
subject,  in all cases,  to the terms of section  5.4.  The portion of each such
payment  made  to  the  Indenture  Trustee  which  is to be  distributed  by the
Indenture  Trustee  in payment of Notes  shall be  applied  in  accordance  with
Section 3.11. Any payment received by the Indenture  Trustee pursuant to section
6.8 shall be distributed to the Holders of the Notes, ratably,  without priority
of one over the other,  in the  proportion  that the  amount of such  payment or
payments  then due and unpaid on all Notes held by each such Holder bears to the
aggregate  amount of the payments then due and unpaid on all Notes  Outstanding.
Amounts  distributed by the Indenture Trustee pursuant to this section 5.1 shall
be  distributed  as  promptly as  practicable  after such  amounts are  actually
received by the  Indenture  Trustee;  provided,  however,  that in the event the
Indenture  Trustee  shall be directed to make payments to the Holder of any Note
by wire transfer in accordance with Section 3.8 hereof,  any amounts received by
the Indenture  Trustee after 11:00 A.M.,  New York City time, may be distributed
on the following Business Day.



                                      -27-



<PAGE>


                SECTION 5.2. Amounts Received as Result of Event of Lass, Deemed
Loss  Event,  Exercise  of  Option  to  Terminate,  Exercise  of Cure  Option or
Occurrence of Special Purchase Event.

                  If an Event of toss or Deemed  Loss Event  shall  occur or the
Lessee shall exercise the Cure Option, and if either the Assumption Agreement or
the  undivided  Interest  Indenture  Supplement  shall  have been  executed  and
delivered,  any amounts of Casualty value, special casualty Value or Fair Market
Sales value  received or held by the Indenture  Trustee in respect of such Event
of Loss or Deemed Loss Event or exercise  of the Cure  Option  shall,  except as
otherwise  provided  in  Section  5.3,  be  distributed  forthwith  to the Owner
Participant.  If the  Lessee or the  Owner  Trustee,  as the case may be,  shall
exercise  its option to  terminate  the  Facility  Lease  pursuant to Section 14
thereof, or the special Purchase Event shall have occurred,  then there shall be
prepaid,  on the date payments of proceeds with respect  thereto are received by
the Indenture Trustee (or as soon thereafter as practicable) under section 13(c)
or 14 of the Facility Lease as the case may be, the unpaid  principal  amount of
all  Notes,  together  with the  premium,  if any,  and all  accrued  but unpaid
interest thereon to the date of such prepayment. Notice of such prepayment shall
be given as  provided in Section  3.9(c) and may  provide  that it is subject to
receipt of funds for such prepayment.  Except as. otherwise  provided in section
5.3 or 5.7, any payments  received and amounts realized by the Indenture Trustee
upon  exercise of the Lessee's or the Owner  Trustee's  option to terminate  the
Facility  Lease  under  section  14 thereof or upon  occurrence  of the  Special
Purchase  Event shall in each case be  distributed  on the date of prepayment as
provided in clauses first, second and fifth of Section 5.3.

                  SECTION  5.3.  Amounts  Received  After,  or  Held  at rime of
Indenture Event of Default under Section 6.2.




                                                       -28-
6091.50.2831.57:1


<PAGE>
                  Except as  otherwise  provided in Section  5.7,  all  payments
received and amounts  realized by the Indenture  Trustee in respect of the Lease
Indenture Estate  (including any amounts realized by the Indenture  Trustee from
the  exercise of any remedies  pursuant to the  Facility  Lease or Article VI of
this Indenture)  after an Indenture Event of Default  referred to in section 6.2
shall  have  occurred  and be  continuing  and the Notes  have been  accelerated
pursuant to Section 7.1, as well as all payments  thereafter received or amounts
then held by the Indenture Trustee as part of the Lease Indenture Estate,  shall
be distributed by the Indenture Trustee in the following order of priority:

                  first,  so  much of such  payments  or  amounts  as  shall  be
        required to reimburse the Indenture  Trustee for any Trustee's  Expenses
        (to the  extent not  previously  reimbursed)  and to pay the  reasonable
        remuneration of the Indenture Trustee, shall be applied by the Indenture
        Trustee to such reimbursement and payment;

                  second, so much of such payments or amounts remaining as shall
        be required to pay in full the aggregate  unpaid principal amount of all
        Notes,  together with premium,  if any, plus accrued but unpaid interest
        (as well as interest on overdue  principal and, to the extent  permitted
        by law, on overdue interest) thereon to the date of distribution,  shall
        be  distributed  to the Holders of such Notes and in case the  aggregate
        amount so to be distributed  shall be insufficient to pay all such Notes
        in full as  aforesaid,  then ratably,  without  priority of one over the
        other, in the proportion that the aggregate  unpaid  principal amount of
        all such Notes held by each such Holder,  together with premium, if any,
        plus  accrued but unpaid  interest  thereon to the date of  distribution
        bears to the aggregate unpaid  principal  amount of all Notes,  together
        with premium,  if any, plus accrued but unpaid  interest  thereon to the
        date of distribution;

                  third, so much of such payments or amounts  remaining as shall
        be  required  to pay the  present  or  former  Holders  of the Notes the
        amounts  payable to them as  Indemnitees  (to the extent not  previously



                                      -29-



<PAGE>

        reimbursed)  shall  be  distributed  to such  Holders;  and in case  the
        aggregate  amount so to be paid to all such Holders in  accordance  with
        this  clause  third  shall be  insufficient  to pay all such  amounts as
        aforesaid,  then ratably, without priority of one over the other, in the
        proportion  that the amount of such indemnity or other payments to which
        such Person is entitled bears to the aggregate  amount of such indemnity
        or other payments to which all such Persons are entitled;

                fourth,  the  balance,  if any,  of  such  payments  or  amounts
         remaining shall be applied to the payment of any other  indebtedness at
         the time due and owing to the  Indenture  Trustee or the Holders of the
         Notes which this Indenture by its terms secures; and

                fifth,  the  balance,  if  any,  of  such  payments  or  amounts
         remaining  thereafter  shall be distributed to or upon the direction of
         the Owner Trustee.

                SECTION 5.4.  Amounts  Received for which provision Is Made in a
Transaction Document.

                Except as otherwise  provided in section 5.1, 5.3 or 5.7 hereof,
any payments received by the Indenture Trustee in respect of the Lease Indenture
Estate  for  which  provision  as  to  the  application  thereof  is  made  in a
Transaction  Document shall be applied to the purpose for which such payment was
made in accordance with the terms of such Transaction  Document,  as determined,
in the first instance, from instructions or other information  accompanying such
payment,  or, otherwise,  in accordance with instructions from the payor of such
payments.

                  SECTION 5.5.  Amounts Received for Which No Provision Is Made.

                  Except as otherwise  provided in section 5.1, 5.2, 5.3 or 5.7,
any  payments  received  and any amounts  realized by the  Indenture  Trustee in
respect of the Lease Indenture Estate




                                      -30-



<PAGE>


        (a) for which no  provision as to the  application  thereof is made in a
        Transaction Document or elsewhere in this Article V shall be held by the
        Indenture Trustee as part of the Lease Indenture Estate, and

        (b) to the extent received or realized at any time after payment in full
        of the principal of and premium,  if any, and interest on all the Notes,
        as well as any other  amounts  remaining as part of the Lease  Indenture
        Estate after  payment in full of the  principal of and premium,  if any,
        and interest on all the Notes,  shall be  distributed  by the  Indenture
        Trustee  in the order of  priority  set forth in Section  5.3  (omitting
        clause second thereof).

                  SECTION 5.6.  Payments to Owner Trustee.

                Unless otherwise directed by the Owner Trustee,  all payments to
be made to the Owner Trustee hereunder shall be made to the Owner Participant by
wire transfer of immediately  available  funds as soon as practicable but in any
event no later than the close of business on the date of receipt  (assuming  the
Indenture Trustee has received such funds prior to 11:00 a.m. New York City time
on the same day),  to such  account  at such bank or trust  company as the Owner
Participant  shall  from time to time  designate  in  writing  to the  Indenture
Trustee.

                  SECTION 5.7.  Excepted Payments.

                Anything in this Article V or elsewhere in this Indenture to the
contrary  notwithstanding,  any  Excepted  Payment  received  at any time by the
Indenture  Trustee shall be distributed as promptly as practicable to the Person
entitled to receive such Payment (such entitlement to be conclusively determined
by reference to payment instructions from such Person).






                                      -31-

<PAGE>


                                   ARTICLE VI

                         REPRESENTATIONS, WARRANTIES AND
                       COVENANTS OF OWNER TRUSTEE; EVENTS
                           OF DEFAULT; REMEDIES OF THE
                                INDENTURE TRUSTEE


                SECTION 6.1. Representations,  Warranties and Covenants of Owner
Trustee

                The Owner Trustee  hereby  covenants and agrees that (i) it will
duly and punctually pay the principal of, and premium.  if any, and interest on,
the Notes in accordance with the terms thereof and this Indenture,  (ii) it will
not pledge, create a security interest in or mortgage, so long as this Indenture
shall remain in effect,  any of its estate,  right,  title or interest in and to
the Lease Indenture Estate or otherwise  constituting  part of the Trust Estate,
to anyone  other than the  Indenture  Trustee,  (iii) so long as this  Indenture
shall  remain in effect,  it will not purchase or agree to purchase any property
or asset other than the Undivided  Interest and the Real  Property  Interest and
other  than as  contemplated  by the  Transaction  Documents,  (iv) it will not,
except  with the  prior  written  concurrence  of the  Indenture  Trustee  or as
expressly  provided in or  permitted  by this  Indenture  or with respect to the
Trust  Agreement or any property not  constituting  part of the Lease  Indenture
Estate,  take any action which would result in an  impairment of any Note or the
obligation  of the Lessee to pay any amount  under the  Facility  Lease which is
part of the Lease  Indenture  Estate (not in any event  including  in respect of
Excepted  Payments) or any of the other  rights or security  created or effected
thereby,  or (v) issue, or incur any obligation in respect of,  indebtedness for
borrowed money except for its obligations in respect of Notes.

                  A signed  copy of any  amendment  or  supplement  to the Trust
Agreement  shall be delivered by the Owner Trustee to the Indenture  Trustee and
the Lessee.  This Indenture and the Lease Indenture Estate shall not be affected



                                      -32-



<PAGE>

by any  action  taken  under or in  respect  of the  Trust  Agreement  except as
otherwise  provided in or permitted by this  Indenture.  The Trust Agreement may
not in any event be terminated by the Owner  Participant or the Owner Trustee or
revoked  by the  Owner  Participant  so long as any of the  Notes or any  unpaid
obligations  under this  Indenture  remain  Outstanding.  The Owner  Trustee may
resign  as  Owner  Trustee,  appoint  a  successor  Owner  Trustee  and take all
necessary and proper action to constitute  one or more Persons as  co-trustee(s)
jointly with the Owner Trustee or as separate trustee(s), all in accordance with
the terms and conditions of Article IX of the Trust Agreement.

                  SECTION 6.2.  Indenture Events of Default.

                The term Indenture Event of Default, wherever used herein, shall
mean any of the following  events  (whatever the reason for such Indenture Event
of Default and whether it shall be voluntary or  involuntary or come about or be
effected by operation of law or pursuant to or in compliance  with any judgment,
decree  or  order  of  any  court  or  any  order,  rule  or  regulation  of any
administrative or governmental body):

                  (a) any of the Events of Default  specified  in the  following
clauses of section 15 of the Facility Lease: (1) clause (i)(y), except a failure
of the Lessee to pay any amount which shall constitute an Excepted Payment;  (2)
clause  (i)(x),  except a failure of the Lessee to pay any  amount  which  shall
constitute an Excepted  Payment or except where the Owner Trustee shall not have
rescinded or terminated the Facility  Lease pursuant to section  l6(a)(i) of the
Facility Lease; or (3) clause (vii); or

                  (b) the rescission, or termination of, or the taking of action
by the Owner  Trustee or the Owner  Participant  the effect of which would be to
rescind or terminate,  the Facility Lease,  whether pursuant to section l6(a)(i)
of the Facility Lease or otherwise; or

                  (c) any failure by the Lessee to perform  and observe  Section
10(b) (3)(iii) of the Participation Agreement; or


                                      -33-



<PAGE>


                  (d) the  Owner  Trustee  shall  fail to make  any  payment  in
respect of the  principal  of, or premium,  if any,  or  interest  on, the Notes
within ten (10)  Business  Days after the same shall have become due (other than
by virtue of any failure by the Lessee to make any payment of Rent therefor); or

                  (e) the Owner  Trustee  shall fail to  perform or observe  any
covenant or agreement  to be  performed  or observed by it under  section 6.1 of
this Indenture,  or the Owner  Participant  shall fail to perform or observe any
covenant or agreement to be performed or observed by it under Section 7(b)(l) of
the  Participation  Agreement and, in any such case, such failure shall continue
for a period of 30 days after notice  thereof shall have been given to the Owner
Trustee,  the  Owner  Participant  and  the  Lessee  by the  Indenture  Trustee,
specifying such failure and requiring it to be remedied.

                  SECTION 5.3.  Enforcement of Remedies

                  (a) In the event that an Indenture Event of Default shall have
occurred and be continuing,  then and in every such case the Indenture  Trustee,
subject to  paragraph  (b) of this section 6.3 and section  6.11,  may, and when
required pursuant to the provisions of Article VIZ hereof shall, exercise any or
all of the rights and  powers  and  pursue,  subject to the rights of the Lessee
under the Facility  Lease,  (x) in the event such Indenture  Event of Default is
referred to in  paragraph  (d) or (e) of Section 6.2, any or all of the remedies
then available  pursuant to this Article V! and Article VII, or (y) in the event
such  Indenture  Event of Default is referred to in paragraph (a), (b) or (c) of
Section  6.2,  any or all of such  remedies  concurrently  with the exercise and
pursuit by the Owner Trustee of any or all of the remedies then available to the
Owner Trustee under the Facility Lease.

                  (b) Any  provisions of the Facility Lease or this Indenture to
the  contrary  notwithstanding,  if the Lessee  shall  fail to pay any  Excepted
Payment to any Person  entitled  thereto as and when due, such Person shall have



                                      -34-



<PAGE>

the right at all times,  to the exclusion of the Indenture  Trustee,  to demand,
collect,  sue for, enforce performance of obligations  relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment.

                SECTION 5.4.  Specific  Remedies;  Enforcement of claims without
Possession of Notes.

                Subject to  sections  6.2,  6.3 and 6.11 hereof and the terms of
the  documents  constituting  a part of the  Lease  Indenture  Estate,  upon the
occurrence and during the continuance of an Indenture Event of Default:

                  (a) The Indenture  Trustee may, in order to enforce the rights
of the Indenture  Trustee and of the Holders of the Notes,  direct payment to it
of all moneys and enforce any agreement or  undertaking  constituting  a part of
the Lease Indenture Estate by any action, suit, remedy or proceeding  authorized
or  permitted  by this  Indenture  or by law or by equity,  and  whether for the
specific  performance of any agreement  contained  herein,  or for an injunction
against the violation of any of the terms  hereof,  or in aid of the exercise of
any power granted hereby or by Applicable Law, and in addition may sell, assign,
transfer and deliver,  from time to time to the extent  permitted by  Applicable
Law, all or any part of the Lease Indenture Estate or any Interest  therein,  at
any private sale or public  auction  with or without  demand,  advertisement  or
notice  (except as herein  required or as may be required by Applicable  Law) of
the date, time and place of sale and any adjournment thereof, for cash or credit
or other property, for immediate or future delivery and for such price or prices
and on such terms as the Indenture Trustee, in its uncontrolled discretion,  may
determine,  or as may be  required  by  Applicable  Law,  so long  as the  Owner
Participant  and the  Owner  Trustee  are  afforded  a  commercially  reasonable
opportunity  to bid for  all or  such  part of the  Lease  Indenture  Estate  in
connection  therewith.   It  is  agreed  that  90  days'  notice  to  the  Owner
Participant, the Owner Trustee and the Lessee of the date, time and place of any
proposed sale by the Indenture Trustee of all or any part of the Lease Indenture



                                      -35-



<PAGE>

Estate or interest  therein is reasonable.  The Indenture  Trustee may file such
proofs of claim and other  papers or  documents as may be necessary or advisable
in order to have the claims of the Indenture  Trustee and of the }Holders of the
Notes  asserted  or upheld in any  bankruptcy,  receivership  or other  judicial
proceedings.

                  (b) Without limiting the foregoing, the Indenture Trustee, its
assigns and its legal representatives, subject to the rights of the Lessee under
the Facility Lease,  shall have as to such of the Lease  Indenture  Estate as is
subject  to  the  uniform  commercial  Code  or  similar  law in  each  relevant
jurisdiction  all the remedies of a secured  party under the uniform  commercial
Code or similar law in such  jurisdiction and such further remedies as from time
to time may hereafter be provided in such jurisdiction for a secured party.

                  (c) All  rights of action and  rights to assert  claims  under
this  Indenture  or under  any of the  Notes may be  enforced  by the  Indenture
Trustee  without the  possession of the Notes at any trial or other  proceedings
instituted by the  Indenture  Trustee,  and any such trial or other  proceedings
shall be  brought  in its own  name as  trustee  of an  express  trust,  and any
recovery  or  judgment  shall be for the  ratable  benefit of the Holders of the
Notes as herein provided.  In any proceedings  brought by the Indenture  Trustee
(and also any proceedings  involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party) the Indenture Trustee
shall be held to  represent  all the  Holders of the Notes,  and it shall not be
necessary to make any such Holders parties to such proceedings.

                  (d) The  Indenture  Trustee  may  exercise  any other right or
remedy  that  may  be  available  to it  under  Applicable  Law  or  proceed  by
appropriate  court action to enforce the terms hereof or to recover  damages for
the breach hereof.






                                      -36-



<PAGE>


                  SECTION 6.5.  Rights and Remedies Cumulative.

                  Subject to Sections  6.2,  6.3 and 6.11  hereof,  (a) each and
every right, power and remedy herein specifically given to the Indenture Trustee
under this Indenture shall be cumulative and shall be in addition to every other
right,  power and remedy herein  specifically given or now or hereafter existing
at law,  in equity or by  statute,  and each and every  right,  power and remedy
whether  herein given or otherwise  existing may be exercised  from time to time
and as often  and in such  order as may be  deemed  expedient  by the  Indenture
Trustee and the exercise or the beginning of the exercise of any right, power or
remedy  shall not be  construed  to be a waiver of the right to  exercise at the
same time or thereafter  any other right,  power or remedy,  and (b) no delay or
omission by the Indenture Trustee in the exercise of any right,  power or remedy
or in the  pursuance of any remedy shall impair any such right,  power or remedy
or be  construed  to be a  waiver  of any  default  on  the  part  of the  Owner
Participant, the Owner Trustee or the Lessee or to be an acquiescence therein.

                  SECTION 6.5.  Restoration of Rights and Remedies.

