PUBLIC SERVICE ELECTRIC AND GAS COMPANY


                                       and



                      FIRST UNION NATIONAL BANK, as Trustee



                                    INDENTURE

                            Dated as of June 1, 1996


                          Providing for the Issuance of
              Deferrable Interest Subordinated Debentures in Series
                                    including


          8.625% Deferrable Interest Subordinated Debentures, Series A


<PAGE>
                                TABLE OF CONTENTS




       ARTICLE 1
       DEFINITIONS AND INCORPORATION BY REFERENCE                       Page


SECTION 1.01  Definitions...............................................  2
SECTION 1.02  Other Definitions.........................................  7
SECTION 1.03  Incorporation by Reference of Trust Indenture Act.........  7
SECTION 1.04  Rules of Construction.....................................  8
SECTION 1.05  Acts of Holders and Holders of Preferred Securities.......  8

       ARTICLE 2
       THE DEBENTURES; THE SERIES A DEBENTURES


SECTION 2.01  Issue of Debentures Generally.............................  9
SECTION 2.02  Terms and Form of the Series A Debentures................. 11
SECTION 2.03  Payment of Principal and Interest......................... 12
SECTION 2.04  Execution, Authentication and Delivery.................... 14
SECTION 2.05  Registrar and Paying Agent................................ 16
SECTION 2.06  Paying Agent to Hold Money in Trust....................... 17
SECTION 2.07  Debentureholder Lists..................................... 17
SECTION 2.08  Transfer and Exchange..................................... 17
SECTION 2.09  Replacement Debentures.................................... 18
SECTION 2.10  Outstanding Debentures; Determinations of Holders' Action. 19
SECTION 2.11  Temporary Debentures...................................... 19
SECTION 2.12  Book-Entry System......................................... 20
SECTION 2.13  Cancellation.............................................. 21

       ARTICLE 3
       REDEMPTION


SECTION 3.01  Redemption; Notice to Trustee............................. 22
SECTION 3.02  Selection of Debentures to be Redeemed.................... 22
SECTION 3.03  Notice of Redemption...................................... 22


<PAGE>



SECTION 3.04  Effect of Notice of Redemption............................ 23
SECTION 3.05  Deposit of Redemption Price............................... 24
SECTION 3.06  Debentures Redeemed in Part............................... 24

       ARTICLE 4
       COVENANTS


SECTION 4.01  Payment of Debentures..................................... 24
SECTION 4.02  Prohibition Against Dividends............................. 25
SECTION 4.03  SEC Reports............................................... 25
SECTION 4.04  Compliance Certificates................................... 26
SECTION 4.05  Further Instruments and Acts.............................. 26
SECTION 4.06  Payments for Consents..................................... 26
SECTION 4.07  Payment of Expenses of Trust I............................ 26

       ARTICLE 5
       SUCCESSOR CORPORATION


SECTION 5.01  When the Company May Merge................................ 27

       ARTICLE 6
       DEFAULTS AND REMEDIES


SECTION 6.01  Events of Default......................................... 27
SECTION 6.02  Acceleration.............................................. 29
SECTION 6.03  Other Remedies............................................ 30
SECTION 6.04  Waiver of Past Defaults................................... 30
SECTION 6.05  Control by Majority....................................... 31
SECTION 6.06  Limitation on Suits....................................... 31
SECTION 6.07  Rights of Holders to Receive Payment...................... 32
SECTION 6.08  Collection Suit by the Trustee............................ 32
SECTION 6.09  The Trustee May File Proofs of Claim...................... 32
SECTION 6.10  Priorities................................................ 33
SECTION 6.11  Undertaking for Costs..................................... 33
SECTION 6.12  Waiver of Stay............................................ 34




<PAGE>



       ARTICLE 7
       THE TRUSTEE

SECTION 7.01  Duties of the Trustee..................................... 34
SECTION 7.02  Rights of the Trustee..................................... 35
SECTION 7.03  Individual Rights of the Trustee.......................... 36
SECTION 7.04  The Trustee's Disclaimer.................................. 36
SECTION 7.05  Notice of Defaults........................................ 36
SECTION 7.06  Reports by Trustee to Holders............................. 37
SECTION 7.07  Compensation and Indemnity................................ 37
SECTION 7.08  Replacement of Trustee.................................... 38
SECTION 7.09  Successor Trustee by Merger............................... 39
SECTION 7.10  Eligibility; Disqualification............................. 39
SECTION 7.11  Preferential Collection of Claims Against the Company..... 39

       ARTICLE 8
       SATISFACTION AND DISCHARGE OF INDENTURE;
       DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS

SECTION 8.01  Satisfaction and Discharge of Indenture................... 39
SECTION 8.02  Application by Trustee of Funds Deposited for Payment of
              Debentures................................................ 41
SECTION 8.03  Repayment of Moneys Held by Paying Agent.................. 41
SECTION 8.04  Return of Moneys Held by the Trustee and Paying Agent
              Unclaimed for Three Years................................. 41

       ARTICLE 9
       AMENDMENTS


SECTION 9.01  Without Consent of Holders................................ 42
SECTION 9.02  With Consent of Holders................................... 42
SECTION 9.03  Compliance with Trust Indenture Act....................... 44
SECTION 9.04  Revocation and Effect of Consents; Waivers and Actions.... 44
SECTION 9.05  Notation on or Exchange of Debentures..................... 44
SECTION 9.06  Trustee to Execute Supplemental Indentures................ 45
SECTION 9.07  Effect of Supplemental Indentures......................... 45



<PAGE>



       ARTICLE 10
       SUBORDINATION


SECTION 10.01 Debentures Subordinated to Senior Indebtedness............ 45
SECTION 10.02 Priority and Payment of Proceeds in Certain Events:
              Remedies Standstill....................................... 45
SECTION 10.03 Payments which May Be Made Prior to Notice................ 47
SECTION 10.04 Rights of Holders of Senior Indebtedness Not to Be
              Impaired.................................................. 47
SECTION 10.05 Trustee May Take Action to Effectuate Subordination....... 47
SECTION 10.06 Subrogation............................................... 48
SECTION 10.07 Obligations of Company Unconditional; Reinstatement....... 48
SECTION 10.08 Trustee Entitled to Assume Payments Not Prohibited in 
              Absence of Notice......................................... 49
SECTION 10.09 Right of Trustee to Hold Senior Indebtedness.............. 50

       ARTICLE 11
       MISCELLANEOUS

SECTION 11.01 Trust Indenture Act Controls.............................. 50
SECTION 11.02 Notices................................................... 50
SECTION 11.03 Communication by Holders with Other Holders............... 51
SECTION 11.04 Certificate and Opinion as to Conditions Precedent........ 51
SECTION 11.05 Statements Required in Certificate or Opinion............. 51
SECTION 11.06 Severability Clause....................................... 52
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar.............. 52
SECTION 11.08 Legal Holidays............................................ 52
SECTION 11.09 Governing Law............................................. 53
SECTION 11.10 No Recourse Against Others................................ 53
SECTION 11.11 Successors................................................ 53
SECTION 11.12 Multiple Original Copies of this Indenture................ 53
SECTION 11.13 No Adverse Interpretation of Other Agreements............. 53
SECTION 11.14 Table of Contents: Headings............................... 53
SECTION 11.15 Benefits of the Indenture................................. 54

<PAGE>
  PSE&G Indenture
            Certain Sections of this Indenture  relating to Sections 310 through
            318 of the Trust Indenture Act of 1939

      Trust Indenture   Indenture
      Act Section       Section

      ss. 310(a)(1)      7.10
      (a)(2)             7.10
      (a)(3)             Not Applicable
      (a)(4)             Not Applicable
      (a)(5)             Not Applicable
      (b)                7.08; 7.10; 11.01
      (c)                Not Applicable
ss.311(a)                7.11
      (b)                7.11
      (c)                Not Applicable
ss.312(a)                2.07
      (b)                11.03
      (c)                11.03
ss.313(a)                 7.06
      (b)(1)             Not Applicable
      (b)(2)             7.06
      (c)                7.06; 11.02
      (d)                7.06
ss.314(a)                4.03; 11.02
      (b)                Not Applicable
      (c)(1)             2.02; 11.04; 11.05
      (c)(2)             2.02; 11.04; 11.05
      (c)(3)             Not Applicable
      (d)                Not Applicable
      (e)                11.05
      (f)                Not Applicable
ss.315(a)                7.01(b)
      (b)                7.05, 11.02
      (c)                7.01(a)
      (d)                7.01(c)
      (e)                6.11
ss. 316(a)(1)(A)         6.05
      (a)(1)(B)          6.04
      (a)(2)             Not Applicable
      (a)(last sentence) 2.10
      (b)                6.07
      (c)                1.05
ss.317(a)(1)             6.08
      (a)(2)             6.09
      (b)                2.06
ss.318(a)                11.01
      (b)                Not Applicable
      (c)                11.01

Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Indenture

<PAGE>

                                    INDENTURE,  dated as of June 1, 1996, by and
between Public Service  Electric and Gas Company,  a corporation  duly organized
and existing under the laws of the State of New Jersey (the "Company"), and
First Union National  Bank, a national  banking  association  duly organized and
existing  under  the laws of the  United  States of  America,  as  trustee  (the
"Trustee").

                                    WHEREAS,  the  Company may from time to time
create or establish  one or more  statutory  business  trusts for the purpose of
issuing undivided beneficial interests in the assets thereof (the "Trust
Securities") and using the proceeds thereof to acquire the Company's  Deferrable
Interest Subordinated Debentures.

                                    WHEREAS, pursuant to an Amended and Restated
Trust  Agreement  dated as of June 26, 1996 (the "Trust I Agreement")  among the
Company, as depositor, First Union National Bank, as Property Trustee (the
"Property Trustee I"), the Delaware Trustee named therein and the Administrative
Trustee named  therein,  there has been declared and  established  PSE&G Capital
Trust I, a Delaware business trust ("Trust I").

                                    WHEREAS,  Trust I intends to issue its Trust
Securities,   including  its  8.625%   Cumulative   Quarterly  Income  Preferred
Securities,  Series A, representing undivided beneficial interests in the assets
of Trust I,  having a  liquidation  amount of $25 per security and having rights
provided  therefor  in  the Trust I Agreement (the  "Series  A  Preferred
Securities").

                                    WHEREAS,  the  Company  has  authorized  the
issuance of its 8.625% Deferrable  Interest  Subordinated  Debentures,  Series A
(the "Series A Debentures") to be purchased by Trust I with the proceeds from
the  issuance and sale of its Trust  Securities,  and to provide  therefor,  the
Company has duly authorized the execution and delivery of this Indenture.

                                    WHEREAS,  all things  necessary  to make the
securities  issued  hereunder,  when duly issued and executed by the Company and
authenticated and delivered hereunder, the valid obligations of the Company,
and to make  this  Indenture  a valid  and  binding  agreement  of the  Company,
enforceable in accordance with its terms, have been done.

                                    NOW THEREFORE:

                                    Each  of  the  Company   and  the   Trustee,
intending to be legally bound  hereby,  agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders (as hereinafter
defined) of the securities issued hereunder, including the Series A Debentures:




<PAGE>

                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

                            SECTION 1.01 Definitions

                                    "Affiliate" of any specified Person means
any other Person, directly or indirectly,  controlling or controlled by or under
direct or indirect  common  control with such specified  Person.  When used with
respect to any Person,  "control"  means the power to direct the  management and
policies of such Person,  directly or indirectly,  whether through the ownership
of voting securities,  by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                                    "Board  of  Directors"  means  the  Board of
Directors  of the Company or any  committee  thereof duly  authorized  to act on
behalf of such Board.

                                    "Board  Resolution"  means  (i) a copy  of a
resolution  certified by the Secretary or the Assistant Secretary of the Company
to have been duly adopted by the Board of Directors  and to be in full force and
effect on the date of such  certification and delivered to the Trustee or (ii) a
certificate  signed by the  authorized  officer or officers to whom the Board of
Directors  has  delegated  its  authority,  and in each case,  delivered  to the
Trustee.

                                    "Business  Day"  means any day that is not a
Saturday,  a Sunday or a day on which  banking  institutions  in The City of New
York or the State of New Jersey are authorized or required by law or
executive order to close.

                                    "Capital  Lease  Obligations"  of  a  Person
means any  obligation  which is required to be classified and accounted for as a
capital lease on the face of a balance sheet of such Person prepared in
accordance with GAAP.

                                    "Capital  Stock"  means any and all  shares,
interests,  rights  to  purchase,  warrants,  options,  participation  or  other
equivalents of or interests in (however designated) corporate stock.

                                    "Company" means Public Service  Electric and
Gas Company, a New Jersey corporation, or any successor thereto.

                                    "Company  Order" means a written  request or
order  signed  in the name of the  Company  by an  Officer  of the  Company  and
delivered to the Trustee.

                                    "Debentureholder" or "Holder" means a Person
in whose name a Debenture is registered on the Registrar's books.

                                    "Debentures"   shall   mean   any   of   the
securities  of  any  series  issued,  authenticated  and  delivered  under  this
Indenture.

                                    "Default" means any event which is, or after
notice or passage of time,  or both,  would be, an Event of Default  pursuant to
Section 6.01 hereof.

                                    "Exchange Act" means the Securities Exchange
Act of 1934, as amended.

                                    "Extension  Period",  with  respect  to  any
series of  Debentures,  means the period  during  which the Company may elect to
extend the interest payment period on such series of the Debentures pursuant to
Section  4.01(b) hereof;  provided that no Extension  Period shall extend beyond
the Stated Maturity Date or the Redemption Date of any Debenture of such series.

                                    "GAAP" means generally  accepted  accounting
principles  set  forth in the  opinions  and  pronouncements  of the  Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board.

                                    "Indebtedness"  means,  without duplication,
(i) the principal of and premium (if any) in respect of (A)  indebtedness of the
Company for money borrowed and (B) indebtedness evidenced by securities,
debentures,  bonds or other similar instruments issued by the Company;  (ii) all
Capital Lease  Obligations of the Company;  (iii) all obligations of the Company
issued or assumed as the deferred  purchase price of property,  all  conditional
sale  obligations  of the Company and all  obligations  of the Company under any
title retention  agreement (but excluding trade accounts  payable arising in the
ordinary  course of  business);  (iv) all  obligations  of the  Company  for the
reimbursement  of any  obligation,  any letter of credit,  banker's  acceptance,
security purchase facility or similar credit transaction (other than obligations
with respect to letters of credit securing  obligations  (other than obligations
described  in (i) through  (iii) above)  entered into in the ordinary  course of
business by the Company to the extent such  letters of credit are not drawn upon
or, if and to the extent drawn upon,  such drawing is  reimbursed  no later than
the  third  business  day  following  receipt  by the  Company  of a demand  for
reimbursement  following  payment on the applicable  letter of credit);  (v) all
obligations of the type referred to in clauses (i) through (iv) of other Persons
and all  dividends of other  Persons  (other than the  Preferred  Securities  or
similar  securities)  for the payment of which,  in either case,  the Company is
responsible or liable as obligor,  guarantor or otherwise (other than the Series
A  Guarantee  Agreement  or  obligations  ranking  pari  passu with the Series A
Guarantee  Agreement);  and (vi) all  obligations  of the  type  referred  to in
clauses (i) through (v) of other Persons  secured by any lien on any property or
asset of the Company (whether or not such obligation is assumed by the Company),
the amount of such obligation being deemed to be the lesser of the value of such
property  or  assets or the  amount  of the  obligation  so  secured;  provided,
however,   that  Indebtedness  will  not  include   endorsements  of  negotiable
instruments for collection in the ordinary course of business.

                                    "Indenture" means this indenture, as amended
or supplemented from time to time in accordance with the terms hereof, including
the provisions of the TIA that are deemed to be a part hereof.

                                    "Interest  Payment  Date",  when  used  with
respect  to the  Debentures  of any  series,  means the stated  maturity  of any
installment of interest on the Debentures of that series.

                                    "Issue  Date",  with  respect to a series of
Debentures, means the date on which the Debentures of such series are originally
issued.

                                    "Officer"   means,   with   respect  to  any
corporation,  the  Chairman  of the  Board,  the Chief  Executive  Officer,  the
President,  any Vice  President,  the Treasurer,  any Assistant  Treasurer,  the
Secretary or any Assistant Secretary of such corporation.

                                    "Officer's   Certificate"  means  a  written
certificate  containing the applicable  information  specified in Sections 11.04
and 11.05 hereof, signed in the name of the Company by any one of its Officers,
and delivered to the Trustee.

                                    "Opinion of Counsel" means a written opinion
containing  the  applicable  information  specified in Sections  11.04 and 11.05
hereof, by legal counsel who is reasonably acceptable to the Trustee.

                                    "Paying  Agent" means any Person  authorized
by the Company to pay the principal of and premium,  if any, and interest on the
Debentures of any series on behalf of the Company.

                                    "Person" means any individual,  corporation,
partnership, limited liability company, joint venture, association,  joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.

                                    "Predecessor  Debentures"  of any particular
Debenture means every previous Debenture evidencing all or a portion of the same
debt as that evidenced by such particular Debenture; and for purposes of
this definition,  any Debenture  authenticated  and delivered under Section 2.09
hereof in  exchange  for or in lieu of a  mutilated,  destroyed,  lost or stolen
Debenture shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Debenture.

                                    "Preferred Securities"  means the Cumulative
Quarterly  Income  Preferred Securities  of  a  Trust,   representing  undivided
beneficial  interests  in the assets of such Trust.

                                    "Property  Trustee I" means First   Union
National  Bank and its successors  and  assigns, as   property trustee under the
Trust I Agreement.

                                    "Record Date", with respect to any series of
the  Debentures,  means the Regular  Record Date, the Special Record Date or any
date set to determine the Holders of Debentures of such series entitled to vote,
consent,  make a request  or  exercise  any  other  right  associated  with such
Debentures.

                                    "Redemption   Date",  with  respect  to  the
Debentures  of any  series  to be  redeemed,  means the date  specified  for the
redemption  thereof in accordance with the terms thereof and pursuant to Article
3 of this Indenture.

