Document:

PPL 8k 12-21 Exhibit 4b Electric Utilities

Exhibit 4(b)

 

 

PPL
ELECTRIC UTILITIES CORPORATION

(formerly
PP&L, Inc. and Pennsylvania Power & Light Company)

 

TO

 

DEUTSCHE
BANK TRUST COMPANY AMERICAS

 

(formerly
Bankers Trust Company, 

successor
to Morgan Guaranty Trust Company of New York,

formerly
Guaranty Trust Company of New York)

As
Trustee under PPL Electric Utilities Corporation’s

Mortgage
and Deed of Trust,

Dated
as of October 1, 1945

 

_____________________________

 

Seventy-fifth
Supplemental Indenture

Providing
among other things for

First
Mortgage Bonds, 4.95% Collateral Series due December 15, 2015, and

First
Mortgage Bonds, 5.15% Collateral Series due December 15,
2020

_____________________________

 

Dated
as of December 1, 2005

 

 

Seventy-fifth
Supplemental Indenture

 

SEVENTY-FIFTH
SUPPLEMENTAL INDENTURE, dated as of December 1, 2005 made and entered into by
and between PPL ELECTRIC UTILITIES CORPORATION (formerly PP&L, Inc. and
Pennsylvania Power & Light Company), a corporation of the Commonwealth of
Pennsylvania, whose address is Two North Ninth Street, Allentown, Pennsylvania
18101 (hereinafter sometimes called the Company), and DEUTSCHE BANK TRUST
COMPANY AMERICAS (formerly Bankers Trust Company), a corporation of the State of
New York, whose address is 60 Wall Street, New York, New York 10005 (hereinafter
sometimes called the Trustee), as Trustee under the Mortgage and Deed of Trust,
dated as of October 1, 1945 (hereinafter called the Mortgage and, together
with any indentures supplemental thereto, hereinafter called the Indenture),
which Mortgage was executed and delivered by Pennsylvania Power & Light
Company to secure the payment of bonds issued or to be issued under and in
accordance with the provisions of the Mortgage, reference to which said Mortgage
is hereby made, this instrument (hereinafter called the Seventy-fifth
Supplemental Indenture) being supplemental thereto.

 

WHEREAS,
said Mortgage was or is to be recorded in various Counties in the Commonwealth
of Pennsylvania, which Counties include or will include all Counties in which
this Seventy-fifth Supplemental Indenture is to be recorded; and

 

WHEREAS,
by amendment to its Articles of Incorporation filed in the Office of the
Secretary of State of Pennsylvania on September 12, 1997, the Company
changed its name to PP&L, Inc.; and

 

WHEREAS,
by an amendment to its Articles of Incorporation filed with the Office of the
Secretary of State of Pennsylvania on February 14, 2001, the Company
changed its name to PPL Electric Utilities Corporation; and

 

WHEREAS,
an instrument, dated August 5, 1994, was executed by the Company appointing
Bankers Trust Company as Trustee in succession to said Morgan Guaranty Trust
Company of New York (resigned) under the Indenture, and by Bankers Trust Company
accepting said appointment, which instrument was or is to be recorded in various
Counties in the Commonwealth of Pennsylvania; and

 

WHEREAS,
by an amendment to its Articles of Incorporation filed in the office of the
Secretary of State of New York, effective April 15, 2002, the Trustee changed
its name to Deutsche Bank Trust Company Americas; and 

 

WHEREAS,
by the Mortgage the Company covenanted that it would execute and deliver such
supplemental indenture or indentures and such further instruments and do such
further acts as might be necessary or proper to carry out more effectually the
purposes of the Indenture and to make subject to the lien of the Indenture any
property thereafter acquired and intended to be subject to the lien thereof;
and

 

WHEREAS,
the Company executed and delivered as supplements to the Mortgage, the following
supplemental indentures:

 

	
      Designation

       
	
      Dated
      as of

       