                In case the Indenture  Trustee  shall have  proceeded to enforce
any  right,  power or remedy  under  this  Indenture  by  foreclosure,  entry or
otherwise,  and such proceedings  shall have been  discontinued or abandoned for
any reason or shall have been  determined  adversely to the  Indenture  Trustee,
then and in every  such  case the Owner  Trustee,  the  Owner  Participant,  the
Indenture Trustee and the Lessee shall be restored to their former positions and
rights  hereunder with respect to the Lease  Indenture  Estate,  and all rights,
powers and  remedies  of the  Indenture  Trustee  shall  continue  as if no such
proceedings had been taken.







                                      -37-



<PAGE>


                  SECTION 6.7.  Waiver of Past Defaults.

                  Any past Indenture  Default or Indenture  Event of Default and
its  consequences  may be waived by the Indenture  Trustee,  except an Indenture
Default or an Indenture  Event of Default (i) in the payment of the principal of
or interest on any Note,  subject to the  provisions  of Section 7.1 hereof,  or
(ii) in respect of a covenant or  provision  hereof  which,  under  Section 10.2
hereof,  cannot be modified or amended  without the con-sent of each Holder of a
Note then outstanding. Upon any such waiver, such Indenture Default or Indenture
Event of Default shall cease to exist,  and any other Indenture Event of Default
arising  therefrom shall be deemed to have been cured, for every purpose of this
Indenture;  but no such waiver shall extend to any subsequent or other Indenture
Default or Indenture Event of Default or impair any right consequent thereon.

                SECTION 6.8. Right of Owner Trustee to Pay Rent;  Note Purchase;
Substitute Lessee.

                Anything  in this  Article  VI or  Article  VII to the  contrary
notwithstanding:

                  (a) an  Indenture  Event of Default  shall be deemed  cured if
such  Indenture  Event of  Default  results  from  non-payment  of Basic Rent or
supplemental  Rent under the Facility Lease,  and the Owner Trustee or the Owner
Participant  shall  have paid all  principal  of and  interest  on the Notes due
(other  than by  acceleration)  on the date such  Basic Rent was  payable  (plus
interest on such amount as required  hereby) within 20 days after the receipt by
the Owner  Trustee of notice of such  non-payment,  such receipt to be evidenced
by,  among  other  things,  any  notice  thereof  given to the Owner  Trustee in
accordance with the notice provisions of the Participation  Agreement. The owner
Trustee  or the Owner  Participant,  upon  exercising  cure  rights  under  this
paragraph  (a),  shall not  obtain  any Lien on any part of the Lease  Indenture
Estate on  account  of such  payment  for' the costs and  expenses  incurred  in
connection  therewith  nor,  except  as  expressly  provided  in the  succeeding



                                      -38-



<PAGE>

sentence, shall any claims of the Owner Trustee or the Owner Participant against
the Lessee or any other Person for the repayment  thereof impair the prior right
and security  interest of the  Indenture  Trustee in and to the Lease  Indenture
Estate. Upon any payment by the Owner Trustee or the Owner Participant  pursuant
to this Section 6.6, the Owner Trustee or the Owner Participant, as the case may
be, shall (to the extent of such payment made by it) be subrogated to the rights
of the Indenture  Trustee and the Holders of the Notes to receive the payment of
Rent with respect to which the Owner Trustee or the Owner  Participant made such
payment and interest on account of such Rent payment being overdue in the manner
set  forth in the next  sentence.  If the  Indenture  Trustee  shall  thereafter
receive such payment of Rent or such  interest,  the  Indenture  Trustee  shall,
notwithstanding  the  requirements  of section  5.10 on the date such payment is
received by the Indenture Trustee,  remit such payment of Rent (to the extent of
the payment made by the Owner Trustee or the Owner Participant  pursuant to this
section 6.6) and such interest to the Owner Trustee or the Owner Participant, as
the case may be, in reimbursement for the funds so advanced by it.

                  (b) Each Holder of a Note agrees, by acceptance thereof,  that
if the Notes  have been  accelerated  pursuant  to  section  7.1,  and the Owner
Trustee,  within 30 days  after  receiving  notice  from the  Indenture  Trustee
pursuant to Section  7.1  hereof,  shall give  written  notice to the  Indenture
Trustee  of the  Owner  Trustee's  intention  to  purchase  all of the  Notes in
accordance with this  paragraph,  accompanied by assurances of the Owner Trustee
to purchase the Notes,  then,  upon receipt  within 10 Business  Days after such
notice  from the  Owner  Trustee  of an  amount  equal to the  aggregate  unpaid
principal  amount of and any premium  with respect to any unpaid Notes then held
by such Holder, together with accrued but unpaid interest thereon to the date of
such  receipt (as well as any interest on overdue  principal  and, to the extent
permitted by law, interest),  such Holder will forthwith sell, assign,  transfer
and convey to the Owner Trustee (without  recourse or warranty of any kind other



                                      -39-



<PAGE>

than of title to the Notes so conveyed) all of the right,  title and interest of
such Holder in and to the Lease.  Indenture Estate, this Indenture and all Notes
held by such  Holder;  provided,  that no such  Holder  shall be  required so to
convey unless (1) the Owner Trustee shall have  simultaneously  tendered payment
for all other Notes issued by the Owner Trustee at the time Outstanding pursuant
to this paragraph and (2) such  conveyance is not in violation of any Applicable
Law.

                  (c) Each  Holder of a Note  further  agrees by its  acceptance
thereof that the Owner Trustee  shall have the right,  pursuant to Section 16 of
the  Facility  Lease,  to  terminate  the  Facility  Lease  and,  in  connection
therewith,  to arrange for the  substitution of another Person as lessee under a
new  lease  substantially   similar  to  the  Facility  Lease  (hereinafter  the
Substituted  Lessee) and,  subject to: (i) any Indenture  Event of Default under
paragraphs  (d) and (e) of Section 6.2 having  been cured by the Owner  Trustee,
(ii) the  Substituted  Lessee's  assuming all of the  obligations  of the Lessee
under the Facility Lease and (iii) the  Substituted  Lessee's having an assigned
credit rating by Standard & Poor's  Corporation and Moody's  Investors  Service,
Inc. (or, if either of such  organizations  shall not rate securities  issued by
such Substituted Lessee, by any other nationally  recognized rating organization
in the United States of America) with respect to at least one series of its debt
obligations  or  preferred  stock equal to or better than the ratings  assigned,
immediately  prior to such  substitution,  by such  organizations  to comparable
securities of the Lessee  immediately prior to such substitution but in no event
less than "investment  grade", then the Facility Lease between the Owner Trustee
and such Substituted Lessee shall, for all purposes of this Indenture, be deemed
to be the Facility Lease subject to the lien of this Indenture.

                  SECTION 6.9.  Further Assurances.

                  Subject to section 7.6 hereof, the Owner Trustee covenants and
agrees from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably  requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the intent
hereof.


                                      -40-



<PAGE>


                  SECTION 6.10. Right of Indenture Trustee To Perform Covenants,
etc.

                  If the Owner Trustee shall fail to make any payment or perform
any act  required to be made or  performed by it hereunder or under the Facility
Lease or if the Owner Trustee shall fail to release any Lien affecting the Lease
Indenture Estate which it is required to release by the terms of this Indenture,
the Indenture  Trustee,  without  notice to or demand upon the Owner Trustee and
without waiving or releasing any obligation or default,  may (but shall be under
no obligation to) at any time  thereafter  make such payment or perform such act
for the account and at the expense of the Lease  Indenture  Estate.  All sums so
paid by the  Indenture  Trustee and all costs and  expenses  (including  without
limitation   reasonable   fees  and   expenses   of  legal   counsel  and  other
professionals)  so incurred,  together  with  interest  thereon from the date of
payment or occurrence,  shall constitute additional indebtedness secured by this
Indenture  and shall be paid from the Lease  Indenture  Estate to the  Indenture
Trustee on demand.  The  Indenture  Trustee  shall not be liable for any damages
resulting  from any such  payment  or  action  unless  such  damages  shall be a
consequence  of  willful  misconduct  or  gross  negligence  on the  part of the
Indenture Trustee.

                  SECTION 6.11.  Certain Other Rights of the Owner Trustee.

                Notwithstanding any provision to the contrary in this Indenture,
the Owner Trustee  shall at all times retain,  to the exclusion of the Indenture
Trustee,  all rights of the Owner  Trustee to exercise any election or option or
to make any decision or determination or to give or receive any notice, consent,
waiver  or  approval  or to take any other  action  under or in  respect  of the
Facility  Lease,  as well as all rights,  powers and remedies on the part of the
Owner Trustee,  whether arising under the Facility Lease or by statute or at law



                                      -41-



<PAGE>

or in  equity or  otherwise,  arising  out of any  Default  or Event of  Default
subject,  however,  to Section 10.2.  Without the prior  written  consent of the
indenture  Trustee,  the exercise of any of the aforesaid  rights so retained by
the Owner  Trustee  shall not be exercised in such a manner as to (i) reduce the
amounts  payable  by the  Lessee  under the  Facility  Lease  below the  amounts
necessary  to provide the owner  Trustee with  sufficient  monies to make timely
payments in full of amounts due with respect to the principal of and premium, if
any, and interest on all Notes or (ii) rescind or terminate  the Facility  Lease
pursuant to section 16 thereof.  Nor shall the Owner Trustee  exercise any other
right or remedy under the Facility  Lease the effect of which would be to effect
such rescission or termination.



                                   ARTICLE VII

                            CERTAIN DUTIES OF THU ON
                        TRUSTEE AND THE INDENTURE TRUSTEE


                  SECTION  7.1.  Duties in Respect of Events of Default,  Deemed
Loss Events and Events of Loss; Acceleration of Maturity.

                In the event the Owner Trustee shall have actual knowledge of an
Indenture Event of Default, an Event of Default, a Deemed Loss Event or an Event
of Loss, the Owner Trustee shall give prompt written notice thereof to the Owner
Participant,  the Lessee and the Indenture  Trustee.  In the event the Indenture
Trustee shall have actual  knowledge of an Event of Default,  an Indenture Event
of Default, a Deemed Loss Event or an Event of Loss, the Indenture Trustee shall
give prompt written notice thereof to the Owner Participant,  the Owner Trustee,
the Lessee and each Holder of a Mote. Subject to the terms of sections 6.2, 6.3,
6.4, 6.8, 6.11 and 7.3 hereof,  (a) the Indenture Trustee shall take such action
(including  the waiver of past Defaults in accordance  with section 6.7 hereof),
or refrain from taking such action,  with respect to any such Indenture Event of



                                      -42-



<PAGE>

Default,  Event of Default,  Deemed Loss Event or Event of Loss as the Indenture
Trustee shall be instructed by a Directive,  (b) if the Indenture  Trustee shall
not have received instructions as above provided within 20 days after mailing by
the Indenture  Trustee of notice of such  Indenture  Event of Default,  Event of
Default,  Deemed Loss Event or Event of Loss to the  Persons  referred to above,
the Indenture Trustee may1 subject to instructions  thereafter received pursuant
to the preceding sentence, take such action, or refrain from taking such action,
but shall be under no duty to take or  refrain  from  taking  any  action,  with
respect to such Indenture Event of Default, Event of Default,  Deemed Loss Event
or Event of Loss as it shall  determine  advisable in the best  interests of the
Holders of the Notes of all series and (c) in the event that an Indenture  Event
of Default shall have occurred and be continuing,  the Indenture  Trustee in its
discretion  may, or upon receipt of a Directive  shall, by written notice to the
Owner  Trustee,  declare the unpaid  principal  amount of all Notes with accrued
interest thereon to be immediately due and payable,  upon which declaration such
principal  amount and much accrued  interest  shall  immediately  become due and
payable  without  further  act or notice of any kind.  For all  purposes of this
Indenture, in the absence of actual knowledge, neither the Owner Trustee nor the
Indenture  Trustee  shall be deemed to have  knowledge of an Indenture  Event of
Default or Event of Default except that the Indenture Trustee shall be deemed to
have knowledge of the failure of the Lessee to pay any installment of Basic Rent
within 10 Business  nays after the same shall  become due.  For purposes of this
section 7.1, neither the Owner Trustee nor the Indenture Trustee shall be deemed
to have actual  knowledge of any Indenture  Event of Default,  Event of Default,
Deemed Loss Event or Event of Loss unless it shall have received  notice thereof
pursuant to section 11.6 hereof or such  Indenture  Event of Default or Event of
Default shall actually be known by an officer in the corporate trust  department
of the Owner  Trustee or by an officer in the corporate  Trustee  Administration
Department of the Indenture Trustee, as the case may be.




                                      -43-



<PAGE>


                  SECTION  7.2.  Duties  in  Respect  of  Matters  Specified  in
Directive.

                  Subject to the terms of Sections 6.2, 6.3, 6.4, 6.8, 6.11, 7.1
and 7.3 hereof,  upon receipt of a Directive,  the Indenture  Trustee shall take
such of the following  actions as may be specified in such  Directive:  (i) give
such notice or  direction  or exercise  such  right,  remedy or power  permitted
hereunder or permitted  with respect to the Facility  Lease or in respect of any
part  or all of the  Lease  Indenture  Estate  as  shall  be  specified  in such
Directive;  and (ii) take such action to preserve or protect the Lease Indenture
Estate as shall be  specified  in such  Directive,  it being agreed that without
such a Directive,  the Indenture Trustee shall not waive,  consent to or approve
any such matter as satisfactory to it.

                  SECTION 7.3.  Indemnification.

                The  Indenture  Trustee shall not be required to take or refrain
from taking any action under section 7.1 or 7.2 or Article VI hereof which shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
any financial liability unless the Indenture Trustee shall have been indemnified
by the  Holders  of the Notes  against  liability,  cost or  expense  (including
counsel fees) which may be incurred in connection  therewith,  or unless, in the
reasonable  judgment of the Indenture  Trustee,  the  indemnities  of the Lessee
shall be adequate for such  purpose;  provided,  however,  that if the Holder of
such Notes is the Collateral Trust Trustee, the unsecured written undertaking of
the collateral Trust Trustee,  in its individual  capacity,  shall be sufficient
indemnity  for purposes of this  Section.  The  Indenture  Trustee  shall not be
required  to take any action  under  Section 7.1 or 7.2 or Article VI hereof nor
shall any other  provision  of this  Indenture be deemed to impose a duty on the
Indenture  Trustee to take any action, if the Indenture Trustee shall reasonably
determine,  or shall have been advised by counsel, that such action is likely to
result in  personal  liability  or is  contrary  to the  terms  hereof or of the
Facility Lease or is otherwise contrary to law.


                                      -44-


<PAGE>


                  SECTION 7.4. Limitations on Duties; Discharge of Certain Liens
Resulting from Claims Against Indenture Trustee.

                  The Indenture Trustee shall have no duty or obligation to take
or refrain from taking any action under,  or in connection  with, this Indenture
or the  Facility  Lease,  except  as  expressly  provided  by the  terms of this
Indenture.  The  Indenture  Trustee  nevertheless  agrees  that it will,  in its
individual  capacity and at its own cost and expense,  promptly take such action
as may be  necessary  duly to  discharge  all  Liens  on any  part of the  Lease
Indenture  Estate which result from acts by or claims  against it arising out of
events or conditions not related to its rights in the Lease Indenture  Estate or
the   administration   of  the  Lease  Indenture   Estate  or  the  transactions
contemplated hereby.

                  SECTION  7.5.  Restrictions  on Dealing  with Lease  Indenture
Estate.

                Except  as  provided  in the  Transaction  Documents,  the Owner
Trustee shall not use, operate, store, lease, control,  manage, sell, dispose of
or otherwise deal with any part of the Lease Indenture Estate.

                  SECTION 7.6. Filing of Financing  Statements and  Continuation
Statements.

                Pursuant to Section l0(b)(2) of the participation Agreement, the
Lessee has  covenanted to maintain the priority of the lien of this Indenture on
the Lease  Indenture  Estate.  The Indenture  Trustee shall,  at the request and
expense of the Lessee as provided in the  participation  Agreement,  execute and
deliver to the Lessee and the Lessee  will  file,  if not  already  filed,  such
financing  statements  or other  documents and such  continuation  statements or
other  documents  with  respect  to  financing  statements  or  other  documents
previously  filed relating to the lien created under this Indenture in the Lease



                                      -45-



<PAGE>

Indenture  Estate as may be necessary to protect,  perfect and preserve the lien
created  under  this  Indenture.  At any time and  from  time to time,  upon the
request of the Lessee or the Indenture Trustee,  at the expense of the Lessee as
provided  in the  Participation  Agreement  (and  upon  receipt  of the  form of
document so to be executed) , the Owner Trustee shall  promptly and duly execute
and deliver any and all such further  instruments and documents as the Lessee or
the Indenture Trustee may reasonably  request in order for the Indenture Trustee
to obtain the full benefits of the security  interest,  assignment  and mortgage
created or  intended  to be created  hereby and of the rights and powers  herein
granted.   Upon  the  reasonable   instructions  (which  instructions  shall  be
accompanied  by the form of  document  to be filed) at any time and from time to
time of the Lessee or the Indenture Trustee, the Owner Trustee shall execute and
file any financing statement (and any continuation statement with respect to any
such financing  statement),  any certificate of title or any other document,  in
each case relating to the security interest,  assignment and mortgage created by
this  Indenture,  as may be specified  in such  instructions.  In addition,  the
Indenture   Trustee  and  the  Owner  Trustee  will  execute  such  continuation
statements with respect to financing  statements and other documents relating to
the lien created under this  Indenture in the Lease  Indenture  Estate as may be
reasonably  specified from time to time in written instructions of any Holder of
a Note (which  instructions  may, by their terms,  be operative only at a future
date and which shall be accompanied by the form of such  continuation  statement
or other document so to be filed).















                                      -46-



<PAGE>


                                  ARTICLE VIII

                        CONCERNING THE OWNER TRUSTEE AND
                              THE INDENTURE TRUSTEE


                  SECTION 8.1.  Acceptance of Trusts; Standard of Care.

                The  Indenture  Trustee  accepts the trusts  hereby  created and
applicable  to it and agrees to perform the same but only upon the terms of this
Indenture and the Participation Agreement and agrees to receive and disburse all
moneys  constituting  part of the Lease Indenture  Estate in accordance with the
provisions hereof,  provided that no implied duties or obligations shall be read
into  this  Indenture  or the  Participation  Agreement  against  the  Indenture
Trustee.  The  Indenture  Trustee  shall enter into and perform its  obligations
under the Participation Agreement, and, at the request of the Owner Trustee, any
other agreement  relating to any transfer of the Undivided  Interest or the Real
Property  Interest  or  the  assignment  of  rights  under  the  Assignment  and
Assumption or, at the request of the Owner  Trustee,  the purchase by any Person
of Notes or Additional Notes issued hereunder,  all as contemplated  hereby. The
Indenture  Trustee shall not be liable under any  circumstances,  except for its
own willful  misconduct or gross  negligence.  If any Indenture Event of Default
shall have occurred and be continuing, the Indenture Trustee shall exercise such
of the  rights  and  remedies  vested in it by this  Indenture,  subject  to the
provisions  hereof, and shall use the same degree of care in their exercise as a
prudent man would exercise or use in the circumstances in the conduct of his own
affairs;  provided that it in the opinion of the  Indenture  Trustee such action
may tend to involve expense or liability, it shall not be obligated to take such
action unless it is furnished with indemnity satisfactory to it.