                                    "Redemption  Price",  with  respect  to  the
Debentures of any series to be redeemed, means the price at which such Debenture
is to be redeemed in accordance with the terms thereof and pursuant to
Article 3 of this Indenture.

                                    "Regular  Record  Date",  with respect to an
interest payment on the Debentures of a series, means the date set forth in this
Indenture  or  the   supplemental   indenture   creating  such  series  for  the
determination  of Holders  entitled  to receive  payment of interest on the next
succeeding Interest Payment Date.

                                    "SEC" or "Commission" means the Securities 
and Exchange Commission.

                                    "Securities Act" means the Securities Act
of 1933, amended.

                                    "Senior Indebtedness" means all 
Indebtedness,  except for Indebtedness  that is by its terms  subordinated to or
pari passu with the Debentures.  Notwithstanding anything to the contrary in the
foregoing,  Senior  Indebtedness  shall not  include  the  Company's  Deferrable
Interest Subordinated  Debentures issued and outstanding from time to time under
the Indenture dated as of November 1, 1994, as amended and supplemented, between
the Company and First  Fidelity Bank,  National  Association,  as trustee,  with
which the Debentures are intended to be pari passu, or any Indebtedness  between
or among the Company and any Affiliate.

                                    "Series  A  Debentures"  means  any  of  the
Company's 8.625% Deferrable Interest  Subordinated  Debentures,  Series A issued
under this Indenture.

                                    "Series  A  Guarantee  Agreement"  means the
Guarantee Agreement dated as of June 26, 1996 from the Company, as guarantor, to
First Union National Bank, as guarantee trustee, with respect to the Series
A Preferred Securities.

                                    "Series A  Preferred  Securities"  means the
undivided  beneficial  interests in the assets of Trust I, having a  liquidation
amount of $25 per security and having rights provided therefor in the Trust I
Agreement.

                                    "Special Record Date" for the payment of any
Defaulted  Interest on the  Debentures  of any series means the date  determined
pursuant to Section 2.03 hereof.

                                    "Stated Maturity Date",  with respect to any
Debenture,  means the date  specified  for such  Debenture  as the fixed date on
which the principal of such Debenture is due and payable.

                                    "Subsidiary"    means    any    corporation,
association,  partnership, trust or other business entity of which more than 50%
of the  total  voting  power of  shares  of  Capital  Stock  or other  interests
(including  partnership interests) entitled (without regard to the occurrence of
any  contingency)  to vote in the  election of  directors,  managers or trustees
thereof is at the time owned or controlled,  directly or indirectly,  by (i) the
Company,  (ii) the  Company and one or more  Subsidiaries,  or (iii) one or more
Subsidiaries.

                                    "TIA" means the Trust Indenture Act of 1939,
as amended and as in effect on the date of this  Indenture;  provided,  however,
that if the TIA is amended after such date, TIA means, to the extent
required by any such amendment, the TIA as so amended.

                                    "Trust" means any statutory  business  trust
created by the Company to issue Trust  Securities  and to use the proceeds  from
the sale thereof to purchase Debentures.

                                    "Trust I" means PSE&G Capital Trust I, a
Delaware statutory business trust created under the Delaware Business Trust Act,
Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. ss. 3801, et seq.

                                    "Trust I Agreement" means the Amended and 
Restated  Trust  Agreement  dated as of June 26,  1996,  among the  Company,  as
Depositor,  First Union National Bank, as Property Trustee, the Delaware Trustee
named therein and the Administrative  Trustee named therein,  as the same may be
amended and modified from time to time.

                                    "Trust Officer", when used with respect to
the Trustee, means any Senior Vice President,  any Vice President, any Assistant
Vice  President,  any Trust  Officer,  or Assistant  Trust  Officer or any other
officer of the Corporate Trust Department of the Trustee customarily  performing
functions similar to those performed by any of the above designated officers and
also means,  with  respect to a particular  corporate  trust  matter,  any other
officer to whom such matter is referred  because of that officer's  knowledge of
and familiarity with the particular subject.

                                    "Trust Securities" means the undivided
beneficial interests in the assets of a Trust.

                                    "Trustee"  means First Union  National Bank,
until a successor  replaces it pursuant  to the  applicable  provisions  of this
Indenture and, thereafter, shall mean such successor.

                                    "U.S. Government Obligations" means direct
obligations  (or  certificates   representing  an  ownership  interest  in  such
obligations)  of  the  United  States  of  America   (including  any  agency  or
instrumentality  thereof)  for the payment of which the full faith and credit of
the  United  States of  America is  pledged  and which are not  callable  at the
issuer's option.

                                    "Wholly Owned Subsidiary" means a Subsidiary
all the Capital  Stock of which  (other than  directors'  qualifying  shares) is
owned by the Company or another Wholly Owned Subsidiary.

                         SECTION 1.02 Other Definitions

     TERM                                              DEFINED IN SECTION
     "Act"................................................   1.05
     "Bankruptcy Law".....................................   6.01
     "Custodian"..........................................   6.01
     "Defaulted Interest".................................   2.03
     "Depositary".........................................   2.12
     "global Debenture"...................................   2.12
     "Legal Holiday"......................................  11.08
     "Notice of Default"..................................   6.01
     "Register"...........................................   2.05
     "Registrar"..........................................   2.05
     "Successor"..........................................   5.01

         SECTION 1.03 Incorporation by Reference of Trust Indenture Act

                                    Whenever   this   Indenture   refers   to  a
provision of the TIA, such provision is  incorporated by reference in and made a
part of this Indenture. The following TIA terms used in this Indenture have the
following meanings:

     "indenture securities" means the Debentures.

     "indenture security holder" means a Debentureholder or Holder.
     "indenture to be qualified" means this Indenture.

     "indenture trustee" or "institutional trustee" means the Trustee.

     "obligor" on the indenture securities means the Company and any other
      obligor on the Debentures.

                     All other TIA terms used in this Indenture that are defined
by the TIA,  defined by TIA reference to another  statute or defined by SEC rule
have the meanings assigned to them by such definitions.

                       SECTION 1.04 Rules of Construction

     Unless the context otherwise requires:

     (1)  Each capitalized term has the meaning assigned to it;

     (2)  an accounting term not otherwise defined has the meaning assigned
          to it in accordance with GAAP;

     (3)  "or" is not exclusive;

     (4)  "including" means including, without limitation;

     (5)  words in the singular include the plural, and words in the plural
          include the singular; and

     (6)  "herein,"  "hereof"  and other words of similar  import  refer to this
          Indenture  as a whole and not to any  particular  Article,  Section or
          other subdivision.

        SECTION 1.05 Acts of Holders and Holders of Preferred Securities

     (a)  Any request, demand, authorization, direction, notice, consent, waiver
          or other  action  provided by this  Indenture  to be given or taken by
          Holders or by holders of Preferred  Securities  may be embodied in and
          evidenced by one or more  instruments of  substantially  similar tenor
          signed  by  such  Holders  or  holders  of  Preferred  Securities,  as
          applicable,  in person or by an agent duly  appointed  in writing and,
          except as herein  otherwise  expressly  provided,  such  action  shall
          become  effective when such instrument or instruments are delivered to
          the  Trustee  and,  where  it is  hereby  expressly  required,  to the
          Company.  Such  instrument  or  instruments  (and the action  embodied
          therein and evidenced thereby) are herein sometimes referred to as the
          "Act" of  Holders  or holders of  Preferred  Securities  signing  such
          instrument or  instruments.  Proof of execution of any such instrument
          or of a writing  appointing any such agent shall be sufficient for any
          purpose of this  Indenture and  conclusive in favor of the Trustee and
          the Company, if made in the manner provided in this Section.

     (b)  The  fact  and  date  of the  execution  by  any  Person  of any  such
          instrument  or writing  may be proved in any manner  which the Trustee
          deems sufficient.

     (c)  The ownership of Debentures shall be proved by the Register.

     (d)  Any request, demand, authorization, direction, notice, consent, waiver
          or other Act of the Holder of any  Debenture  shall bind every  future
          Holder of the same Debenture and the Holder of every Debenture  issued
          upon the registration  transfer thereof or in exchange  therefor or in
          lieu  thereof in respect of anything  done,  omitted or suffered to be
          done by the Trustee or the Company in reliance thereon, whether or not
          notation of such action is made upon such Debenture.

     (e)  If  the  Company  solicits  from  the  Holders  any  request,  demand,
          authorization,  direction,  notice,  consent, waiver or other Act, the
          Company  may, at its option,  by or  pursuant to a  resolution  of its
          Board of Directors, fix in advance a Record Date for the determination
          of  Holders  entitled  to give such  request,  demand,  authorization,
          direction, notice, consent, waiver or other Act, but the Company shall
          have no  obligation  to do so. If such a Record  Date is  fixed,  such
          request, demand, authorization,  direction, notice, consent, waiver or
          other Act may be given  before or after  such  Record  Date,  but only
          Holders of record at the close of  business  on such Record Date shall
          be  deemed to be  Holders  for the  purposes  of  determining  whether
          Holders of the requisite  proportion of  outstanding  Debentures  have
          authorized   or  agreed  or   consented  to  such   request,   demand,
          authorization,  direction,  notice,  consent, waiver or other Act, and
          for that purpose the  outstanding  Debentures  shall be computed as of
          such Record Date.

                                    ARTICLE 2
                     THE DEBENTURES; THE SERIES A DEBENTURES

                   SECTION 2.01 Issue of Debentures Generally

                                    The aggregate principal amount of any series
of Debentures which may be  authenticated  and delivered under this Indenture is
limited to the aggregate liquidation amount of the Trust Securities of
the Trust purchasing such Debentures.

                                    The  Debentures may be issued in one or more
series as from time to time shall be authorized by the Board of Directors.

                                    The   Debentures  of  each  series  and  the
Trustee's  Certificate of Authentication  shall be substantially in the forms to
be attached as exhibits to the Indenture or supplemental indenture creating such
series,  but in the case of any  series of  Debentures  other  than the Series A
Debentures,  with such  inclusions,  omissions  and  variations  as to  letters,
numbers or other marks of  identification  or  designation  and such  legends or
endorsements  printed,  lithographed or engraved thereon as the Company may deem
appropriate and as are not  inconsistent  with the provisions of this Indenture,
or as may be required to comply with any law or with any rule or regulation made
pursuant  thereto or with any rule or regulation of any  securities  exchange on
which such Debentures may be listed, or to conform to usage.

                                    Other series of  Debentures  may differ from
the Series A Debentures,  and as and between series, in respect of any or all of
the following matters:

     (a)  designation;

     (b)  Stated  Maturity Date or Dates,  which may be serial and the Company's
          option, if any, to change the Stated Maturity Date or Dates;

     (c)  interest rate or method of determination of the interest rate;

     (d)  the basis  upon  which  interest  shall be  computed  if other  than a
          360-day year composed of twelve 30-day months;

     (e)  Interest Payment Dates and the Regular Record Dates therefor;

     (f)  the maximum duration of the Extension Period;

     (g)  Issue Date or Dates and interest accrual provisions;

     (h)  authorized denominations;

     (i)  the place or places for the payment of principal (and premium, if any)
          and interest;

     (j)  the aggregate  principal amount of Debentures of such series which may
          be issued;

     (k)  the optional and mandatory redemption provisions, if any;

     (l)  provisions, if any, for any sinking or analogous fund; and

     (m)  any  other  provisions  expressing  or  referring  to  the  terms  and
          conditions  upon which the  Debentures of such series are to be issued
          under this Indenture  which are not in conflict with the provisions of
          this Indenture.


in each  case as  determined  by the Board of  Directors  and  specified  in the
supplemental indenture creating such series.

             SECTION 2.02 Terms and Form of the Series A Debentures

     (a)  The Series A Debentures  shall be designated  "Public Service Electric
          and Gas Company,  8.625% Deferrable Interest Subordinated  Debentures,
          Series A." The Series A Debentures  and the Trustee's  Certificate  of
          Authentication  shall  be  substantially  in the  form  of  Exhibit  A
          attached hereto.  The Series A Debentures shall initially be issued as
          global Debentures in accordance with the provisions of Section 2.12 of
          this Indenture,  with The Depository Trust Company as Depositary.  The
          terms  and  provisions  contained  in the  Series A  Debentures  shall
          constitute,  and are hereby  expressly made, a part of this Indenture.
          The Company and the Trustee,  by their  execution and delivery of this
          Indenture,  expressly  agree to such  terms and  provisions  and to be
          bound thereby.

     (b)  The aggregate  principal amount of Series A Debentures  outstanding at
          any time may not exceed  $214,433,000  except as  provided  in Section
          2.09  hereof.  The  Series A  Debentures  shall be  authenticated  and
          delivered  upon delivery to the Trustee of items  specified in Section
          2.04(d) hereof.

     (c)  The Stated Maturity Date of the Series A Debentures is June 26, 2045.

     (d)  The interest rate of the Series A Debentures is 8.625% per annum.  The
          Interest  Payment Dates for the Series A Debentures are March 31, June
          30,  September  30 and December 31 of each year,  commencing  June 30,
          1996.  In the event that any date on which  interest is payable on the
          Series A Debentures  is not a Business  Day,  then payment of interest
          payable  on such date will be made on the next day which is a Business
          Day (and without any interest or other  payment in respect of any such
          delay),  except that if such  Business  Day is in the next  succeeding
          calendar year, such payment shall be made on the immediately preceding
          Business  Day,  in each case with the same force and effect as if made
          on such date. The Regular  Record Date for each Interest  Payment Date
          for the Series A  Debentures  shall be the 15th day  (whether or not a
          Business  Day) of the last month of each  calendar  quarter,  provided
          that if Trust I is the sole Holder of the Series A  Debentures  or the
          Series A Debentures  are issued in  book-entry-only  form, the Regular
          Record  Date  shall  be the  close of  business  on the  Business  Day
          immediately preceding such Interest Payment Date.

          Each Series A Debenture  shall bear  interest from  its Issue  Date or
          from  the  most  recent  Interest  Payment Date to which  interest has
          been  paid or  duly  provided  for  with  respect  to  such  Series  A
          Debenture;  except  that,  so long as there is no  existing  Defaulted
          Interest (as defined in Section  2.03  hereof) or Extension  Period on
          the Series A Debentures,  any Series A Debenture  authenticated by the
          Trustee between the Regular Record Date for any Interest  Payment Date
          and such Interest  Payment Date shall bear interest from such Interest
          Payment Date.

          Overdue   principal of and  interest on any  Series A  Debenture   and
          interest  which has been deferred  pursuant to Section  4.01(b) hereof
          shall bear  interest (to the extent that the payment of such  interest
          shall  be  legally  enforceable)  at a rate  per  annum  equal  to the
          interest rate per annum payable on such Series A Debenture.

     (e)  The Series A  Debentures  shall be issuable  only in  registered  form
          without  coupons  and only in  denominations  of $25 and any  integral
          multiple thereof.

     (f)  The maximum  Extension  Period for the Series A Debentures shall be 20
          consecutive quarters.

                 SECTION 2.03 Payment of Principal and Interest

                                    Unless  otherwise   specified   pursuant  to
Section 2.01(d),  interest on the Debentures shall be computed on the basis of a
360-day year composed of twelve 30-day months, and for any period shorter than
thirty days, interest will be computed on the basis of the actual number of days
elapsed in such period.

                                    Unless otherwise provided with  respect to a
series of Debentures,

     (i)  the principal and  Redemption  Price of and interest on each Debenture
          shall be payable  in such coin or  currency  of the  United  States of
          America as at the time of payment is legal  tender for the  payment of
          public and private debts;

     (ii) the  principal  and  Redemption  Price of any  Debenture  and interest
          payable on the Stated Maturity Date (if other than an Interest Payment
          Date) or  Redemption  Date shall be  payable  upon  surrender  of such
          Debenture at the office or agency of any Paying Agent therefor; and

     (iii)interest on any Debenture shall be paid on each Interest  Payment Date
          therefor to the Holder  thereof at the close of business on the Record
          Date  therefor,  such  interest  to be payable by check  mailed to the
          address of the Person entitled  thereto as such address appears on the
          Register;  provided  however,  that (1) at the written  request of the
          Holder  of  at  least  $10,000,000   aggregate   principal  amount  of
          Debentures received by the Registrar not later than the Regular Record
          Date  for  such  Interest  Payment  Date,  interest  accrued  on  such
          Debenture  will be payable  by wire  transfer  within the  continental
          United  States  in  immediately  available  funds to the bank  account
          number of such  Holder  specified  in such  request and entered on the
          Register by the  Registrar  and (2) payments made in respect of global
          Debentures  shall  be  made  in  immediately  available  funds  to the
          Depositary.

                                    Except as specified pursuant to Section 2.01
or Section  4.01(b) hereof,  interest on any Debenture which is payable,  and is
punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that  Debenture (or one or more  Predecessor
Debentures)  is registered  at the close of business on the Regular  Record Date
for such interest.  Any interest on any Debenture  which is payable,  but is not
punctually  paid or duly  provided  for, on any  Interest  Payment  Date (herein
called  "Defaulted  Interest") shall forthwith cease to be payable to the Holder
on the relevant  Regular  Record Date by virtue of having been such Holder,  and
such  Defaulted  Interest  may be paid by the  Company,  at its election in each
case, as provided in Clause (1) and (2) below:

     (1)  The Company may elect to make payment of any Defaulted Interest to the
          Persons in whose names the Debentures (or their respective Predecessor
          Debentures)  are  registered  at the  close of  business  on a Special
          Record Date for the payment of such Defaulted Interest, which shall be
          fixed in the following  manner.  The Company  shall,  not less than 15
          Business  Days prior to the date of the proposed  payment,  notify the
          Trustee  and the Paying  Agent in  writing of the amount of  Defaulted
          Interest  proposed  to be paid on each  Debenture  and the date of the
          proposed payment,  and at the same time the Company shall deposit with
          the  Paying  Agent an amount of money  equal to the  aggregate  amount
          proposed  to be paid in respect of such  Defaulted  Interest  or shall
          make  arrangements  satisfactory  to the Paying Agent for such deposit
          prior to the date of the proposed  payment,  such money when deposited
          to be held in trust for the  benefit of the  Persons  entitled to such
          Defaulted Interest as in this Clause provided. The Special Record Date
          for the  payment  of such  Defaulted  Interest  shall be the  close of
          business on the tenth  calendar  day prior to the date of the proposed
          payment.  The  Trustee  shall,  in the name and at the  expense of the
          Company,  cause  notice  of the  proposed  payment  of such  Defaulted
          Interest  and the  Special  Record  Date  therefor  to be given to the
          Holders  thereof,  not less than 7 calendar days prior to such Special
          Record Date. Notice of the proposed payment of such Defaulted Interest
          and the Special Record Date therefor having been given, such Defaulted
          Interest  shall be paid to the Persons in whose  names the  Debentures
          (or their  respective  Predecessor  Debentures)  are registered at the
          close of business on such  Special  Record Date and shall no longer be
          payable pursuant to the following Clause (2).