	
      First
      Supplemental Indenture
	
      July
      1, 1947

	
      Second
      Supplemental Indenture
	
      December
      1, 1948

	
      Third
      Supplemental Indenture
	
      February
      1, 1950

	
      Fourth
      Supplemental Indenture
	
      March
      1, 1953

	
      Fifth
      Supplemental Indenture
	
      August
      1, 1955

	
      Sixth
      Supplemental Indenture
	
      December
      1, 1961

	
      Seventh
      Supplemental Indenture
	
      March
      1, 1964

	
      Eighth
      Supplemental Indenture
	
      June
      1, 1966

	
      Ninth
      Supplemental Indenture
	
      November
      1, 1967

	
      Tenth
      Supplemental Indenture
	
      December
      1, 1967

	
      Eleventh
      Supplemental Indenture
	
      January
      1, 1969

	
      Twelfth
      Supplemental Indenture
	
      June
      1, 1969

	
      Thirteenth
      Supplemental Indenture
	
      March
      1, 1970

	
      Fourteenth
      Supplemental Indenture
	
      February
      1, 1971

	
      Fifteenth
      Supplemental Indenture
	
      February
      1, 1972

	
      Sixteenth
      Supplemental Indenture
	
      January
      1, 1973

	
      Seventeenth
      Supplemental Indenture
	
      May
      1, 1973

	
      Eighteenth
      Supplemental Indenture
	
      April
      1, 1974

	
      Nineteenth
      Supplemental Indenture
	
      October
      1, 1974

	
      Twentieth
      Supplemental Indenture 
	
      May
      1, 1975

	
      Twenty-first
      Supplemental Indenture
	
      November
      1, 1975

	
      Twenty-second
      Supplemental Indenture
	
      December
      1, 1976

	
      Twenty-third
      Supplemental Indenture
	
      December
      1, 1977

	
      Twenty-fourth
      Supplemental Indenture
	
      April
      1, 1979

	
      Twenty-fifth
      Supplemental Indenture
	
      April
      1, 1980

	
      Twenty-sixth
      Supplemental Indenture
	
      June
      1, 1980

	
      Twenty-seventh
      Supplemental Indenture
	
      June
      1, 1980

	
      Twenty-eighth
      Supplemental Indenture
	
      December
      1, 1980

	
      Twenty-ninth
      Supplemental Indenture
	
      February
      1, 1981

	
      Thirtieth
      Supplemental Indenture
	
      February
      1, 1981

	
      Thirty-first
      Supplemental Indenture
	
      September
      1, 1981

	
      Thirty-second
      Supplemental Indenture
	
      April
      1, 1982

	
      Thirty-third
      Supplemental Indenture
	
      August
      1, 1982

	
      Thirty-fourth
      Supplemental Indenture
	
      October
      1, 1982

	
      Thirty-fifth
      Supplemental Indenture
	
      November
      1, 1982

	
      Thirty-sixth
      Supplemental Indenture
	
      February
      1, 1983

	
      Thirty-seventh
      Supplemental Indenture
	
      November
      1, 1983

	
      Thirty-eighth
      Supplemental Indenture
	
      March
      1, 1984

	
      Thirty-ninth
      Supplemental Indenture
	
      April
      1, 1984

	
      Fortieth
      Supplemental Indenture
	
      August
      15, 1984

	
      Forty-first
      Supplemental Indenture
	
      December
      1, 1984

	
      Forty-second
      Supplemental Indenture
	
      June
      15, 1985

	
      Forty-third
      Supplemental Indenture
	
      October
      1, 1985

	
      Forty-fourth
      Supplemental Indenture
	
      January
      1, 1986

	
      Forty-fifth
      Supplemental Indenture
	
      February
      1, 1986

	
      Forty-sixth
      Supplemental Indenture
	
      April
      1, 1986

	
      Forty-seventh
      Supplemental Indenture
	
      October
      1, 1986

	
      Forty-eighth
      Supplemental Indenture
	
      March
      1, 1988

	
      Forty-ninth
      Supplemental Indenture
	
      June
      1, 1988

	
      Fiftieth
      Supplemental Indenture
	
      January
      1, 1989

	
      Fifty-first
      Supplemental Indenture
	
      October
      1, 1989

	
      Fifty-second
      Supplemental Indenture
	
      July
      1, 1991

	
      Fifty-third
      Supplemental Indenture
	
      May
      1, 1992

	
      Fifty-fourth
      Supplemental Indenture
	
      November
      1, 1992

	
      Fifty-fifth
      Supplemental Indenture
	
      February
      1, 1993

	
      Fifty-sixth
      Supplemental Indenture
	
      April
      1, 1993

	
      Fifty-seventh
      Supplemental Indenture
	
      June
      1, 1993

	
      Fifty-eighth
      Supplemental Indenture
	
      October
      1, 1993

	
      Fifty-ninth
      Supplemental Indenture
	
      February
      15, 1994

	
      Sixtieth
      Supplemental Indenture
	
      March
      1, 1994

	
      Sixty-first
      Supplemental Indenture
	
      March
      15, 1994

	
      Sixty-second
      Supplemental Indenture
	
      September
      1, 1994

	
      Sixty-third
      Supplemental Indenture
	
      October
      1, 1994

	
      Sixty-fourth
      Supplemental Indenture
	
      August
      1, 1995

	
      Sixty-fifth
      Supplemental Indenture
	
      April
      1, 1997

	
      Sixty-sixth
      Supplemental Indenture
	
      May
      1, 1998

	
      Sixty-seventh
      Supplemental Indenture
	
      June
      1, 1999

	
      Sixty-eighth
      Supplemental Indenture
	
      August
      1, 2001

	
      Sixty-ninth
      Supplemental Indenture
	
      January
      1, 2002

	
      Seventieth
      Supplemental Indenture
	
      February
      1, 2003

	
      Seventy-first
      Supplemental Indenture
	
      May
      1, 2003

	
      Seventy-second
      Supplemental Indenture
	
      February
      1, 2005

	
      Seventy-third
      Supplemental Indenture
	
      May
      1, 2005

	
      Seventy-fourth
      Supplemental Indenture
	
      June
      1, 2005

 

which
supplemental indentures were or are to be recorded in various Counties in the
Commonwealth of Pennsylvania; and

 

WHEREAS,
the Company executed and delivered its Supplemental Indenture, dated July 1,
1954, creating a security interest in certain personal property of the Company,
pursuant to the provisions of the Pennsylvania Uniform Commercial Code, as a
supplement to the Mortgage, which Supplemental Indenture was filed in the Office
of the Secretary of the Commonwealth of Pennsylvania on July 1, 1954, and all
subsequent supplemental indentures were so filed; and

 

WHEREAS,
in addition to the property described in the Mortgage, as heretofore
supplemented, the Company has acquired certain other property, rights and
interests in property; and

 

WHEREAS,
the Company has heretofore issued, in accordance with the provisions of the
Mortgage, as supplemented, the following series of First Mortgage
Bonds:

 

 

	
       

       

      Series
	
      Principal

      Amount

      Issued
	
      Principal

      Amount

      Outstanding

	
       
	
       
	
       

	
      3%
      Series due 1975
	
      $93,000,000
	
      None

	
      2-3/4%
      Series due 1977
	
      20,000,000
	
      None

	
      3-1/4%
      Series due 1978
	
      10,000,000
	
      None

	
      2-3/4%
      Series due 1980
	
      37,000,000
	
      None

	
      3-1/2%
      Series due 1983
	
      25,000,000
	
      None

	
      3-3/8%
      Series due 1985
	
      25,000,000
	
      None

	
      4-5/8%
      Series due 1991
	
      30,000,000
	
      None

	
      4-5/8%
      Series due 1994
	
      30,000,000
	
      None

	
      5-5/8%
      Series due 1996
	
      30,000,000
	
      None

	
      6-3/4%
      Series due 1997
	
      30,000,000
	
      None

	
      6-1/2%
      Series due 1972
	
      15,000,000
	
      None

	
      7%
      Series due 1999
	
      40,000,000
	
      None

	
      8-1/8%
      Series due June 1, 1999
	
      40,000,000
	
      None

	
      9%
      Series due 2000
	
      50,000,000
	
      None

	
      7-1/4%
      Series due 2001
	
      60,000,000
	
      None

	
      7-5/8%
      Series due 2002
	
      75,000,000
	
      None

	
      7-1/2%
      Series due 2003
	
      80,000,000
	
      None

	
      Pollution
      Control Series A
	
      28,000,000
	
      None

	
      9-1/4%
      Series due 2004
	
      80,000,000
	
      None

	
      10-1/8%
      Series due 1982
	
      100,000,000
	
      None

	
      9-3/4%
      Series due 2005
	
      125,000,000
	
      None

	
      9-3/4%
      Series due November 1, 2005
	
      100,000,000
	
      None

	
      8-1/4%
      Series due 2006
	
      150,000,000
	
      None

	
      8-1/2%
      Series due 2007
	
      100,000,000
	
      None

	
      9-7/8%
      Series due 1983-1985
	
      100,000,000
	
      None

	
      15-5/8%
      Series due 2010
	
      100,000,000
	
      None

	
      11-3/4%
      Series due 1984
	
      30,000,000
	
      None

	
      Pollution
      Control Series B
	
      70,000,000
	
      None

	
      Pollution
      Control Series C
	
      20,000,000
	
      None

	
      14%
      Series due December 1, 1990
	
      125,000,000
	
      None

	
      15%
      Series due 1984-1986
	
      50,000,000
	
      None

	
      14-3/4%
      Series A due 1986
	
      30,000,000
	
      None

	
      14-3/4%
      Series B due 1986
	
      20,000,000
	
      None

	
      16-1/2%
      Series due 1987-1991
	
      $52,000,000
	
      None

	
      16-1/8%
      Series due 1992
	
      100,000,000
	
      None

	
      16-1/2%
      Series due 1986-1990
	
      92,500,000
	
      None

	
      13-1/4%
      Series due 2012
	
      100,000,000
	
      None

	
      Pollution
      Control Series D
	
      70,000,000
	
      None

	
      12-1/8%
      Series due 1989-1993
	
      50,000,000
	
      None

	
      13-1/8%
      Series due 2013
	
      125,000,000
	
      None

	
      Pollution
      Control Series E
	
      37,750,000
	
      None

	
      13-1/2%
      Series due 1994
	
      125,000,000
	
      None

	
      Pollution
      Control Series F
	
      115,500,000
	
      None

	
      12-3/4%
      Series due 2014
	
      125,000,000
	
      None

	
      Pollution
      Control Series G
	
      55,000,000
	
      None

	
      12%
      Series due 2015
	
      125,000,000
	
      None

	
      10-7/8%
      Series due 2016
	
      125,000,000
	
      None

	
      9-5/8%
      Series due 1996
	
      125,000,000
	
      None

	
      9%
      Series due 2016
	
      125,000,000
	
      None

	
      9-1/2%
      Series due 2016
	
      125,000,000
	
      None

	
      9-1/4%
      Series due 1998
	
      125,000,000
	
      None

	
      9-5/8%
      Series due 1998
	
      125,000,000
	
      None

	
      10%
      Series due 2019
	
      125,000,000
	
      None

	
      9-1/4%
      Series due 2019
	
      250,000,000
	
      None

	
      9-3/8%
      Series due 2021
	
      150,000,000
	
      None

	
      7-3/4%
      Series due 2002
	
      150,000,000
	
      None

	
      8-1/2%
      Series due 2022
	
      150,000,000
	
      None

	
      Pollution
      Control Series H
	
      90,000,000
	
      None

	
      6-7/8%
      Series due 2003
	
      100,000,000
	
      None

	
      7-7/8%
      Series due 2023
	
      200,000,000
	
      None

	
      5-1/2%
      Series due 1998
	
      150,000,000
	
      None

	
      6-1/2%
      Series due 2005
	
      125,000,000
	
      None

	
      6%
      Series due 2000
	
      125,000,000
	
      None

	
      6-3/4%
      Series due 2023
	
      150,000,000
	
      None

	
      Pollution
      Control Series I
	
      53,250,000
	
      None

	
      6.55%
      Series due 2006
	
      150,000,000
	
      146,000,000

	
      7.30%
      Series due 2024
	
      150,000,000
	
      None

	
      6-7/8%
      Series due 2004
	
      150,000,000
	
      None

	
      7-3/8%
      Series due 2014
	
      100,000,000
	
      10,290,000

	
      Pollution
      Control Series J
	
      115,500,000
	
      None

	
      7.70%
      Series due 2009
	
      200,000,000
	
      325,000

	
      Pollution
      Control Series K
	
      55,000,000
	
      None

	
      Short-Term
      Series A
	
      800,000,000
	
      None

	
      6
      1/8% REset Put Securities Series due 2006
	
      200,000,000
	
      None

	
      Short-Term
      Series B
	
      600,000,000
	
      None

	
      5-7/8%
      Series due August 15, 2007
	
      300,000,000
	
      254,866,000

	
      6-1/4%
      Series due August 15, 2009
	
      500,000,000
	
      485,785,000

	
      3.125%
      Pollution Control Series due 2008
	
      90,000,000
	
      90,000,000

	
      4.30%
      Collateral Series due 2013
	
      100,000,000
	
      100,000,000

	
      4.70%
      Pollution Control Series due 2029
	
      115,500,000
	
      115,500,000

	
      4.75%
      Pollution Control Series due 2027
	
      108,250,000
	
      108,250,000

 

which
bonds are also sometimes called bonds of the First through Eighty-first Series,
respectively; and