                                      -47-


<PAGE>


                  SECTION 8.2.  No Duties of Maintenance, Etc.

                Except pursuant to Section 7.2 hereof and except as provided in,
and without  limiting  the  generality  of,  sections  7.1 and 7.4  hereof,  the
Indenture  Trustee  shall have no duty (i) to see to any  recording or filing of
any Transaction  Document, or to see to the maintenance of any such recording or
filing,  or (ii) 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, or  assessed  or levied  against,  any part of the Lease  Indenture
Estate  (except such as are required to be paid or  discharged by it pursuant to
this  Indenture or any 0(pound) the other  Transaction  Documents) or to make or
file any reports or returns related thereto.

                  SECTION  8.3.  Representations  and  warranties  of  Indenture
Trustee and the Owner Trustee.

                NEITHER THE OWNER  TRUSTEE NOR THE  INDENTURE  TRUSTEE MAKES Any
REPRESENTATION  OR  WARRANTY  AS TO THE  VALUE,  CONDITION,  MERCHANTABILITY  OR
FITNESS  FOR USE OF UNIT 1, THE  UNDIVIDED  INTEREST  OR ANY  PART OF THE  LEASE
INDENTURE ESTATE OR AS TO ITS INTEREST THEREIN,  OR ANY OTHER  REPRESENTATION OR
WARRANTY WITH RESPECT TO UNIT 1, THE UNDIVIDED INTEREST OR ANY PART OF THE LEASE
INDENTURE ESTATE  WHATSOEVER.  The Owner Trustee and the Indenture  Trustee each
represents  and warrants,  in its  individual  capacity,  as to itself that this
Indenture has been executed and delivered by one or more of its officers who are
duly authorized to execute and deliver this Indenture on its behalf.

                  SECTION 8.4.  Moneys Held in Trust; Non-Segregation of Moneys.

                All  moneys  and  securities  deposited  with  and  held  by the
Indenture  Trustee under this  Indenture for the purpose of paying,  or securing
the  payment of, the  principal  of or premium or interest on the Notes shall be
held in trust.  Except as  provided  in Sections  2.3(c),  8.8 and 11.1  hereof,
moneys received by the Indenture Trustee under this Indenture need not be


                                      -48-



<PAGE>


segregated  in any  manner  except to the  extent  required  by law,  and may be
deposited under such general  conditions as may be prescribed by law;  provided,
however,  that any  payments  received  or applied  hereunder  by the  Indenture
Trustee  shall be  accounted  for by the  Indenture  Trustee so that any portion
thereof paid or applied  pursuant  hereto shall be identifiable as to the source
thereof.  Except as otherwise  expressly  provided herein, the Indenture Trustee
shall  not be  liable  for any  interest  on any  money  held  pursuant  to this
Indenture.

                  SECTION 8.5.  Reliance on Writings, Use of Agents, Etc.

                The  Indenture  Trustee  shall incur no  liability  to anyone in
acting upon any signature,  instrument,  notice,  resolution,  request, consent,
telegram, order,  certificate,  report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties.  In the case of the Lessee,  the Indenture Trustee may accept a copy
of a resolution of the Board of Directors or any duly constituted and authorized
committee of the Board of Directors of the Lessee, certified by the Secretary or
an  Assistant  Secretary  of the  Lessee as duly  adopted  and in full force and
effect,  as conclusive  evidence that such  resolution  has been duly adopted by
such Board or Committee and that the same is in full force and effect. As to the
aggregate unpaid  principal amount of the Notes  outstanding as of any date, the
Owner Trustee may for all purposes  hereof rely on a  certificate  signed by any
Authorized Officer of the Indenture Trustee. As to any fact or matter the manner
of ascertainment of which is not specifically  described  herein,  the Indenture
Trustee  may for  all  purposes  hereof  rely on a  certificate,  signed  by the
Chairman of the Board,  the  President,  any Vice president and the Treasurer or
the secretary or any Assistant  Treasurer or Assistant Secretary of the Lessee ,
or a Holder of a Note or any  Responsible  Officer of the Owner Trustee,  as the
case may be, as to such fact or matter,  and such  certificate  shall constitute
full  protection to the Indenture  Trustee for any action taken or omitted to be



                                      -49-


<PAGE>

taken by it in good faith in  reliance  thereon.  The  Indenture  Trustee  shall
furnish to the Owner  Trustee upon request such  information  and copies of such
documents as the  Indenture  Trustee may have and as are necessary for the Owner
Trustee to perform its duties under Article III hereof. In the administration of
the trusts  hereunder,  the  Indenture  Trustee may execute any of the trusts or
powers  hereof and perform its powers and duties  hereunder  directly or through
agents or attorneys  selected by it in good faith and with reasonable care, and,
with respect to matters  relating to the Notes,  the Lease Indenture  Estate and
its rights and duties under this Indenture and the other Transaction  Documents,
may, at the expense of the Lessee, or, if the Lessee shall have failed to pay or
provide for the payment thereof,  at the expense of the Lease Indenture  Estate,
consult with counsel,  accountants  and other skilled persons to be selected and
employed by it in good faith and with reasonable care, and the Indenture Trustee
shall not be liable for anything  done,  suffered or omitted in good faith by it
in  accordance  with the advice or opinion of any such counsel,  accountants  or
other skilled persons so selected.  unless otherwise  specified herein or in any
other Transaction Document, any opinion of counsel referred to in this Indenture
or in such other Transaction  Document may be relied on by the Indenture Trustee
to the extent it is rendered by an attorney or firm of attorneys satisfactory to
the Indenture Trustee (which may be counsel to the Owner Participant,  the Owner
Trustee, the Lessee or any party to any Transaction Document)

                  SECTION 8.6.  Indenture Trustee to Act solely as Trustee.

                The Indenture Trustee acts hereunder solely as trustee as herein
provided  and not in any  individual  capacity,  except as  otherwise  expressly
provided  herein;  and  except  as  provided  in  Sections  9(a) and 9(b) of the
Participation  Agreement  or section 7.4 or 6.1 hereof,  all Persons  having any
claim against the Indenture  Trustee arising from matters  relating to the Notes
by reason of the transactions contemplated hereby shall, subject to the lien and
priorities of payment as herein  provided and to Sections 3.6 and 5.7, look only
to the Lease Indenture Estate for payment or satisfaction thereof.

                                      -50-



<PAGE>


                SECTION 8.7.  Limitation on Rights Against  Registered  Holders,
the Owner Trustee or Lease Indenture Estate.

                The Indenture Trustee shall be entitled to be paid or reimbursed
for  Trustee's  Expenses  as  provided  herein  and  in  the  other  Transaction
Documents. Nonetheless, the Indenture Trustee agrees that it shall have no right
against  the  Holders  of the  Notes,  the Owner  Trustee  (except to the extent
included in Transaction Expenses payable by the Owner Participant) or, except as
provided in Article V and section 6.4 or this Article VIII, the Lease  Indenture
Estate for any fee as compensation for its services hereunder.

                SECTION  8.8.   Investment  of  Certain  Payments  Held  by  the
Indenture Trustee.

                Any amounts held by the Indenture  Trustee  hereunder other than
pursuant  to section  2.3(c) or 11.1 hereof  shall be invested by the  Indenture
Trustee from time to time as directed in writing by the Owner Participant and at
the  expense  and  risk of the  Owner  Participant  in (i)  obligations  of,  or
guaranteed  as to  interest  and.  principal  by, the United  States  Government
maturing  not  more  than  90 days  after  such  investment,  (ii)  open  market
commercial  paper of any corporation  incorporated  under the laws of the United
states of America or any state  thereof  rated  "prime-1" or its  equivalent  by
Moody's Investors Service,  Inc. or "A-1" or its equivalent by Standard & Poor's
corporation or (iii)  certificates of deposit maturing within 90 days after such
investment  issued by commercial  banks  organized  under the laws of the United
States of  America or of any  political  subdivision  thereof  having a combined
capital  and  surplus in excess of  $500,000,000;  provided,  however,  that the
aggregate amount at any one time so invested (a) in open market commercial paper
of any  corporation  shall not  exceed  $2,000,000  and (b) in  certificates  of



                                      -51-



<PAGE>

deposit issued by any one bank shall not exceed $10,000,000.  Any income or gain
realized  as a result of any such  investment  shall be  applied  to make up any
losses  resulting  from any such  investment to the extent such losses shall not
have been paid by the Owner  Trustee or the Owner  Participant  pursuant to this
Section  8.8.  Any  further  income  or  gain  so  realized  shall  be  promptly
distributed  (in no event later than the next Business Day) to the Owner Trustee
or the Owner Participant, except after the occurrence and during the continuance
of an Indenture Event of Default.  The Indenture Trustee shall have no liability
for any loss resulting from any investment made in accordance with this section.
Any  such  investment  may be sold  (without  regard  to  maturity  date) by the
Indenture  Trustee  when-ever  necessary  to make any  distribution  required by
Article V hereof.

                  SECTION 8.9.  No Responsibility for Recitals etc.

                The Indenture  Trustee makes no representation or warranty as to
the correctness of any statement,  recital or representation  made by any Person
other  than the  Indenture  Trustee  in this  Indenture,  any other  Transaction
Document or the Notes.

                SECTION   8.10.   Indenture   Trustee   May  Engage  in  Certain
Transactions.

                The  Indenture  Trustee  may engage in or be  interested  in any
financial or other transaction with the Lessee, the Owner Participant, the Owner
Trustee  and any other party to a  Transaction  Document,  provided  that if the
Indenture  Trustee  determines  that any such  relation is in conflict  with its
duties  under this  Indenture,  it shall  eliminate  the  conflict  or resign as
Indenture Trustee.

                  SECTION 8.11.  Construction of Ambiguous Provisions.
Construction of Ambiguous




                                      -52-


<PAGE>
                The  Indenture  Trustee,  subject to  Section  6.1  hereof,  may
construe any ambiguous or  inconsistent  provisions of this  Indenture,  and any
such   construction  by  the  Indenture   Trustee  shall  be  binding  upon  the
Noteholders.  In construing any such  provision,  the Indenture  Trustee will be
entitled to rely upon  opinions of counsel and will not be  responsible  for any
loss or damage resulting from reliance in good faith thereon, except for its own
gross negligence or willful misconduct.



                                   ARTICLE IX

                               SUCCESSOR TRUSTEES


                SECTION  9.1.  resignation  and  removal of  Indenture  trustee;
Appointment of Successor.

                  (a) The Indenture Trustee may resign at any time without cause
by giving at least 30 days' prior written notice to the Owner  Participant,  the
Owner Trustee,  the Lessee and to each Holder of a Note, such  resignation to be
effective upon the acceptance of such  trusteeship by a successor.  In addition,
the Indenture  Trustee may be removed without cause by a Directive  delivered to
the Owner Participant,  the Owner Trustee, the Lessee and the Indenture Trustee,
and the Indenture  Trustee shall promptly give notice thereof in writing to each
Holder of a Note.  In the case of the  resignation  or removal of the  Indenture
Trustee,  a  successor  trustee  may be  appointed  by  such a  Directive.  If a
successor trustee shall not have been appointed within 30 days after such notice
of  resignation  or removal,  the  Indenture  Trustee,  the Owner Trustee or any
Holder of a Note may apply to any court of competent  jurisdiction  to appoint a
successor  to act until  such  time,  if any,  as a  successor  shall  have been
appointed  as above  provided.  The  successor  so appointed by such court shall
immediately and without further act be superseded by any successor  appointed as
above provided within one year from the date of the appointment by such court.




                                      -53-


<PAGE>

                (b) Any successor trustee, however appointed,  shall execute and
deliver to its predecessor and to the Owner Trustee an instrument accepting such
appointment,  and thereupon such  successor,  without  further act, shall become
vested  with all the  estates,  properties,  rights,  powers  and  duties of its
predecessor  hereunder in the trusts under this Indenture  applicable to it with
like effect as if originally  named the Indenture  Trustee;  but,  nevertheless,
upon the written  request of such  successor  trustee or receipt of a Directive,
its  predecessor  shall execute and deliver an instrument  transferring  to such
successor  trustee,  upon the trusts herein expressly  applicable to it, all the
estates, properties, rights and powers of such predecessor under this Indenture,
and such predecessor shall duly assign,  transfer,  deliver and pay over to such
successor  trustee all moneys or other  property  then held by such  predecessor
under this Indenture.

                  (c) Any successor trustee, however appointed,  shall be a bank
or  trust  company  organized  under  the  laws  of  the  United  States  or any
jurisdiction  thereof  having  a  combined  capital  and  surplus  of  at  least
$100,000,000,  if  there  be such  en  institution  willing,  able  and  legally
qualified  to  perform  the  duties  of the  Indenture  Trustee  hereunder  upon
reasonable or customary terms.

                  (d) Any  corporation  into which the Indenture  Trustee may be
merged or converted  or with which it may be  consolidated,  or any  corporation
resulting from any merger,  conversion or  consolidation  to which the Indenture
Trustee shall be a party,  or any  corporation  to which  substantially  all the
corporate  trust business of the Indenture  Trustee may be  transferred,  shall,
subject to the terms of  paragraph  (c) of this  Section  9.1, be the  Indenture
Trustee under this Indenture with-out further act.









                                      -54-


<PAGE>


                                    ARTICLE X

                       SUPPLEMENTS AND AMENDMENTS TO THIS
                          INDENTURE AND OTHER DOCUMENTS


                SECTION 10.1. Supplements,  Amendments and Modifications to This
Indenture without Consent of Holders of Notes.

                  The  Indenture  Trustee may,  with the written  consent of the
Owner  Trustee,  from time to time and at any time execute a supplement  to this
Indenture  without the consent of the Holders of Notes  outstanding  in order to
(i) cure any defect,  omission or ambiguity  in this  Indenture or for any other
purpose if such action does not adversely  affect the interests of such Holders,
(ii) grant or confer upon the Indenture  Trustee for the benefit of such Holders
any  additional  rights,  remedies,  powers,  authority or security which may be
lawfully granted or conferred and which are not contrary to or inconsistent with
this Indenture,  (iii) add to. the covenants or agreements to be observed by the
Owner  Trustee and which are not contrary to this  Indenture  or  surrender  any
right or power of the  Owner  Trustee,  (iv)  confirm  or  amplify,  as  further
assurance, any pledge under, and the subjection to any lien or pledge created or
to be created by, this Indenture,  of the properties  covered hereby, or subject
to the lien or pledge of this Indenture additional revenues, properties or other
collateral,  including pursuant to an undivided  Interest Indenture  Supplement,
(v) qualify this Indenture under the provisions of the Trust Indenture Act, (vi)
evidence the  appointment  of any successor  Indenture  Trustee  pursuant to the
terms  hereof,  (vii)  evidence  the  assumption  and  release  affected  by the
Assumption Agreement,  or (viii) execute supplemental indentures to evidence the
issuance of and to provide the terms of, Additional Notes to be issued hereunder
in accordance with the terms hereof.






                                      -55-



<PAGE>

                SECTION 10.2.  Supplements  and Amendments to this Indenture and
the Facility Lease With Consent of Holders of Notes.

                  Except as provided  in Section  10.1  hereof,  at any time and
from time to time, (i) upon receipt of a Directive,  the Indenture Trustee shall
execute a supplement to this Indenture (to which the Owner Trustee has agreed in
writing)  for the purpose of adding  provisions  to, or changing or  eliminating
provisions of, this Indenture, but only as specified in such Directive and, (ii)
upon receipt of a written instruction from the Lessee and the Owner Trustee, the
Indenture  Trustee  shall  consent  to any  amendment  of or  supplement  to the
Facility Lease or execute and deliver such written waiver or modification of the
terms of the  Facility  Lease to which the Owner  Trustee  may agree;  provided,
however,  that,  without  the  consent  of the  Holders  of all the  Notes  then
Outstanding  no such  supplement or amendment to this  Indenture or the Facility
Lease,  or waiver or  modification  of the  terms of either  thereof,  shall (x)
modify any of the  provisions of this section or of section 7.1 or 7.2 hereof or
Section 4 of the Facility Lease or of the  definition of Directive  contained in
Appendix A hereto or the definition of Indenture Event of Default herein, reduce
the  amount  of  the  Basic  Runt,  Casualty  Value,   Special  Casualty  Value,
Termination value or any payment under or pursuant to section 16 of the Facility
Lease as set forth in the Facility Lease below such amount as is required to pay
the full principal of, and premium, if any, and interest on, the Notes when due,
or extend the time of payment  thereof,  (y) except as  permitted  by clause (x)
above,  modify,  amend  or  supplement  the  Facility  Lease or  consent  to the
termination  or any  assignment  thereof,  in any  case  reducing  the  Lessee's
obligations in respect of the payment of the Basic Rent, Casualty Value, special
Casualty Value, Termination Value or any payment under or pursuant to section 16
of the Facility Lease below the amount  referred to in clause (x) above,  or (z)
deprive  the  Holders  of any Notes of the lien of this  Indenture  on the Lease
Indenture  Estate  (except  as  contemplated  by Section  3.9(b)) or  materially
adversely affect the rights and remedies for the benefit of such Holders


                                      -56-


<PAGE>


provided in Article VI of this Indenture; and, provided,  further, that, without
the  consent  of the  Holders  of all the Notes then  outstanding  and  affected
thereby no such supplement or amendment to this Indenture or the Facility Lease,
or waiver or  modification  of the terms of either  thereof,  shall  reduce  the
amount or extend  the time of  payment  of any  amount  payable  under any Note,
reduce or modify the  provisions  for the  computation  of the rate of  interest
owing or payable thereon,  adversely alter or modify the provisions of Article V
with respect to the order of priorities in which  distributions  thereunder with
respect to the Notes shall be made, or reduce,  modify or amend any  indemnities
in favor of the Holders of the Notes.  Anything to the contrary contained herein
notwithstanding, without the necessity of the consent of the Holders of Notes or
the Indenture Trustee,  (a) any indemnities in favor of the Owner Trustee or the
Owner Participant may be modified,  amended or changed and (b) the Owner Trustee
may enter into any agreement with respect to the Lease Indenture Estate which by
its terms does not become  effective prior to the  satisfaction and discharge of
this Indenture,  provided however,  that any agreement entered into by the Owner
Trustee  pursuant to this clause (b) shall not materially  adversely  affect the
Indenture Trustee or the Holder of any Note.  Notwithstanding the foregoing, the
Indenture Trustee shall,  upon receipt or a written  instruction from the Lessee
and the Owner  Trustee,  consent to an amendment of the  definitions  of "Deemed
Loss Event, "Event of Loss" and "Final shutdown" contained in or appended to the
Facility  Lease or this  Indenture.  The  Owner  Trustee  shall  deliver  to the
Indenture  Trustee a copy of each amendment to the Facility Lease whether or not
the  Indenture  Trustee is required  to consent or  otherwise  act with  respect
thereto.

                SECTION 10.3. certain Limitations on Supplements and Amendments.