     (2)  The  Company  may  make  payment  of  any  Defaulted  Interest  on the
          Debentures  in any  other  lawful  manner  not  inconsistent  with the
          requirements  of any securities  exchange on which such Debentures may
          be listed,  and upon such notice as may be required by such  exchange,
          if,  after  notice  given by the Company to the Trustee and the Paying
          Agent of the proposed payment pursuant to this Clause,  such manner of
          payment shall be deemed practicable by the Paying Agent.

                                    Subject to the foregoing  provisions of this
Section,  each Debenture  delivered  under this Indenture upon  registration  of
transfer of or in exchange for or in lieu of any other Debenture shall carry
the rights to interest accrued and unpaid, and to accrue,  which were carried by
such other Debenture.

               SECTION 2.04 Execution, Authentication and Delivery

     (a)  The  Debentures  shall be  executed  on behalf of the  Company  by its
          Chairman,  its  President  or one of its Vice  Presidents,  under  its
          corporate  seal  imprinted or  reproduced  thereon and attested by its
          Secretary or one of its  Assistant  Secretaries.  The signature of any
          such Officer on the Debentures may be manual or facsimile.

     (b)  Debentures  bearing the manual or facsimile  signatures of individuals
          who were at any time the proper Officers of the Company shall bind the
          Company,  notwithstanding  that such  individuals  or any of them have
          ceased to hold such offices prior to the  authentication  and delivery
          of such  Debentures  or did not hold such  offices at the date of such
          Debentures.

     (c)  No Debenture  shall be entitled to any benefit under this Indenture or
          be valid or  obligatory  for any purpose  unless there appears on such
          Debenture a Certificate of Authentication duly executed by the Trustee
          by  manual  signature  of a Trust  Officer,  and such  Certificate  of
          Authentication  upon any Debenture shall be conclusive  evidence,  and
          the only evidence, that such Debenture has been duly authenticated and
          made available for delivery hereunder.

     (d)  The Trustee shall authenticate and deliver Debentures of a series, for
          original  issue,  at one time or from time to time in accordance  with
          the Company Order referred to below, upon receipt by the Trustee of:

          (1)  a Board Resolution  approving the form or forms and terms of such
               Debentures;

          (2)  a Company Order  requesting  the  authentication  and delivery of
               such  Debentures  and stating  the  identity of the Trust and the
               aggregate liquidation amount of the Trust Securities to be issued
               concurrently   with  such  Debentures;

          (3)  unless previously delivered,  this Indenture or a supplemental
               indenture hereto setting forth the form of such Debentures and
               establishing the terms thereof;

          (4)  the Debentures of such series,  executed on behalf of the Company
               in accordance with Section 2.04(a) hereof;

          (5)  an Opinion of Counsel to the effect that:

               (i)  the  form  or  forms  of  such  Debentures  have  been  duly
                    authorized  by the  Company  and have  been  established  in
                    conformity with the provisions of this Indenture; and

               (ii) such  Debentures,  when  authenticated  and delivered by the
                    Trustee  and  issued  and  delivered  by the  Company in the
                    manner  and  subject  to any  conditions  specified  in such
                    Opinion of Counsel,  will have been duly  issued  under this
                    Indenture  and will  constitute  valid and  legally  binding
                    obligations  of  the  Company,   entitled  to  the  benefits
                    provided by this  Indenture,  and  enforceable in accordance
                    with  their  terms,  subject,  as  to  enforcement  to  laws
                    relating  to  or  affecting  generally  the  enforcement  of
                    creditors' rights, including, without limitation, bankruptcy
                    and  insolvency  laws and to  general  principles  of equity
                    (regardless of whether such  enforceability is considered in
                    a proceeding in equity or at law); and

               (iii)that this Indenture or any supplemental  indenture  referred
                    to in clause  (3) above has been duly  authorized,  executed
                    and  delivered  by the  Company  and is a  valid  instrument
                    legally binding upon the Company,  enforceable in accordance
                    with its terms,  subject as to  enforcement to laws relating
                    to  or  affecting  creditors'  rights,  including,   without
                    limitation,  bankruptcy and  insolvency  laws and to general
                    principles   of   equity   (regardless   of   whether   such
                    enforceability is considered in a proceeding in equity or at
                    law); and

               (iv) that all consents,  approvals and orders of any  commission,
                    governmental authority or agency required in connection with
                    the  issuance  and  delivery  of such  Debentures  have been
                    obtained.

          (e)  an Officer's  Certificate  certifying that no Default or Event of
               Default has occurred and is continuing.

          (f)  The  Trustee  shall  act as  the  initial  authenticating  agent.
               Thereafter,  the Trustee may appoint an authenticating  agent. An
               authenticating  agent may  authenticate  Debentures  whenever the
               Trustee  may  do  so.  Each   reference  in  this   Indenture  to
               authentication  by the Trustee  includes  authentication  by such
               agent. The Trustee shall pay any  authenticating  agent appointed
               by the Trustee  reasonable  compensation for its services and the
               Trustee  shall be  reimbursed  for such  payment  by the  Company
               pursuant to Section  7.07  hereof.  The  provisions  set forth in
               Section 7.02,  Section 7.03, Section 7.04 and Section 7.07 hereof
               shall be applicable to any authenticating agent.

                     SECTION 2.05 Registrar and Paying Agent

                                    The  Company  shall  maintain or cause to be
maintained, within or outside the State of New Jersey, an office or agency where
the Debentures may be presented for registration of transfer or for
exchange  ("Registrar"),  a Paying Agent at whose office the  Debentures  may be
presented or surrendered for payment,  and an office or agency where notices and
demands to or upon the Company in respect of the  Debentures  and this Indenture
may be served.  The  Registrar  shall keep a register  (the  "Register")  of the
Debentures and of their transfer and exchange.  The Company may have one or more
co-Registrars  and one or more  additional  Paying  Agents.  The term  Registrar
includes  any  additional  registrar  and the term  Paying  Agent  includes  any
additional  paying  agent.  The corporate  office of the Trustee in Newark,  New
Jersey,  shall  initially be the Registrar for the Series A Debentures and agent
for service of notice or demands on the Company, and the Trustee shall initially
be the Paying Agent for the Series A Debentures.

                                    The Company shall enter into an  appropriate
agency  agreement with any Registrar,  Paying Agent or co-Registrar  (if not the
Company or the Trustee or an affiliate of the Trustee). The agreement shall
implement  the  provisions  of this  Indenture  that relate to such  agent.  The
Company  shall give prompt  written  notice to the Trustee and to the Holders of
any change of  location  of such  office or agency.  If at any time the  Company
shall fail to maintain or cause to be  maintained  any such  required  office or
agency or shall fail to furnish  the  Trustee  with the  address  thereof,  such
presentations,  surrenders,  notices  and  demands  may be made or served at the
address of the  Trustee set forth in Section  11.02  hereof.  The Company  shall
notify the  Trustee of the name and  address of any such  agent.  If the Company
fails to maintain a  Registrar,  Paying Agent or agent for service of notices or
demands,  the Trustee  shall act as such and shall be  entitled  to  appropriate
compensation  therefor  pursuant  to Section  7.07  hereof.  The  Company or any
Affiliate  of the Company may act Paying  Agent,  Registrar or  co-Registrar  or
agent for service of notices and demands.

                                    The  Company  may  also  from  time  to time
designate  one or more other  offices or agencies  where the  Debentures  may be
presented or surrendered for any or all such purposes and may from time to time
rescind such  designations.  The Company will give prompt  written notice to the
Trustee  and to the Holders of any such  designation  or  rescission  and of any
change in location of any such other office or agency.

                SECTION 2.06 Paying Agent to Hold Money in Trust

                                    Except as otherwise  provided herein,  prior
to or on each due date of the  principal of and premium (if any) and interest on
any Debenture, the Company shall deposit with the Paying Agent a sum of
money  sufficient  to pay such  principal,  premium  (if any)  and  interest  so
becoming  due.  The Company  shall  require  each Paying  Agent  (other than the
Trustee or the Company) to agree in writing that such Paying Agent shall hold in
trust for the  benefit of Holders  or the  Trustee  all money held by the Paying
Agent for the payment of  principal  of and premium (if any) and interest on the
Debentures  and shall notify the Trustee of any Default by the Company in making
any such payment.  At any time during the  continuance of any such Default,  the
Paying  Agent  shall,  upon the  request of the  Trustee,  forthwith  pay to the
Trustee all money so held in trust and account  for any money  disbursed  by it.
The Company at any time may  require a Paying  Agent to pay all money held by it
to the Trustee and to account for any money  disbursed by it. Upon doing so, the
Paying Agent shall have no further  liability  for the money so paid over to the
Trustee.  If the Company, a Subsidiary or an Affiliate of either of them acts as
Paying Agent,  it shall  segregate the money held by it as Paying Agent and hold
it as a separate trust fund.

                       SECTION 2.07 Debentureholder Lists

                                    The Trustee  shall  preserve in as current a
form as is reasonably  practicable  the most recent list  available to it of the
names and addresses of Debentureholders. If the Trustee is not the
Registrar,  the Company  shall cause to be furnished to the Trustee on or before
the Record Date for each  Interest  Payment  Date and at such other times as the
Trustee may request in writing,  within five Business  Days of such  request,  a
list,  in such  form as the  Trustee  may  reasonably  require  of the names and
addresses of Debentureholders.

                       SECTION 2.08 Transfer and Exchange

                                    When   Debentures  are   presented   to  the
Registrar  or a  co-Registrar  with a request to  register  the  transfer or to
exchange them for an equal principal  amount of Debentures of the same series of
other  authorized  denominations,  the Registrar  shall register the transfer or
make  the  exchange  as  requested  if  its  reasonable  requirements  for  such
transactions  are met. To permit  registrations  of transfer and exchanges,  the
Company shall execute and the Trustee shall authenticate Debentures,  all at the
Registrar's request.

                                    Every Debenture presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company or
the Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form  satisfactory  to the Registrar  duly executed by the Holder or
his attorney duly authorized in writing.

                                    The Company  shall not require  payment of a
service charge for any  registration of transfer or exchange of Debentures,  but
the Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges that may be imposed in connection with
the   registration   of  the  transfer  or  exchange  of  Debentures   from  the
Debentureholder requesting such transfer or exchange (other than any exchange of
a temporary  Debenture  for a definitive  Debenture  not involving any change in
ownership).

                                    The  Company  shall not be required to make,
and the Registrar need not register, transfers or exchanges of (a) any Debenture
for a period beginning at the opening of business 15 days before the
mailing  of a notice of  redemption  of  Debentures  and  ending at the close of
business on the day of such  mailing or (b) any  Debenture  selected,  called or
being called for redemption, except, in the case of any Debenture to be redeemed
in part, the portion thereof not to be redeemed.

                       SECTION 2.09 Replacement Debentures

                                    If   (a)   any   mutilated    Debenture   is
surrendered  to the Company or the  Trustee,  or (b) the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Debenture,  and there is delivered to the Company and the Trustee such Debenture
or indemnity as may be required by them to save each of them harmless,  then, in
the absence of notice to the Company or the Trustee that such Debenture has been
acquired by a bona fide purchaser, the Company shall execute in exchange for any
such  mutilated  Debenture  or in lieu of any  such  destroyed,  lost or  stolen
Debenture,  a new  Debenture of the same series and of like tenor and  principal
amount,  bearing a number not  contemporaneously  outstanding,  and the  Trustee
shall authenticate and make such new Debenture available for delivery.

                                    In case any such mutilated,  destroyed, lost
or stolen  Debenture  has  become or is about to become due and  payable,  or is
about to be redeemed by the Company pursuant to Article 3 hereof, the Company in
its discretion  may,  instead of issuing a new  Debenture,  pay or purchase such
Debenture, as the case may be.

                                    Upon  the  issuance  of any  new  Debentures
under this Section 2.09, the Company may require the payment of a sum sufficient
to cover any tax or other  governmental  charge  that may be imposed in relation
thereto and any other expenses  (including the fees and expenses of the Trustee)
in connection therewith.

                                    Every new Debenture  issued pursuant to this
Section 2.09 in lieu of any mutilated, destroyed, lost or stolen Debenture shall
constitute an original additional contractual obligation of the Company (whether
or not the mutilated,  destroyed,  lost or stolen Debenture shall be at any time
enforceable) and shall be entitled to all benefits of this Indenture equally and
ratably with any and all other Debentures duly issued hereunder.


                                    The provisions of this Section 2.09 are
exclusive and shall preclude (to the extent  lawful) all other rights and 
remedies  with respect to the replacement or payment of mutilated, destroyed, 
lost or stolen Debentures.

     SECTION 2.10 Outstanding Debentures; Determinations of Holders' Action

                                    Debentures  outstanding  at any time are all
the  Debentures  authenticated  by the Trustee  except for those canceled by it,
those delivered to it for  cancellation,  those  mutilated,  destroyed,  lost or
stolen  Debentures  referred to in Section  2.09 hereof,  those  redeemed by the
Company  pursuant to Article 3 hereof,  and those described in this Section 2.10
as not  outstanding.  A Debenture does not cease to be  outstanding  because the
Company or a Subsidiary  or Affiliate  thereof  holds the  Debenture;  provided,
however,  that in  determining  whether the Holders of the  requisite  principal
amount  of  Debentures   have  given  or  concurred  in  any  request,   demand,
authorization,  direction, notice, consent or waiver hereunder, Debentures owned
by the Company or a Subsidiary or Affiliate (other than any Trust so long as any
of the Preferred  Securities of such Trust are outstanding) shall be disregarded
and deemed not to be outstanding.

                                    Subject to the  foregoing,  only  Debentures
outstanding  at the time of such  determination  shall be considered in any such
determination (including determinations pursuant to Articles 3, 6 and 9).

                                    If  a  Debenture  is  replaced  pursuant  to
Section 2.09 hereof,  it ceases to be  outstanding  unless the Trustee  receives
proof satisfactory to it that the replaced Debenture is held by a bona fide
purchaser.

                                    If the Paying Agent (other than the Company)
holds, in accordance  with this  Indenture,  at the Stated Maturity Date or on a
Redemption Date,  money  sufficient to pay the Debentures  payable on that date,
then  immediately on the Stated  Maturity Date or such  Redemption  Date, as the
case may be, such  Debentures  shall cease to be outstanding,  and interest,  if
any, on such Debentures shall cease to accrue.

                        SECTION 2.11 Temporary Debentures

                                   The Company may execute temporary Debentures,
and upon the  Company's  Order,  the Trustee shall  authenticate  and make such
temporary  Debentures  available for  delivery.  Temporary  Debentures  shall be
printed, lithographed,  typewritten,  mimeographed or otherwise produced, in any
authorized  denomination,  in the same series and  principal  amount and of like
tenor as the  definitive  Debentures  in lieu of which  they are issued and with
such appropriate  insertions,  omissions,  substitutions and other variations as
the  Officers  of the  Company  executing  such  Debentures  may  determine,  as
conclusively evidenced by their execution of such Debentures.

                                    After   the    preparation   of   definitive
Debentures,  the  temporary  Debentures  shall be  exchangeable  for  definitive
Debentures of the same series upon surrender of the temporary  Debentures at the
office or agency of the Company  designated for such purpose pursuant to Section
2.05  hereof,  without  charge  to  the  Holders  thereof.  Upon  surrender  for
cancellation of any one or more temporary Debentures,  the Company shall execute
a like  principal  amount  of  definitive  Debentures  of  the  same  series  of
authorized  denominations,  and the Trustee,  upon  receipt of a Company  Order,
shall  authenticate and make such Debentures  available for delivery in exchange
therefor.  Until so exchanged, the temporary Debentures shall in all respects be
entitled to the same benefits under this Indenture as definitive Debentures.

                         SECTION 2.12 Book-Entry System

                                    In order to utilize a book-entry-only system
for all or any portion of the Debentures of any series,  all or a portion of the
Debentures of any series may be issued in the form of one or more fully
registered  Debentures of the same series for the aggregate  principal amount of
such  Debentures of each Issue Date,  interest rate and Stated  Maturity Date (a
"global  Debenture"),  which global Debenture shall be registered in the name of
the depositary (the "Depositary") selected by the Company or in the name of such
Depositary's nominee. Each global Debenture shall be delivered by the Trustee to
the  Depositary  or pursuant to the  Depositary's  instruction  and shall bear a
legend  substantially to the following effect:  "Except as otherwise provided in
Section 2.12 of the Indenture,  this Debenture may be transferred,  in whole but
not in  part,  only to  another  nominee  of the  Depositary  or to a  successor
Depositary or to a nominee of such successor Depositary."

                                    Notwithstanding  any other provision of this
Section 2.12 or of Section 2.08 hereof, a global Debenture may be transferred in
whole but not in part and in the manner provided in Section 2.08 hereof,
only by a nominee of the Depositary for such series, or by the Depositary or any
such nominee of a successor  Depositary for such series  selected or approved by
the Company or to a nominee of such successor Depositary.