 

WHEREAS,
Section 8 of the Mortgage provides that the form of each series of bonds (other
than the First Series) issued thereunder shall be established by Resolution of
the Board of Directors of the Company and that the form of such series, as
established by said Board of Directors, shall specify the descriptive title of
the bonds and various other terms thereof, and may also contain such provisions
not inconsistent with the provisions of the Indenture as the Board of Directors
may, in its discretion, cause to be inserted therein expressing or referring to
the terms and conditions upon which such bonds are to be issued and/or secured
under the Indenture; and

 

WHEREAS,
Section 120 of the Mortgage provides, among other things, that any power,
privilege or right expressly or impliedly reserved to or in any way conferred
upon the Company by any provision of the Indenture, whether such power,
privilege or right is in any way restricted or is unrestricted, may be in whole
or in part waived or surrendered or subjected to any restriction if at the time
unrestricted or to additional restriction if already restricted, and the Company
may enter into any future covenants, limitations or restrictions for the benefit
of any one or more series of bonds issued thereunder, or the Company may cure
any ambiguity contained therein or in any supplemental indenture or may
establish the terms and provisions of any series of bonds other than said First
Series, by an instrument in writing executed and acknowledged by the Company in
such manner as would be necessary to entitle a conveyance of real estate to
record in all of the States in which any property at the time subject to the
lien of the Indenture shall be situated; and

 

WHEREAS,
the Company now desires to create two new series of bonds and to add to its
covenants and agreements contained in the Mortgage, as heretofore supplemented,
certain other covenants and agreements to be observed by it and to alter and
amend in certain respects the covenants and provisions contained in the
Mortgage; and

 

WHEREAS,
the execution and delivery by the Company of this Seventy-fifth Supplemental
Indenture, and the terms of the bonds of the Eighty-second and Eighty-third
Series, hereinafter referred to, have been duly authorized by the Board of
Directors of the Company by appropriate Resolutions of said Board of
Directors;

 

NOW,
THEREFORE, THIS INDENTURE WITNESSETH: That PPL Electric Utilities Corporation,
in consideration of the premises and of One Dollar to it duly paid by the
Trustee at or before the ensealing and delivery of these presents, the receipt
whereof is hereby acknowledged, and in further evidence of assurance of the
estate, title and rights of the Trustee and in order further to secure the
payment both of the principal of and interest and premium, if any, on the bonds
from time to time issued under the Indenture, according to their tenor and
effect and the performance of all the provisions of the Indenture (including any
modification made as in the Mortgage provided) and of said bonds, hereby grants,
bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets
over and confirms (subject, however, to Excepted Encumbrances as defined in
Section 6 of the Mortgage) unto Deutsche Bank Trust Company Americas, as Trustee
under the Indenture, and to its successor or successors in said trust, and to
said Trustee and its successors and assigns forever, all property, real,
personal and mixed, of the kind or nature specifically mentioned in the
Mortgage, as heretofore supplemented, or of any other kind or nature, acquired
by the Company after the date of the execution and delivery of the Seventy-fifth
Supplemental Indenture (except any herein or in the Mortgage, as heretofore
supplemented, expressly excepted and except any which may not lawfully be
mortgaged or pledged under the Indenture), now owned or, subject to the
provisions of Section 87 of the Mortgage, hereafter acquired by the Company (by
purchase, consolidation, merger, donation, construction, erection or in any
other way) and wheresoever situated, including (without in anywise limiting or
impairing by the enumeration of the same the scope and intent of the foregoing)
all lands, power sites, flowage rights, water rights, water locations, water
appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways,
dams, dam sites, aqueducts, and all other rights or means for appropriating,
conveying, storing and supplying water; all rights of way and roads; all plants
for the generation of electricity by steam, water and/or other power; all power
houses, gas plants, street lighting systems, standards and other equipment
incidental thereto, telephone, radio and television systems, air-conditioning
systems and equipment incidental thereto, water works, water systems, steam heat
and hot water plants, substations, lines, service and supply systems, bridges,
culverts, tracks, ice or refrigeration plants and equipment, offices, buildings
and other structures and the equipment thereof; all machinery, engines, boilers,
dynamos, electric, gas and other machines, regulators, meters, transformers,
generators, motors, electrical, gas and mechanical appliances, conduits, cables,
water, steam heat, gas or other pipes, gas mains and pipes, service pipes,
fittings, valves and connections, pole and transmission lines, wires, cables,
tools, implements, apparatus, furniture and chattels; all municipal and other
franchises, consents or permits; all lines for the transmission and distribution
of electric current, gas, steam heat or water for any purpose including towers,
poles, wires, cables, pipes, conduits, ducts and all apparatus for use in
connection therewith; all real estate, lands, easements, servitudes, licenses,
permits, franchises, privileges, rights of way and other rights in or relating
to real estate or the occupancy of the same and (except as herein or in the
Mortgage, as heretofore supplemented, expressly excepted) all the right, title
and interest of the Company in and to all other property of any kind or nature
appertaining to and/or used and/or occupied and/or enjoyed in connection with
any property hereinbefore or in the Mortgage, as heretofore supplemented,
described;

 

TOGETHER
with all and singular the tenements, hereditaments, prescriptions, servitudes,
and appurtenances belonging or in anywise appertaining to the aforesaid property
or any part thereof, with the reversion and reversions, remainder and remainders
and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents,
revenues, issues, earnings, income, product and profits thereof, and all the
estate, right, title and interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and to the
aforesaid property and franchises and every part and parcel
thereof;

 

IT IS
HEREBY AGREED by the Company that, subject to the provisions of Section 87 of
the Mortgage and to the extent permitted by law, all the property, rights, and
franchises acquired by the Company (by purchase, consolidation, merger,
donation, construction, erection or in any other way) after the date hereof,
except any herein or in the Mortgage, as heretofore supplemented, expressly
excepted, shall be and are as fully granted and conveyed hereby and as fully
embraced within the lien hereof and the lien of the Indenture, as if such
property, rights and franchises were now owned by the Company and were
specifically described herein and conveyed hereby; and

 

IT IS
HEREBY DECLARED by the Company that all the property, rights and franchises now
owned or hereafter acquired by the Company have been, or are, or will be owned
or acquired with the intention to use the same in carrying on the business or
branches of business of the Company, and it is hereby declared that it is the
intention of the Company that all thereof, except any herein or in the Mortgage,
as heretofore supplemented, expressly excepted, shall (subject to the provisions
of Section 87 of the Mortgage and to the extent permitted by law) be embraced
within the lien of this Seventy- fifth Supplemental Indenture and the lien of
the Indenture;

 

PROVIDED
that the following are not and are not intended to be now or hereafter granted,
bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged,
set over or confirmed hereunder and are hereby expressly excepted from the lien
and operation of this Seventy- fifth Supplemental Indenture and from the lien
and operation of the Indenture, viz: (1)
cash, shares of stock, bonds, notes and other obligations and other securities
not hereafter specifically pledged, paid, deposited, delivered or held under the
Indenture or covenanted so to be; (2) goods, wares, merchandise, equipment,
apparatus, materials, or supplies held for the purpose of sale or other
disposition in the usual course of business; fuel, oil and similar materials and
supplies consumable in the operation of any of the properties of the Company;
construction equipment acquired for temporary use; all aircraft, rolling stock,
trolley coaches, buses, motor coaches, automobiles and other vehicles and
materials and supplies held for the purposes of repairing or replacing (in whole
or part) any of the same; all timber, minerals, mineral rights and royalties;
(3) bills, notes and accounts receivable, judgments, demands and choses in
action, and all contracts, leases and operating agreements not specifically
pledged under the Indenture or covenanted so to be; the Company’s contractual
rights or other interest in or with respect to tires not owned by the Company;
(4) the last day of the term of any lease or leasehold which may be or become
subject to the lien of the Indenture; (5) electric energy, gas, steam, ice, and
other materials or products generated, manufactured, produced or purchased by
the Company for sale, distribution or use in the ordinary course of its business
and (6) any property released from the lien of the Mortgage pursuant to Sections
58, 59, 60, 62 or 63 of the Mortgage; provided, however, that the property and
rights expressly excepted from the lien and operation of the Indenture in the
above subdivisions (2) and (3) shall (to the extent permitted by law) cease to
be so excepted in the event and as of the date that the Trustee or a receiver or
trustee shall enter upon and take possession of the Mortgaged and Pledged
Property in the manner provided in Article XIII of the Mortgage by reason of the
occurrence of a Default as defined in Section 65 thereof, as supplemented by the
provisions of this Seventy- fifth Supplemental Indenture;