                If in the opinion of the Owner Trustee or the Indenture Trustee,
each of which shall be entitled to rely on counsel for  purposes of this Section



                                      -57-



<PAGE>

10.3,  any  document  required to be executed by either of them  pursuant to the
terms of  Section  10.1 or 10.2 does not comply  with.  the  provisions  of this
Indenture or adversely affects any right,  immunity or indemnity in favor of, or
increases  any duty of, the Owner  Trustee or the  Indenture  Trustee under this
Indenture,  the Facility Lease or the Participation Agreement, the owner Trustee
or the Indenture  Trustee,  as the case may be, may in its discretion decline to
execute such document.

                SECTION  10.4.  Directive  Need Not specify  particular  Form of
Supplement or Amendment.

                It shall not be necessary for any Directive  furnished  pursuant
to Section 10.2 hereof to specify the particular form of the proposed  documents
to be executed  pursuant to such  section,  but it shall be  sufficient  if such
request shall indicate the substance thereof.

                SECTION  10.5.  Trustee  to  Furnish  Copies  of  Supplement  or
Amendment.

                Promptly  after  the  execution  by  the  Owner  Trustee  or the
Indenture  Trustee of any document  entered into pursuant to section  10.2,  the
Indenture Trustee shall mail, by first class mail,  postage prepaid, a conformed
copy thereof to each Holder of an outstanding Note at the address of such Person
set forth in the  register  kept  pursuant to Section 4.1 but the failure of the
Indenture  Trustee to mail such conformed  copies shall not impair or affect the
validity of such document.















                                      -58-



<PAGE>


                                   ARTICLE XI

                                  MISCELLANEOUS


                  SECTION  11.1.  Moneys for  Payments in Respect of Notes to be
Held in Trust.

                In case the Holder of any Note  shall  fail to present  the same
for  payment  on any date on which the  principal  thereof or  interest  thereon
becomes  payable,  the Indenture  Trustee may set aside in trust the moneys then
due thereon  uninvested  and shall pay such moneys to the Holder of such Note or
such Person upon due  presentation  or surrender  thereof in accordance with the
provisions of this  Indenture,  subject  always  however,  to the  provisions of
Sections 3.8 and 11.2.

                SECTION 11.2. Disposition of Moneys Held for Payments of Notes.

                Any moneys set aside under  section 11.1 and not paid to Holders
of Notes as provided in Section 11.1 shall be held by the  Indenture  Trustee in
trust  until  the  latest  of (i) the date  three  years  after the date of such
setting aside,  (ii) the date all other Holders of the Notes shall have received
full payment of all  principal of and interest and other sums payable to them on
such Notes or the  Indenture  Trustee  shall hold (and shall have  notified such
Persons  that it holds) in trust for that purpose an amount  sufficient  to make
full payment  thereof when due and (iii) the date the Owner  Trustee  shall have
fully performed and observed all its covenants and obligations contained in this
Indenture with respect to the Notes;  and thereafter  shall be paid to the Owner
Trustee by the Indenture Trustee on demand;  and thereupon the Indenture Trustee
shall be released from all further  liability  with respect to such moneys;  and
thereafter the Holder. of the Notes in respect of which such moneys were so paid
to the Owner  Trustee shall have no rights in respect  thereof  except to obtain
payment of such moneys from the Owner  Trustee.  upon the setting  aside of such
moneys, interest shall cease to accrue on the Notes.


                                      -59-



<PAGE>


                  SECTION 11.3.  Transfers Not to Affect Indenture or Trusts.

                  No Holder of a Note shall have legal  title to any part of the
Lease Indenture  Estate. No transfer,  by operation of law or otherwise,  of any
Note or other  right,  title and  interest of any Holder of a Note in and to the
Lease Indenture Estate or hereunder shall operate to terminate this Indenture or
the trusts  hereunder  with  respect to such Note or entitle  any  successor  or
transferee  of such Holder to an  accounting  or to the  transfer to it of legal
title to any part of the Lease Indenture Estate.

                SECTION 11.4. Binding Effect of Sale of Lease Indenture Estate.

                  Any sale or other  conveyance of the Lease Indenture Estate or
any part thereof by the  Indenture  Trustee  made  pursuant to the terms of this
Indenture or the Facility Lease shall bind the Holders of the Notes and shall be
effective to transfer or convey all right,  title and interest of the  Indenture
Trustee,  the Owner Trustee and such Holders in and to the same. No purchaser or
other grantee shall be required to inquire as to the  authorization,  necessity,
expediency or regularity of such sale or conveyance or as to the  application of
any sale or other proceeds with respect thereto by the Indenture Trustee.

                SECTION 11.5.  Limitation as to Enforcement of Rights,  Remedies
and Claims.

                  Nothing in this Indenture,  whether express or implied,  shall
be  construed  to give to any person,  other than the Owner  Trustee,  the Owner
Participant,  the Lessee (to the extent the Lessee's  consent or other action by
the Lessee is expressly  provided for), the Indenture Trustee and the Holders of
the Notes, any legal or equitable right,  remedy or claim under or in respect of
this Indenture or any Note.





                                      -60-



<PAGE>


                  SECTION 11.6. Notices.

                  Unless otherwise expressly specified or permitted by the terms
hereof,  all communications and notices given hereunder to the Lessee, the Owner
Trustee,  the Owner  Participant or the Indenture  Trustee shall be given in the
manner  provided in Section 16 of the  Participation  Agreement.  Notices by the
Indenture Trustee to any Holder of a Note shall be in writing and shall be given
in  person or by means of  telex,  telecopy  or other  wire  transmission  (with
request  for  assurance  of  receipt  in  a  manner   typical  with  respect  to
communications  of that  type),  or  mailed by  registered  or  certified  mail,
addressed to such Holder at the address set forth in the register  kept pursuant
to Section  4.1.  Whenever  any notice in writing is required to be given by the
Indenture  Trustee to any Holder of a Note such notice shall be effective (x) if
sent by telex, telecopy or other wire transmission,  on the date of transmission
thereof, or (y) if sent by mail, three Business flays after being mailed.

                  SECTION 11.7.  Separability of Provisions

                  In case any one or more of the provisions of this Indenture or
any  application  thereof  shall be  invalid,  illegal or  unenforceable  in any
respect,  the validity,  legality and enforceability of the remaining provisions
hereof and any other  application  hereof  shall not in any way be  affected  or
impaired.

                  SECTION 11.8.  Benefit of Parties, Successors and Assigns.

                All  representations,   warranties,   covenants  and  agreements
contained  herein shall be binding upon,  and inure to the benefit of, the Owner
Trustee,  the Indenture Trustee and their respective  successors and assigns and
each Holder of a Note, all as herein provided. Any request,  notice,  direction,
consent, waiver or other instrument or action by any Holder of a Note shall bind
the  successors  and  assigns of such  Holder and any Holder of a Note issued in
transfer or exchange of such Note.


                                      -61-



<PAGE>


                  SECTION 11.9.  Survival of Representations and Warranties.

                  All  representations  and warranties  made with respect to the
Notes shall survive the execution and delivery of this  Indenture and the issue,
sale and delivery of any Notes and shall  continue in effect so long as any Note
issued hereunder is outstanding and unpaid.

                  SECTION 11.10.  Bankruptcy of the Owner Trustee.

                  If (a) the  Owner  Trustee  becomes  a debtor  subject  to the
reorganization  provisions of the Bankruptcy  Code, or any successor  provision,
(b) pursuant to such reorganization provisions the owner Trustee is required, by
reason of the Owner Trustee being held to have  recourse  liability  directly or
indirectly to the Holder of any Note or the Indenture  Trustee,  to make payment
on account of any amount  payable as  principal or interest on such Note and (a)
such Holder or the  Indenture  Trustee  actually  receives any Excess Amount (as
hereinafter  defined) which reflects any payment by the Owner Trustee on account
of clause (b) of this section1 then such Holder or the Indenture Trustee, as the
case may be, shall  promptly  refund to the Owner  Trustee  such Excess  Amount,
"Excess  Amount" means the amount by which such payment exceeds the amount which
would have been  received on or prior to the date of such payment by such Holder
or the  Indenture  Trustee if the Owner  Trustee  had not become  subject to the
recourse liability referred to in clause (b) of this Section.  Nothing contained
in this  Section  shall  prevent  such  Holder  or the  Indenture  Trustee  from
enforcing any recourse  obligation  (and retaining the proceeds  thereof) of the
Owner Trustee expressly provided for under this Indenture or in the Notes.








                                      -62-


<PAGE>


                SECTION 11.11. Bankruptcy of the Owner Participant.

                The  Indenture  Trustee  and the  Holders of the Notes  shall be
bound by the provisions of Section 19(f) of the Participation Agreement.

                SECTION 11.12.  Counterpart Execution.

                This Indenture and any amendment or supplement to this Indenture
may be  executed  in any number of  counterparts  and by the  different  parties
hereto and thereto on separate counterparts, each of which, when so executed and
delivered,  shall be an  original,  but all  such  counterparts  shall  together
constitute but one and the same instrument.

                  SECTION 11.13.  Dating of Indenture.

                Although  this  Indenture is dated for  convenience  and for the
purpose of  reference  as of the date  mentioned,  the  actual  date or dates of
execution  by the Owner  Trustee and the  Indenture  Trustee are as indicated by
their respective acknowledgments hereto annexed.






















                                      -63-



<PAGE>


         IN WITNESS  WHEREOF,  the Owner Trustee and the Indenture  Trustee have
each caused this  Indenture  to be duly  executed by their  respective  officers
thereunto duly authorized, all as of the date first set forth above.



                                    THE FIRST' NATIONAL BANK OF
                                    BOSTON, not in its individual
                                    capacity, but solely as Owner Trustee
                                    under the Trust Agreement dated as of
                                    July 31,  1986 with  Chase  Manhattan
                                    Realty Leasing Corporation


                                    By  /s/ M P. Henry
                                        ------------------------------
                                          Assistant Vice President

                                    CHEMICAL BANK



                                    By   /s/ T. J. Foley
                                         -----------------------------
                                           Vice President














                                      -64-



<PAGE>


STATE OF NEW YORK       )
                        )  ss:
COUNTY OF NEW YORK      )

                  On ,the 30th day of July,  1986,  before me personally came M.
P. Henry, to me known, who, being by me duly sworn, did acknowledge,  depose and
say that he resides  at  Boston,  Massachusetts;  that he is an  Assistant  Vice
President of THE FIRST NATIONAL BANK 0F BOSTON, a national banking  association,
described in and which executed the foregoing instrument; that he knows the seal
of said association; that the seal affixed to said instrument is such seal; that
it was so affixed by authority of the by-laws of said  association;  and that he
signed his name thereto on behalf of said association by like order.

                                        /s/ Delia T. Santiago
                                        ------------------------------
                                            Notary Public


[NOTARIAL SEAL]                          Term Expires:



                                Delia T. Santiago
                        Notary Public, State of New York
                                  No. 41-341160
                           Qualified in Queens County
                       Commission Expires: March 30, 1987

















                                      -65-


<PAGE>
STATE OF NEW YORK        )
                         )   ss:
COUNTY OF NEW YORK       )

                  On the 30th day of July, 1986,  before me personally came T.J.
FOLEY, to me known, who, being by me duly sworn, did acknowledge, depose and say
that he resides at Bethpage,  New York;  that he is a Vice president of CHEMICAL
BANK,  a New York  banking  corporation,  described  in and which  executed  the
foregoing instrument; that he knows the seal of said corporation;  that the seal
affixed to said  instrument is such seal; that it was so affixed by authority of
the board of directors of said corporation;  and that he signed his name thereto
on behalf of said corporation by like order.

                                           /s/ Delia T. Santiago
                                        ------------------------------
                                              Notary Public


[NOTARIAL SEAL]                          Term Expires.:


                                Delia T. Santiago
                        Notary Public, State of New York
                                  No. 41-341160
                           Qualified in Queens County
                       Commission Expires: March 30, 1987















                                      -66-


<PAGE>




                                                                   EXHIBIT A
                                                                          TO
                                                                   INDENTURE

                           FORM OF INITIAL SERIES NOTE


The Initial Series Note shall be  substantially in the following form, with such
omissions, insertions and variations as the Owner Trustee may determine with the
approval of the Indenture  Trustee and are not inconsistent  with the provisions
of the Indenture or as may be provided for in the Indenture:


                   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
       SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR OFFERED
                       FOR SALE IN VIOLATION OF SUCH ACT

                  NONRECQURSE PROMISSORY NOTED, INITIAL SERIES

                                        Issued at: New York, New York

                                        Issue Date: August 1, 1986


                  THE  FIRST  NATIONAL  BANK OF  BOSTON,  not in its  individual
capacity,  but solely as owner trustee (Owner  Trustee) under a Trust  Agreement
dated as of July 31, 1986 with Chase Manhattan  Realty Leasing  Corporation (the
Owner Participant),  hereby promises to pay to FIRST PV FUNDING CORPORATION,  or
registered assigns, the principal sum of Forty Million Dollars ($40,000,000) (to
the  extent  remaining  unpaid on such  date) on January  15,  2015,  and to pay
interest on the remaining  unpaid  principal amount hereof from the date hereof,
or from the most recent interest payment date to which interest has been paid or
duly provided for,  quarterly on January 15, April 15, July 15 and October 15 in
each year,  commencing  October 15, 1986, at the rate equal to the Variable Rate
(as defined below) per annum, until the principal hereof is paid in full or Made
available for payment.


                                       A-1




<PAGE>


Said principal shall be payable in installments consisting of 54 installments of
principal  commencing  on July  15,  1988,  and on each  January  15 and July 15
thereafter,  to and including January 15, 2015, each such principal  installment
to be equal to the percentage of the original  principal amount hereof set forth
in Schedule X hereto for the date such installment is due.

         The "Variable  Rate" shall mean the  Applicable  Percentage (as defined
below) of the rate of interest per annum equal to the prime  commercial  lending
rate of The Chase  Manhattan  Bank,  N.A., as announced from time to time at its
principal office in New York, New York. The "Applicable  Percentage" shall equal
(1) 100% for the period from August 1, 1986 through  January 30, 1987, (ii) 125%
for the period from January 31, 1987 through April 30, 1987,  (iii) 150% for the
period from May 1, 1987  through July 30, 1987,  and (iv) 200%  thereafter.  All
payments of interest shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be.

                  Capitalized  terms used in this Initial  Series Note which are
not otherwise  defined  herein shall have the meanings  ascribed  thereto in the
Indenture (as hereinafter defined).

                  In the  event any date on which a  payment  is due under  this
Initial  Series Note is not a Business Day, then payment  thereof may be made on
the next  succeeding  Business  Day with the same force and effect as if made on
the date on which such payment was due.

                  All payments of principal, premium, if any, and interest to be
made by the Owner  Trustee  hereunder and under the Trust  Indenture,  Mortgage,
Security  Agreement and Assignment of Rents dated as of July 31, 1986, as at any
time hereafter amended or supplemented in accordance with the provisions thereof




                                       A-2



<PAGE>


(the  Indenture),  between the Owner Trustee and Chemical  Bank, as Trustee (the
Indenture  Trustee),  shall be made only from the Lease Indenture Estate and the
Trust Estate and the Indenture  Trustee shall have no obligation for the payment
thereof  except to the extent that the Indenture  Trustee shall have  sufficient
income or proceeds  from the Lease  :Indenture  Estate to make such  payments in
accordance with the terms of Article V of the Indenture.  The Holder hereof,  by
its  acceptance of this Initial  Series Note,  agrees that such Holder will look
solely to the income and proceeds from the Lease Indenture  Estate to the extent
available  for  distribution  to the Holder hereof as above  provided,  and that
neither  the  Owner  Participant,  nor,  except  as  expressly  provided  in the
Indenture, the Owner Trustee nor the Indenture Trustee is or shall be personally
liable to the Holder hereof for any amounts  payable  under this Initial  Series
Note or for any  performance  to be rendered  under the  Indenture  or any other
Transaction Document or for any liability thereunder provided,  however, that in
the event the Lessee  shall  assume  all the  obligations  of the Owner  Trustee
hereunder and under the Indenture  pursuant to section  3.9(b) of the Indenture,
then all the  payments  to be made  under  this  Note  shall be made  only  from
payments made by the Lessee in accordance with the Assumption Agreement referred
to in said section  3.9(b) and the Holder of this Note agrees that in such event
it will look solely to the Lessee for such payment.

                  Principal,  premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Initial Series Note
at the Indenture Trustee Office, or as otherwise provided in the Indenture.

                  The Holder  hereof,  by its  acceptance of this Initial Series
Note,  agrees that each payment received by it hereunder shall be applied in the
manner set forth in Section  3.11 of the  Indenture.  The solder of this Initial
Series  Note  agrees,  by its  acceptance  hereof,  that  it will  duly  note by
appropriate  means all payments of principal or interest made hereon and that it
will not in any event transfer or otherwise  dispose of this Initial Series Note
unless and until all such notations have been duly made.


                                       A-3



<PAGE>



                  This Initial  Series Note is the Initial  Series Note referred
to in the Indenture.  The Indenture permits the issuance of additional series of
Notes,  as provided in Section 3.5 of the Indenture,  and the several series may
be for  varying  aggregate  principal  amounts and may have  different  maturity
dates, interest rates,  redemption provisions and other terms. The properties of
the Owner  Trustee  included  in the Least  Indenture  Estate are pledged to the
Indenture  Trustee to the extent  provided in the  Indenture as security for the
payment of the  principal of and  premium,  if any, and interest on this Initial
series Note and all other Notes issued and  outstanding  from time to time under
the Indenture.  Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the  security  for,  this
Initial  Series  Note and of the  rights  of,  and the  nature and extent of the
security for, the Holders of the other Notes and of certain  rights of the Owner
Trustee,  as well as for a statement  of the terms and  conditions  of the trust
created by the Indenture, to all of which terms and conditions the Holder hereof
agrees by its acceptance of the Initial series Note.

                  This Initial Series Note is subject to mandatory prepayment in
full as provided in section 5.2 of the Indenture,  such prepayment being without
premium but including  accrued  interest to the date of prepayment.  In addition
this Initial Series note is subject to special prepayment, in whole only, on the
date on which the Fixed Rate Note is issued in  accordance  with  section 3.5 of
the Indenture,  by giving written notice to the Indenture Trustee and the Holder
of this Initial  Series Note at least one Business Day prior to such date,  such
prepayment being without premium,  together with accrued interest to the date of
prepayment.






                                       A-4




<PAGE>


        In case an Indenture  Event of Default shall occur and be continuing the
unpaid  balance of the principal of this Initial Series Note and any other Notes
together with all accrued but unpaid  interest  thereon may,  subject to certain
rights of the Owner Trustee or the Owner Participant contained or referred to in
the Indenture,  be declared or may become due and payable in the manner and with
the effect provided in the Indenture.  Upon such declaration there shall also be
due and payable as a special premium on this Initial Series Note an amount equal
to a ratable  portion of the fees and expenses  then  payable to the  Collateral
Trust Trustee,  as certified to the Indenture  Trustee by the  collateral  Trust
Trustee.

        The lien upon the Lease  Indenture  Estate is subject  to being  legally
discharged  prior to the maturity of this  Initial  Series Note upon the deposit
with the Indenture Trustee of cash or certain securities  sufficient to pay this
Initial  Series Note when due or an  assumption  of the  obligation of the Owner
Trustee  under  this  Initial  Series  Note and the  Indenture,  in each case in
accordance with the terms of the Indenture.