                                    If (i) at any time the Depositary for global
Debentures of any series of Debentures notifies the Company that it is unwilling
or unable to continue as Depositary for such global Debentures or if at
any time the Depositary for such global Debentures shall no longer be registered
or in good  standing  under the  Exchange  Act or other  applicable  statute  or
regulation,  and a  successor  Depositary  for  such  global  Debentures  is not
appointed by the Company  within 90 days after the Company  receives such notice
or  becomes  aware  of such  condition,  as the case  may be,  (ii) the  Company
determines in its sole  discretion,  that the  Debentures of any series shall no
longer be  represented  by one or more  global  Debentures  and  delivers to the
Trustee an Officer's Certificate evidencing such determination or (iii) an Event
of Default  occurs and is  continuing,  then the provisions of this Section 2.12
shall no longer  apply to the  Debentures  of such  series.  In such event,  the
Company will execute and the Trustee,  upon receipt of an Officer's  Certificate
evidencing such  determination  by the Company,  will  authenticate  and deliver
Debentures  of such series and of like tenor in definitive  registered  form, in
authorized  denominations,  and  in  aggregate  principal  amount  equal  to the
principal  amount of the global  Debentures  of such series in exchange for such
global Debentures. Upon the exchange of global Debentures for such Debentures in
definitive  registered form without coupons,  in authorized  denominations,  the
global  Debentures  shall  be  cancelled  by the  Trustee.  Such  Debentures  in
definitive  registered form issued in exchange for global Debentures pursuant to
this  Section  2.12 shall be  registered  in such  names and in such  authorized
denominations  as the Depositary,  pursuant to  instructions  from its direct or
indirect  participants  or otherwise,  shall  instruct the Trustee.  The Trustee
shall deliver such  Debentures to the Persons in whose names such Debentures are
so registered.

                                    Except   as   provided   above,   owners  of
beneficial  interests  in a global  Debenture  shall not be  entitled to receive
physical  delivery of Debentures  in definitive  form and will not be considered
the Holders thereof for any purpose under this Indenture.

                                    Members of or participants in the Depositary
shall have no rights under this Indenture  with respect to any global  Debenture
held on their behalf by the Depositary,  and such Depositary or its nominee,  as
the case may be, may be treated by the Company,  the  Trustee,  and any agent of
the  Company  or the  Trustee as the Holder of such  global  Debentures  for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the  Company,  the  Trustee,  or any agent of the Company or the  Trustee,  from
giving  effect  to  any  written  certification  proxy  or  other  authorization
furnished by the Depositary or impair, as between the Depositary and its members
or participants,  the operation of customary practices governing exercise of the
rights of a Holder of any Debenture,  including without  limitation the granting
of proxies or other  authorization  of participants to give or take any request,
demand, authorization,  direction, notice, consent, waiver or other action which
a Holder is entitled to give or take under this Indenture.

                            SECTION 2.13 Cancellation

                                    All  Debentures   surrendered  for  payment,
redemption  by the  Company  pursuant  to  Article 3 hereof or  registration  of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly  canceled by the Trustee.  The
Company may at any time deliver to the Trustee for  cancellation  any Debentures
previously  authenticated  and made available for delivery  hereunder  which the
Company  may have  acquired  in any manner  whatsoever,  and all  Debentures  so
delivered shall be promptly canceled by the Trustee. The Company may not reissue
or issue new  Debentures  to replace  Debentures it has paid or delivered to the
Trustee for cancellation.  No Debentures shall be authenticated in lieu of or in
exchange for any Debentures canceled as provided in this Section 2.13, except as
expressly  permitted  by this  Indenture.  All canceled  Debentures  held by the
Trustee  shall be  destroyed  by the Trustee,  and the Trustee  shall  deliver a
certificate of destruction to the Company.


                                    ARTICLE 3
                                   REDEMPTION

                   SECTION 3.01 Redemption; Notice to Trustee

          (a)  The  Series A  Debentures  are  subject  to  redemption  prior to
               maturity as provided therein.

          (b)  The  redemption  terms for any  additional  series of  Debentures
               shall be as specified in the supplemental indenture creating such
               series of Debentures.

          (c)  If any or all of the  Debentures  are to be redeemed  pursuant to
               Section 3.01 (a) or (b) hereof,  the Company shall deliver to the
               Trustee at least 45 days prior to the  Redemption  Date a Company
               Order specifying the series and principal amount of Debentures to
               be redeemed and the Redemption Date and Redemption Price for such
               Debentures.  Such Company Order shall be  accompanied  by a Board
               Resolution  authorizing such  redemption.  If the Debentures of a
               series are held by a Trust, the Company shall also deliver a copy
               of such Company Order to the Property Trustee for such Trust.

               SECTION 3.02 Selection of Debentures to be Redeemed

                                    If less than all the outstanding  Debentures
of a series  are to be  redeemed  at any time,  the  Trustee  shall  select  the
Debentures of such series to be redeemed by lot or by any other method the
Trustee considers fair and appropriate.  The Trustee shall make the selection at
least 30 but not more than 60 days before the Redemption  Date from  outstanding
Debentures of such series not previously  called for  redemption.  Provisions of
this  Indenture  that apply to Debentures  called for  redemption  also apply to
portions of  Debentures  called for  redemption.  The Trustee  shall  notify the
Company promptly of the Debentures or portions of Debentures to be redeemed.

                        SECTION 3.03 Notice of Redemption

                                    At least  30 days but not more  than 60 days
before the  Redemption  Date,  the  Trustee,  in the  Company's  name and at the
Company's expense, shall mail or cause to be mailed a notice of redemption by
first-class mail,  postage prepaid,  to each Holder of Debentures to be redeemed
at such Holder's last address as it appears in the Register.

                                    The notice of redemption  shall identify the
Debentures  to be redeemed,  the provision of the  Debentures or this  Indenture
pursuant to which the Debentures called for redemption are being redeemed
and shall state:

          (1)  the Redemption Date;

          (2)  the Redemption Price;

          (3)  the name and address of the Paying Agent;

          (4)  that payment of the  Redemption  Price of  Debentures  called for
               redemption will be made only upon surrender of such Debentures to
               the Paying Agent;

          (5)  if fewer than all the outstanding Debentures of any series are to
               be redeemed,  the  identification  and  principal  amounts of the
               particular  Debentures  to be redeemed and that, on and after the
               Redemption  Date,  upon  surrender  of  such  Debentures,  a  new
               Debenture or  Debentures of the same series and of like tenor and
               in a principal  amount equal to the  unredeemed  portion  thereof
               will be issued; and

          (6)  that,  unless the Company defaults in paying the Redemption Price
               of the Debentures  called for redemption,  plus accrued  interest
               thereon to the Redemption Date,  interest will cease to accrue on
               such Debentures on and after the Redemption Date.

                                    Any notice of redemption given in the manner
provided  herein shall be conclusively  presumed to have been given,  whether or
not such notice is actually received. Failure to mail any notice or defect
in the mailed notice or the mailing  thereof in respect of any  Debenture  shall
not affect the validity of the redemption of any other Debenture.

                   SECTION 3.04 Effect of Notice of Redemption

                                    After notice of  redemption  has been given,
Debentures  called for redemption shall become due and payable on the Redemption
Date and at the Redemption  Price and from and after the Redemption Date (unless
the Company  shall  default in the payment of the  Redemption  Price and accrued
interest),  such Debentures shall cease to bear interest.  Upon the later of the
Redemption  Date and the date such  Debentures  are  surrendered  to the  Paying
Agent,  such  Debentures  shall be paid at the  Redemption  Price,  plus accrued
interest to the  Redemption  Date,  provided  that  installments  of interest on
Debentures with an Interest  Payment Date which is on or prior to the Redemption
Date  shall  be  payable  to the  Holders  of  such  Debentures,  or one or more
Predecessor  Debentures,  registered  as such at the  close of  business  on the
Regular Record Dates therefor according to their terms and provisions.

                    SECTION 3.05 Deposit of Redemption Price

                                    On or  prior  to the  Redemption  Date,  the
Company  shall  deposit with the Paying Agent (or if the Company or an Affiliate
is the Paying Agent, shall segregate and hold in trust or cause such Affiliate
to segregate and hold in trust) money sufficient to pay the Redemption Price of,
and accrued  interest on, all Debentures to be redeemed on that Redemption Date.
The Paying  Agent shall  return to the Company any money in excess of the amount
sufficient  to pay the  Redemption  Price  of,  and  accrued  interest  on,  all
Debentures  to be  redeemed  and any  interest  accrued on the amount  deposited
pursuant to this Section 3.05.

                    SECTION 3.06 Debentures Redeemed in Part

                                    Upon   surrender  of  a  Debenture  that  is
redeemed in part, the Trustee shall  authenticate for the Holder a new Debenture
of the same series and in a principal amount equal to the unredeemed portion of
such Debenture.


                                    ARTICLE 4
                                    COVENANTS

                       SECTION 4.01 Payment of Debentures

          (a)  The Company shall pay the  principal of and premium,  if any, and
               interest  (including interest accruing during an Extension Period
               and/or on or after the  filing of a  petition  in  bankruptcy  or
               reorganization  relating to the  Company,  whether or not a claim
               for  post-filing  interest is allowed in such  proceeding) on the
               Debentures on or prior to the dates and in the manner provided in
               such Debentures or pursuant to this Indenture.  An installment of
               principal,  premium, if any, or interest shall be considered paid
               on the  applicable  due date if on such date the  Trustee  or the
               Paying Agent holds,  in  accordance  with this  Indenture,  money
               sufficient to pay all of such  installment then due. With respect
               to any  Debenture,  the  Company  shall pay  interest  on overdue
               principal  and  interest  on  overdue  installments  of  interest
               (including interest accruing during an Extension Period and/or on
               or after the filing of a petition in bankruptcy or reorganization
               relating to the Company,  whether or not a claim for  post-filing
               interest is allowed in such proceeding), to the extent lawful, at
               the rate per annum borne by such Debenture, compounded quarterly.
               Interest  on overdue  interest  shall  accrue  from the date such
               amounts become overdue.

          (b)  Notwithstanding  the provisions of Section  4.01(a) hereof or any
               other  provision  herein to the contrary,  the Company shall have
               the  right in its sole and  absolute  discretion  at any time and
               from  time  to  time  while  the  Debentures  of any  series  are
               outstanding,  so long as no Event of Default with respect to such
               series of  Debentures  has occurred and is  continuing,  to defer
               payments of interest by extending the interest payment period for
               such series of Debentures for the Extension  Period,  if any, for
               such series of Debentures,  provided that such  Extension  Period
               shall not extend  beyond the Stated  Maturity  Date or Redemption
               Date of any Debenture of such series,  and provided  further that
               at the end of each  Extension  Period the  Company  shall pay all
               interest then accrued and unpaid  (together with interest thereon
               to the extent  permitted by applicable  law at the rate per annum
               borne  by  such  Debentures).  Prior  to  the  termination  of an
               Extension  Period,  the Company may shorten or may further extend
               the  interest  payment  period  for such  series  of  Debentures,
               provided  that  such  Extension  Period  together  with  all such
               previous  and  further  extensions  may not  exceed  the  maximum
               duration of the Extension Period for such series of Debentures or
               extend beyond the Stated  Maturity Date or Redemption Date of any
               Debenture  of such  series.  The  Company  shall give the Trustee
               notice of the Company's election to begin an Extension Period for
               any series of Debentures and any shortening or extension  thereof
               at least one  Business  Day  prior to the date the  notice of the
               record  or  payment  date  of  the  related  distribution  on the
               Preferred  Securities  issued by the Trust which is the Holder of
               the  Debentures of such series or the date payment of interest on
               such   Debentures  is  required  to  be  given  to  any  national
               securities  exchange  on  which  such  Preferred   Securities  or
               Debentures  are then listed or other  applicable  self-regulatory
               organization,  but in any event not less than two  Business  Days
               prior to the Record  Date fixed by the Company for the payment of
               such  interest.  The  Company  shall give or cause the Trustee to
               give  notice (a form of which shall be provided by the Company to
               the  Trustee) of the  Company's  election  to begin an  Extension
               Period to the Holders by first class mail, postage prepaid.

                   SECTION 4.02 Prohibition Against Dividends, Etc.

                                    The  Company  shall not  declare  or pay any
dividend on, or redeem,  purchase,  acquire or make a  liquidation  payment with
respect to, any of its Capital Stock (i) during an Extension Period, (ii) if at
such time there shall have  occurred and is  continuing  any Default or Event of
Default, or (iii) if the Company shall be in default with respect to its payment
or other obligations under any Guarantee Agreement.

                            SECTION 4.03 SEC Reports

                                    The  Company  shall  file with the  Trustee,
within 15 days after it files them with the SEC, copies of its annual report and
of the information, documents and other reports (or copies of such portions
of any of the foregoing as the SEC may by rules and regulations prescribe) which
the Company is required to file with the SEC  pursuant to Section 13 or 15(d) of
the Exchange Act. If the Company is not subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the Trustee
such information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may by rules and  regulations  prescribe)  which are
specified  in Sections 13 or 15(d) of the Exchange  Act. The Company  shall also
comply with the provisions of Section 314(a) of the TIA.

                      SECTION 4.04 Compliance Certificates

          (a)  The Company  shall  deliver to the Trustee,  within 90 days after
               the end of each  of the  Company's  fiscal  years,  an  Officer's
               Certificate  stating  whether  or not  the  signer  knows  of any
               Default or Event of Default.  Such  certificate  shall  contain a
               certification  from the principal  executive  officer,  principal
               financial officer or principal  accounting officer of the Company
               as to his or her knowledge of the Company's  compliance  with all
               conditions and covenants  under this  Indenture.  For purposes of
               this Section 4.04(a), such compliance shall be determined without
               regard to any period of grace or requirement  of notice  provided
               under this Indenture. If such Officer does know of such a Default
               or Event of Default, the Officer's Certificate shall describe any
               such Default or Event of Default,  and its status. Such Officer's
               Certificate need not comply with Sections 11.04 and 11.05 hereof.

          (b)  The  Company  shall  deliver  to  the  Trustee  any   information
               reasonably  requested  by the  Trustee  in  connection  with  the
               compliance by the Trustee or the Company with the TIA.

                    SECTION 4.05 Further Instruments and Acts

                                    Upon  request of the  Trustee,  the  Company
shall execute and deliver such further  instruments  and do such further acts as
may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.

                       SECTION 4.06 Payments for Consents

                                    Neither  the  Company  nor  any   Subsidiary
shall,  directly  or  indirectly,  pay or cause  to be paid  any  consideration,
whether by way of interest,  fee or otherwise,  to any Holder of any  Debentures
for or as an inducement to any consent,  waiver or amendment of any of the terms
or provisions of this Indenture or the Debentures  unless such  consideration is
offered to be paid or agreed to be paid to all Holders of the  Debentures who so
consent,  waive or agree to amend in the time  frame set forth in the  documents
soliciting such consent, waiver or agreement.

                   SECTION 4.07 Payment of Expenses of Trust I

                                    The Company covenants for the benefit of the
Holders  of the Series A  Debentures  to pay all of the  obligations,  costs and
expenses of Trust I in accordance with Section 2.03(b) of the Trust I
Agreement and to pay the taxes of Trust I in accordance  with Section 2.03(c) of
the Trust I Agreement  in order to permit Trust I to make  distributions  on and
redemptions of the Series A Preferred  Securities in accordance  with Article IV
of the Trust I Agreement.

                                    ARTICLE 5
                              SUCCESSOR CORPORATION

                     SECTION 5.01 When the Company May Merge, Etc.
    

                                    The  Company  may  not  consolidate  with or
merge with or into, or sell, convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety (either in one transaction or
a series of transactions) to, any Person unless:

          (1)  the Person formed by or surviving such consolidation or merger or
               to which such sale, conveyance, transfer or lease shall have been
               made  (the  "Successor")  if  other  than  the  Company,  (a)  is
               organized  and  existing  under the laws of the United  States of
               America or any State thereof or the District of Columbia, and (b)
               shall expressly assume by a supplemental indenture,  executed and
               delivered to the Trustee,  in form  satisfactory  to the Trustee,
               all the  obligations  of the Company under the Debentures and the
               Indenture; 

          (2)  immediately  prior to and after giving effect to such transaction
               (and treating any Indebtedness which becomes an obligation of the
               Successor   Person  or  any   Subsidiary  as  a  result  of  such
               transaction  as  having  been  incurred  by such  Person  or such
               Subsidiary at the time of such transaction),  no Default or Event
               of Default  shall have  occurred and be  continuing;  and 

          (3)  the Company delivers to the Trustee an Officer's  Certificate and
               an Opinion of  Counsel,  each  stating  that such  consolidation,
               merger, sale, conveyance, transfer or lease and such supplemental
               indenture  comply with this Indenture.

                                    The  Successor  will be the successor to the
Company,  and will be  substituted  for, and may exercise every right and power
and  become  the  obligor  on the  Debentures  with  the same  effect  as if the
Successor  had been  named as the  Company  herein  but,  in the case of a sale,
conveyance,  transfer or lease of all or substantially  all of the assets of the
Company, the predecessor Company will not be released from its obligation to pay
the principal of and premium, if any, and interest on the Debentures.


                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

                         SECTION 6.01 Events of Default

                                    An "Event of Default" occurs with respect to
the Debentures of any series if one of the following  shall have occurred and be
continuing:

          (1)  The Company defaults in the payment, when due and payable, of (a)
               interest  on  any  Debenture  of  that  series  and  the  default
               continues  for a period  of 30 days;  provided,  that  during  an
               Extension  Period for the  Debentures of that series,  failure to
               pay  interest  on  the   Debentures  of  that  series  shall  not
               constitute  a Default or Event of Default  hereunder,  or (b) the
               principal of or premium, if any, on any Debentures of that series
               when the same becomes due and payable on the Stated Maturity Date
               thereof, upon acceleration, on any Redemption Date, or otherwise;

          (2)  The  Company  defaults in the  performance  of or fails to comply
               with any of its other  covenants or agreements in the  Debentures
               of that series or this Indenture or in any supplemental indenture
               under  which the  Debentures  of that series may have been issued
               and such  failure  continues  for 60 days  after  receipt  by the
               Company of a "Notice of Default";

          (3)  The Company,  pursuant to or within the meaning of any Bankruptcy
               Law:

               (a)  commences a voluntary case or proceeding;

               (b)  consents  to the entry of an order for relief  against it in
                    an involuntary case or proceeding;

               (c)  consents to the  appointment of a Custodian of it or for all
                    or substantially all of its property,  and such Custodian is
                    not discharged within 60 days;

               (d)  makes a general assignment for the benefit of its creditors;
                    or

               (e)  admits in writing its  inability to pay its debts  generally
                    as they become due; or

          (4)  A court of competent jurisdiction enters an order or decree under
               any Bankruptcy Law that:

               (a)  is for relief against the Company in an involuntary  case or
                    proceeding;

               (b)  appoints a Custodian of the Company for all or substantially
                    all of its properties;

               (c)  orders the liquidation of the Company;

               (d)  and in each case the order or decree remains unstayed and in
                    effect for 60 days.