 

TO HAVE
AND TO HOLD all such properties, real, personal and mixed, granted, bargained,
sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or
confirmed by the Company as aforesaid, or intended so to be, unto Deutsche Bank
Trust Company Americas, as Trustee, and its successors and assigns
forever;

 

IN TRUST
NEVERTHELESS for the same purposes and upon the same terms, trusts and
conditions and subject to and with the same provisos and covenants as are set
forth in the Mortgage, as heretofore supplemented, this Seventy- fifth
Supplemental Indenture being supplemental to the Mortgage;

 

AND IT IS
HEREBY COVENANTED by the Company that all the terms, conditions, provisos,
covenants and provisions contained in the Mortgage, as heretofore supplemented,
shall affect and apply to the property hereinbefore described and conveyed and
to the estate, rights, obligations and duties of the Company and the Trustee and
the beneficiaries of the trust with respect to said property, and to the Trustee
and its successors as Trustee of said property in the same manner and with the
same effect as if the said property had been owned by the Company at the time of
the execution of the Mortgage, and had been specifically and at length described
in and conveyed to the Trustee by the Mortgage as a part of the property therein
stated to be conveyed.

 

The
Company further covenants and agrees to and with the Trustee and its successors
in said trust under the Indenture, as follows:

ARTICLE
I.  

Eighty-second
Series of Bonds

SECTION
1.  There
shall be a series of bonds designated “First Mortgage Bonds, 4.95% Collateral
Series due December 15, 2015” (herein sometimes referred to as the
“Eighty-second Series”), each of which shall also bear the descriptive title
First Mortgage Bonds, and the form thereof, which shall be established by
Resolution of the Board of Directors of the Company, shall contain suitable
provisions with respect to the matters hereinafter in this Section specified.
Bonds of the Eighty-second Series shall be limited to $100,000,000 in aggregate
principal amount, except as provided in Section 16 of the Mortgage, and shall be
issued as fully registered bonds in denominations of One Thousand Dollars and in
any multiple or multiples of One Thousand Dollars; each bond of the
Eighty-second Series shall mature on December 15, 2015, shall bear interest at
the rate of 4.95% per annum, payable semi-annually on June 15 and December 15 of
each year; the principal of and interest on each said bond to be payable at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, and interest on each said bond to be also payable at the office of the
Company in the City of Allentown, Pennsylvania, in such coin or currency of the
United States of America as at the time of payment is legal tender for public
and private debts. Bonds of the Eighty-second Series shall be dated as in
Section 10 of the Mortgage provided.

 

The bonds
of the Eighty-second Series shall be issued by the Company, registered in the
name of and delivered to JPMorgan Chase Bank, N.A., as trustee (the “2001
Trustee”) under an Indenture dated as of August 1, 2001 (the “2001 Indenture”),
to provide for the payment when due (whether at maturity, by acceleration or
otherwise) of the principal and interest of the Securities (as defined in the
2001 Indenture) to be issued from time to time under the 2001
Indenture.

 

The bonds
of the Eighty-second Series shall not be transferable by the 2001 Trustee,
except to a successor trustee under the 2001 Indenture. Bonds of the
Eighty-second Series so transferable to a successor trustee under the 2001
Indenture may be transferred at the principal office of the Trustee in the
Borough of Manhattan, The City of New York. 

 

Any
payment by the Company under the 2001 Indenture of the principal of or premium,
if any, or interest, if any on the securities (the “4.95% Securities”) which
shall been authenticated and delivered under the 2001 Indenture on the basis of
the issuance and delivery to the 2001 Trustee of bonds of the Eighty-second
Series (other than by the application of the proceeds of a payment in respect of
such bonds) shall, to the extent hereof, be deemed to satisfy and discharge the
obligation of the Company, if any, to make a payment of principal of, or
premium, or interest on such bonds, as the case may be, which is then
due.

 

The
Trustee may conclusively presume that the obligation of the Company to pay the
principal of or interest on the bonds of the Eighty-second Series as the same
shall become due and payable shall have been fully satisfied and discharged
unless and until it shall have received a written notice from the 2001 Trustee,
signed by an authorized officer thereof, stating that the principal of or
interest on specified bonds of the Eighty-second Series has become due and
payable and has not been fully paid, and specifying the amount of funds required
to make such payment.

 

(I) Each
holder of a bond of the Eighty-second Series consents that the bonds of the
Eighty-second Series may be redeemable at the option of the Company or pursuant
to the requirements of the Mortgage in whole at any time, or in part from time
to time, prior to maturity, without notice provided in Section 52 of the
Mortgage, at the principal amount of the bonds to be redeemed, in each case,
together with accrued interest to the date fixed for redemption by the Company
in a notice delivered on or before the date fixed for redemption by the Company
to the Trustee and to the holders of the bonds to be redeemed.

 

(II) The
bonds of the Eighty-second Series shall also be redeemable, in whole at any
time, or in part from time to time, prior to maturity, at a redemption price
equal to the principal amount thereof, together with accrued and unpaid interest
to the date of payment of such principal amount, upon receipt by the Trustee of
a written notice from the 2001 Trustee (i) delivered to the Trustee and the
Company, (ii) signed by its President or any Vice President, (iii) stating that
an Event of Default has occurred under the 2001 Indenture and is continuing and
that, as a result, there then is due and payable a specified amount with respect
to the Securities Outstanding under the 2001 Indenture, for the payment of which
the 2001 Trustee has not received funds, and (iv) specifying the principal
amount of the bonds of the Eighty-second Series to be redeemed. Delivery of such
notice shall constitute a waiver by the 2001 Trustee of notice of redemption
under the Indenture.

 

(III) At
the option of the registered owner, any bonds of the Eighty-second Series, upon
surrender thereof, for cancellation, at the office or agency of the Company in
the Borough of Manhattan, The City of New York, shall be exchangeable for a like
aggregate principal amount of bonds of the same series, interest rate, maturity
and other terms of other authorized denominations.

 

Subject
to the provisions of the third paragraph of this Section 1, Bonds of the
Eighty-second Series shall be transferable, upon the surrender thereof for
cancellation, together with a written instrument of transfer in form approved by
the registrar duly executed by the registered owner or by his duly authorized
attorney, at the office or agency of the Company in the Borough of Manhattan,
The City of New York; provided that such transfer shall not result in any
security being required to be registered under the Securities Act of 1933, as
amended, and an opinion of counsel satisfactory to the Company to such effect
shall have been provided to the Company.

 

The bonds
of the Eighty-second Series shall not be redeemable by the application of cash
deposited with the Trustee pursuant to the provisions of Section
64.

 

Upon any
transfer or exchange of bonds of the Eighty-second Series, the Company may make
a charge therefor sufficient to reimburse it for any tax or taxes or other
governmental charge, as provided in Section 12 of the Mortgage, but the Company
hereby waives any right to make a charge in addition thereto for any exchange or
transfer of bonds of the Eighty-second Series.

ARTICLE
II.

Eighty-third
Series of Bonds

SECTION
2.  There
shall be a series of bonds designated “First Mortgage Bonds, 5.15% Collateral
Series due December 15, 2020” (herein sometimes referred to as the “Eighty-third
Series”), each of which shall also bear the descriptive title First Mortgage
Bonds, and the form thereof, which shall be established by Resolution of the
Board of Directors of the Company, shall contain suitable provisions with
respect to the matters hereinafter in this Section specified. Bonds of the
Eighty-third Series shall be limited to $100,000,000 in aggregate principal
amount, except as provided in Section 16 of the Mortgage, and shall be issued as
fully registered bonds in denominations of One Thousand Dollars and in any
multiple or multiples of One Thousand Dollars; each bond of the Eighty-third
Series shall mature on December 15, 2020, shall bear interest at the rate of
5.15% per annum, payable semi-annually on June 15 and December 15 of each year;
the principal of and interest on each said bond to be payable at the office or
agency of the Company in the Borough of Manhattan, The City of New York, and
interest on each said bond to be also payable at the office of the Company in
the City of Allentown, Pennsylvania, in such coin or currency of the United
States of America as at the time of payment is legal tender for public and
private debts. Bonds of the Eighty-third Series shall be dated as in Section 10
of the Mortgage provided.