        There shall be maintained at the Indenture  Trustee's  office a register
for the purpose of  registering  transfers  and exchanges of Notes in the manner
provided  in the  Indenture.  The  transfer  of  this  Initial  Series  Note  is
registrable, as provided in the Indenture, upon surrender of this Initial Series
Note for  registration of transfer duly  accompanied by a written  instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable  transfer taxes.  Prior to due presentment for
registration  of transfer of this Initial Series Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Initial Series Note is
registered  as the  owner  hereof  for the  purpose  of  receiving  payments  of
principal  of, and premium if any, and interest on this Initial  Series Note and
for all other  purposes  whatsoever,  whether or not this Initial Series Note be
overdue,  and  neither  the Owner  Trustee nor the  Indenture  Trustee  shall be
affected by notice to the contrary.


                                       A-5



<PAGE>


        This  Initial  Series Note shall be governed by the laws of the State of
New York.

        IN WITNESS  WHEREOF,  the Owner  Trustee has caused this Initial  Series
Note to be duly executed as of the date hereof.


                                          THE FIRST NATIONAL BANK OF BOSTON, not
                                          in its individual capacity, but solely
                                          as   Owner   Trustee   under  a  Trust
                                          Agreement  dated as of July  31,  1986
                                          with Chase  Manhattan  Realty  Leasing
                                          Corporation


                                          By
                                             --------------------------------
                                                 Assistant Vice President


        This Note is one of the Series of Notes  referred  to therein and in the
within-mentioned Indenture.


                                          CHEMICAL BANK,
                                          as Indenture Trustee


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








                                       A-6


<PAGE>


                                   ASSIGNMENT

                                                          Date:  August 1, 1986


                For value received,  the undersigned  hereby sells,  assigns and
transfers  to  CHEMICAL  BANK,  as  Trustee  pursuant  to the  Collateral  Trust
Indenture dated as of December 16, 1985, as amended and supplemented,  among the
undersigned,  Public  Service  Company of New Mexico and said  Trustee,  without
recourse,  the Initial  Series Note to which this  Assignment is annexed and all
rights thereunder.


                                         FIRST PV FUNDING CORPORATION


                                         By
                                            -------------------------
                                                  Vice President
















                                       A-7



<PAGE>

                                                                     SCHEDULE X
                                                                             to
                                                                 INITIAL SERIES
                                                                           NOTE

Date                                                       Principal Amount
----                                                       ----------------
                                                         
July 15, 1989                                                0.5972134%
January 15, 1989                                             0.8241794
July 15, 1989                                                0.8653883
January 15, 1990                                             0.9086578
July 15, 1990                                                0.9540906
January 15, 1991                                             1.0017952
July 15, 1991                                                1.0518849
January 15, 1992                                             1.1044792
July 15, 1992                                                1.1597031
January 15, 1993                                             1.2176883
July 15, 1993                                                1.2785727
January 15, 1994                                             1.3425013
July 15, 1994                                                1.4096264
January 15, 1995                                             1.4801077
July 15, 1995                                                1.5541131
January 15, 1996                                             1.6318188
July 15, 1996                                                1.7134097
January 15, 1997                                             1.7990802
July 15, 1997                                                1.8890342
January 15, 1998                                             1.9834859
July 15, 1998                                                2.0826602
January 15, 1999                                             2.1867932
July 15, 1999                                                2.2961329
January 15, 2000                                             2.4109395
July 15, 2000                                                2.5314865
January 15, 2001                                             2.6580608
July 15, 2001                                                2.7909639
January 15, 2002                                             2.3233915









                                       A-8
        


<PAGE>


July 15, 2002                                                   1.7247869%
January15, 2003                                                 1.4465925
July 15, 2003                                                   1.7366326
January 15, 2004                                                1.4625916
July 15, 2004                                                   1.8222554
January 15, 2005                                                1.5343060
July 15, 2005                                                   1.9121376
January 15, 2006                                                1.6095839
July 15, 2006                                                   2.0064425
January 15, 2007                                                1.6885660
July 15, 2007                                                   2.1053877
January 15, 2008                                                1.7714343
July 15, 2008                                                   2.2092016
January 15, 2Q09                                                1.8583802
July 15, 2009                                                   2.3181236
January 15, 2010                                                1.9496043
July 15, 2010                                                   2.4324051
January 15, 2011                                                2.0453171
July 15, 2011                                                   2.5523099
January 15, 2012                                                2.1457395
July 15  2012                                                   2.6781146
January 15, 2013                                                2.2511032
July 15  2013                                                   2.8101095
January 15, 2014                                                2.3616513
July 15, 2014                                                   2.9485993
January 15, 2015                                                3.5713649















                                      A-9



<PAGE>



                                    EXHIBIT B


                              ASSUMPTION AGREEMENT


        TO:  The Holders  (as defined  below) from time to time at the Notes (as
             defined below) of The First  national  flank of Boston,  not in its
             individual  capacity,  but  solely as owner  trustee  under a Trust
             Agreement  dated as a! July 31, 1986 with chase  Manhattan  Leasing
             Realty corporation (in such capacity, the "Issuer") under the Trust
             Indenture,  Mortgage,  Security Agreement,  and Assignment of Rents
             (the  Indenture)  dated as of July 31,  1986  among the  Issuer and
             Chemical Bank (the "Trustee").


        The  undersigned,  PUBLIC  SERVICE  COMPANY OF NEW MEXICO,  a New Mexico
corporation  (the  "Obligor"),  for  the  purpose  of  satisfying  in  part  its
obligation to make certain  payments under that certain  Facility Lease dated as
of July 31, 1986 between the Issuer and the Obligor (the "Facility Lease"), does
hereby  covenant and agree with the Holders (as defined in the  Indenture)  from
time to time of the Notes (as defined in the Indenture) as follows:

                  SECTION 1. The Obligor  does hereby agree to, and does hereby,
assume  unconditionally  the  payment of the  principal  of the Notes and of the
interest and premium (if any) thereon,  at the rates provided in the Notes, when
and as the same  shall  become due and  payable,  whether  at  maturity  or upon
mandatory prepayment or upon declaration or otherwise, according to the terms of
the Notes and of the Indenture.





                                       B-1

           


<PAGE>


                  SECTION 2. The assumption  herein  contained  shall be binding
upon the obligor,  its successors and assigns and shall remain in full force and
effect  irrespective of the power or authority of the :Issuer to issue the Notes
or to execute,  acknowledge  and deliver the  Indenture  or the  validity of the
Notes,  or the Indenture,  or of any defense  whatsoever  that the Issuer may or
might have to the payment of the Notes (principal,  interest or premium),  or to
the  performance  or  observance  of any of the  provisions or conditions of the
Indenture or any Note,  or of the  existence or  continuance  of the Issuer as a
legal   entity;   nor  shall  said   assumption   be  affected  by  the  merger,
consolidation,  or other dissolution of the Issuer or the sale or other transfer
of the property of the Issuer or by the Issuer as an entirety,  or substantially
so, to any other person;  nor shall the  assumption be discharged or impaired by
any act,  failure or omission  whatsoever on the part of any Holder of any Notes
or the Trustee,  including,  among other such acts, failures and omissions,  the
following:

                  (a) any  failure to present  any Note for payment or to demand
        payment  thereof,  or to give to the  obligor  notice  of  dishonor  and
        non-payment of any Note when and as the same may become due and payable,
        or  notice  of any  failure  on the part of the  Issuer to do any act or
        thing or to perform or keep any  covenant or agreement by it to be done,
        kept or performed under the terms of Notes or the Indenture;

                  (b)  any  extension  of the  obligation  of any  Note,  either
        indefinitely or for any period of time, or any other modification in the
        obligations  under any Note or the Indenture or of the Issuer thereon or
        in connection therewith;

                  (c) any act or failure  to act with  regard to any Note or the
        Indenture or anything which might vary the risk of the obligor; and




                                       B-2
           


<PAGE>
                  (d) any action taken under the  Indenture and the Notes in the
        exercise  of any right or power  thereby  conferred  or any  failure  or
        omission on the part of the Trustee or the Holder of any Note to enforce
        any right or security  given  under the  Indenture  or any Note,  or any
        waiver  of any  right  or any  failure  or  omission  on the part of the
        Trustee or any Holder of any Note to enforce  any right of any Holder of
        any Note against the Issuer;

provided,  always, that the specific  enumeration of the above mentioned acts,
failures,  waivers or  omissions  shall not be deemed to exclude any other acts,
failures,  waivers or omissions though not  specifically  mentioned  herein,  it
being the purpose and intent of this Assumption Agreement that the obligation of
the obligor shall be absolute and  unconditional  to the extent herein specified
and shall not be  discharged,  impaired  or varied  except by the payment of the
principal  of and  interest  on any  Note  and any  premium  thereon  in case of
prepayment1 and then only to the extent of such payments.

        SECTION 3. (a) Subject to the  requirements  of sections 10(b) (3) (iii)
and (b)  (3)  (iv)  of the  participation  Agreement  and to the  provisions  of
paragraph (b) of this section,  nothing  contained in this Assumption  Agreement
shall prevent any  consolidation or merger of the obligor with or into any other
corporation or  corporations  (whether or not affiliated  with the obligor),  or
successive  consolidations  or mergers in which the obligor or its  successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease of all or  substantially  all the  property of the  obligor,  to any other
corporation  authorized to acquire and operate the same; provided,  however, and
the  obligor  hereby  covenants  and agrees,  that upon any such  consolidation,
merger,  sale,  conveyance or lease,  all  obligations of the Obligor under this
Assumption  Agreement  on or in  respect of any Note,  and the due and  punctual
performance  and  observance  of all of the  covenants  and  conditions  of this
Assumption Agreement to be performed by the Obligor, shall be expressly and duly
assumed,  by an agreement  reasonably  satisfactory in form and substance to the
Trustee,  executed and delivered by the  corporation (if other than the obligor)
formed by such consolidation,  or into which the obligor shall have been merged,
or by the corporation which shall have acquired such property.

                                       B-3
           


<PAGE>



        (b) The  Indenture  Trustee  (as defined in the  Indenture),  subject to
applicable  provisions of the Indenture,  may rely upon an opinion of counsel to
the Obligor as conclusive evidence that any such merger, consolidation,  sale or
conveyance complies with the provisions of this Section.

        SECTION  4. The  Obligor  does  hereby  consent  to all of the terms and
conditions of each Note Series and of the  Indenture,  and hereby waives any and
all  rights  of  notice of any fact or facts or  circumstance  or  circumstances
whatsoever and consents to any extension or extensions of time of any payment or
payments,  or of any other act or thing  which any Bolder or Holders of any Note
or the Issuer may agree to consent to,  either  expressly,  by  acquiescence  or
otherwise,  and hereby agrees not to claim or enforce any rights of  subrogation
or any other right or privilege  which might  otherwise  arise on account of any
payment  made by it or act or thing done by it on  account  of or in  accordance
with its  assumption  herein  contained,  unless and until all of the Notes have
been fully paid and discharged.

        SECTION  5.  The  assumption  herein  expressed  may be  transferred  or
assigned  at any  time  or from  time to time  and  shall  be  considered  to be
transferred and assigned upon the transfer of any Note,  whether with or without
the consent of or notice to the obligor or the Issuer. The Obligor hereby agrees
to execute and deliver such instruments and to do such acts and things requested
by the Trustee as shall be reasonably  necessary to carry out and effectuate the
purposes and intents of this Assumption Agreement. This Assumption Agreement may
not be amended or  modified in any respect  without  the prior  written  consent
(evidenced  as  provided  in the  Indenture)  of the  Holders of not less than a
majority  in  principal  amount  of the Notes  outstanding  (as  defined  in the
Indenture);  provided,  however, that without the written consent of the Holders
of all of the Notes  outstanding,  no such  amendment or  modification  shall be
effective  which will change any of the  provisions  of sections 1, 2, 4 or S of
this Assumption Agreement. The Obligor agrees to file with the Indenture Trustee
a duplicate original of each such consent.

                                       B-4

6091.50.2831.57:1


<PAGE>




                                     PUBLIC SERVICE COMPANY OF NEW
                                     MEXICO


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

ATTEST:


-----------------------
Title:




                                       B-5



<PAGE>


                                    EXHIBIT C

                    UNDIVIDED INTEREST SUPPLEMENTAL INDENTURE



                  SUPPLEPIENTAL INDENTURE NO. dated as of _________ to the TRUST
INDENTURE,  MORTOAGE,  SECURITY AGREEMENT AND ASSIGNMENT OF RENTS  (hereinafter,
together with  supplements  thereto,  the Indenture)  dated as of July 31, 1986,
between THE FIRST NATIONAL BANK OF BOSTON (FNB), not in its individual capacity,
but solely as trustee (the Owner Trustee) under a Trust  Agreement,  dated as of
July 31,  1986,  between  FNB,  whose  address is 100  Federal  Street,  Boston,
Massachusetts  02110,  and  Chase  Manhattan  Realty  Leasing  Corporation,  and
CHEMICAL BANK, a New York banking  corporation  (the Indenture  Trustee),  whose
address is 55 Water Street, New York, New York 10041.

                              W I T N E S S E T H:


         WHEREAS,  in accordance  with Section 9(j) of the Facility  Lease,  the
Owner Trustee is obligated,  in certain cases,  to cause the Undivided  Interest
and the Real Property Interest to be subjected to the Lien of the Indenture; and

         WHEREAS, in order to further secure the obligations  referred to in the
Indenture,  the Owner  Trustee  desires to grant to the  Indenture  Trustee  the
security  interest and realty  mortgage  herein  provided and the parties hereto
desire  that the  Indenture  be regarded  (i) to the extent  that the  Undivided
Interest  constitutes  personal  property,  as a "security  agreement"  and as a
"financing  statement" under the Uniform  Commercial Code and (ii) to the extent
that the Undivided Interest and the Real Property Interest  constitute  fixtures
or real property, as a realty mortgage;





                                       C-1
         


<PAGE>

         NOW, THEREFORE,  in consideration of the premises and of other good and
valuable   consideration,   receipt   and   sufficiency   of  which  are  hereby
acknowledged, the parties hereto agree as follows:

         SECTION 1.1. The Indenture. This supplemental Indenture No.______ shall
be construed as supplemental to and amendatory of the Indenture and shall form a
part thereof,  and the Indenture is hereby  incorporated by reference herein and
is hereby ratified, approved and confirmed.

         SECTION 1.2. Definitions.  Capitalized terms used herein, but which are
not otherwise  defined herein shall have the meanings set forth in Appendix A to
the Indenture.

         SECTION 1.3.  Recording.  Information.  The  Indenture  was recorded on
___________ , in Maricopa  County,  Arizona  [describe]  (specify other recorded
documents) [specify other places of recordation).

         SECTION 1.4.  Governing  Law. This  supplemental  Indenture No. and the
Indenture shall, for all purposes,. be construed in accordance with and governed
by the laws of the State of New York  except to the extent  that the laws of the
State of Arizona shall be mandatorily applicable thereto.

         SECTION 1.5. Security Interest and Realty Mortgage. As further security
for the due and punctual  payment of the  principal of and premium,  if any, and
interest on the Notes  according  to their  respective  terms and effect and the
performance  and  observance  by the  Owner  Trustee  of all the  covenants  and
agreements made by it or on its behalf in the Notes, the Participation Agreement
and the Indenture, the Owner Trustee does, by its execution and delivery hereof,
hereby grant a security interest in, bargain, convey, warrant, assign, transfer,
mortgage,  pledge and set over unto the Indenture Trustee, and to its successors
and  assigns  in  trust,  the  following  (which  shall  be a part of the  Lease
Indenture  Estate for all purposes of the  Indenture  and the other  Transaction
Documents):




                                       C-2



<PAGE>


                  (l) the  Undivided  Interest and the Real  Property  Interest,
         including,  but without  limitation,  the Owner  Trustee's share of all
         Capital  Improvements  (including any which  constitute  fixtures under
         Applicable  Law) now existing or which hereafter may become part of the
         Undivided Interest;

                  (2) all right,  title and interest of the Owner Trustee in, to
         and under (a) the Bill of Sale, (b) the ANPP  Participation  Agreement,
         (a) the need and (C) the Assignment of Beneficial Interest,  including,
         but without  limitation,  all amounts of Rent,  insurance  proceeds and
         condemnation, requisition and other awards and payments of any kind for
         or  with  respect  to  any  part  of  the  Lease  Indenture  Estate  as
         contemplated in such documents;

                  (3) all other  property of every kind and  description,  real,
        personal and mixed, and interests therein now held or hereafter acquired
        by the Owner Trustee  pursuant to any term of any Transaction  Document,
        whether or not  subjected  to the Lien of the  Indenture by an indenture
        supplemental hereto; and

                  (4) all proceeds of the foregoing;

but  excluding,  however,  (i) such of the foregoing as, in accordance  with the
terms of the Indenture,  shall have been released from the lien of the Indenture
and distributed to the Owner Trustee or the Owner  Participant,  as the case may
be, and (ii) any and all Excepted  Payments;  and subject,  however,  to (x) the
terms and provisions of the Indenture and (y) the rights of the Lessee under the
Facility Lease.

                  TO HAVE AND TO HOLD all the aforesaid proper ties,  rights and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust,  nevertheless,  for the use and purposes and with the power and authority
and  subject  to the  terms  and  conditions  mentioned  and  set  forth  in the
Indenture.



                                       C-3



<PAGE>



                    UPON CONDITION that,  unless and until an Indenture Event of
Default  shall have  occurred  and be  continuing,  the Owner  Trustee  shall be
permitted,  to the  exclusion of the Indenture  Trustee,  to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation  of the  foregoing;  the Owner Trustee may exercise all of its rights
under the  documents  specified in clause (2) above to the same extent as if its
right, title and interest therein had not been assigned to the Indenture Trustee
to the extent set forth above,  except that the Indenture  Trustee shall receive
all payments of Assigned  Payments and all moneys and securities  required to be
held by or deposited with the Indenture Trustee hereunder.

                  The Owner Trustee hereby  warrants and represents  that it has
not assigned or pledged any of its right,  title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.

                  SECTION 1.6. Real Estate Remedies. In addition to the remedies
specified  in the  Indenture  (including  but  without  limitation  Section  6.4
thereof) or otherwise  available  pursuant to Applicable Law, to the extent that
any portion of the Lease Indenture Estate constitutes fixtures or real property,
the Indenture and this Supplemental  Indenture No. shall be, and shall be deemed
to be, a realty  mortgage and  assignment  of rents with respect to all items of
real property and fixtures and the Indenture  Trustee shall have all the rights,
remedies  and  benefits  of a mortgage of real  property  under  Applicable  Law
(including,  but without  limitation,  rights and  remedies  pursuant to Arizona
Revised Statutes Section 33-702.8,  or any comparable  successor  provision) and
the Owner Trustee shall be and be deemed to be, a mortgagor with respect to such
fixtures and real property.