                                    The  foregoing  will  constitute an Event of
Default  whatever  the reason for any such  Event of Default  and  whether it is
voluntary or involuntary or is effected by operation of law or pursuant to any
judgment,  decree or order of any court or any order,  rule or regulation of any
administrative or governmental body.

                                    The term  "Bankruptcy Law" means Title 11 of
the United  States Code,  or any similar  federal or state law for the relief of
debtors. "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator, custodian or similar official under any Bankruptcy Law.

                                    A Default  under  clause (2) above is not an
Event of Default  until (i) the  Trustee  provides a "Notice of  Default" to the
Company or the Holders of at least 25% in aggregate principal amount of the
Debentures  of that  series  at the  time  outstanding  or,  if that  series  of
Debentures  is held  by a  Trust,  the  holders  of at  least  25% in  aggregate
liquidation amount of the outstanding Preferred Securities of that Trust provide
a "Notice of Default"  to the Company and the Trustee and (ii) the Company  does
not cure such  Default  within  the time  specified  in clause  (2) above  after
receipt of such notice. Any such notice must specify the Default, demand that it
be remedied and state that such notice is a "Notice of Default."

                            SECTION 6.02 Acceleration

                                    If any Event of Default  with respect to the
Debentures  of any series other than an Event of Default under clause (3) or (4)
of Section 6.01 hereof occurs and is  continuing,  the Trustee or the Holders of
at least 25% in aggregate principal amount of the Debentures of that series then
outstanding  may declare the principal of all the  Debentures of that series due
and payable,  provided that in the case of a series of Debentures then held by a
Trust, if upon an Event of Default with respect to the Debentures of that series
the Trustee has, or the Holders of at least 25% in aggregate principal amount of
the  Debentures  of that series  have,  failed to declare the  principal  of the
Debentures of that series to be immediately  due and payable,  the holders of at
least  25%  in  aggregate   liquidation  amount  of  the  outstanding  Preferred
Securities  of that  Trust  shall  have such right by a notice in writing to the
Company and the Trustee.  If an Event of Default  specified in clause (3) or (4)
of  Section  6.01  hereof  occurs,  the  principal  of and  interest  on all the
Debentures  shall ipso facto become and be immediately  due and payable  without
any declaration or other act on the part of the Trustee or any Debentureholders.
Upon such an  acceleration,  such principal,  together with all interest accrued
thereon, shall be due and payable immediately.

                                    The  Holders  of  at  least  a  majority  in
aggregate  principal  amount  of the  Debentures  of  that  series  at the  time
outstanding,  in each  case,  by  notice to the  Trustee,  may  rescind  such an
acceleration  and its consequences if the rescission would not conflict with any
judgment or decree and if all  existing  Events of Default  with respect to such
series of Debentures have been cured or waived except nonpayment of principal or
interest that has become due solely  because of  acceleration,  provided that if
the principal of a series of Debentures has been declared due and payable by the
holders of the Preferred  Series of a Trust, no rescission of acceleration  will
be  effective  unless  consented  to by the  holders of at least a  majority  in
aggregate  liquidation amount of the Preferred Securities of that Trust. No such
rescission  shall affect any subsequent  Default or impair any right  consequent
thereto.

                           SECTION 6.03 Other Remedies

                                    If  an  Event  of  Default   occurs  and  is
continuing,  the Trustee may, in its own name or as trustee of an express trust,
institute, pursue and prosecute any proceeding, including, without limitation,
any  action  at law or  suit in  equity  or  other  judicial  or  administrative
proceeding  to collect  the  payment of  principal  of or  premium,  if any,  or
interest on the  Debentures  of the series  that is in  default,  to enforce the
performance  of any provision of the Debentures of that series or this Indenture
or to obtain any other available remedy.

                                    The Trustee may maintain a  proceeding  even
if it does not  possess  any of the  Debentures  or does not  produce any of the
Debentures in the proceeding. A delay or omission by the Trustee, any
Debentureholder  or the holders of Preferred  Securities in exercising any right
or remedy  accruing  upon an Event of  Default  shall not  impair  such right or
remedy or constitute a waiver of, or acquiescence in, such Event of Default.  No
remedy is exclusive of any other remedy. All available remedies are cumulative.

                      SECTION 6.04 Waiver of Past Defaults

                                    If  a  Default  or  Event  of  Default  with
respect to a series of Debentures has occurred and is continuing, the Holders of
at least a majority in aggregate principal amount of the Debentures of that
series at the time  outstanding,  or, if that series of  Debentures is held by a
Trust, the holders of at least a majority in aggregate liquidation amount of the
Preferred  Securities  of that Trust,  in each case by notice to the Trustee and
the  Company,  may  waive  an  existing  Default  or Event  of  Default  and its
consequences  except a  Default  or  Event  of  Default  in the  payment  of the
principal  of or premium,  if any, or interest on any  Debenture of that series.
When a Default or Event of Default is waived, it is deemed cured and shall cease
to exist,  but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any consequent right.

                        SECTION 6.05 Control by Majority

                                    The  Holders  of  at  least  a  majority  in
aggregate  principal amount of the Debentures of each series affected (with each
such series voting as a class) or, if that series of Debentures is held by a
Trust, the holders of at least a majority in aggregate liquidation amount of the
Preferred  Securities  of that Trust,  may direct the time,  method and place of
conducting  any  proceeding  for  any  remedy  available  to the  Trustee  or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or that
the  Trustee  determines  in good faith is unduly  prejudicial  to the rights of
other  Debentureholders  or may involve the Trustee in personal  liability.  The
Trustee may take any other  action  deemed  proper by the  Trustee  which is not
inconsistent with such direction, including withholding notice to the Holders of
the Debentures of continuing  default (except in the payment of the principal of
(other than any mandatory sinking fund payment) or premium,  if any, or interest
on any Debentures) if the Trustee considers it in the interest of the Holders of
the Debentures to do so.

                        SECTION 6.06 Limitation on Suits

                                    Except as provided in Section  6.07  hereof,
no Holder of Debentures or holder of Preferred  Securities of the Trust which is
the Holder of that series of Debentures may pursue any remedy with respect
to this Indenture or the Debentures unless:

          (1)  the  Holders  of  Debentures  or the  holders  of such  Preferred
               Securities  give to the Trustee  written  notice  stating that an
               Event of Default with respect to the corresponding  Debentures is
               continuing;

          (2)  the Holders of at least 25% in aggregate  principal amount of the
               Debentures  of that  series  or the  holders  of at least  25% in
               aggregate  liquidation amount of such Preferred Securities make a
               written request to the Trustee to pursue a remedy;

          (3)  the  Holders  of  Debentures  or the  holders  of such  Preferred
               Securities  provide  to  the  Trustee  reasonable   security  and
               indemnity against any loss,  liability or expense satisfactory to
               the Trustee;

          (4)  the Trustee does not comply with the request within 60 days after
               receipt of the notice,  the request and the offer of security and
               indemnity; and

          (5)  during such 60 day period,  the Holders of at least a majority in
               aggregate  principal  amount of the  Debentures of that series or
               the  holders  of at least a  majority  in  aggregate  liquidation
               amount of such  Preferred  Securities  do not give the  Trustee a
               direction inconsistent with the request.

                                    A  Holder  of  Debentures  or  a  holder  of
Preferred  Securities  may not use this  Indenture  to  prejudice  the rights of
another  Debentureholder  or a holder  of  Preferred  Securities  or to obtain a
preference  or priority  over  another  Debentureholder  or holder of  Preferred
Securities.

                SECTION 6.07 Rights of Holders to Receive Payment

                                    Notwithstanding  any other provision of this
Indenture,  the right of any Holder to receive  payment of the  principal of and
premium (if any) or interest on the Debentures held by such Holder,  on or after
the respective  due dates  expressed in the Debentures (in the case of interest,
as the  same  may  be  extended  pursuant  to  Section  4.01(b)  hereof)  or any
Redemption Date, is absolute and  unconditional  and such right and the right to
bring suit for the  enforcement of any such payment on or after such  respective
dates shall not be impaired  or affected  adversely  without the consent of such
Holder.  If the Debentures of a series are then held by a Trust,  each holder of
Preferred  Securities  of such Trust shall have the right to bring suit directly
against the Company for the  enforcement of payment to such holder in respect of
Debentures  of  such  series  in a  principal  amount  equal  to  the  aggregate
liquidation amount of the Preferred Securities of such holder.

                   SECTION 6.08 Collection Suit by the Trustee

                                    If an Event of Default  described in Section
6.01(1) hereof occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express  trust  against the Company or any obligor
on the  Debentures for the whole amount owing with respect to the Debentures and
the amounts provided for in Section 7.07 hereof.

               SECTION 6.09 The Trustee May File Proofs of Claim

                                    In case of the pendency of any receivership,
insolvency, liquidation,  bankruptcy,  reorganization,  arrangement, adjustment,
composition  or  other  judicial  proceeding  relative  to  the  Company  or its
properties  or  assets,  the  Trustee  shall  be  entitled  and  empowered,   by
intervention in such proceeding or otherwise:

          (1)  to file and prove a claim for the whole  amount of the  principal
               of and premium,  if any, and  interest on the  Debentures  and to
               file  such  other  papers or  documents  as may be  necessary  or
               advisable  in order to have the claims of the Trustee  (including
               any   claim   for   the   reasonable   compensation,    expenses,
               disbursements  and  advances  of  the  Trustee,  its  agents  and
               counsel) and of the Holders allowed in such judicial  proceeding;
               and

          (2)  to collect and receive  any moneys or other  property  payable or
               deliverable  on any such claims and to distribute  the same;  and
               any  Custodian  in  any  such   judicial   proceeding  is  hereby
               authorized  by each  Holder to make such  payments to the Trustee
               and, in the event that the Trustee shall consent to the making of
               such  payments  directly to the  Holders,  to pay the Trustee any
               amount  due  it  for  the  reasonable   compensation,   expenses,
               disbursements  and  advances  of  the  Trustee,  its  agents  and
               counsel, and any other amounts due the Trustee under Section 7.07
               hereof.

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

                             SECTION 6.10 Priorities

                                    If the Trustee  collects any money  pursuant
to this Article 6, it shall,  subject to Article 10 hereof, pay out the money in
the following order:

          FIRST: to the Trustee for amounts due under Section 7.07 hereof;

          SECOND: to  Holders  of  Debentures  in  respect  of  which or for the
               benefit of which such money has been  collected  for  amounts due
               and  unpaid  on  such   Debentures  for  the  principal   amount,
               Redemption  Price  or  interest,  if  any,  as the  case  may be,
               ratably, without preference or priority of any kind, according to
               such amounts due and payable on such Debentures; and

          THIRD: the balance, if any, to the Company.

                                    Except  as   otherwise   set  forth  in  the
Debentures,  the Trustee may fix a Record Date and payment  date for any payment
to Debentureholders pursuant to this Section 6.10.

                       SECTION 6.11 Undertaking for Costs

                                    In any suit for the enforcement of any right
or remedy under this Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit of
an undertaking to pay the costs of the suit, and the court in its discretion may
assess  reasonable  costs,  including  reasonable  attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses  made by the party  litigant.  This Section 6.11
does not apply to a suit by the  Trustee,  a suit by a Holder of  Debentures  or
holder of  Preferred  Securities  pursuant  to Section  6.07 hereof or a suit by
Holders of  Debentures  of more than 10% in  aggregate  principal  amount of the
Debentures of any series or, if a series of  Debentures is held by a Trust,  the
holders  of more  than 10% in  aggregate  liquidation  amount  of the  Preferred
Securities of that Trust.

              SECTION 6.12 WAIVER OF STAY; Extension or Usury Laws

                                    The Company covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead or in any
manner whatsoever claim or take the benefit or advantage of, any stay
or extension law or any usury or other law wherever enacted,  now or at any time
hereafter in force,  that would  prohibit or forgive the Company from paying all
or any  portion of the  principal  of or  premium,  if any,  or  interest on the
Debentures as contemplated  herein or affect the covenants or the performance by
the Company of its  obligations  under this  Indenture;  and the Company (to the
extent  that it may  lawfully  do so) hereby  expressly  waives  all  benefit or
advantage  of any such law,  and  covenants  that it will not  hinder,  delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and  permit  the  execution  of every  such power as though no such law had been
enacted.


                                    ARTICLE 7
                                   THE TRUSTEE

                       SECTION 7.01 Duties of the Trustee

          (a)  If an Event of Default  occurs and is continuing  with respect to
               the  Debentures  of any series,  the Trustee  shall  exercise the
               rights and powers vested in it by this  Indenture with respect to
               that  series  and use the same  degree  of care and  skill in its
               exercise  as a  prudent  man  would  exercise  or use  under  the
               circumstances in the conduct of his own affairs.

          (b)  Except during the continuance of an Event of Default with respect
               to the  Debentures  of any series,  (i) the Trustee  need perform
               only  those   duties  with   respect  to  that  series  that  are
               specifically  set  forth  in  this  Indenture  or the  TIA and no
               others;  and (ii) in the  absence  of bad faith on its part,  the
               Trustee may conclusively  rely, as to the truth of the statements
               and the  correctness  of the  opinions  expressed  therein,  upon
               certificates or opinions  furnished to the Trustee and conforming
               to the  requirements of this Indenture.  However,  in the case of
               any  certificates  or opinions which by any provision  hereof are
               specifically required to be furnished to the Trustee, the Trustee
               shall examine the certificates and opinions to determine  whether
               or not they conform to the requirements of this Indenture.

          (c)  The  Trustee  may  not be  relieved  from  liability  for its own
               negligent  action,  its own  negligent  failure to act or its own
               willful misconduct, except that:

               (i)  this  Section  7.01(c)  does not limit the effect of Section
                    7.01(b) hereof;

               (ii) the  Trustee  shall not be liable for any error of  judgment
                    made in good  faith by a Trust  Officer  unless it is proved
                    that the Trustee was negligent in ascertaining the pertinent
                    facts; and

               (iii)the Trustee  shall not be liable with  respect to any action
                    it takes or omits to take in good faith in accordance with a
                    direction received by it pursuant to Section 6.05 hereof.

          (d)  Every  provision of this Indenture that in any way relates to the
               Trustee  is  subject to  Section  7.01(a),  (b),  (c) and (e) and
               Section 7.02 hereof.

          (e)  The Trustee may refuse to perform any duty or exercise  any right
               or power or extend or risk its own funds or  otherwise  incur any
               financial  liability  unless it receives  security and  indemnity
               reasonably  satisfactory  to it against  any loss,  liability  or
               expense (including reasonable counsel fees).

          (f)  Money  held  by  the  Trustee  in  trust  hereunder  need  not be
               segregated from other funds except to the extent required by law.
               Except as  otherwise  provided in Section  3.05 and Section  8.01
               hereof, the Trustee shall not be liable for interest on any money
               held by it hereunder.

                       SECTION 7.02 Rights of the Trustee

          (a)  The Trustee may rely on any document believed by it to be genuine
               and to have been signed or  presented by the proper  person.  The
               Trustee  need not  investigate  any fact or matter  stated in the
               document.

          (b)  Before the Trustee acts or refrains  from acting,  it may require
               an  Officer's  Certificate  and,  if  appropriate,  an Opinion of
               Counsel.  The Trustee shall not be liable for any action it takes
               or omits  to take in good  faith in  reliance  on such  Officer's
               Certificate and Opinion of Counsel.

          (c)  The Trustee may act through  agents and shall not be  responsible
               for the misconduct or negligence of any agent  appointed with due
               care.

          (d)  The Trustee  shall not be liable for any action it takes or omits
               to  take  in  good  faith  which  it  reasonably  believes  to be
               authorized or within its rights or powers.

          (e)  The Trustee may consult  with  counsel of its  selection  and the
               advice of such  counsel or any  Opinion of Counsel  shall be full
               and  complete  authorization  and  protection  in  respect of any
               action  taken,  suffered or omitted by it hereunder in good faith
               and in  reliance  thereon.

          (f)  The Trustee  shall be under no  obligation to exercise any of the
               rights or powers vested in it by this Indenture at the request or
               direction  of any of the  Holders  pursuant  to  this  Indenture,
               unless such Holders shall have offered to the Trustee  reasonable
               security   and   indemnity   against  the  costs,   expenses  and
               liabilities  (including  reasonable  counsel fees) which might be
               incurred by it in compliance with such request or direction.

                  SECTION 7.03 Individual Rights of the Trustee

                                    The Trustee in its  individual  or any other
capacity may become the owner or pledgee of Debentures  and may  otherwise  deal
with the Company or its Affiliates with the same rights it would have if it
were not Trustee.  Any Paying Agent,  Registrar or co-registrar  may do the same
with like rights.  However,  the Trustee must comply with Sections 7.10 and 7.11
hereof.

                      SECTION 7.04 The Trustee's Disclaimer

                                    The Trustee  makes no  representation  as to
the validity or adequacy of this Indenture or the Debentures.  The Trustee shall
not be accountable for the Company's use of the proceeds from the
Debentures,  and the Trustee shall not be responsible  for any statement in this
Indenture or the Debentures or any report or  certificate  issued by the Company
hereunder or any registration  statement  relating to the Debentures (other than
the Trustee's  Certificate  of  Authentication  and the  Trustee's  Statement of
Eligibility on Form T-1), or the determination as to which beneficial owners are
entitled to receive any notices hereunder.