 

The bonds
of the Eighty-third Series shall be issued by the Company, registered in the
name of and delivered to JPMorgan Chase Bank, N.A., as trustee (the “2001
Trustee”) under an Indenture dated as of August 1, 2001 (the “2001 Indenture”),
to provide for the payment when due (whether at maturity, by acceleration or
otherwise) of the principal and interest of the Securities (as defined in the
2001 Indenture) to be issued from time to time under the 2001
Indenture.

 

The bonds
of the Eighty-third Series shall not be transferable by the 2001 Trustee, except
to a successor trustee under the 2001 Indenture. Bonds of the Eighty-third
Series so transferable to a successor trustee under the 2001 Indenture may be
transferred at the principal office of the Trustee in the Borough of Manhattan,
The City of New York. 

 

Any
payment by the Company under the 2001 Indenture of the principal of or premium,
if any, or interest, if any on the securities (the “5.15% Securities”) which
shall been authenticated and delivered under the 2001 Indenture on the basis of
the issuance and delivery to the 2001 Trustee of bonds of the Eighty-third
Series (other than by the application of the proceeds of a payment in respect of
such bonds) shall, to the extent hereof, be deemed to satisfy and discharge the
obligation of the Company, if any, to make a payment of principal of, or
premium, or interest on such bonds, as the case may be, which is then
due.

 

The
Trustee may conclusively presume that the obligation of the Company to pay the
principal of or interest on the bonds of the Eighty- third Series as the same
shall become due and payable shall have been fully satisfied and discharged
unless and until it shall have received a written notice from the 2001 Trustee,
signed by an authorized officer thereof, stating that the principal of or
interest on specified bonds of the Eighty-third Series has become due and
payable and has not been fully paid, and specifying the amount of funds required
to make such payment.

 

(I) Each
holder of a bond of the Eighty-third Series consents that the bonds of the
Eighty-third Series may be redeemable at the option of the Company or pursuant
to the requirements of the Mortgage in whole at any time, or in part from time
to time, prior to maturity, without notice provided in Section 52 of the
Mortgage, at the principal amount of the bonds to be redeemed, in each case,
together with accrued interest to the date fixed for redemption by the Company
in a notice delivered on or before the date fixed for redemption by the Company
to the Trustee and to the holders of the bonds to be redeemed.

 

(II) The
bonds of the Eighty-third Series shall also be redeemable, in whole at any time,
or in part from time to time, prior to maturity, at a redemption price equal to
the principal amount thereof, together with accrued and unpaid interest to the
date of payment of such principal amount, upon receipt by the Trustee of a
written notice from the 2001 Trustee (i) delivered to the Trustee and the
Company, (ii) signed by its President or any Vice President, (iii) stating that
an Event of Default has occurred under the 2001 Indenture and is continuing and
that, as a result, there then is due and payable a specified amount with respect
to the Securities Outstanding under the 2001 Indenture, for the payment of which
the 2001 Trustee has not received funds, and (iv) specifying the principal
amount of the bonds of the Eighty-third Series to be redeemed. Delivery of such
notice shall constitute a waiver by the 2001 Trustee of notice of redemption
under the Indenture.

 

(III) At
the option of the registered owner, any bonds of the Eighty-third Series, upon
surrender thereof, for cancellation, at the office or agency of the Company in
the Borough of Manhattan, The City of New York, shall be exchangeable for a like
aggregate principal amount of bonds of the same series, interest rate, maturity
and other terms of other authorized denominations.

 

Subject
to the provisions of the third paragraph of this Section 1, Bonds of the
Eighty-third Series shall be transferable, upon the surrender thereof for
cancellation, together with a written instrument of transfer in form approved by
the registrar duly executed by the registered owner or by his duly authorized
attorney, at the office or agency of the Company in the Borough of Manhattan,
The City of New York; provided that such transfer shall not result in any
security being required to be registered under the Securities Act of 1933, as
amended, and an opinion of counsel satisfactory to the Company to such effect
shall have been provided to the Company.

 

The bonds
of the Eighty-third Series shall not be redeemable by the application of cash
deposited with the Trustee pursuant to the provisions of Section
64.

 

Upon any
transfer or exchange of bonds of the Eighty-third Series, the Company may make a
charge therefor sufficient to reimburse it for any tax or taxes or other
governmental charge, as provided in Section 12 of the Mortgage, but the Company
hereby waives any right to make a charge in addition thereto for any exchange or
transfer of bonds of the Eighty-third Series.

 

ARTICLE
III.

 

Miscellaneous
Provisions

 

SECTION
3.  The
Company reserves the right to make such amendments to the Mortgage, as
supplemented, as shall be necessary in order to delete subsection (I) of Section
39 of the Mortgage, and each holder of bonds of the Eighty-second Series and
Eighty-third Series hereby consents to such deletion without any other or
further action by any holder of bonds of the Eighty-second Series and
Eighty-third Series.

 

SECTION
4.  The terms
defined in the Mortgage, as heretofore supplemented, shall, for all purposes of
this Seventy-fifth Supplemental Indenture, have the meanings specified in the
Mortgage, as heretofore supplemented.

 

SECTION
5.  Whenever
in this Seventy-fifth Supplemental Indenture either of the parties hereto is
named or referred to, this shall, subject to the provisions of Articles XVI and
XVII of the Mortgage, be deemed to include the successors and assigns of such
party, and all the covenants and agreements in this Seventy-fifth Supplemental
Indenture contained by or on behalf of the Company, or by or on behalf of the
Trustee shall, subject as aforesaid, bind and inure to the respective benefits
of the respective successors and assigns of such parties, whether so expressed
or not.

 

SECTION
6.  So long
as any bonds of the Eighty-second Series and Eighty-third Series remain
Outstanding, unless this provision shall have been waived in writing by the
holders of a majority in aggregate principal amount of bonds of the
Eighty-second Series and Eighty-third Series Outstanding at the time of such
consent, subdivision (c) of Section 65 of the Mortgage shall read as
follows:

 

“(c)
Failure to pay interest or premium, if any, upon or principal (whether at
maturity as therein expressed or by declaration, or otherwise) of any
Outstanding Qualified Lien Bonds or of any outstanding indebtedness secured by
any mortgage or other lien (not included in the term Excepted Encumbrances)
prior to the lien of this Indenture, existing upon any property of the Company
which is subject to the lien and operation of this Indenture continued beyond
the period of grace, if any, specified in such mortgage or Qualified Lien or
other lien securing the same;”

 

SECTION
7.  A breach
of a specified covenant or agreement of the Company contained in this
Seventy-fifth Supplemental Indenture shall become a Default under the Indenture
upon the happening of the events provided in Section 65(g) of the Mortgage with
respect to such a covenant or agreement.

 

SECTION
8.  The
Trustee hereby accepts the trusts herein declared, provided, created or
supplemented and agrees to perform the same upon the terms and conditions herein
and in the Mortgage, as heretofore supplemented, set forth and upon the
following terms and conditions:

 

The
Trustee shall not be responsible in any manner whatsoever for or in respect of
the validity or sufficiency of this Seventy-fifth Supplemental Indenture or for
or in respect of the recitals contained herein, all of which recitals are made
by the Company solely. Each and every term and condition contained in Article
XVII of the Mortgage, as heretofore amended by said First through Seventy-fifth
Supplemental Indentures, shall apply to and form part of this Seventy-fifth
Supplemental Indenture with the same force and effect as if the same were herein
set forth in full with such omissions, variations and insertions, if any, as may
be appropriate to make the same conform to the provisions of this Seventy-fifth
Supplemental Indenture.

 

SECTION
9.  Nothing
in this Seventy-fifth Supplemental Indenture, expressed or implied, is intended,
or shall be construed, to confer upon, or to give to, any person, firm or
corporation, other than the parties hereto and the holders of the bonds and
coupons Outstanding under the Indenture, any right, remedy or claim under or by
reason of this Seventy-fifth Supplemental Indenture or by any covenant,
condition, stipulation, promise or agreement hereof, and all the covenants,
conditions, stipulations, promises and agreements in this Seventy-fifth
Supplemental Indenture contained by or on behalf of the Company shall be for the
sole and exclusive benefit of the parties hereto, and of the holders of the
bonds and coupons Outstanding under the Indenture.

 

SECTION
10.  This
Seventy-fifth Supplemental Indenture shall be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and
the same instrument.