                                       C-4
6091.50.2831.57:1


<PAGE>

                  SECTION  1.7.  Certain  Releases.  In case a release  from the
security  and other  interests  created by Section  1.5 hereof by the  Indenture
Trustee of a portion of the  undivided  Interest  shall be necessary in order to
enable the Owner Trustee or the Lessee to perform its  covenants and  agreements
set forth in the Transaction Documents or in the ANPP Participation Agreement or
the Owner Trustee or the Lessee to carry out any action required by Section 8 of
the Facility  Lease,  the Indenture  Trustee shall execute and deliver to, or as
directed  by,  the Owner  Trustee  or the Lessee an  appropriate  instrument  or
instruments provided to the Indenture Trustee by the Owner Trustee or the Lessee
(in due form for filing or  recording),  so releasing a portion of the Undivided
Interest,  provided,  however,  that the  Indenture  Trustee  shall  have  first
received an Officer's Certificate in form and substance reasonably  satisfactory
to the Indenture Trustee,  executed by the Lessee,  accompanied by an opinion of
counsel reasonably satisfactory to the Indenture Trustee, each of which shall be
to  the  effect  that  all  necessary  actions  have  been  or are  being  taken
simultaneously  with such  release in  connection  with the  proposed  action to
comply with the terms of this Indenture and Section 8 of the Facility Lease.

                  SECTION 1.8.  Severance.  The parties  hereto  understand  and
agree that Unit 1 and the Common Facilities  (including the Undivided Interest),
each Capital Improvement and each part thereof is or shall be severed, and shall
be and remain severed, from the real estate constituting the PVNGS Site and even
if physically attached thereto, shall retain the character of personal property,
shall be treated as personal  property with respect to the rights of all persons
whomsoever, shall not be or become fixtures or otherwise part of the real estate
constituting the PVNGS Site, and, by virtue of its nature as personal  property,
shall not be affected in any way by any instrument  dealing with the real estate
constituting the PVNCS Site.




                                       C-5

6091.50.2831.57:1


<PAGE>
                  SECTION 1.9. ANPP  Participation  Agreement.  The provision by
the Owner  Trustee  to the  Indenture  Trustee of the  realty  mortgage  and the
security  interest  contemplated  by this  Supplemental  Indenture  No. __ is in
compliance with the provisions of the ANPP Participation  Agreement,  including,
but without limitation, Section 15.6.3.2 thereof.

                  SECTION 1.10. Appointment of Co-Trustees or Separate Trustees.

                  (a) At any time or times, when necessary or prudent or for the
purpose of meeting the legal  requirements of any jurisdiction in which any part
of the Lease  Indenture  Estate may,  at any time,  be  located,  the  Indenture
Trustee, except as set forth in subsection (b)(6) of this section 1.10, may, and
upon  receipt  of a  Directive  shall,  appoint  one or more  Persons  to act as
co-trustee  of all or any such part of the Lease  Indenture  Estate or to act as
separate trustee of any property  constituting part thereof, in either case with
such powers as may be provided in the instrument of appointment,  and to vest in
such Person or Persons any property,  title,  right or power deemed necessary or
desirable,  subject to the remaining  provisions of this Section 1.10. Except as
set forth in subsection (b)(6) of this Section 1.10 the Owner Trustee shall join
in any such  appointment  upon the request of the  Indenture  Trustee,  but such
joining will not be necessary for the effectiveness of such appointment.

                  (b) Every  separate  trustee or co-trustee  shall be appointed
subject to the following terms:

                  (1) The rights,  power.,  duties and obligations  conferred or
         imposed  upon any such  separate  trustee  or  co-trustee  shall not be
         greater than those conferred or imposed upon the Indenture Trustee, and
         such  rights and powers  shall be  exercisable  only  jointly  with the
         Indenture  Trustee,  except to the  extent  that,  under any law of any
         jurisdiction  in which any  particular act or acts are to be performed,
         the Indenture  Trustee shall be  incompetent  or unqualified to perform
         such act or acts, in which event, except as set forth in subsection (b)
         (6) of this Section 1.10,  such rights and powers shall be exercised by
         such  separate  trustee  or  co-trustee  subject to the  provisions  of
         subsection (b) (4) of this Section 1.10.


                                       C-6
        


<PAGE>


  
                  (2) The Indenture Trustee may at any time, by an instrument in
        writing executed by it, accept the resignation of, and may (and upon the
        receipt of a Directive, shall) remove any separate trustee or co-trustee
        appointed under this section 1.10.

                  (3) No  trustee  under  the  Indenture  and this  Supplemental
         Indenture  No.____  shall be liable by reason of any act or omission of
         any other trustee or co-trustee under this Indenture.

                  (4) Except as set forth in subsection  (b) (6) of this Section
         1.10,  no power given to such separate  trustee or co-trustee  shall be
         separately  exercised  hereunder by such separate trustee or co-trustee
         except with the consent in writing of the Indenture Trustee.

                  (5) The Indenture  Trustee shall maintain custody of all money
         and securities.

                  (6) Notwithstanding anything contained to the contrary in this
         Section 1.10, to the extent the laws of any  jurisdiction  preclude the
         Indenture  Trustee  from  taking any  action  hereunder  either  alone,
         jointly or through a separate  trustee  under the direction and control
         of the Indenture Trustee,  the Owner Trustee, at the instruction of the
         Indenture   Trustee,   shall  appoint  a  separate   trustee  for  such
         jurisdiction,   which  separate  trustee  shall  have  full  power  and
         authority to take all action  hereunder as to matters  relating to such
         jurisdiction  without the consent of the Indenture Trustee, but subject
         to the same  limitations  in any exercise of his power and authority as
         those to which the Indenture Trustee is subject.



                                       C-7



<PAGE>


         (c) Upon the  acceptance  in  writing of such  appointment  by any such
separate trustee or co-trustee,  it shall be vested with the estates or property
to which its appointment  relates as specified in the instrument of appointment,
subject to all the terms of the Indenture and this Supplemental Indenture No.

         (d) Any separate trustee or co-trustee may, at any time, constitute the
Indenture Trustee, its agent or attorney-in-fact, with full power and authority,
to the extent not prohibited by Law, to do any lawful act under or in respect of
the Indenture and this Supplemental Indenture No.______ on its behalf and in its
name. If a separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed,  all of its  estates,  properties,  rights,  remedies  and
trusts shall vest in and be exercised by the  Indenture  Trustee,  to the extent
permitted by law, without the appointment of a new or successor trustee.

         SECTION 1.11.  Separability  of Provisions.  In case any one or more of
the provision.  of this Supplemental Indenture No. __ or any application thereof
shall be  invalid,  illegal  or  unenforceable  in any  respect,  the  validity,
legality and enforceability of the remaining provisions hereof and the Indenture
and any other application hereof and thereof shall not in any way be affected or
impaired.

         SECTION 1.12. Counterpart Execution. This Supplemental Indenture No. __
may be  executed  in any number of  counterparts  and by the  different  parties
hereto and thereto on separate counterparts, each of which, when so executed and
delivered,  shall be an  original,  but all  such  counterparts  shall  together
constitute but one and the same instrument.








                                       C-8




<PAGE>


         IN WITNESS  WHEREOF,  the owner Trustee and the Indenture  Trustee have
each caused this  Indenture  to be duly  executed by their  respective  officers
thereunto duly authorized, all as of the date first set forth above.



                                         THE FIRST  NATIONAL  BANK OF BOSTON not
                                           in  its  individual   capacity,   but
                                           solely  as Owner  Trustee  under  the
                                           Trust  Agreement dated as of July 31,
                                           1986,  with  Chase  Manhattan  Realty
                                           Corporation


                                         By
                                            --------------------------------
                                               Assistant Vice President

                                         CHEMICAL BANK

                                         By
                                            ---------------------------------
                                               Vice President















                                       C-9



<PAGE>


                                   SCHEDULE 1
                                       to
                                    INDENTURE




                         UNDIVIDED INTEREST DESCRIPTION


                  The Undivided  Interest is a (i) 1.133333%  undivided interest
in and to the  property  described  under A below and (ii) a .377777%  individed
interest in and to the property described in B below.

                  A.  Unit  1 of  the  Palo  Verde  Nuclear  Generating  station
(PVNGS)1 located in Maricopa County, Arizona, approximately 55 miles west of the
City of  phoenix,  Arizona,  and  approximately  16  miles  west of the  City of
Buckeye, Arizona, consisting of:

         I.       Unit 1 Combustion  Engineering  "System 80" pressurized  water
                  reactor  nuclear steam supply  system (the NSSS).  The N858 is
                  comprised Of a reactor vessel  containing 241 fuel  assemblies
                  with   approximately   100  tons  of  enriched  uranium  (fuel
                  assemblies,  however,  are  not  part  of  Unit 1 and  are not
                  included in the  Undivided  Interest  being  sold),  two steam
                  generators,  tour reactor coolant pumps and various additional
                  systems and  subsystems.  The licensed  thermal  rating of the
                  NSSS is 3800 MW.

         II.      Unit 1 GE TC6F-43, 1800 RPM tandem-compound,  six flow, reheat
                  turbine-generator  including  turbine,   generator,   moisture
                  separator-reheater    exciter,    controls,    and   auxiliary
                  subsystems.  The  turbine-generator  is  conductor  cooled and
                  rated at 1,554 MVA at 24,000 V, 3 phase,  60 Hz, 1.5 in Kg ABS
                  back  pressure,  and  approximately  1,363  Mw  maximum  gross
                  electric output.



<PAGE>



         III.     Unit  1 146  ft.  inside  diameter,  steel-lined,  prestressed
                  concrete cylindrical containment building with a hemispherical
                  dome designed for 60 psig;.  The  containment  building houses
                  the reactor system.

         IV.      Unit 1 auxiliary  Systems and equipment  including  engineered
                  safeguards    systems,    reactor    auxiliary   systems   and
                  turbine-generator  auxiliary systems  associated with items I,
                  II,  and III  above,  extending  to and  including  the Unit 1
                  start-up transformer.


         V.       Unit 1 cooling tower system consisting of three (3) mechanical
                  draft  cooling  towers,  including a closed cycle  circulating
                  water system, make-up water systems and essential spray ponds.

         VI.      Unit 1 radioactive waste treatment  system,  including liquid,
                  gaseous,    and    solid    waste    subsystems,     controls,
                  instrumentation, storage, handling and shipment facilities.

         VII.     Unit  1  emergency   diesel-generator   system,   including  a
                  diesel-generator    building   which   contains   two   diesel
                  generators,  fuel oil  systems,  storage  tanks,  control  and
                  instrumentation systems and other equipment.

         VIII.    Unit 1 internal  communication  systems,  including associated
                  interconnections and computer data links.






                                       -2-



<PAGE>


BUT EXCLUDING:

         I.       Nuclear fuel for Unit 1, including spare fuel assemblies.

         II.      Spare Parts (Unit 1).

         III.     Transmission  facilities (including any and all facilities and
                  equipment providing interconnection between the Unit 1 turbine
                  generator  and the ANPP  nigh  Voltage  Switchyard,  including
                  step-up transformers and standby equipment and Systems).

         IV.      Oil and diesel fuel inventories (Unit1)

                  B.     All PVNGS common facilities, INCLUDING LIMITED TO:
BUT NOT LIMITED TO:


         I.       Surveillance   systems,   including   associated   radioactive
                  monitoring systems and equipment.

         II.      Water treatment facilities and transport systems for supply of
                  waste water effluent.

         III.     Warehouses and related storage facilities and equipment.

BUT EXCLUDING:

         I.       Nuclear fuel, including spare fuel assemblies.

         II.      All transmission and ANPP High Voltage Switchyard facilities.

         III.     Administration Building.


                                       -3-
                               


<PAGE>


         IV.      Administration Annex Building.

         V.       Technical Support Center.

         VI.      Visitor Center.

         VII.     External   communication  Systems  and  equipment,   including
                  associated interconnections and computer data links.

         VIII.    Parking  lot  improvements,  road  improvements,  fencing  and
                  dikes.

         IX.      Spare parts (common facilities).

         X.       Simulator.

         XI.      Oil and diesel fuel inventories.

         XII.     Real  property,  beneficial  interest  in Title USA Company of
                  Arizona  Trust  No.  530,  and  Project  Agreement   interests
                  described in Exhibit A.




















                                       -4-



<PAGE>


                                   SCHEDULE 2
                                       to
                                    INDENTURE



                        REAL ESTATE INTEREST DESCRIPTION

                  The Real Estate Interest is a (i) .333333%  undivided interest
in the land  described in I below,  a (ii)  .377777%  undivided  interest in the
rights and  interests  described  in I!  below,  and (iii) a .377777%  undivided
interest in the right and interests described in III below.


I.      PVNGS PLANT SITE

PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest quarter;  and
the West half of the Southwest quarter, all in Section Two (2), Township One (1)
South, Range Six (6) West of the Qua and Salt River Base and Meridian,  Maricopa
County; Arizona.

PARCEL NO. 2: All of Section  Three (3),  Township One  (1)South,  Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.

PARCEL NO. 3: The East half of Section Four (4),  Township One (1) South,  Range
Six (6) West of the Gila and Salt  River  Base and  Meridian,  Maricopa  County,
Arizona.

PARCEL MC. 4: The West half of Section Twenty-six (26),  Township One (1) North,
Range  Six (6)  West of the  Gila and Salt  River  Base and  Meridian,  Maricopa
County, Arizona.

PARCEL NO. 5: Section  Twenty-seven (27),  Township One (1) North, Range Six (6)
West of the Gila and Salt River Base and  Meridian,  Maricopa  County,  Arizona;
EXCEPT the Northwest quarter of Section 27.






<PAGE>
PARCEL NO. 6: The Southeast quarter of Section  Twenty-eight (28),  Township One
(1)  North,  Range Six (6) West of the Gila and salt  River  Base and  Meridian,
Maricopa County,  Arizona; EXCEPT 50% of all oil, gas and other mineral deposits
and  geothermal  resources  recovered  from or  developed  on the  property,  as
reserved in instrument recorded May 10, 1974 in Docket 10647, page 136.

PARCEL  NO. 7: The East half of  Section  Thirty-three  (33),  Township  One (1)
North, Range Six (6) West of the Qua and Salt River Base and Meridian,  Maricopa
County, Arizona.

PARCEL NO, 8: All of Section Thirty-four (34), Township One (1) North, Range Six
(6) West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.

PARCEL NO. 9: The West half of Section Thirty-five (35), Township One (1) North,
Range  Six (6)  West of the  Gila and Salt  River  Base and  Meridian,  Maricopa
County, Arizona.

PARCEL NO. 10: The  Southeast  quarter  of Section  Nine (9),  Township  One (1)
South, Range Six (S) West of the Gila and Salt River Base and Meridian, Maricopa
County, Arizona; EXCEPT the Northwest quarter thereof.

PARCEL NO. 11: All of Section Ten (10),  Township  One (1) South,  Range six (6)
West of the Gila and Salt River Base and  Meridian,  Maricopa  County,  Arizona;
EXCEPT the East half of the Southeast quarter thereof; and EXCEPT the North half
of the South half of the Northwest quarter of the Northwest quarter thereof.

PARCEL NO. 12:  That part of the East half of the  Southwest  quarter of Section
Twenty-three  (23),  Township One (1) North,  Range Six (6) West of the Gila and
Salt  River Base and  Meridian,  Maricopa  County,  Arizona,  more  particularly
described as follows:

                  BEGINNING at the Southeast corner of the said East half of the
        Southwest  quarter of Section 23; thence West, an assumed  bearing along
        the South line of the said East half of the Southwest quarter of Section
        23, for a distance of 762.04 feet; thence



                                       -2-


<PAGE>


        North 0 degrees 03 minutes 39 seconds West; parallel to the East line of
        the said  East  half of the  Southwest  quarter  of  Section  23,  for a
        distance of 1946.46  feet to a point on the South  right-of-way  line of
        the 200 foot wide  HASSAYAMPA-SALOME  HIGHWAY, as recorded in nook 12 of
        Road Maps, page 62, Maricopa County Recorder,  Maricopa county1 Arizona;
        thence  continuing  North 0 degrees 03  minutes  39  seconds  West for a
        distance  of 234.15  feet to a point on the North  right-of-way  line of
        said highway;  thence south 56 degrees 43 minutes 35 seconds East, along
        said North right-of-way line for a distance of 892.17 feet to a point on
        the said East line of the East half of the Southwest  quarter of Section
        23; thence South 0 degrees 03 minutes 39 seconds  East,  along said East
        line  for a  distance  of  234.15  feet to a  point  on the  said  South
        right-of-way  line;  thence  continuing  South 0 degrees  03  minutes 39
        seconds  East  for a  distance  of  1483.31  feet to the  true  point of
        beginning;

                  EXCEPT the East 305 feet of the South 305 feet thereof; and

                  EXCEPT one-half of the minerals and mineral rights and mineral
        estates  of every  kind and  nature,  as set forth in Deed  recorded  in
        Docket 11652, page 52, Maricopa County Records.

PARCEL NO. 13: The North half of the South half of the Northwest  quarter of the
Northwest  quarter of Section Ten (10),  Township  One (1) south,  Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.


II.      HASSAYAMP PUMPING STATION AND EFFLUENT PIPELINE

                All real property,  leases, licenses,  easements,  rights-of-way
and  other  property  held by  Title  USA  Company  of  Arizona  Trust  No.  530
established by that certain Trust  Agreement dated October 15, 1975, as amended,
but excluding therefrom all improvements.





                                       -3-



<PAGE>


III.      MISCELLANEOUS REAL PROPERTY INTERESTS

                  Those  ANPP  Project   Agreements  (as  defined  in  the  ANPP
Participation  Agreement),  in  addition  to the Trust  Agreement  for Title USA
Company of Arizona Trust 530,  consisting of leases,  licenses,  easements,  and
permits, which provide land and land rights for (a) the pipeline to supply waste
water effluent to PVNGS from the 91st Avenue sewage  treatment plant serving the
Phoenix  Metropolitan area and (b) railroad access to the nuclear Plant Site (as
defined in the ANPP Participation Agreement).































                                       -4-

<PAGE>

When Recorded, Return to: Greg R. Nielsen

                                 SNELL & WILMER
                             3100 Valley Bank Center
                             Phoenix, Arizona 85073

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

                           SUPPLEMENTAL INDENTURE NO.1

                          Dated as of November 18, 1986

                                       To

                TRUST INDENTURE MORTGAGE, SECURITY AGREEMENT AND
                               ASSIGNMENT OF RENTS

                            Dated as of July 31, 1986

                                     between

                     THE FIRST NATIONAL BANK OF BOSTON, not
                     in its individual capacity, but solely
                         as Owner Trustee under a Trust
                         Agreement dated as of July 31,
                            1986 with Chase Manhattan
                           Realty Leasing Corporation

                                       and

                                 CHEMICAL BANK,
                              as Indenture Trustee

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

                 Original Indenture Recorded August 1, 1986, as
              Instrument No. 86-404572 in Maricopa County, Arizona
                               Recorder's Office.
================================================================================









<PAGE>


                  SUPPLEMENTAL  INDENTURE No. 1 dated as of November 18, 1986 to
Trust Indenture,  Mortgage,  Security Agreement and Assignment Of Rents dated as
of July 31, 1986,  between THE FIRST NATIONAL BANK OF BOSTON, a national banking
association (FNB), not in its individual  capacity,  but solely as Owner Trustee
(the Owner Trustee) under a Trust Agreement  dated as of July 31, 1986,  between
FNB, whose address is 100 Federal  Street,  Boston,  Massachusetts  02110,  with
Chase Manhattan Realty Leasing Corporation, a New York corporation, and CHEMICAL
BANK, a New York banking corporation (the Indenture  Trustee),  whose address is
55 Water Street, New York, New York 10041.