                         SECTION 7.05 Notice of Defaults

                                    If a Default  occurs and is continuing  with
respect to the  Debentures of any series and if it is known to the Trustee,  the
Trustee shall mail to each Holder of a Debenture of that series notice of
the Default  within 90 days after it becomes  known to the  Trustee  unless such
Default  shall  have  been  cured or  waived.  Except  in the case of a  Default
described in Section 6.01(1) hereof, the Trustee may withhold such notice if and
so long as a  committee  of Trust  Officers  in good faith  determines  that the
withholding  of such notice is in the interests of the Holders of the Debentures
of that series.  The Trustee shall not be charged with  knowledge of any Default
(except  in the  case of a  Default  under  Section  6.01(1)  hereof)  unless  a
responsible  Trust  Officer  assigned to the Corporate  Trust  Department of the
Trustee shall have actual knowledge of the Default.  The second sentence of this
Section 7.05 shall be in lieu of the proviso to TIA Section 315(b). Said proviso
is hereby expressly excluded from this Indenture, as permitted by the TIA.

                   SECTION 7.06 Reports by Trustee to Holders

                                    Within 60 days after each May 31,  beginning
with the May 31 next  following  the date of this  Indenture,  the Trustee shall
mail to each Debentureholder, and such other holders that have submitted
their names to the Trustee for such purpose, a brief report dated as of such May
31 in accordance with and to the extent required under TIA Section 313.

                                    A copy of  each  report  at the  time of its
mailing to  Debentureholders  shall be filed with the  Company,  the SEC and any
securities exchange on which the Debentures are listed. The Company agrees to
promptly  notify  the  Trustee  whenever  the  Debentures  become  listed on any
securities exchange and of any listing thereof.

                     SECTION 7.07 Compensation and Indemnity

                                    The Company agrees:

          (1)  to pay to the  Trustee  from  time to time such  compensation  as
               shall be agreed in writing  between  the  Company and the Trustee
               for all  services  rendered by it hereunder  (which  compensation
               shall not be  limited  by any  provision  of law in regard to the
               compensation of a trustee of an express trust);

          (2)  to  reimburse  the  Trustee  upon  its  request  for   reasonable
               expenses,  disbursements  and  advances  incurred  or made by the
               Trustee  in  accordance  with  any  provision  of this  Indenture
               (including  the  reasonable  compensation  and the expenses,  and
               advances of its agents and  counsel,  provided  that prior to any
               Event of  Default,  the  Trustee  shall  only have one  counsel),
               including all reasonable  expenses and advances  incurred or made
               by the  Trustee  in  connection  with any Event of Default or any
               membership on any creditors'  committee,  except any such expense
               or advance as may be attributable to its negligence or bad faith;
               and

          (3)  to  indemnify   the  Trustee,   its   officers,   directors   and
               shareholders,  for, and to hold it harmless against,  any and all
               loss,  liability  or  expense,  incurred  without  negligence  or
               willful  misconduct on its part,  arising out of or in connection
               with the acceptance or  administration  of this trust,  including
               the costs and expenses of defending  itself  against any claim or
               liability in connection  with the exercise or  performance of any
               of its powers or duties hereunder.

                                    Before,  after or during an Event of Default
with respect to the  Debentures of a series,  the Trustee shall have a claim and
lien prior to the Debentures of that series as to all property and funds
held by it  hereunder  for any amount  owing it for its fees and expenses or any
predecessor  Trustee pursuant to this Section 7.07, except with respect to funds
held by the Trustee or any Paying Agent in trust for the payment of principal of
or premium,  if any, or interest on  particular  Debentures  pursuant to Section
2.06 or Section 8.01 hereof.
                                    The Company's payment  obligations  pursuant
to this Section 7.07 are not subject to Article 10 of this  Indenture  and shall
survive the discharge of this Indenture. When the Trustee renders services
or incurs  expenses after the occurrence of a Default  specified in Section 6.01
hereof,  the  compensation  for services and expenses are intended to constitute
expenses of administration under any Bankruptcy Law.

                       SECTION 7.08 Replacement of Trustee

                                    The  Trustee  may resign at any time,  by so
notifying  the  Company  in  writing  at least 30 days  prior to the date of the
proposed resignation; provided, however, no such resignation shall be effective
until a successor Trustee has accepted its appointment  pursuant to this Section
7.08.  The Holders of at least a majority in aggregate  principal  amount of the
Debentures  at the time  outstanding  may remove the Trustee by so notifying the
Trustee in writing and may appoint a successor  Trustee,  which shall be subject
to the consent of the Company  unless an Event of Default  has  occurred  and is
continuing. The Trustee shall resign if:

          (1)  the Trustee fails to comply with Section 7.10 hereof;

          (2)  the Trustee is adjudged bankrupt or insolvent;

          (3)  a receiver or public  officer  takes charge of the Trustee or its
               property; or

          (4)  the Trustee otherwise becomes incapable to act.

                                   If the Trustee resigns or is  removed or if a
vacancy  exists in the office of  Trustee  for any  reason,  the  Company  shall
promptly  appoint a successor  Trustee.  A  successor  Trustee  shall  deliver a
written  acceptance  of its  appointment  to  the  retiring  Trustee  and to the
Company.  Thereupon  the  resignation  or removal of the retiring  Trustee shall
become effective,  and the successor  Trustee shall have all the rights,  powers
and duties of the Trustee under this Indenture. The successor Trustee shall mail
a notice of its  succession  to  Debentureholders.  Subject  to  payment  of all
amounts owing to the Trustee  under  Section 7.07 hereof and subject  further to
its lien under Section 7.07, the retiring  Trustee shall  promptly  transfer all
property held by it as Trustee to the successor Trustee.  If a successor Trustee
does not take office  within 30 days after the  retiring  Trustee  resigns or is
removed,  the  Company  or the  Holders  of at  least a  majority  in  aggregate
principal  amount of the  Debentures  at the time  outstanding  may petition any
court of competent jurisdiction for the appointment of a successor Trustee.

                                    If the Trustee  fails to comply with Section
7.10  hereof,   any   Debentureholder   may  petition  any  court  of  competent
jurisdiction for its removal and the appointment of a successor Trustee.

                    SECTION 7.09 Successor Trustee by Merger

                                    If the Trustee  consolidates with, merges or
converts  into,  or  transfers  all or  substantially  all its  corporate  trust
business or assets to another corporation, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.

                   SECTION 7.10 Eligibility; Disqualification

                                    The Trustee  shall at all times  satisfy the
requirements  of TIA  Sections  310(a)(1)  and  310(a)(2).  The  Trustee (or any
Affiliate thereof which has unconditionally guaranteed the obligations of the
Trustee  hereunder)  shall  have a  combined  capital  and  surplus  of at least
$50,000,000  as set  forth in its  most  recently  published  annual  report  of
condition.  The Trustee  shall comply with TIA Section  310(b).  In  determining
whether  the  Trustee  has  conflicting  interests  as  defined  in TIA  Section
310(b)(1),  the provisions contained in the proviso to TIA Section 310(b)(1) and
the Trustee's  Statement of Eligibility on Form T-1 shall be deemed incorporated
herein.

       SECTION 7.11 Preferential Collection of Claims Against the Company

                                    If and when the Trustee shall be or become a
creditor of the Company,  the Trustee shall be subject to the  provisions of the
TIA regarding the collection of claims against the Company.


                                    ARTICLE 8
                    SATISFACTION AND DISCHARGE OF INDENTURE;
               DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS

              SECTION 8.01 Satisfaction and Discharge of Indenture

                                    The Company shall be deemed to have paid and
discharged the entire  indebtedness on any series of the Debentures  outstanding
on the date the Company has  irrevocably  deposited or caused to be  irrevocably
deposited  with  the  Trustee  or any  Paying  Agent as  trust  funds in  trust,
specifically  pledged as security for, and  dedicated  solely to, the benefit of
the Holders of the  Debentures  of such series (1) cash (which may be held in an
interest bearing account insured by the Federal Deposit  Insurance  Corporation)
in an amount, or (2) U.S. Government  Obligations,  maturing as to principal and
interest at such times and in such  amounts as will ensure the  availability  of
cash,  or (3) a  combination  thereof,  sufficient  to pay the  principal of and
premium, if any, and interest on all Debentures of such series then outstanding,
provided that in the case of  redemption,  notice of redemption  shall have been
given or the Company shall have irrevocably  instructed the Trustee to give such
notice; and further provided that the following conditions shall have been met:

          (A)  no Default or Event of Default with respect to the  Debentures of
               such series has  occurred and is  continuing  on the date of such
               deposit or occurs as a result of such deposit;

          (B)  the Company has delivered to the Trustee an Officer's Certificate
               certifying that there does not exist (i) a default in the payment
               of all or any  portion  of any  Senior  Indebtedness  or (ii) any
               other  default  affecting  Senior  Indebtedness   permitting  its
               acceleration  as the  result  of which  the  maturity  of  Senior
               Indebtedness has been accelerated;

          (C)  the  Company  has  delivered  to the Trustee (i) either a private
               Internal  Revenue  Service ruling or an Opinion of Counsel to the
               effect that the Holders of the Debentures of such series will not
               recognize income, gain or loss for federal income tax purposes as
               a result of such  deposit,  defeasance  and discharge and will be
               subject  to  federal  income  tax on the same  amount  and in the
               manner  and at the same times as would have been the case if such
               deposit,  defeasance  and  discharge  had  not  occurred,  and an
               Opinion of Counsel to the effect that (A) the  deposit  shall not
               result in the Company,  the Trustee or, if the Debentures of such
               series  are held by a Trust,  such  Trust  being  deemed to be an
               "investment company" under the Investment Company Act of 1940, as
               amended,  and (B) such deposit creates a valid trust in which the
               Holders of the Debentures of such series have the sole beneficial
               interest  or that the  Holders of the  Debentures  of such series
               have a  nonavoidable  first  priority  security  interest in such
               trust; and

          (D)  the Company has delivered to the Trustee an Officer's Certificate
               and an Opinion  of  Counsel,  each  stating  that all  conditions
               precedent  relating  to  the  defeasance   contemplated  by  this
               provision have been complied with.

Upon such deposit,  provisions of this  Indenture with respect to such series of
Debentures  shall  no  longer  be in  effect  (except  as to (1) the  rights  of
registration  of transfer and  exchange of  Debentures  of such series,  (2) the
replacement  of  apparently  mutilated,   defaced,  destroyed,  lost  or  stolen
Debentures  of such series,  (3) the rights of the Holders of the  Debentures of
such series to receive  payments of the principal  thereof and premium,  if any,
and interest  thereon,  (4) the rights of the Holders of the  Debentures of such
series as  beneficiaries  hereof with respect to the property so deposited  with
the Trustee  payable to all or any of them, (5) the obligation of the Company to
maintain an office or agency for payments on and registration of transfer of the
Debentures of such series,  (6) the rights,  obligations  and  immunities of the
Trustee  hereunder,  and (7) the  obligations  of the Company to the Trustee for
compensation and indemnity under Section 7.07 hereof;  and the Trustee shall, at
the request and expense of the Company, execute proper instruments acknowledging
the same.

SECTION 8.02 Application by Trustee of Funds Deposited for Payment of Debentures

                                    Subject to Section 8.04  hereof,  all moneys
deposited  with the  Trustee  pursuant to Section  8.01 hereof  shall be held in
trust and applied by it to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent),  to the Holders of
the  Debentures of the series for the payment or redemption of which such moneys
have been deposited with the Trustee,  of all sums due and to become due thereon
for  principal and  interest;  but such money need not be segregated  from other
funds except to the extent required by law.

              SECTION 8.03 Repayment of Moneys Held by Paying Agent

                                    In  connection  with  the  satisfaction  and
discharge of this Indenture, all moneys then held by any Paying Agent under this
Indenture  shall,  upon  demand of the  Company,  be repaid to it or paid to the
Trustee,  and  thereupon  such Paying  Agent shall be released  from all further
liability with respect to such moneys.

               SECTION 8.04 Return of Moneys Held by the Trustee
                   and Paying Agent Unclaimed for Three Years

                                    Any  moneys  deposited  with  or paid to the
Trustee or any Paying Agent for the payment of the principal of and premium,  if
any, or interest on the  Debentures  of any series and not applied but remaining
unclaimed for three years after the date when such principal,  premium,  if any,
or interest shall have become due and payable shall,  unless otherwise  required
by mandatory provisions of applicable escheat or abandoned or unclaimed property
law,  be repaid to the  Company by the  Trustee or such  Paying  Agent,  and the
Holders  of such  Debentures  shall,  unless  otherwise  required  by  mandatory
provisions  of  applicable  escheat or  abandoned or  unclaimed  property  laws,
thereafter  look only to the Company  for any  payment  which such Holder may be
entitled to collect,  and all  liability of the Trustee or any Paying Agent with
respect to such moneys shall thereupon cease.


                                    ARTICLE 9
                                   AMENDMENTS

                     SECTION 9.01 Without Consent of Holders

                                    From  time to  time,  when  authorized  by a
resolution  of the Board of  Directors,  the  Company and the  Trustee,  without
notice  to or the  consent  of any  Holders  of the  Debentures,  may  amend  or
supplement this Indenture:

          (1)  to cure any ambiguity, defect or inconsistency;

          (2)  to comply with Article 5 hereof;

          (3)  to provide  for  uncertificated  Debentures  in addition to or in
               place of certificated Debentures;

          (4)  to make any other change that does not in the reasonable judgment
               of   the   Company   adversely   affect   the   rights   of   any
               Debentureholder;

          (5)  to comply with any  requirement of the SEC in connection with the
               qualification of this Indenture under the TIA; or

          (6)  to set  forth  the  terms  and  conditions,  which  shall  not be
               inconsistent  with this  Indenture,  of any series of  Debentures
               (other  than the  Series  A  Debentures)  that  are to be  issued
               hereunder and the form of Debentures of such series.

                      SECTION 9.02 With Consent of Holders

                                   The Company  and the Trustee may amend this 
Indenture  in any manner not  permitted  by  Section  9.01 or may waive  future
compliance by the Company with any provisions of this Indenture with the consent
of the  Holders  of at least a majority  in  aggregate  principal  amount of the
Debentures of each series affected thereby. Such an amendment or waiver may not,
without the consent of each Holder of the Debentures affected thereby:

          (1)  reduce the principal amount of such Debentures;

          (2)  reduce the  principal  amount of such  Debentures  the Holders of
               which must consent to an amendment of this Indenture or a waiver;

          (3)  change the stated maturity of the principal of or the interest on
               or rate of interest of such Debentures;

          (4)  change  adversely  to the Holders the  redemption  provisions  of
               Article 3 hereof;

          (5)  change the  currency  in respect  of which the  payments  on such
               Debentures are to be made;

          (6)  make any change in Article 10 hereof that  adversely  affects the
               rights of the  Holders  of the  Debentures  or any  change to any
               other Section  hereof that  adversely  affects their rights under
               Article 10 hereof; or

          (7)  change Section 6.07 hereof;

provided that, in the case of the  outstanding  Debentures of a series then held
by a Trust, no such amendment  shall be made that adversely  affects the holders
of the Preferred Securities of that Trust, and no waiver of any Event of Default
with respect to the  Debentures of that series or  compliance  with any covenant
under  this  Indenture  shall be  effective,  without  the prior  consent of the
holders  of at least a  majority  of the  aggregate  liquidation  amount  of the
outstanding  Preferred  Securities  of that  Trust or the  holder  of each  such
Preferred Security, as applicable.

                                    A  supplemental  indenture  that  changes or
eliminates any covenant or other  provision of this Indenture that has expressly
been  included  solely  for the  benefit  of one or more  particular  series  of
Debentures,  or which  modifies the rights of the Holders of  Debentures of such
series with respect to such covenant or other provision,  shall be deemed not to
affect the rights under this Indenture of the Holders of Debentures of any other
series.

                                    It shall not be necessary for the consent of
the Holders of Debentures or holders of Preferred  Securities under this Section
9.02 to approve the particular form of any proposed  amendment,  but it shall be
sufficient if such consent approves the substance thereof.

                                    If certain  Holders  agree to defer or waive
certain  obligations of the Company hereunder with respect to Debentures held by
them, such deferral or waiver shall not affect the rights of any other Holder to
receive the payment or performance required hereunder in a timely manner.

                                    After an  amendment  or  waiver  under  this
Section 9.02 becomes  effective,  the Company shall mail to each Holder a notice
briefly describing the amendment or waiver. Any failure of the Company to mail
such notices,  or any defect therein,  shall not, however,  in any way impair or
affect the validity of such amendment or waiver.

                SECTION 9.03 Compliance with Trust Indenture Act

                                    Every   supplemental    indenture   executed
pursuant to this Article 9 shall comply with the TIA.

       SECTION 9.04 Revocation and Effect of Consents; Waivers and Actions

                                    Until an  amendment,  waiver or other action
by Holders becomes effective, a consent to it or any other action by a Holder of
a Debenture hereunder is a continuing consent by the Holder and every subsequent
Holder of that  Debenture or portion of the  Debenture  that  evidences the same
obligation  as the  consenting  Holder's  Debenture,  even  if  notation  of the
consent,  waiver  or  action is not made on such  Debenture.  However,  any such
Holder or subsequent Holder may revoke the consent,  waiver or action as to such
Holder's  Debenture  or portion of the  Debenture  if the Trustee  receives  the
notice of  revocation  before the consent of the requisite  aggregate  principal
amount of such  Debentures  then  outstanding has been obtained and not revoked.
After an  amendment,  waiver or action  becomes  effective,  it shall bind every
Holder of the  Debentures of the related  series,  except as provided in Section
9.02 hereof.

                                    The Company  may, but shall not be obligated
to, fix a Record Date for the  purpose of  determining  the Persons  entitled to
consent  to  any  amendment  or  waiver.  If  a  Record  Date  is  fixed,  then,
notwithstanding the first two sentences of the immediately  preceding paragraph,
only Holders of Debentures or holders of Preferred Securities, as applicable, on
such Record Date or their duly designated proxies, and only those Persons, shall
be entitled to consent to such amendment,  supplement or waiver or to revoke any
consent previously given,  whether or not such Persons continue to be such after
such Record Date.  No such consent  shall be valid or effective for more than 90
days after such Record Date.