 

PPL
ELECTRIC UTILITIES CORPORATION does hereby constitute and appoint James E. Abel,
Treasurer of PPL ELECTRIC UTILITIES CORPORATION, to be its attorney for it, and
in its name and as and for its corporate act and deed to acknowledge this
Seventy-fifth Supplemental Indenture before any person having authority by the
laws of the Commonwealth of Pennsylvania to take such acknowledgment, to the
intent that the same may be duly recorded, and DEUTSCHE BANK TRUST COMPANY
AMERICAS does hereby constitute and appoint Susan Johnson, a Vice President of
DEUTSCHE BANK TRUST COMPANY AMERICAS, to be its attorney for it, and in its name
and as and for its corporate act and deed to acknowledge this Seventy-fifth
Supplemental Indenture before any person having authority by the laws of the
Commonwealth of Pennsylvania to take such acknowledgment, to the intent that the
same may be duly recorded.

 

IN
WITNESS WHEREOF, PPL ELECTRIC UTILITIES CORPORATION has caused its corporate
name to be hereunto affixed, and this instrument to be signed and sealed by its
President, one of its Vice Presidents or its Treasurer, and its corporate seal
to be attested by its Secretary or one of its Assistant Secretaries for and in
its behalf, in the City of Allentown, Pennsylvania, and DEUTSCHE BANK TRUST
COMPANY AMERICAS has caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by one of its Principals, Vice Presidents,
Trust Officers or Associates, and its corporate seal to be attested by one of
its Vice Presidents, Assistant Vice Presidents, Trust Officers or Associates, in
The City of New York, as of the day and year first above written.

 

	
       
	
      PPL
      ELECTRIC UTILITIES CORPORATION

	
       
	
       

	
       
	
      By:
	
       

	
       
	
      Name:
      James E. Abel

      Title:
      Treasurer

	
       
	
       

 

Attest:

 

                                                 

Assistant
Secretary

 

	
       
	
      DEUTSCHE
      BANK TRUST COMPANY AMERICAS

	
       
	
       

	
       
	
      By:
	
       

	
       
	
      Name:
      Susan Johnson

      Title:
      Vice President

	
       
	
       

 

Attest:

 

                                              

Vice
President

 

COMMONWEALTH
OF PENNSYLVANIA )

                                                                          
  )ss.:

COUNTY OF
LEHIGH                                     
)

On this
___ day of December, 2005, before me, a notary public, the undersigned,
personally appeared James E. Abel, who acknowledged himself to be Treasurer of
PPL ELECTRIC UTILITIES CORPORATION, a corporation and that he, as such
Treasurer, being authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as
Treasurer.

 

In
witness whereof, I hereunto set my hand and official seal.

 

	
       
	
       

	
       
	
       

	
       
	
      Notary
      Public

	
       
	
       

 

STATE OF
NEW YORK      )

                                             
  )ss

COUNTY OF
NEW YORK  )

On this
___ day of December, 2005, before me, a notary public, the undersigned,
personally appeared Susan Johnson, who acknowledged herself to be a Vice
President of DEUTSCHE BANK TRUST COMPANY AMERICAS, a
corporation and that she, as such Vice President, being authorized to do so,
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by herself as Vice President.

 

In
witness whereof, I hereunto set my hand and official seal.

 

	 	 
	 	 
	 	
      Notary
      Public

	 	 

 

Deutsche
Bank Trust Company Americas hereby certifies that its precise name and address
as Trustee hereunder are:

 

DEUTSCHE
BANK TRUST COMPANY AMERICAS

Trust
& Securities Services

60 Wall
Street, MS NYC60-2710

New York,
New York 10005

	 	
      DEUTSCHE
      BANK TRUST COMPANY AMERICAS

	 	 
	 	
      By:
	 
	 	
      Name:
      Susan Johnson

      Title:
      Vice PresidentEXHIBIT 4.1

 THIS NOTE  HAS NOT  BEEN REGISTERED  UNDER THE  SECURITIES ACT  OF 1933,  AS
 AMENDED (THE "SECURITIES ACT"), OR ANY  STATE SECURITIES LAW AND MAY NOT  BE
 SOLD, TRANSFERRED  OR  OTHERWISE DISPOSED  OF  UNLESS REGISTERED  UNDER  THE
 SECURITIES ACT AND  UNDER APPLICABLE STATE  SECURITIES LAWS  OR THE  COMPANY
 SHALL HAVE RECEIVED  AN OPINION OF  COUNSEL THAT REGISTRATION  OF THIS  NOTE
 UNDER THE  SECURITIES  ACT AND  UNDER  THE PROVISIONS  OF  APPLICABLE  STATE
 SECURITIES LAWS IS NOT REQUIRED.

 THIS NOTE  SUBJECT TO  CERTAIN RESTRICTIONS  ON  TRANSFER CONTAINED  IN  THE
 SETTLEMENT AGREEMENT (AS DEFINED BELOW). A COPY OF SUCH SETTLEMENT AGREEMENT
 AND ALL APPLICABLE AMENDMENTS  THERETO WILL BE FURNISHED  BY THE COMPANY  TO
 THE HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT  ITS
 PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.

 THIS  NOTE  AND  THE  INDEBTEDNESS  OF  THE  COMPANY  EVIDENCED  HEREBY  ARE
 SUBORDINATE TO THE PAYMENT OF CERTAIN OTHER INDEBTEDNESS OF THE COMPANY,  AS
 MORE PARTICULARLY DESCRIBED HEREIN.

                        CARRINGTON LABORATORIES, INC.

                      6.0% SUBORDINATED PROMISSORY NOTE

 U.S. $400,000                                              IRVING, TEXAS
                                                            NO.: PN-2005-017
                                                            December 20, 2005

      FOR VALUE RECEIVED, the undersigned, Carrington Laboratories, Inc., a
 Texas corporation (the "Company"), hereby promises to pay to the order of
 Swiss-American Products, Inc. or any future holder of this subordinated
 promissory note (the "Payee"), at the address of the Payee set forth herein,
 or at such other place as the Payee may designate in writing to the Company,
 the principal sum of up to Four Hundred Thousand Dollars (U.S. $400,000), or
 such other amount as may be outstanding hereunder, together with all accrued
 but unpaid interest, in such coin or currency of the United States of
 America as at the time shall be legal tender for the payment of public
 and private debts and in immediately available funds, as provided herein.

      This 6.0% Subordinated Promissory Note (this "Note") is being issued
 together with a Series C Common Stock Purchase Warrant, dated as of the
 date hereof (the "Series C Warrant"), pursuant to the terms of a Settlement
 Agreement and Mutual Release of all Claims among the Company, G. Scott Vogel
 and the Payee (the "Settlement Agreement").

      1. Principal And Interest Payments.

           (a)  The Company shall repay in full the entire principal balance
 then outstanding under this Note on the first to occur (the "Maturity Date")
 of: (i) the Payment Date, or (ii) the acceleration of the unpaid principal
 balance of this Note pursuant to the provisions hereof.  As used herein, (a)
 "Payment Date" means the first to occur of: (i) December 20, 2009, or (ii)
 the tenth Business Day (defined below) after the full exercise by Payee of
 its Series C Warrant issued to Payee on the date hereof; and (b) "Business
 Day" means any day except Saturday, Sunday and any day which shall be a
 federal legal holiday or a day on which banking institutions in the State
 of Texas are authorized or required by law or other governmental action to
 close.

           (b)  Interest on the outstanding principal balance of this Note
 shall accrue at a rate of six percent (6%) per annum, compounded quarterly.
 Interest on the outstanding principal balance of this Note shall be computed
 on the basis of the actual number of days elapsed (including the first day,
 but excluding the last) and a year of three hundred sixty (360) days and
 shall be payable quarterly within ten (10) calendar days from the end of
 each calendar quarter.

           (c) At the Company's sole option, the Company may prepay, in whole
 or in part, the outstanding principal balance of this Note, plus all accrued
 and unpaid interest on the amount so prepaid, at any time and from time to
 time, in each case without premium or penalty.

      2. Non-Business Days. Whenever any payment to be made under this Note
 shall be due on a day that is not a Business Day, such payment shall be due
 on the next succeeding Business Day and such next succeeding day shall be
 included in the calculation of the amount of accrued interest payable on
 such date.