                              W I T N E S S E T H:

                  WHEREAS,  the Owner  Trustee and the  Indenture  Trustee  have
entered into a Trust Indenture,  Mortgage,  Security Agreement and Assignment of
Rents  dated as of July 31,  1986 (the  Indenture)  pursuant  to which the Owner
Trustee has issued the Initial Series Note;

                  WHEREAS, Section 3.5(1) of the Indenture provides, among other
things, that the Initial Series Note may be refunded with Additional Notes;

                  WHEREAS, Section 3.5(4) of the Indenture provides, among other
things,  that the  Owner  Trustee  and the  Indenture  Trustee  may  enter  into
indentures supplemental to the Indenture for, among other things, the purpose of
establishing the terms, conditions and designations of Additional Notes;

                  WHEREAS,  the Owner Trustee desires to issue  Additional Notes
to  effect a  refunding  of the  Initial  Series  Note and to  enter  into  this
Supplemental Indenture No. 1 to establish the terms, conditions and designations
of such Additional Notes; and

                  WHEREAS,  Section  10.l(viii) of the Indenture  provides that,
without the consent of Holders of the Notes  Outstanding,  the Indenture Trustee
may, with the written consent of the Owner Trustee, from time to time and at any
time execute a supplement  to the Indenture in order to evidence the issuance of
and to provide the terms of Additional Notes;

                  NOW, THEREFORE,  in consideration of the premises and of other
good and valuable  consideration,  receipt and  sufficiency  of which are hereby
acknowledged, the parties hereto agree as follows:



<PAGE>


SECTION 1.  Definitions.

                For  purposes  hereof,  capitalized  terms  used  herein and not
otherwise  defined  herein  shall have the  meanings  assigned  to such terms in
Appendix A to the Indenture.

SECTION 2.  Terms, Conditions and Designations of the Additional Notes.

                (a)  The Fixed Rate Notes.

                There is hereby  created and  established  a separate  series of
Notes of the Owner Trustee designated  "Nonrecourse Promissory Notes, Fixed Rate
Series" herein  referred to as the Fixed Rate Notes.  The Fixed Rate Notes shall
be payable as to principal and bear interest on the principal  amount thereof as
follows:

     Fixed Rate Note              Interest                    Principal
          Due                      Rate                         Amount
     ---------------              --------                    ---------
 
    January 15, 1992                 8.05%                     $l,501,000
    January 15, 1997                 8.95%                     $5,626,000
    January 15, 2015                10.15%                    $32,873,000
                                                             ------------
                                                              $40,000,000
                                                             ============

Each Fixed Rate Note shall bear  interest on the principal  amount  thereof from
time to time  Outstanding  from  the  date  thereof  until  paid at the  rate of
interest set forth therein.  The principal  amount of each Fixed Rate Note shall
be payable as set forth in Schedule 1 attached thereto,  as such Schedule may be
adjusted,  in the case of the Fixed Rate Note due January 15, 2015, from time to
time in accordance with the terms of the Indenture,  this Supplemental Indenture
No. 1 and such Fixed Rate Note.  Installments  of interest on and  principal  of
(and  premium,  if any, on) each Fixed Rate Note shall be due and payable at the
rates of interest and on the dates  specified in such Fixed Rate Note. The Fixed
Rate Note due January 15, 1992 shall be substantially in the form of Exhibit A-l
to this  Supplemental  Indenture No. 1. The Fixed Rate Note due January 15, 1997
shall be substantially in the form of Exhibit A-2 to this Supplemental Indenture
No. 1. The Fixed Rate Note due January 15,  2015 shall be  substantially  in the
form of Exhibit A-3 to this Supplemental Indenture No. 1.






                                       -2-


<PAGE>




                (b) Certain Adjustments to Amortization Schedules.

                The  schedule of  principal  amortization  attached to the Fixed
Rate Note due January 15,  2015 may be adjusted at the  discretion  of the Owner
Trustee  at one time prior to July 15,  1997;  provided,  however,  that no such
adjustment  shall be made by the Owner Trustee which will increase or reduce the
average life of such Fixed Rate Note  (calculated  in accordance  with generally
accepted  financial practice from the date of initial issuance) by more than two
years; provided, however, such adjustment may be made only in connection with an
adjustment to Basic Rent pursuant to Section 3(d) of the Facility  Lease. If the
Owner Trustee shall elect to make the  foregoing  adjustment,  the Owner Trustee
shall deliver to the Indenture  Trustee and to the Lessee at least 60 days prior
to the first  payment date  (specified  on the schedule to such Fixed Rate Note)
proposed to be affected by such  adjustment,  a certificate of the Owner Trustee
(x) stating  that the Owner  Trustee has  elected to make such  adjustment,  (y)
setting forth the revised schedule of principal amortization for such Fixed Rate
Note and (2) attaching  calculations showing that the average life of such Fixed
Rate Note will not be reduced or increased except as permitted by this paragraph
(b). The Indenture Trustee may rely on such Owner Trustee  certificate and shall
have no duty with  respect  to the  calculations  referred  to in the  foregoing
clause (z).

SECTION 3.  Miscellaneous.

                (a)  Effective Date of Supplemental Indenture.

                This Supplemental  Indenture No. 1 shall be and become effective
upon the execution hereof by the parties hereto.

                (b)  Counterpart Execution.

                This Supplemental  Indenture No. 1 may be executed in any number
of counterparts  and by the different  parties hereto on separate  counterparts,
each of which,  when so executed and  delivered,  shall be an original,  but all
such counterparts shall together constitute but one and the same instrument.

                (c)  Execution as Supplemental Indenture.

               


                                       -3-


<PAGE>

                This  Supplemental  Indenture  No. 1 is  executed  and  shall be
construed as an indenture  supplemental to the Indenture and, as provided in the
Indenture, this Supplemental Indenture No. 1 forms a part thereof.

                (d)  Disclosure.

                Pursuant  to  Arizona  Revised  Statutes  Section  33-401,   the
beneficiary  of  the  Trust   Agreement  is  Chase   Manhattan   Realty  Leasing
Corporation, a New York corporation. The address of the beneficiary is One chase
Manhattan  Plaza,  New York,  New York 10005.  A copy of the Trust  Agreement is
available  for  inspection  at the  offices of the Owner  Trustee at 100 Federal
Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.

                IN WITNESS WHEREOF,  the Owner Trustee and the Indenture Trustee
have each caused this Supplemental  Indenture No. 1 to be duly executed by their
respective  officers  thereunto  duly  authorized,  all as of the date first set
forth above.




                                       THE FIRST NATIONAL BANK OF
                                       BOSTON, not in its individual capacity, 
                                       but solely as
                                       Owner Trustee under the
                                       Trust Agreement dated as of
                                       July 31, 1986, with Chase
                                       Manhattan Realty Leasing
                                                Corporation

                                       By /s/ Martin P. Henry
                                          ----------------------------
                                            Assistant Vice President



                                       CHEMICAL BANK,


                                       By  /s/ T. J. Foley
                                           -------------------------- 
                                                Authorized Officer





                                      -4-


<PAGE>


STATE OF NEW YORK      )
                       )  ss.:
COUNTY OF NEW YORK     )


                On the 24th day of November,  1986,  before me  personally  came
MARTIN P. HENRY,  to me known,  who,  being by me duly sworn,  did  acknowledge,
depose and say that he resides at Boston, Massachusetts; that he is an Assistant
Vice  President  of THE  FIRST  NATIONAL  BANK OF  BOSTON,  a  national  banking
association,  described in and which executed the foregoing instrument; and that
he signed his name  thereto on behalf of said  association  by  authority of the
Board of Directors of such association.

                                       /s/ David A. Spivak
                                      ----------------------------
                                              Notary Public

                                             DAVID A. SPIVAK
(NOTARIAL SEAL)                 Term Expires: Notary Public, State of New York
                                              No. 31-4688468
                                       Qualified in New York County
                                     Commission Expires March 30, 1987

















                                       -5-


<PAGE>


STATE OF NEW YORK    )
                     ) ss.
COUNTY OF NEW YORK   )

                On the 24th day of November,  1986,  before me  personally  came
T.J. Foley, to me known,  who, being by me duly sworn, did  acknowledge,  depose
and say that he resides at Bethpage,  New York;  that he is a Vice  President of
CHEMICAL RANK, a New York banking  corporation,  described in and which executed
the foregoing instrument;  and that he signed his name thereto on behalf of said
corporation by authority of the Board of Directors of such corporation.


                                         /s/ Delia T. Santiago
                                         --------------------------
                                              Notary Public

[NOTARIAL SEAL}                             Term Expires:


                                            Delia T. Santiago
                                            Notary Public, State of New York
                                            No. 41-3151160
                                            Qualified in Queens County
                                            Commission Expires, March 30, 1987





























                                       -6-


<PAGE>


                                   EXHIBIT A-l
                                  TO SUPPLEMENT
                                      NO. 1

                             FORM OF FIXED RATE NOTE
                             (DUE JANUARY 15, 1992)


                   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
           SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR
                   OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                 NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
                             (DUE JANUARY 15, 1992)

                                                   Issued at: New York, New York

                                                   Issue Date: November 25, 1986


                THE FIRST NATIONAL BANK or , not in its individual capacity, but
solely as Owner Trustee (Owner Trustee) under a Trust Agreement dated as of July
31,  1986  with  Chase   Manhattan   Realty  Leasing   Corporation   (the  Owner
Participant),  hereby  promises  to pay to  First  PV  FUNDING  CORPORATION,  or
registered  assigns,  the principal sum of $1,501,000  (One Million Five Hundred
One Thousand  Dollars) on January 15, 1992 together  with interest  (computed on
the basis of a 360-day year of twelve 30-day months) on the aggregate  amount of
such  principal  sum  remaining  unpaid  from time to time from the date of this
Fixed  Rate Note until due and  payable,  in  arrears,  at the rate of 8.05% per
annum. Payments of principal  installments of this Fixed Rate Note shall be made
in the  "principal  amount  payable"  and on the  "payment  dates"  specified in
Schedule 1 hereto. Payments of accrued interest on this Fixed Rate Note shall be
made on January 15 and July 15 in each year  commencing  January 15, 1987 to and
including the last "payment date" specified in Schedule 1 hereto.

                Capitalized  terms  used in this  Fixed  Rate Note which are not
otherwise  defined  herein  shall  have the  meanings  ascribed  thereto  in the
Indenture (as hereinafter defined).

                Interest on any overdue  principal and premium,  if any, and (to
the extent permitted by applicable law) any overdue interest,  shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.05% (computed
on the basis of a.360-day  year of twelve  30-day  months) for the period during
which any such principal, premium or interest shall be overdue.


<PAGE>


                In the event any date on which a payment is due under this Fixed
Rate Note is not a Business  Day,  then payment  thereof may be made on the next
succeeding Business Day with the same force and effect as if made on the date on
which such payment was due.

                All payments of principal,  premium,  if any, and interest to be
made by the Owner  Trustee  hereunder and under the Trust  Indenture,  Mortgage,
Security  Agreement and Assignment of Rents dated as of July 31, 1986, as at any
time  heretofore or hereafter  amended or  supplemented  in accordance  with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee),  shall be made only from the Lease Indenture
Estate and the Trust Estate and the  Indenture  Trustee shall have no obligation
for the payment  thereof  except to the extent that the Indenture  Trustee shall
have sufficient  income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture.  The Holder
hereof,  by its acceptance of this Fixed Rate Note, agrees that such Molder will
look  solely to the Trust  Estate  and the income  and  proceeds  from the Lease
Indenture  Estate to the extent  available for distribution to the Holder hereof
as above  provided,  and that  neither  the  Owner  Participant  nor,  except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally  liable to the Holder  hereof for any amounts  payable
under this  Fixed  Rate Note or for any  performance  to be  rendered  under the
Indenture or any other  Transaction  Document on for any  liability  thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner  Trustee  hereunder  and under the  Indenture  pursuant  to Section
3.9(b) of the Indenture,  then all the payments to be made under this Fixed Rate
Note shall be made only from  payments  made by the Lessee under this Fixed Rate
Note in accordance  with the  Assumption  Agreement  referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note  agrees that in such event it will
look solely to the Lessee for such payment.

                Principal,  premium,  if any, and interest shall be payable,  in
the manner provided in the Indenture,  on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.


                                       -2-


<PAGE>


                The Holder  hereof,  by its  acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the  Indenture.  The Holder of this Fixed Rate Note
agrees,  by its acceptance  hereof,  that it will duly note by appropriate means
all payments of  principal  or interest  made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.

                This Fixed Rate Note i5 one of the Fixed Rate Notes  referred to
in the  Indenture.  The Indenture  permits the issuance of additional  series of
Notes,  as provided in section 3.5 of the Indenture,  and the several series may
be for  varying  aggregate  principal  amounts and may have  different  maturity
dates, interest rates,  redemption provisions and other terms. The properties of
the Owner  Trustee  included  in the Lease  Indenture  Estate are pledged to the
Indenture  Trustee to the extent  provided in the  Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other  Notes  issued  and  outstanding  from time to time under the
Indenture.  Reference  is hereby made to the  Indenture  for a statement  of the
rights of the Holders of, and the nature and extent of the  security  for,  this
Fixed Rate Note and of the  rights of and the nature and extent of the  security
for, the Holders of the other Notes and of certain  rights of the Owner Trustee,
as well as for a statement of the terms and  conditions  of the trust created by
the Indenture,  to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.

                This Fixed Rate Note is not subject to prepayment in whole or in
part.

                In case  an  Indenture  Event  of  Default  shall  occur  and be
continuing,  the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain  rights of the Owner  Trustee of the Owner  Participant  contained or
referred to in the  Indenture,  be declared or may become due and payable in the
manner and with the effect provided in the Indenture.




                                       -3-


<PAGE>


                The lien upon the Lease  Indenture  Estate is  subject  to being
legally  discharged  prior to the  maturity  of this  Fixed  Rate  Note upon the
deposit with the Indenture Trustee of cash or certain  securities  sufficient to
pay this  Fixed Rate Note when due or an  assumption  of the  obligation  of the
Owner  Trustee  under this Fixed  Rate Note and the  Indenture,  in each case in
accordance with the terms of the Indenture.

                There shall be maintained at the  Indenture  Trustee's  Office a
register for the purpose of registering  transfers and exchanges of Notes in the
manner  provided  in the  Indenture.  The  transfer  of this  Fixed Rate Note is
registrable,  as provided in the  Indenture,  upon  surrender of this Fixed Rate
Note for  registration of transfer duly  accompanied by a written  instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable  transfer taxes.  Prior to due presentment for
registration  of  transfer  of this Fixed Rate Note,  the Owner  Trustee and the
Indenture  Trustee  may treat the  person in whose  name this Fixed Rate Note is
registered  as the  owner  hereof  for the  purpose  of  receiving  payments  of
principal of and  premium,  if any, and interest on this Fixed Rate Note and for
all other purposes  whatsoever,  whether or not this Fixed Rate Note be overdue,
and neither the Owner  Trustee nor the  Indenture  Trustee  shall be affected by
notice to the contrary.

                This Fixed  Rate Note shall be  governed  by, and  construed  in
accordance with, the laws of the State of New York.





















                                       -4-


<PAGE>


                IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed Rate
Note to be duly executed as of the date hereof


                                       THE FIRST NATIONAL BANK OF
                                       BOSTON,  not in  its  individual
                                       capacity,  but  solely  as Owner
                                       Trustee under a Trust  Agreement
                                       dated as of July 31,  1986  with
                                       Chase  Manhattan  Realty Leasing
                                       Corporation


                                       By
                                          -----------------------------
                                             Assistant Vice President



         This Note is one or the series of Notes  referred to therein and in the
within-mentioned Indenture

                                       CHEMICAL BANK,
                                       as Indenture Trustee

                                       By
                                          -----------------------------
                                                 Vice President














                                       -5-


<PAGE>


                                   SCHEDULE 1
                             TO THE FIXED RATE NOTE
                             (DUE JANUARY 15, 1992)

                       Schedule of Principal Amortization

                           $1,501,000 Principal Amount

     Payment                             Principal                Principal
      Date                             Amount Payable            Amount Paid
----------------                       --------------            -----------

July 15, 1990                              $229,000
January 15, 1991                            407,000
July 15, 1991                               424,000
January 15, 1992                            441,000
                                         ----------
Principal Amount                         $1,501,000
                                         ==========













                                   Page 1 of 1




<PAGE>


                                   ASSIGNMENT

                           Date: November 25, 1986

                For value  received,  FIRST PV  FUNDING  CORPORATION  (First PV)
hereby sells, assigns and transfers to CHEMICAL BANK as Collateral Trust Trustee
pursuant to the  Collateral  Trust  Indenture  dated as of December 16, 1985, as
heretofore  amended and supplemented,  among First PV, Public Service Company of
New Mexico and said Collateral Trust Trustee,  without recourse,  the Fixed Rate
Note to which this Assignment is annexed and all rights thereunder.


                                       FIRST PV FUNDING CORPORATION


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


<PAGE>


                                                                     EXHIBIT A-2
                                                                   TO SUPPLEMENT
                                                                            NO.1

                             FORM OF FIXED RATE NOTE
                             (DUE JANUARY 15, l997)



                   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
               SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                 NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
                             (DUE JANUARY 15, 1997)

                                                   Issued at: New York, New York

                                                   Issue Date: November 25, 1986


                THE  FIRST  NATIONAL  BANK  OF  BOSTON,  not in  its  individual
capacity,  but solely as Owner Trustee (Owner  Trustee) under a Trust  Agreement
dated as of July 31, 1986 with Chase Manhattan  Realty Leasing  Corporation (the
Owner Participant),  hereby promises to pay to FIRST PV FUNDING CORPORATION,  or
registered  assigns,  the principal sum of $5,626,000  (Five Million Six Hundred
Twenty Six  Thousand  Dollars)  on  January  15,  1997  together  with  interest
(computed  on the  basis of a  360-day  year of  twelve  30-day  months)  on the
aggregate  amount of such principal sun remaining  unpaid from time to time from
the date of this Fixed Rate Note until due and payable,  in arrears, at the rate
of 8.95% per annum.  Payments of principal  installments of this Fixed Rate Note
shall be made in the  "principal  amount  payable"  and on the  "payment  dates"
specified in Schedule 1 hereto.  Payments of accrued interest on this Fixed Rate
Note shall be made on January 15 and July 15 in each year commencing January 15,
1987 to and including the last "payment data" specified in Schedule 1 hereto.

                Capitalized  terms  used in this  Fixed  Rate Note which are not
otherwise  defined  herein  shall  have the  meanings  ascribed  thereto  in the
Indenture (as hereinafter defined).

                Interest on any overdue  principal and premium,  if any, and (to
the extent permitted by applicable law) any overdue interest,  shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.95% (computed
on the basis of a 360-day  year of twelve 30- day months) for the period  during
which any such principal, premium or interest shall be overdue.