               SECTION 9.05 Notation on or Exchange of Debentures

                                    Debentures    of    the    related    series
authenticated  and made  available  for  delivery  after the  execution  of any
supplemental indenture pursuant to this Article 9 may, and shall, if required by
the  Trustee,  bear a notation in form  approved by the Trustee as to any matter
provided for in such supplemental  indenture. If the Company shall so determine,
new Debentures so modified as to conform,  in the opinion of the Trustee and the
Board of  Directors,  to any such  supplemental  indenture  may be prepared  and
executed by the Company and authenticated and made available for delivery by the
Trustee in exchange for outstanding Debentures.

             SECTION 9.06 Trustee to Execute Supplemental Indentures

                                    The Trustee shall  execute any  supplemental
indenture  authorized  pursuant to this Article 9 if the supplemental  indenture
does not adversely affect the rights,  duties,  liabilities or immunities of the
Trustee.  If it does,  the Trustee may,  but need not,  execute it. In executing
such supplemental  indenture the Trustee shall be entitled to receive, and shall
be fully  protected in relying  upon,  an Officer's  Certificate  and Opinion of
Counsel stating that such  supplemental  indenture is authorized or permitted by
this Indenture.

                 SECTION 9.07 Effect of Supplemental Indentures

                                    Upon  the  execution  of  any   supplemental
indenture  under this Article 9, this Indenture  shall be modified in accordance
therewith, and such supplemental indenture shall form a part of this Indenture
for  all  purposes  and  every  Holder  of  Debentures  of  the  related  series
theretofore  or  thereafter   authenticated  and  made  available  for  delivery
hereunder shall be bound thereby.


                                   ARTICLE 10
                                  SUBORDINATION

          SECTION 10.01 Debentures Subordinated to Senior Indebtedness
   

                                    Notwithstanding  the  provisions  of Section
6.10 hereof or any other provision  herein or in any Debenture,  the Company and
the Trustee and, by their acceptance thereof, the Holders of the Debentures
(a)  covenants  and agrees that all payments by the Company of the  principal of
and premium, if any, and interest on the Debentures (other than Debentures which
have been discharged  pursuant to Article 8) shall be subordinated in accordance
with the  provisions of this Article 10 to the prior payment in full, in cash or
cash equivalents,  of all amounts payable on, under or in connection with Senior
Indebtedness,  and (b) acknowledges  that holders of Senior  Indebtedness are or
shall be relying on this Article 10.

        SECTION 10.02 Priority and Payment of Proceeds in Certain Events;
                              Remedies Standstill

          (a)  Upon any payment or  distribution  of assets or securities of the
               Company, as the case may be, of any kind or character, whether in
               cash, property or securities,  upon any dissolution or winding up
               or total or partial liquidation or reorganization of the Company,
               whether voluntary or involuntary,  or in bankruptcy,  insolvency,
               receivership or other proceedings,  all amounts payable on, under
               or in connection with Senior Indebtedness (including any interest
               accruing  on  such   Senior   Indebtedness   subsequent   to  the
               commencement of a bankruptcy,  insolvency or similar  proceeding)
               shall first be paid in full in cash,  or payment  provided for in
               cash or cash  equivalents,  before the  Holders or the Trustee on
               behalf of the  Holders  or the  holders of  Preferred  Securities
               shall be  entitled  to receive  from the  Company  any payment of
               principal of or premium, if any, or interest on the Debentures or
               distribution of any assets or securities.

          (b)  No direct or  indirect  payment by or on behalf of the Company of
               principal  of or premium,  if any, or interest on the  Debentures
               (other than  Debentures  which have been  discharged  pursuant to
               Article 8),  whether  pursuant to the terms of the  Debentures or
               upon acceleration or otherwise, shall be made if, any the time of
               such payment, there exists (i) a default in the payment of all or
               any  portion  of any  Senior  Indebtedness  and the  Trustee  has
               received written notice thereof from the Company, from holders of
               Senior Indebtedness or from any trustee,  representative or agent
               therefor, or (ii) any other default affecting Senior Indebtedness
               as a result of which the maturity of Senior Indebtedness has been
               accelerated and the Trustee has received  written notice from the
               Company, from holders of Senior Indebtedness or from any trustee,
               representative or agent therefor, and such default shall not have
               been  cured or  waived by or on  behalf  of the  holders  of such
               Senior Indebtedness.

          (c)  If,  notwithstanding  the foregoing  provisions  prohibiting such
               payment or  distribution,  the  Trustee or any Holder  shall have
               received  any payment on account of the  principal of or premium,
               if any,  or  interest  on the  Debentures  when such  payment  is
               prohibited by this Section  10.02 and before all amounts  payable
               on, under or in connection with Senior  Indebtedness  are paid in
               full in cash or cash equivalents, then and in such event (subject
               to the  provisions  of  Section  10.08  hereof)  such  payment or
               distribution  shall be received and held in trust for the holders
               of Senior  Indebtedness  and,  at the  written  direction  of the
               trustee,  representative  or agent for the  holders of the Senior
               Indebtedness,  shall  be  paid  to  the  holders  of  the  Senior
               Indebtedness remaining unpaid to the extent necessary to pay such
               Senior Indebtedness in full in cash or cash equivalents.

                                    Upon any payment or  distribution  of assets
or securities  referred to in this Article 10, the Trustee and the Holders shall
be entitled to rely upon any order or decree of a court of competent
jurisdiction   in  which  such   dissolution,   winding   up,   liquidation   or
reorganization  proceedings are pending, and upon a certificate of the receiver,
trustee in  bankruptcy,  liquidating  trustee,  agent or other Person making any
such  payment or  distribution,  delivered  to the  Trustee  for the  purpose of
ascertaining  the Persons  entitled to  participate  in such  distribution,  the
holders of Senior Indebtedness and other Indebtedness of the Company, the amount
thereof or payable  thereon,  the amount or amounts paid or distributed  thereon
and all other facts pertinent thereto or to this Article 10.

            SECTION 10.03 Payments which May Be Made Prior to Notice

                                    Nothing in this  Article 10 or  elsewhere in
this  Indenture  shall  prevent (i) the  Company,  except  under the  conditions
described in Section 10.02 hereof, from making payments of principal of or
premium,  if any, or  interest on the  Debentures  or from  depositing  with the
Trustee any monies for such payments,  or (ii) the application by the Trustee of
any  monies  deposited  with it for the  purpose  of  making  such  payments  of
principal of or premium,  if any, or interest on the Debentures,  to the Holders
entitled  thereto,  unless at least one Business Day prior to the date when such
payment would otherwise (except for the prohibitions  contained in Section 10.02
hereof)  become due and  payable  the Trustee  shall have  received  the written
notice provided for in Section 10.02(b)(i) or (ii) hereof.

    SECTION 10.04 Rights of Holders of Senior Indebtedness Not to Be Impaired

                                    No right of any present or future  holder of
any Senior Indebtedness to enforce subordination as herein provided shall at any
time or in any way be prejudiced or impaired by any act or failure to
act in good faith by any such  holder,  or by any  noncompliance  by the Company
with the terms and provisions and covenants  herein  regardless of any knowledge
thereof any such holder may have or otherwise be charged with.

                                    The   provisions  of  this  Article  10  are
intended  to be for the benefit of, and shall be  enforceable  directly  by, the
holders of Senior Indebtedness. Notwithstanding anything to the contrary in this
Article 10, to the extent any Holders or the Trustee have paid over or delivered
to any holder of Senior  Indebtedness  any payment or  distribution  received on
account of the principal of or premium (if any) or interest on the Debentures to
which any other  holder of Senior  Indebtedness  shall be  entitled  to share in
accordance  with Section 10.02 hereof,  no holder of Senior  Indebtedness  shall
have a claim or right  against any Holders or the  Trustee  with  respect to any
such payment or  distribution  or as a result of the failure to make payments or
distributions to such other holder of Senior Indebtedness.

        SECTION 10.05 Trustee May Take Action to Effectuate Subordination

                                    Each   Holder   of  a   Debenture,   by  his
acceptance  thereof,  authorizes  and directs the Trustee on his behalf to take
such  action as may be  required  by the  trustee,  representative  or agent for
holders of Senior  Indebtedness or by the Company to effectuate,  as between the
holders of Senior Indebtedness and the Holders, the subordination as provided in
this Article 10 and appoints  the Trustee his  attorney-in-fact  for any and all
such purposes.

                            SECTION 10.06 Subrogation

                                    Upon the  payment  in full,  in cash or cash
equivalents,  of all Senior Indebtedness,  any Holder shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions  of assets of the Company made on such Senior  Indebtedness  until
the Debentures shall be paid in full; and for the purposes of such  subrogation,
no payments or distributions to holders of such Senior  Indebtedness of any cash
property or securities to which such Holders of the Debentures would be entitled
except  for this  Article  10,  and no payment  pursuant  to this  Article 10 to
holders of such Senior Indebtedness by such Holders of the Debentures, shall, as
between  the  Company,   its  creditors   other  than  holders  of  such  Senior
Indebtedness  and such Holders of the  Debentures,  be deemed to be a payment by
the Company to or on account of such Senior  Indebtedness,  it being  understood
that the  provisions  of this  Article 10 are solely for the purpose of defining
the relative rights of the holders of such Senior Indebtedness, on the one hand,
and such Holders of the Debentures, on the other hand.

                                    If any  payment  or  distribution  to  which
Holders of Debentures  would otherwise have been entitled but for the provisions
of this Article 10 shall have been applied, pursuant to this Article 10, to
the payment of all Senior Indebtedness then and in such case such Holders of the
Debentures  shall be  entitled  to  receive  from  the  holders  of such  Senior
Indebtedness at the time outstanding any payments or  distributions  received by
such holders of Senior  Indebtedness in excess of the amount  sufficient to pay,
in cash or cash equivalents, all such Senior Indebtedness in full.

        SECTION 10.07 Obligations of Company Unconditional; Reinstatement

                                    Nothing in this  Article 10 or  elsewhere in
this  Indenture or in any Debenture is intended to or shall  impair,  as between
the Company and Holders of the Debentures, the obligations of the Company, which
are absolute  and  unconditional,  to pay to such  Holders the  principal of and
premium,  if any,  and  interest  on the  Debentures  as and when the same shall
become due and  payable in  accordance  with their  terms,  or is intended to or
shall affect the relative rights of such Holders of the Debentures and creditors
of the  Company  other than the  holders of the Senior  Indebtedness,  nor shall
anything  herein or therein  prevent the Trustee or any Holder of  Debentures or
holder of Preferred  Securities,  as  applicable,  from  exercising all remedies
otherwise  permitted  by  applicable  law under this  Indenture,  subject to the
rights, if any, under this Article 10 of the holders of such Senior Indebtedness
in respect of cash,  property or  securities  of the Company  received  upon the
exercise of any such remedy.

                                    The failure to make a scheduled payment of
principal  of or premium,  if any, or  interest on the  Debentures  by reason of
Section 10.02 shall not be construed as preventing the occurrence of an Event of
Default under Section 6.01 hereof; provided, however, that if (i) the conditions
preventing the making of such payment no longer exist,  and (ii) such Holders of
the Debentures are made whole with respect to such omitted  payments,  the Event
of Default  relating  thereto  (including  any  failure  to pay any  accelerated
amounts)  shall be  automatically  waived,  and the  provisions of the Indenture
shall be reinstated as if no such Event of Default had occurred.

                    SECTION 10.08 Trustee Entitled to Assume
                  Payments Not Prohibited in Absence of Notice

                                    The  Trustee  or Paying  Agent  shall not be
charged with the knowledge of the existence of any default in the payment of all
or a portion of any Senior  Indebtedness or any other default  affecting  Senior
Indebtedness  as a result of which the maturity of the Senior  Indebtedness  has
been  accelerated,  unless  and until the  Trustee  or Paying  Agent  shall have
received  written  notice  thereof  from the  Company or one or more  holders of
Senior  Indebtedness  or from any trustee,  representative  or agent therefor or
unless the Trustee or Paying Agent otherwise had actual knowledge thereof;  and,
prior to the  receipt  of any such  written  notice  or  actual  knowledge  of a
responsible  Trust Officer in the Corporate  Trust  Department of the Trustee or
Paying Agent, the Trustee or Paying Agent may  conclusively  assume that no such
facts exist.

                                    Unless  at least one  Business  Day prior to
the date when by the terms of this  Indenture  any monies are to be deposited by
the Company with the Trustee or any Paying Agent for any purpose (including,
without  limitation,  the payment of the  principal  of or  premium,  if any, or
interest on any Debenture), the Trustee or Paying Agent shall have received with
respect to such monies the notice provided for in Section 10.02 or a responsible
Trust Officer in the Corporate  Trust  Department of the Trustee or Paying Agent
shall have actual knowledge of default in the payment of all or a portion of any
Senior  Indebtedness or any other default  affecting Senior  Indebtedness as the
result of which the maturity of the Senior  Indebtedness  has been  accelerated,
the Trustee or Paying  Agent shall have full power and  authority to receive and
apply such monies to the purpose for which they were  received.  Neither of them
shall be affected by any notice to the contrary, which may be received by either
on or after such date. The foregoing  shall not apply to the Paying Agent if the
Company is acting as Paying Agent. Nothing in this Section 10.08 shall limit the
right of the holders of Senior  Indebtedness to recover payments as contemplated
by Section 10.02  hereof.  The Trustee or Paying Agent shall be entitled to rely
on the delivery to it of a written  notice by a Person  representing  himself or
itself to be a holder of such Senior Indebtedness (or a trustee,  representative
or agent on behalf of such holder) to establish  that such notice has been given
by a holder of such Senior Indebtedness or a trustee, representative or agent on
behalf of any such holder.  The Trustee  shall not be deemed to have any duty to
the holders (and shall be fully protected in relying upon such notice) of Senior
Indebtedness.

           SECTION 10.09 Right of Trustee to Hold Senior Indebtedness

                                    The  Trustee  and any Paying  Agent shall be
entitled  to all of the  rights  set forth in this  Article 10 in respect of any
Senior Indebtedness at any time held by them to the same extent as any other
holder of such  Senior  Indebtedness,  and  nothing in this  Indenture  shall be
construed  to deprive  the  Trustee or any Paying  Agent of any of its rights as
such holder.

                                   ARTICLE 11
                                  MISCELLANEOUS

                   SECTION 11.01 Trust Indenture Act Controls

                                    If any provision of this  Indenture  limits,
qualifies or conflicts with the duties imposed by operation of subsection (c) of
Section 318 of the TIA, the imposed duties shall control. The provisions
of Sections 310 to 317,  inclusive,  of the TIA that impose duties on any Person
(including  provisions  automatically deemed included in an indenture unless the
indenture  provides that such  provisions are excluded) are a part of and govern
this Indenture,  except as, and to the extent,  they are expressly excluded from
this Indenture, as permitted by the TIA.

                              SECTION 11.02 Notices

                                    Any notice,  request or other  communication
required or permitted to be given  hereunder  shall be in writing and delivered,
telecopied or mailed by first-class mail, postage prepaid, addressed as
follows:

            if to the Company:

                              Public Service Electric and Gas Company
                              80 Park Plaza, T6B
                              P.O. Box 570
                              Newark, New Jersey 07101
                              Facsimile No.: 201-596-6309
                              Attention: Treasurer

            if to the Trustee:

                              First Union National Bank
                              765 Broad Street
                              Newark, New Jersey 07101
                              Facsimile No.: 201-430-4963
                              Attention: Corporate Trust Department

                                    The Company or the Trustee, by giving notice
to the other,  may designate  additional or different  addresses for  subsequent
notices of communications. The Company shall notify the holder, if any, of
Senior  Indebtedness of any such additional or different  addresses of which the
Company receives notice from the Trustee.

                                    Any  notice  or  communication  given  to  a
Debentureholder  shall be  mailed or  delivered  to the  Debentureholder  at the
Debentureholder's  address as it appears on the  Register of the  Registrar  and
shall be sufficiently given if mailed within the time prescribed.

                                    Failure to mail a notice or communication to
a  Debentureholder  or any defect in it shall not affect  its  sufficiency  with
respect to other Debentureholders. If a notice or communication is mailed in the
manner  provided  above,  it is  duly  given,  whether  or not  received  by the
addressee.

                                    If   the   Company   mails   a   notice   or
communication to the  Debentureholders,  it shall mail a copy to the Trustee and
each Registrar, Paying Agent or co-Registrar.

           SECTION 11.03 Communication by Holders with Other Holders

                                    Debentureholders may communicate, pursuant
to TIA Section 312(b), with other  Debentureholders with respect to their rights
under this Indenture or the Debentures. The Company, the Trustee, the Registrar,
the Paying  Agent and  anyone  else shall  have the  protection  of TIA  Section
312(c).

        SECTION 11.04 Certificate and Opinion as to Conditions Precedent

                                    Upon  any  request  or  application  by  the
Company to the  Trustee to take any action  under this  Indenture,  the  Company
shall furnish to the Trustee:

          (1)  an Officer's  Certificate  (complying  with Section 11.05 hereof)
               stating  that,  in the opinion of such  Officer,  all  conditions
               precedent to the taking of such action have been  complied  with;
               and

          (2)  if  appropriate,  an Opinion of Counsel  (complying  with Section
               11.05  hereof)  stating  that, in the opinion of such counsel all
               such conditions  precedent to the taking of such action have been
               complied with.

           SECTION 11.05 Statements Required in Certificate or Opinion

                                    Each  Officer's  Certificate  and Opinion of
Counsel with respect to compliance with a covenant or condition  provided for in
this Indenture shall include:

          (1)  a statement that each Person making such Officer's Certificate or
               Opinion of Counsel has read such covenant or condition;

          (2)  a brief  statement as to the nature and scope of the  examination
               or investigation  upon which the statements or opinions contained
               in such Officer's Certificate or Opinion of Counsel are based;

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

          (4)  a statement that, in the opinion of such Person, such covenant or
               condition has been complied with;  provided,  however,  that with
               respect to matters of fact not involving any legal conclusion, an
               Opinion  of  Counsel  may  rely on an  Officer's  Certificate  or
               certificates of public officials.