      3. Events Of Default. The occurrence of any of the following events
 shall be an "Event of Default" under this Note:

           (a)  the Company fails to pay any principal or interest under this
 Note when due and payable and such failure is not remedied within ten (10)
 Business Days thereafter; or

           (b)  the Company (i) fails to duly pay any indebtedness in excess
 of $2,000,000 constituting principal or interest owed by it with respect to
 borrowed money or money otherwise owed under any note, bond, or similar
 instrument, or (ii) otherwise breaches or defaults in the performance of any
 agreement or instrument by which any such indebtedness is issued, evidenced,
 governed, or secured, and, in each case, (1) any such failure, breach or
 default results in the acceleration of such indebtedness, and (2) such
 indebtedness has not been discharged in full or such acceleration has not
 been stayed, rescinded or annulled within five (5) Business Days of such
 acceleration; or

           (c) the Company shall (i) apply for or consent to the appointment
 of, or the taking of possession by, a receiver, custodian, trustee or
 liquidator of itself or of all or a substantial part of its property or
 assets, (ii) make a general assignment for the benefit of its creditors,
 (iii) commence a voluntary case under the United States Bankruptcy Code
 (the "Bankruptcy Code") or under the comparable laws of any jurisdiction
 (foreign or domestic), (iv) file a petition seeking to take advantage of
 any bankruptcy, insolvency, moratorium, reorganization or other similar law
 affecting the enforcement of creditors' rights generally, (v) acquiesce in
 writing to any petition filed against it in an involuntary case under the
 Bankruptcy Code or under the comparable laws of any jurisdiction (foreign
 or domestic), or (vi) take any action under the laws of any jurisdiction
 (foreign or domestic) analogous to any of the foregoing; or

           (d) a proceeding or case shall be commenced in respect of the
 Company or any of its subsidiaries without its application or consent,
 in any court of competent jurisdiction, seeking (i) the liquidation,
 reorganization, moratorium, dissolution, winding up, or composition or
 readjustment of its debts, (ii) the appointment of a trustee, receiver,
 custodian, liquidator or the like of it or of all or any substantial part of
 its assets or (iii) similar relief in respect of it under any law providing
 for the relief of debtors, and such proceeding or case described in clause
 (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect,
 for a period of sixty (60) consecutive days or any order for relief shall
 be entered in an involuntary case under the Bankruptcy Code or under the
 comparable laws of any jurisdiction (foreign or domestic) against the
 Company or any of its subsidiaries or action under the laws of any
 jurisdiction (foreign or domestic) analogous to any of the foregoing shall
 be taken with respect to the Company or any of its subsidiaries and shall
 continue undismissed, or unstayed and in effect for a period of sixty (60)
 consecutive days; or

           (e) the suspension from listing or the failure of the Company's
 common stock, $0.01 par value per share, to be listed on any of the OTC
 Bulletin Board, American Stock Exchange, Nasdaq National Market or Nasdaq
 SmallCap Market for a period of five (5) consecutive trading days.

      4. Remedies Upon An Event Of Default.  If an Event of Default shall
 have occurred and shall be continuing, the Payee of this Note may at any
 time at its option, declare the entire unpaid principal balance of this
 Note, together with all interest accrued hereon, due and payable, and
 thereupon, the same shall be accelerated and so due and payable.  This
 remedy shall not be exclusive of any other remedy referred to herein or
 now or hereafter available at law, in equity, by statute or otherwise.

      5. Replacement.  Upon receipt of a duly executed, notarized and
 unsecured written statement from the Payee with respect to the loss, theft
 or destruction of this Note (or any replacement hereof) and upon receipt of
 a written agreement of indemnification reasonably acceptable to the Company
 signed by the Payee (or holder at the time thereof) or, in the case of a
 mutilation of this Note, upon surrender and cancellation of such Note, the
 Company shall issue a new Note, of like tenor and amount, in lieu of such
 lost, stolen, destroyed or mutilated Note.

      6. Parties In Interest, Transferability.  This Note shall be binding
 upon the Company and its successors and permitted assigns and the terms
 hereof shall inure to the benefit of the Payee and its successors and
 assigns. This Note may be transferred or sold, subject to the provisions
 of Section 14 of this Note or as otherwise provided in the Settlement
 Agreement, or pledged, hypothecated or otherwise granted as security by
 the Payee.

      7. Amendments.  This Note may not be modified or amended in any manner
 except in writing executed by the Company and the Payee.

      8. Notices. Any notice, demand, request, waiver or other communication
 required or permitted to be given hereunder shall be in writing and shall be
 effective (a) upon hand delivery by telecopy or facsimile at the address or
 number designated below (if delivered on a Business Day during normal
 business hours where such notice is to be received), or the first Business
 Day following such delivery (if delivered other than on a Business Day
 during normal business hours where such notice is to be received) or (b)
 on the second Business Day following the date of mailing by express courier
 service, fully prepaid, addressed to such address, or upon actual receipt
 of such mailing, whichever shall first occur. The Company will give written
 notice to the Payee at least twenty (20) days prior to the date on which
 dissolution, liquidation or winding-up will take place and in no event shall
 such notice be provided to the Payee prior to such information being made
 known to the public. Notices to the Payee shall be made to the address set
 forth in the Settlement Agreement. Notices to the Company shall be made to
 the following:

 Address of the Company:  Carrington Laboratories, Inc.
                          2001 Walnut Hill Lane
                          Irving, Texas 75038
                          Attention: Chief Financial Officer
                          Tel. No.: (972) 518-1300
                          Fax No.: (972) 518-1020

         with a copy to:  Patterson Belknap Webb & Tyler LLP
                          1133 Avenue of the Americas
                          New York, New York 10036
                          Attention:  Peter J. Schaeffer
                          Tel. No.: (212) 336-2313
                          Fax No.: (212) 336-2222

      9. Governing Law. This Note shall be governed by and construed in
 accordance with the internal laws of the State of Texas, without giving
 effect to the choice of law provisions. This Note shall not be interpreted
 or construed with any presumption against the party causing this Note to be
 drafted.

      10.  Headings. Article and section headings in this Note are included
 herein for purposes of convenience of reference only and shall not
 constitute a part of this Note for any other purpose.

      11.  Remedies & Characterizations. The remedies provided in this Note
 shall be cumulative and in addition to all other remedies available under
 this Note, at law or in equity (including, without limitation, a decree of
 specific performance and/or other injunctive relief), no remedy contained
 herein shall be deemed a waiver of compliance with the provisions giving
 rise to such remedy and nothing herein shall limit a Payee's right to pursue
 actual damages for any failure by the Company to comply with the terms of
 this Note.

      12.  Failure or Indulgence Not Waiver.  No failure or delay on the
 part of the Payee in the exercise of any power, right or privilege hereunder
 shall operate as a waiver thereof, nor shall any single or partial exercise
 of any such power, right or privilege preclude other or further exercise
 thereof or of any other right, power or privilege.

      13.  Enforcement Expenses. The Company agrees to pay all reasonable
 costs and expenses of enforcement of this Note, including, without
 limitation, reasonable attorneys' fees and expenses.

      14.  Compliance With Securities Laws. The Payee of this Note
 acknowledges that this Note is being acquired solely for the Payee's own
 account and not as a nominee for any other party, and for investment, and
 that the Payee shall not offer, sell or otherwise dispose of this Note other
 than in compliance with the laws of the United States of America and the
 rules of the Securities and Exchange Commission.  In addition, while this
 Note is outstanding, Payee may not transfer its Series C Warrant unless
 Payee simultaneously transfers (in compliance with this Note) Payee's Note,
 and while Payee's Series C Warrant is outstanding, Payee may not transfer
 this Note unless Payee simultaneously transfers (in compliance with the
 Series C Warrant) Payee's Series C Warrant.

      This Note and any Note issued in substitution or replacement therefore
 shall be stamped or imprinted with a legend in substantially the following
 form:

                "THIS  NOTE  HAS  NOT  BEEN  REGISTERED  UNDER  THE
                SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
                ACT"), OR ANY STATE SECURITIES  LAW AND MAY NOT  BE
                SOLD, TRANSFERRED OR  OTHERWISE DISPOSED OF  UNLESS
                REGISTERED  UNDER  THE  SECURITIES  ACT  AND  UNDER
                APPLICABLE STATE  SECURITIES  LAWS OR  THE  COMPANY
                SHALL HAVE  RECEIVED  AN OPINION  OF  COUNSEL  THAT
                REGISTRATION OF THIS NOTE UNDER THE SECURITIES  ACT
                AND  UNDER  THE  PROVISIONS  OF  APPLICABLE   STATE
                SECURITIES LAWS IS NOT REQUIRED."