<PAGE>


                In the event any date on which a payment is due under this Fixed
Rate Note is not a Business  Day,  then payment  thereof may be made on the next
succeeding Business Day with the same force and effect as if made on the date on
which such payment was due.

                All payments of principal,  premium,  if any, and interest to be
made by the Owner  Trustee  hereunder and under the Trust  Indenture,  Mortgage,
Security  Agreement and Assignment of Rents dated as of July 31, 1986, as at any
time  heretofore or hereafter  amended or  supplemented  in accordance  with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee),  shall be made only from the Lease Indenture
Estate and the Trust Estate and the  Indenture  Trustee shall have no obligation
for the payment  thereof  except to the extent that the Indenture  Trustee shall
have sufficient  income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture,  The Holder
hereof,  by its acceptance of this Fixed Rate Note, agrees that such Holder will
look  solely to the Trust  Estate  and the income  and  proceeds  from the Lease
Indenture  Estate to the extent  available for distribution to the Holder hereof
as above  provided,  and that  neither  the  Owner  Participant  nor,  except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally  liable to the Holder  hereof for any amounts  payable
under this  Fixed  Rate Note or for any  performance  to be  rendered  under the
Indenture or any other  Transaction  Document or for any  liability  thereunder:
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner  Trustee  hereunder  and under the  Indenture  pursuant  to Section
3.9(b) of the Indenture,  then all the payments to be made under this Fixed Rate
Note shall be made only from  payments  made by the Lessee under this Fixed Rate
Note in accordance  with the  Assumption  Agreement  referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note  agrees that in such event it will
look solely to the Lessee for such payment.

                Principal,  premium,  if any, and interest shall be payable,  in
the manner provided in the Indenture,  on presentment of this Fixed Rate Note at
the Indenture Trustee's office, or as otherwise provided in the Indenture.





                                       -2-


<PAGE>



                The Holder  hereof,  by its  acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the  Indenture.  The Holder of this Fixed Rate Note
agrees,  by its acceptance  hereof,  that it will duly note by appropriate means
all payments of  principal  or interest  made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.

                This Fixed Rate Note is one of the Fixed Rate Notes  referred to
in the  Indenture.  The Indenture  permits the issuance of additional  series of
Notes,  as provided in Section 3.5 of the Indenture,  and the several series may
be for  varying  aggregate  principal  amounts and may have  different  maturity
dates, interest rates,  redemption provisions and other terms. The properties of
the owner  Trustee  included  in the Lease  Indenture  Estate are pledged to the
Indenture  Trustee to the extent  provided in the  Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other  Notes  issued  and  outstanding  from time to time under the
Indenture.  Reference  is hereby made to the  Indenture  for a statement  of the
rights of the Holders of, and the nature and extent of the  security  for,  this
Fixed Rate Note and of the rights of, and the nature and extent of the  security
for, the Holders of the other Notes and of certain  rights of the owner Trustee,
as well as for a statement of the terms and  conditions  of the trust created by
the Indenture,  to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.

















                                       -3-


<PAGE>


                This  Fixed  Rate Note may be prepaid in whole or in part at any
time on or after  January 15, 1992 by the Owner  Trustee  upon the giving of not
less than 30 days' notice (as provided in the  Indenture)  and at the  following
prepayment  prices  (expressed  as a percentage of the unpaid  principal  amount
hereof), together with interest accrued to the date fixed for prepayment:

                   Twelve Month                            Redemption
                 Period Beginning                            Price
                 ----------------                          ----------    

                 January 15, 199                            102.557%
                 January 15, 199                            101.279

and thereafter at the principal  amount thereof,  together with interest accrued
to the date fixed for prepayment.  This Fixed Rate Note is not otherwise subject
to prepayment in whole or in part.

                In case  an  Indenture  Event  of  Default  shall  occur  and be
continuing,  the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may1 subject
to certain  rights of the Owner  Trustee or the Owner  Participant  contained or
referred to in the  Indenture,  be declared or may become due and payable in the
manner and with the effect provided in the Indenture.

                The lien upon the Lease  Indenture  Estate is  subject  to being
legally  discharged  prior to the  maturity  of this  Fixed  Rate  Note upon the
deposit with the Indenture Trustee of cash or certain  securities  sufficient to
pay this  Fixed Rate Note when due or an  assumption  of the  obligation  of the
Owner  Trustee  under this Fixed  Rate Note and the  Indenture,  in each case in
accordance with the terms of the Indenture.

                There shall be maintained at the  Indenture  Trustee's  Office a
register for the purpose of registering  transfers and exchanges of Notes in the
manner  provided  in the  Indenture.  The  transfer  of this  Fixed Rate Note is
registrable,  as provided in the  Indenture,  upon  surrender of this Fixed Rate
Note for  registration of transfer duly  accompanied by a written  instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for





                                       -4-


<PAGE>


registration  of  transfer  of this Fixed Rate Note,  the Owner  Trustee and the
Indenture  Trustee  may treat the  person in whose  name this Fixed Rate Note is
registered  as the  owner  hereof  for the  purpose  of  receiving  payments  of
principal of and  premium,  if any, and interest on this Fixed Rate Note and for
all other purposes  whatsoever,  whether or not this Fixed Rate Note be overdue,
and neither the Owner  Trustee nor the  Indenture  Trustee  shall be affected by
notice to the contrary.

                This Fixed  Rate Note shall be  governed  by, and  construed  in
accordance with, the laws of the State of New York.
































                                       -5-


<PAGE>


                IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed Rate
Note to be duly executed as of the date hereof


                                       THE FIRST NATIONAL RANK OF
                                       BOSTON,  not in  its  individual
                                       capacity,  but  solely  as Owner
                                       Trustee under a Trust  Agreement
                                       dated as of July 31,  1986  with
                                       Chase  Manhattan  Realty Leasing
                                       Corporation


                                       By
                                          -----------------------------
                                            Assistant Vice President

                This Note is one of the series of Notes  referred to therein and
in the within-mentioned Indenture.

                                       CHEMICAL BANK,
                                       as Indenture Trustee

                                       By
                                          -----------------------------
                                                 Vice President

















                                       -6-


<PAGE>


                                   SCHEDULE 1
                             TO THE FIXED RATE NOTE
                             (DUE JANUARY 15, 1997)

                       Schedule of Principal Amortization

                           $5,626,000 Principal Amount

   Payment                                Principal               Principal
     Date                               Amount Payable          Amount Paid
   -------                              --------------          -----------

July 15, 1992                             $   458,000            $
January 15, 1993                              479,000
July 15, 1993                                 500,000
January 15, 1994                              523,000
July 15, 1994                                 546,000
January 15, 1995                              570,000
July 15, 1995                                 596,000
January 15, 1996                              623,000
July 15, 1996                                 651,000
January 15, 1997                              680,000
                                           ----------
Principal Amount                           $5,626,000
                                           ==========














                                   Page 1 of 1


<PAGE>


                                   ASSIGNMENT


                             Date: November 25, 1986

                For value  received,  FIRST PV  FUNDING  CORPORATION  (First PV)
hereby  sells,  assigns and  transfers to CHEMICAL  BANK,  as  Collateral  Trust
Trustee  pursuant to the  Collateral  Trust  Indenture  dated as of December 16,
1985, as heretofore  amended and  supplemented,  among First PV, Public  service
Company of New Mexico and said Collateral Trust Trustee,  without recourse,  the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.


                                       FIRST PV FUNDING CORPORATION


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


<PAGE>


                                                                     EXHIBIT A-3
                                                                   TO SUPPLEMENT
                                                                           NO. 1

                             FORM OF FIXED RATE NOTE
                             (DUE JANUARY 15, 2015)


                   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
               SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT

                 NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
                             (DUE JANUARY 15, 2015)

                                                   Issued at: New York, New York

                                                   Issue Date: November 25, 1986


                  THE  FIRST  NATIONAL  RANK OF  BOSTON,  not in its  individual
capacity,  but solely as Owner Trustee (Owner  Trustee) under a Trust  Agreement
dated as of July 31, 1986 with Chase Manhattan  Realty Leasing  Corporation (the
Owner Participant),  hereby promises to pay to FIRST PV FUNDING CORPORATION,  or
registered  assigns,  the principal sum of $32,873,000 (Thirty Two Million Eight
Hundred  Seventy  Three  Thousand  Dollars) on January 15,  2015  together  with
interest  (computed on the basis of a 360-day year of twelve  30-day  months) on
the aggregate  amount of such  principal sum remaining  unpaid from time to time
from the date of this Fixed Rate Note until due and payable,  in arrears, at the
rate of 10.15% per annum. Payments of principal  installments of this Fixed Rate
Note shall be made in the "principal  amount payable" and on the "payment dates"
specified  in Schedule 1 hereto,  as such  Schedule  may be revised from time to
time in accordance with the Indenture,  Supplemental Indenture No. 1 thereto and
the terms contained herein. Payments of accrued interest on this Fixed Rate Note
shall be made on  January 15 and July 15 in each year,  commencing  January  15,
1987 to and including the last "payment date" specified in Schedule 1 hereto.

                Capitalized  terms  used in this  Fixed  Rate Note which are not
otherwise  defined  herein  shall  have the  meanings  ascribed  thereto  in the
Indenture (as hereinafter defined).




<PAGE>
                  Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest,  shall be paid, on
demand,  from  the due  date  thereof  at the rate  per  annum  equal to  11.15%
(computed on the basis of a 360-day year of twelve 30-day months) for the period
during which any such principal, premium or interest shall be overdue.

                In the event any date on which a payment is due under this Fixed
Rate Note is not a Business  Day,  then payment  thereof may be made on the next
succeeding Business Day with the same force and effect as if made on the date on
which such payment was due.

                All payments of principal,  premium,  if any, and interest to be
made by the Owner  Trustee  hereunder and under the Trust  Indenture,  Mortgage,
Security  Agreement and Assignment of Rents dated as of July 31, 1986, as at any
time  heretofore or hereafter  amended or  supplemented  in accordance  with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee),  shall be made only from the Lease Indenture
Estate and the Trust Estate and the  Indenture  Trustee shall have no obligation
for the payment  thereof  except to the extent that the Indenture  Trustee shall
have sufficient  income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture.  The Holder
hereof,  by its acceptance of this Fixed Rate Note, agrees that such Holder will
look  solely to the Trust  Estate  and the income  and  proceeds  from the Lease
Indenture  Estate to the extent  available for distribution to the Holder hereof
as above  provided,  and that  neither  the  Owner  Participant  nor,  except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally  liable to the Holder  hereof for any amounts  payable
under this  Fixed  Rate Note or for any  performance  to be  rendered  under the
Indenture or any other  Transaction  Document or for any  liability  thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner  Trustee  hereunder  and under the  Indenture  pursuant  to Section
3.9(b) of the  Indenture  then all the payments to be made under this Fixed Rate
Note shall be made only from  payments  made by the Lessee under this Fixed Rate
Note in accordance  with the  Assumption  Agreement  referred to in said Section
3.9(b) and the Holder of this Fixed Rate Note  agrees that in such event it will
look solely to the Lessee for such payment.



                                       -2-



<PAGE>


                Principal,  premium,  if any, and interest shall be payable, in
the manner  provided in the Indenture1 on presentment of this Fixed Rate Note at
the Indenture Trustee's office, or as otherwise provided in the Indenture.

                  In the  manner and to the extent  provided  in the  Indenture,
Schedule 1 hereto may be adjusted  once at the  discretion  of the Owner Trustee
prior to July 15, 1997,  in  connection  with an  adjustment to Basic Rent under
Section 3 (d) of the Facility Lease.

                The Holder  hereof,  by its  acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the  Indenture.  The Holder of this Fixed Rate Note
agrees,  by its acceptance  hereof,  that it will duly note by appropriate means
all payments of  principal  or interest  made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.

                This Fixed Rate Note is one of the Fixed Rate Notes  referred to
in the  Indenture.  The Indenture  permits the issuance of additional  series of
Notes,  as provided in Section 3.5 of the Indenture,  and the several series nay
be for  varying  aggregate  principal  amounts and may have  different  maturity
dates, interest rates,  redemption provisions and other terms. The properties of
the owner  Trustee  included  in the Lease  Indenture  Estate are pledged to the
Indenture  Trustee to the extent  provided in the  Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other  Notes  issued  and  outstanding  from time to time under the
Indenture.  Reference  is hereby made to the  Indenture  for a statement  of the
rights of the Holders of, and the nature and extent of the  security  for,  this
Fixed Rate Note and of the rights of, and the nature and extent of the  security
for, the Molders of the other Notes and of certain  rights of the Owner Trustee,
as well as for a statement of the terms and  conditions  of the trust created by
the Indenture,  to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.




                                       -3-



<PAGE>
                  This  Fixed Rate Note is  subject  to  prepayment  in whole as
contemplated  by Section 5.2 of the Indenture and in the  circumstances  therein
described.  In addition, this Fixed Rate Note may be prepaid in whole or in part
at any time on or after January is, 1992 by the Owner Trustee upon the giving of
not  less  than 30  days'  notice  (as  provided  in the  Indenture)  and at the
following  prepayment  prices (expressed as a percentage of the unpaid principal
amount hereof), together with interest accrued to the date fixed for prepayment:

       Twelve Month                                           Redemption
     Period Beginning                                            Price
     ----------------                                            -----

     January 15, 1992                                            108.120%
     January 15, 1993                                            107.714
     January 15, 1994                                            107.308
     January 15, 1995                                            106.902
     January 15, 1996                                            106.496
     January 15, 1997                                            106.090
     January 15, 1998                                            105.684
     January 15, 1999                                            105.272
     January 15, 2000                                            104.872
     January 15, 2001                                            104.466
     January 15, 2002                                            104.060
     January 15, 2003                                            103.654
     January 15, 2004.                                           103.248
     January 15, 2005                                            102.842
     January 15, 2006                                            102.436
     January 15, 2007                                            102.030
     January 15, 2008                                            101.624
     January 15, 2009                                            101.218
     January 15, 2010                                            100.812
     January 15, 2011                                            100.406



and thereafter at the principal  amount thereof,  together with interest accrued
to the date fixed for prepayment.  This Fixed Rate Note is not otherwise subject
to prepayment in whole or in part.

                In case  an  Indenture  Event  of  Default  shall  occur  and be
continuing,  the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain  rights of the owner  Trustee or the Owner  Participant  contained or
referred to in the  Indenture,  be declared or may become due and payable in the
manner and with the effect provided in the Indenture.


                                       -4-




<PAGE>


                  The lien upon the Lease  Indenture  Estate is subject to being
legally  discharged  prior to the  maturity  of this  Fixed  Rate  Note upon the
deposit with the Indenture Trustee of cash or certain  securities  sufficient to
pay this  Fixed Rate Note when due or an  assumption  of the  obligation  of the
Owner  Trustee  under this Fixed  Rate Note and the  Indenture,  in each case in
accordance with the terms of the Indenture.

                There shall be maintained at the  Indenture  Trustee's  Office a
register for the purpose of registering  transfers and exchanges of Notes in the
manner  provided  in the  Indenture.  The  transfer  of this  Fixed Rate Note is
registrable,  as provided in the  Indenture,  upon  surrender of this Fixed Rate
Note for  registration of transfer duly  accompanied by a written  instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable  transfer taxes.  Prior to due presentment for
registration  of  transfer  of this Fixed Rate Note,  the Owner  Trustee and the
Indenture  Trustee  may treat the  person in whose  name this Fixed Rate Note is
registered  as the  owner  hereof  for the  purpose  of  receiving  payments  of
principal of and  premium,  if any, and interest on this Fixed Rate Note and for
all other purposes  whatsoever,  whether or not this Fixed Rate Note be overdue,
and neither the Owner  Trustee nor the  Indenture  Trustee  shall be affected by
notice to the contrary.

                  This Fixed Rate Note shall be governed  by, and  construed  in
accordance with, the laws of the State of New York.



















                                       -5-



<PAGE>


                 IN WITNESS  WHEREOF,  the owner  Trustee  has caused this Fixed
Rate Note to be duly executed as of the date hereof.


                                       THE FIRST NATIONAL BANK OF
                                       BOSTON,  not in  its  individual
                                       capacity,  but  solely  as Owner
                                       Trustee under a Trust  Agreement
                                       dated as of July 31,  1986  with
                                       chase  Manhattan  Realty Leasing
                                       Corporation


                                       By
                                          -----------------------------
                                            Assistant Vice President

                This Note is one of the series of Notes  referred to therein and
in the within-mentioned Indenture.


                                       CHEMICAL BANK,
                                       as Indenture Trustee


                                       By
                                          ----------------------------
                                               Vice President












                                       -6-




<PAGE>


                                   SCHEDULE 1
                             TO THE FIXED RATE NOTE
                             (DUE JANUARY 15, 2015)

                       Schedule of Principal Amortization

                          $32,873,000 Principal Amount

   Payment                              Principal           Principal 
    Date                              Amount Payable       Amount Paid
   -------                            --------------       -----------

July 15, 1997                           $ 710,000            $
January 15, 1998                          746,000
July 15, 1998                             784,000
January 15, 1999                          824,000
July 15, 1999                             866,000
January 15, 2000                          604,000
July 15, 2000                             675,000
January 15, 2001                          639,000
July 15, 2001                             718,000
January 15, 2002                          660,000
July 15, 2002                             727,000
January 15, 2003                          656,000
July 15, 2003                             736,000
January 15, 2004                          669,000
July 15, 2004                             781,000
January 15, 2005                          711,000
July 15, 2005                             829,000
January 15, 2006                          754,000
July 15, 2006                             880,000
January 15, 2007                          800,000
July 15, 2007                             934,000
January 15,2008                           850,000
July 15, 2008                             992,000
January 15, 2009                          902,000
July 15, 2009                           1,053,000
January 15, 2010                          957,000
July 15, 2010                           1,118,000



<PAGE>


                                   SCHEDULE 1
                             TO THE FIXED RATE NOTE
                             (DUE JANUARY 15, 2015)

                       Schedule of Principal Amortization
                                   (Continued)


   Payment                              Principal           Principal 
    Date                              Amount Payable       Amount Paid
   -------                            --------------       -----------

January 15, 1998                        1,016,000
July 15, 1998                           1,187,000
January 15, 1999                        1,078,000
July 15, 1999                           1,260,000
January 15, 2000                        1,145,000
July 15, 2000                           1,337,000
January 15, 2001                        1,214,000
July 15, 2001                           1,419,000
January 15, 2002                        1,642,000
                                      -----------
Principal Amount                      $32,873,000
                                      ===========






















                                       -2-




<PAGE>


                                   ASSIGNMENT

                           Date:  November 25, 1986


                  For value received,  FIRST PV FUNDING  CORPORATION  (First PV)
hereby  sells,  assigns and  transfers to CHEMICAL  BANK,  as  Collateral  Trust
Trustee  pursuant to the  Collateral  Trust  Indenture  dated as of December 16,
1985, as heretofore  amended and  supplemented,  among First PV, Public  Service
Company of New Mexico and said Collateral Trust Trustee,  without recourse,  the
Fixed Rate Note to which this Assignment is annexed and all rights thereunder.


                                       FIRST PV FUNDING CORPORATION


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