                        SECTION 11.06 Severability Clause

                                    If any provision in this Indenture or in the
Debentures shall be invalid,  illegal or unenforceable,  the validity,  legality
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

           SECTION 11.07 Rules by Trustee, Paying Agent and Registrar

                                    The  Trustee may make  reasonable  rules for
action by or a meeting of  Debentureholders.  The Registrar and Paying Agent may
make reasonable rules for their functions.

                          SECTION 11.08 Legal Holidays

                                    A "Legal  Holiday"  is any day other  than a
Business Day. If any specified  date  (including a date for giving  notice) is a
Legal Holiday, the action to be taken on such date shall be taken on the next
succeeding day that is not a Legal  Holiday,  and if such action is a payment in
respect of the Debentures,  unless otherwise  specified pursuant to Section 2.01
hereof no principal,  premium (if any) or interest  installment shall accrue for
the intervening  period;  except that if any interest  payment is due on a Legal
Holiday and the next  succeeding  day is in the next  succeeding  calendar year,
such payment shall be made on the Business Day immediately  preceding such Legal
Holiday.

                           SECTION 11.09 Governing Law

                                    This Indenture and the  Debentures  shall be
governed by and construed in accordance with the laws of the State of New Jersey
as applied to contracts made and performed within the State of New
Jersey, without regard to its principles of conflicts of laws.

                    SECTION 11.10 No Recourse Against Others

                                    No    director,    officer,    employee   or
stockholder,  as  such,  of  the  Company  shall  have  any  liability  for  any
obligations  of the Company under the  Debentures  or this  Indenture or for any
claim based on, in respect of or by reason of such  obligations  their creation.
By accepting a Debenture,  each Debentureholder shall waive and release all such
liability.  The waiver and release  shall be part of the  consideration  for the
issue of the Debentures.

                            SECTION 11.11 Successors

                                    All   agreements  of  the  Company  in  this
Indenture and Debentures  shall bind its successors and assigns.  All agreements
of the Trustee in this Indenture shall bind its successors and assigns.

            SECTION 11.12 Multiple Original Copies of this Indenture

                                    The parties may sign any number of copies of
this Indenture.  Each signed copy shall be an original, but all of them together
represent the same agreement. Any signed copy shall be sufficient proof
of this Indenture.

           SECTION 11.13 No Adverse Interpretation of Other Agreements

                                    This  Indenture may not be used to interpret
another indenture, loan or debt agreement of the Company or any subsidiary.  Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.

                    SECTION 11.14 Table of Contents: Headings, Etc.

                                    The  Table  of   Contents,   Cross-Reference
Table,  and headings of the Articles  and Sections of this  Indenture  have been
inserted for  convenience  of reference  only,  are not to be  considered a part
hereof,  and shall in no way modify or restrict  any of the terms or  provisions
hereof.




                     SECTION 11.15 Benefits of the Indenture

                                    Except  as  otherwise   expressly   provided
herein with respect to holders of Senior  Indebtedness  and holders of Preferred
Securities, nothing in this Indenture or in the Debentures, express or implied,
shall give to any  person,  other than the parties  hereto and their  successors
hereunder  and the  Holders  of the  Debentures,  any  benefit  or any  legal or
equitable right, remedy or claim under this Indenture.



<PAGE>


                                   SIGNATURES


                   IN WITNESS WHEREOF, the undersigned, being
duly  authorized,  have  executed  this  Indenture  on behalf of the  respective
parties hereto as of the date first above written.
  

                       PUBLIC SERVICE ELECTRIC AND GAS COMPANY

                       By:    FRANCIS J. RIEPL
                              ----------------               
                       Name:  Francis J. Riepl

                       Title: Vice President and Treasurer

                       FIRST UNION NATIONAL BANK, as Trustee

                       By:    MELISSA MATTHEWS
                              ----------------
                       Name:  Melissa Matthews
                       
                       Title: Vice President

  <PAGE>
                                    Exhibit A

                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY
               8.625% Deferrable Interest Subordinated Debenture,
                                    Series A


No. 1

                                    Public Service  Electric and Gas Company,  a
New Jersey  corporation  (the  "Company",  which  term  includes  any  successor
corporation under the Indenture hereinafter referred to), for value received,
hereby  promises to pay to PSE&G  Capital  Trust I or  registered  assigns,  the
principal sum of  $214,433,000  Dollars on June 26, 2045, and to pay interest on
said principal sum from June 26, 1996 or from the most recent  Interest  Payment
Date (as defined  below) to which  interest has been paid or duly  provided for,
quarterly  in  arrears  on March 31,  June 30,  September  30 and  December  31,
commencing  June 30, 1996 (each,  an "Interest  Payment  Date"),  at the rate of
8.625% per annum until the  principal  hereof shall have become due and payable,
and on any overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue  installment of interest at the
same rate per annum. The amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve  30-day  months,  and
for any period shorter than thirty days,  interest will be computed on the basis
of the  actual  number of days  elapsed  in such  period.  In the event that any
Interest  Payment Date is not a Business  Day,  then interest will be payable on
the next  succeeding  day which is a Business  Day (and  without any interest or
other  payment in respect of any such delay),  except that, if such Business Day
is in the next  succeeding  calendar  year,  such  payment  shall be made on the
immediately  preceding Business Day, in each case with the same force and effect
as if made on such date.  The interest  installment  so payable,  and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture,  be paid to the Person in whose name this  Debenture is registered at
the close of business on the Regular Record Date for such interest  installment,
which shall be the 15th day (whether or not a Business Day) of the last month of
each  calendar  quarter,  provided  that if all of the Series A  Debentures  (as
defined  below)  are then held by PSE&G  Capital  Trust I (the  "Trust")  or the
Series A Debentures  are held in  book-entry-only  form, the Regular Record Date
shall be the close of business on the Business Day  immediately  preceding  such
Interest Payment Date. Any such interest installment not punctually paid or duly
provided for shall  forthwith  cease to be payable to the Holder on such Regular
Record  Date,  and may be paid to the  Person in whose  name this  Debenture  is
registered at the close of business on a Special  Record Date to be fixed by the
Trustee (as defined  below) for the payment of such defaulted  interest,  notice
whereof shall be given to the Holders of the Series A Debentures not less than 7
calendar days prior to such Special  Record Date, as more fully  provided in the
Indenture.

                                    Payment of the  principal of and interest on
this  Debenture  will be made in such coin or currency  of the United  States of
America as at the time of payment is legal tender for payment of public and
private debts.  Payments of interest on an Interest Payment Date will be made by
check  mailed to the Holder  hereof at the address  shown in the Register or, at
the option of the Holder  hereof,  to such other  place in the United  States of
America as the Holder hereof shall  designate to the Trustee in writing.  At the
request of a Holder of at least $10,000,000 aggregate principal amount of Series
A  Debentures,  interest  on such  Debentures  will be payable by wire  transfer
within the continental United States in immediately  available funds to the bank
account number specified in writing by such Holder to the Registrar prior to the
Regular Record Date.

                                    The principal amount hereof and any interest
due on the Stated  Maturity  Date or a  Redemption  Date (other than an Interest
Payment Date) will be paid only upon surrender of this Debenture at the
principal  corporate  office of First Union  National  Bank,  Paying  Agent,  in
Newark, New Jersey, or at such other office or agency of the Paying Agent as the
Company shall designate by written notice to the Holder of this Debenture.

                                    The indebtedness evidenced by this Debenture
is, to the extent provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness, and
this Debenture is issued subject to the provisions of the Indenture with respect
thereto. The Holder of this Debenture,  by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or  appropriate to acknowledge or
effectuate  the  subordination  so  provided  and (c)  appoints  the Trustee his
attorney-in-fact for any and all such purposes. The Holder of this Debenture, by
his  acceptance  hereof,  hereby  waives  all  notice of the  acceptance  of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness,  whether now outstanding or hereafter incurred,  and waives
reliance by each such holder upon said provisions.

                                    This  Debenture is one of a duly  authorized
series of Debentures of the Company (herein sometimes referred to as the "Series
A Debentures"), specified in the Indenture, limited in aggregate
principal  amount to  $214,433,000,  issued  under and  pursuant to an Indenture
dated as June 1, 1996 (the  "Indenture")  executed  and  delivered  between  the
Company and First Union National Bank, as trustee (the "Trustee").  The Series A
Debentures are initially  being issued to the Trust, to be held on behalf of the
Trust by its property trustee (the "Property  Trustee").  Concurrently  with the
issuance of the Series A Debentures,  the Trust is issuing its trust securities,
representing  undivided  beneficial  interests  in the  assets  of the Trust and
having an  aggregate  liquidation  amount equal to the  principal  amount of the
Series A Debentures,  including the Trust's 8.625%  Cumulative  Quarterly Income
Preferred Securities, Series A (the "Preferred Securities"). By the terms of the
Indenture,  Debentures are issuable in series which may vary as to amount,  date
of  maturity,  rate  of  interest  and in  other  respects  as in the  Indenture
provided.  Reference is made to the Indenture  for a description  of the rights,
limitations  of rights,  obligations,  duties and  immunities  thereunder of the
Trustee,  the  Company  and  Holders of the  Debentures.  Each term used in this
Debenture  which is defined in the Indenture  and not defined  herein shall have
the meaning assigned to it in the Indenture.

                                    At the option of the  Company,  the Series A
Debentures are redeemable prior to maturity (i) at any time on or after June 26,
2001, in whole or in part, and (ii) if a Special Event shall occur and be
continuing,  in whole (but not in part),  in each case at 100% of the  principal
amount thereof plus accrued  interest to the Redemption  Date. A "Special Event"
shall mean either a "Tax Event" or an  "Investment  Company  Event." "Tax Event"
shall mean that the Company shall have received an opinion of counsel (which may
be regular counsel to the Company or an Affiliate,  but not an employee  thereof
and which must be acceptable to the Property  Trustee of the Trust)  experienced
in such matters to the effect that,  as a result of any  amendment to, or change
(including any announced  prospective  change) in, the laws (or any  regulations
thereunder)  of  the  United  States  or any  political  subdivision  or  taxing
authority thereof or therein affecting taxation,  or as a result of any official
administrative  pronouncement or judicial decision interpreting or applying such
laws  or   regulations,   which   amendment  or  change  is  effective  or  such
interpretation  or  pronouncement  is announced on or after the date of original
issuance of Preferred Securities,  there is more than an insubstantial risk that
(i) the Trust is subject to United  States  Federal  income tax with  respect to
interest received on the Debentures, (ii) interest payable by the Company to the
Trust on the  Series A  Debentures  will not be  deductible  for  United  States
Federal  income  tax  purposes  or (iii) the Trust is  subject to more than a de
minimis  amount  of other  taxes,  duties,  assessments  or  other  governmental
charges. "Investment Company Event" shall mean the occurrence of a change in law
or regulation or a change in  interpretation or application of law or regulation
by any legislative body, court,  governmental agency or regulatory  authority (a
"Change in 1940 Act Law") to the effect that the Trust is or will be  considered
an "investment  company" that is required to be registered  under the Investment
Company Act of 1940, as amended,  which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Preferred Securities.

                                    At least  30 days but not more  than 60 days
before the  Redemption  Date,  the  Trustee  shall mail or caused to be mailed a
notice of redemption by first-class mail, postage prepaid, to each Holder of
Series A Debentures to be redeemed.

                                    In the event of redemption of this Debenture
in part only, a new Series A Debenture or Debentures for the unredeemed  portion
hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.

                                    In case an Event of Default  with respect to
the Series A Debentures occurs and is continuing,  the principal of and interest
on the Series A Debentures may (and, in certain circumstances, shall) be
declared,  and upon such  declaration  shall  become,  due and  payable,  in the
manner, with the effect and subject to the conditions provided in the Indenture.

                                    The  Indenture   contains   provisions   for
defeasance  at any  time  of the  entire  indebtedness  of this  Debenture  upon
compliance by the Company with certain conditions set forth therein.

                                    Subject   to  certain   exceptions   in  the
Indenture which require the consent of every Holder, the Company and the Trustee
may amend the Indenture or may waive future compliance by the Company with any
provisions  of the  Indenture,  with the  consent  of the  Holders of at least a
majority in aggregate principal amount of the Debentures of each series affected
thereby, provided that if the Series A Debentures are held by the Trust, no such
amendment  or  waiver  that  adversely  affects  the  holders  of the  Preferred
Securities  shall be  effective  without the prior  consent of the holders of at
least a majority in aggregate  liquidation  amount of the outstanding  Preferred
Securities.  Subject to certain exceptions in the Indenture, without the consent
of any  Debentureholder,  the Company and the Trustee may amend the Indenture to
cure  any  ambiguity,  defect  or  inconsistency,  to  bind a  successor  to the
obligations  of the  Indenture,  to provide  for  uncertificated  Debentures  in
addition to  certificated  Debentures,  to comply with any  requirements  of the
Debentures  and the Securities  and Exchange  Commission in connection  with the
qualification of the Indenture under the TIA, or to make any change that, in the
reasonable judgment of the Company,  does not adversely affect the rights of any
Debentureholder. Amendments bind all Holders and subsequent Holders.

                                    No reference  herein to the Indenture and no
provision  of  this  Debenture  or the  Indenture  shall  alter  or  impair  the
obligation of the Company, which is absolute and unconditional, to pay the
principal  of and  interest on this  Debenture  at the time and place and at the
rate and in the money herein prescribed.

                                    So long as no Event of Default  with respect
to the Series A Debentures  has occurred and is  continuing,  the Company  shall
have the right at any time and from time to time to extend the interest
payment period of the Series A Debentures for up to 20 consecutive quarters (the
"Extension  Period"),  provided that no Extension Period shall extend beyond the
Stated Maturity Date or Redemption Date of any Series A Debenture. At the end of
the Extension Period, the Company shall pay all interest then accrued and unpaid
(together  with  interest  thereon  at the  rate  specified  for  the  Series  A
Debentures, compounded quarterly, to the extent that payment of such interest is
enforceable under applicable law). During such Extension Period, the Company may
not  declare  or pay  any  dividend  on,  redeem,  purchase,  acquire  or make a
liquidation  payment  with  respect to, any of its capital  stock.  Prior to the
termination  of any such Extension  Period,  the Company may further extend such
Extension Period,  provided that such Extension  Period,  together with all such
previous and further  extensions,  shall not exceed 20 consecutive  quarters and
shall not extend  beyond  the Stated  Maturity  Date or  Redemption  Date of any
Series A Debenture. At the termination of any such Extension Period and upon the
payment of all amounts then due, the Company may elect to begin a new  Extension
Period, subject to the foregoing restrictions.

                                    Series A  Debentures  are  issuable  only in
registered  form  without  coupons  in  denominations  of $25 and any  integral
multiple  thereof.   As  provided  in  the  Indenture  and  subject  to  certain
limitations  therein  set  forth,  this  Debenture  is  exchangeable  for a like
aggregate  principal  amount of Series A  Debentures  of a different  authorized
denomination, as requested by the Holder surrendering the same.

                                    As provided in the  Indenture and subject to
certain  limitations  therein set forth,  this Debenture is  transferable by the
Holder hereof upon surrender of this Debenture for registration of transfer
at the office or agency of the Registrar  accompanied by a written instrument or
instruments of transfer  inform  satisfactory  to the Registrar duly executed by
the Holder hereof or his attorney duly authorized in writing,  and thereupon one
or more new Series A Debentures  of  authorized  denominations  and for the same
aggregate  principal  amount  will be issued  to the  designated  transferee  or
transferees.  No  service  charge  will be made for any such  transfer,  but the
Company  may  require  payment  of a sum  sufficient  to cover  any tax or other
governmental charge payable in relation thereto.

                                    Prior to  presentment  for  registration  of
transfer of this Debenture,  the Company,  the Trustee, any Paying Agent and any
Registrar may deem and treat the Holder hereof as the absolute owner hereof
(whether or not this Debenture shall be overdue and  notwithstanding  any notice
of ownership or writing  hereon made by anyone other than the Registrar) for the
purpose  of  receiving  payment of or on  account  of the  principal  hereof and
interest due hereon and for all other purposes,  and neither the Company nor the
Trustee nor any Paying Agent nor any  Registrar  shall be affected by any notice
to the contrary.

                                    No recourse  shall be had for the payment of
the  principal  of or the  interest  on this  Debenture,  or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture,  against any  incorporator,  stockholder  officer or director,  past,
present or future,  as such, of the Company or of any  predecessor  or successor
corporation,  whether by virtue of any constitution,  statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being,  by the  acceptance  hereof  and as  part  of the  consideration  for the
issuance hereof, expressly waived and released.

                                    This  Debenture  shall not be valid until an
authorized  signatory  of the  Trustee  manually  signs and dates the  Trustee's
Certificate of Authentication below.



<PAGE>


                                    IN WITNESS  WHEREOF,  the Company has caused
this  Debenture to be signed  manually or by  facsimile  by its duly  authorized
officers and a facsimile of its corporate seal to be affixed hereto or
imprinted hereon.


                                   PUBLIC SERVICE ELECTRIC AND GAS COMPANY

                                    
                                   By:    ROBERT C. MURRAY
                                          ----------------               
                                   Name:  Robert C. Murray

                                   Title: Senior Vice President and
                                          Chief Financial Officer




[SEAL]
                                    
Attest:

JOHN A. ANDERSON, JR.
-----------------------
(Assistant) Secretary



<PAGE>


                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the  Debentures,  of the series  designated,  referred  to in the
within-mentioned Indenture.

FIRST UNION NATIONAL BANK, as Trustee



By: MELISSA MATTHEWS
    ----------------
    Authorized Signatory

Dated: June 26, 1996


<PAGE>


                                 ASSIGNMENT FORM

                                    To assign this  Debenture,  fill in the form
below: (I) or (we) assign and transfer this Debenture to:

               ______________________________________________________
               (Insert assignee's social security or tax I.D. number)


              _____________________________________________________ 
              (Print or type assignee's name, address and zip code)

and irrevocably appoint ____________________ agent to transfer this Debenture on
the books of the Register. The agent may substitute another to act for him.

Dated: _______________             Signature:__________________________________
                                   (Sign exactly as your name
                                    appears on the other side of this Debenture)

Signature Guaranty: ____________________