      15.  Severability. The provisions of this Note are severable, and if
 any provision shall be held invalid or unenforceable in whole or in part
 in any jurisdiction, then such invalidity or unenforceability shall not
 in any manner affect such provision in any other jurisdiction or any other
 provision of this Note in any jurisdiction.

      16.  Consent To Jurisdiction. Each of the Company and the Payee, by its
 acceptance hereof, (i) hereby irrevocably submits to the jurisdiction of the
 United States District Court sitting in the Northern District of Texas and
 the courts of the State of Texas located in Dallas county for the purposes
 of any suit, action or proceeding arising out of or relating to this Note
 and (ii) hereby waives, and agrees not to assert in any such suit, action or
 proceeding, any claim that it is not personally subject to the jurisdiction
 of such court, that the suit, action or proceeding is brought in an
 inconvenient forum or that the venue of the suit, action or proceeding
 is improper.  Each of the Company and the Payee consents to process being
 served in any such suit, action or proceeding by mailing a copy thereof to
 such party at the address set forth in Section 8 hereof and agrees that such
 service shall constitute good and sufficient service of process and notice
 thereof. Nothing in this Section 16 shall affect or limit any right to serve
 process in any other manner permitted by law.

      17.  Waivers.

           (a) Except as otherwise specifically provided herein, the Company
 hereby expressly, irrevocably and unconditionally waives presentment,
 demand, notice of nonpayment, protest and all other demands and notices in
 connection with the delivery, acceptance, performance and enforcement of
 this Note.

           (b) EACH OF THE COMPANY AND THE PAYEE, BY ITS ACCEPTANCE HEREOF,
 HEREBY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
 "QUALIFIED COMMERCIAL LOAN", AS DEFINED IN CHAPTER 306 OF THE TEXAS FINANCE
 CODE, AS AMENDED (THE "TEXAS FINANCE CODE").

      18.  Limitation on Interest.  The Company and Payee, by its acceptance
 hereof, intend to contract in strict compliance with applicable usury law
 from time to time in effect.  In furtherance thereof such persons stipulate
 and agree that none of the terms and provisions contained in this Note,
 the Settlement Agreement, or any other documents or agreements executed
 in connection with the transactions contemplated hereunder or thereunder
 (collectively, the "Transaction Documents") shall ever be construed to
 create a contract to pay, for the use, forbearance or detention of money,
 interest in excess of the maximum amount of interest permitted to be charged
 by applicable law from time to time in effect.  Neither the Company nor any
 present or future guarantors, endorsers, or other persons hereafter becoming
 liable for payment of any obligation under any Transaction Document shall
 ever be liable for unearned interest thereon or shall ever be required to
 pay interest thereon in excess of the maximum amount that may be lawfully
 contracted for, charged, or received under applicable law from time to time
 in effect, and the provisions of this section shall control over all other
 provisions of the Transaction Documents that may be in conflict or apparent
 conflict herewith.  Payee expressly disavows any intention to contract for,
 charge, or collect excessive unearned interest or finance charges in the
 event the maturity of any obligation under any Transaction Document is
 accelerated.  If (a) the maturity of any obligation under any Transaction
 Document is accelerated for any reason, (b) any such obligation is prepaid
 and as a result any amounts held to constitute interest are determined to be
 in excess of the legal maximum, or (c) Payee or any other holder of any or
 all of such obligations shall otherwise collect moneys that are determined
 to constitute interest that would otherwise increase the interest on any or
 all of such obligation to an amount in excess of that permitted to be
 charged by applicable law then in effect, then all sums determined to
 constitute interest in excess of such legal limit shall, without penalty,
 be promptly applied to reduce the then outstanding principal of the related
 obligation or, at Payee's or such holder's option, promptly returned to
 the Company or the other payor thereof upon such determination.  In
 determining whether or not the interest paid or payable, under any specific
 circumstance, exceeds the maximum amount permitted under applicable law,
 Payee and the Company (and any other payors thereof) shall to the greatest
 extent permitted under applicable law, (i) characterize any non-principal
 payment as an expense, fee or premium rather than as interest, (ii) exclude
 voluntary prepayments and the effects thereof, and (iii) amortize, prorate,
 allocate, and spread the total amount of interest throughout the entire
 contemplated term of the instruments evidencing the applicable obligation in
 accordance with the amounts outstanding from time to time thereunder and the
 maximum legal rate of interest from time to time in effect under applicable
 law in order to lawfully contract for, charge, or receive the maximum amount
 of interest permitted under applicable law.  In the event applicable law
 provides for an interest ceiling under Chapter 303 of the Texas Finance
 Code, for that day, the ceiling shall be the "weekly ceiling" as defined in
 the Texas Finance Code, provided that if any applicable law permits greater
 interest, the law permitting the greatest interest shall apply.  As used in
 this section the term "applicable law" means the laws of the State of Texas
 or the laws of the United States of America, whichever laws allow the
 greater interest, as such laws now exist or may be changed or amended or
 come into effect in the future.

      19.  Acknowledgment of Security Interest and Subordination. To the
 extent and in the manner provided herein, the Company covenants and agrees,
 and the Payee by accepting this Note agrees, as follows:

           (a) This Note and the payment and enforcement hereof are expressly
 and in all respects, subordinate and junior and inferior to the Senior
 Indebtedness and the payment and enforcement thereof.  As used herein,
 "Senior Indebtedness" of the Company means all liabilities, indebtedness
 and other obligations of the Company arising under the Comerica Credit
 Documents, the Bancredito Indebtedness and any other indebtedness that,
 by its terms, is senior in rights of payment to this Note, whether now
 existing or hereafter arising, including without limitation any renewals,
 modifications or increases thereof; and "Comerica Credit Documents" means
 the Credit Agreement between Company and Comerica Bank, dated September 1,
 2002, as amended from time to time (the "Comerica Credit Agreement"), and
 all other agreements from time to time executed by Company and evidencing
 or securing any liabilities or other obligations of Company to Comerica
 Bank, whether relating to the Comerica Credit Agreement, or otherwise during
 the term of the that Subordination Agreement between Comerica Bank and
 the Payee; and "Bancredito Indebtedness" means  the Bancredito Note dated
 March 2003 and the Bancredito Note dated September 2004 (collectively, the
 "Bancredito Notes" and, together with the Conmerica Credit Documents, the
 "Credit Documents").

           (b) Upon any payment or distribution of the assets of the Company
 upon a total or partial liquidation, dissolution or winding up of the
 Company or in a bankruptcy, reorganization, insolvency, receivership or
 similar proceeding relating to the Company or its property (each such event,
 if any, herein sometimes referred to as a "Proceeding"):

                (i)  holders of Senior Indebtedness of the Company shall be
      entitled to receive payment in full in cash of such Senior Indebtedness
      before the Payee is entitled to receive any payment of principal of, or
      premium, if any, or interest on this Note; and

                (ii) until the Senior Indebtedness of the Company (and all
      debt securities issued in replacement of or exchange for such Senior
      Indebtedness) is paid in full in cash, any distribution made by or on
      behalf of the Company to which the Payee would be entitled but for this
      paragraph shall be made to holders of Senior Indebtedness of the
      Company as their interests may appear.

      For purposes of this paragraph "paid in full" or "payment in full", as
 used with respect to Senior Indebtedness of the Company, means the receipt
 of cash in payment of the principal amount of such Senior Indebtedness and
 premium, if any, on and interest thereon (including any interest thereon
 accruing after the commencement of any Proceeding) to the date of such
 payment.
           (c)  Notwithstanding anything to the contrary in this Note, prior
 to the Subordination Termination Date, the Payee shall not accept, receive
 or collect (by set-off or other manner) any payment or distribution on
 account of, or ask for, demand or accelerate, directly or indirectly, this
 Note, and the Company shall not make any such payment; except that so long
 as (i) no "Default" or "Event of Default" (as such terms are defined in any
 of the Credit Documents) has occurred and is continuing under such Credit
 Documents, and (ii) no such Default or Event of Default will occur as a
 result of such payment, the Company may make, in accordance with the terms
 of this Note, and the Payee shall be entitled to accept, scheduled payments
 of principal and interest to the Payee.  As used herein, "Subordination
 Termination Date" means the date after the date hereof on which all Senior
 Indebtedness has been paid in cash and satisfied in full and the lenders
 under the Credit Documents have no outstanding commitment (whether or not
 conditioned on the satisfaction of any condition precedent) to lend money
 or otherwise extend credit to the Company under the Credit Documents.

           (d) If a payment or distribution is made to the Payee that because
 of this paragraph should not have been made to the Payee, the Payee shall
 hold it in trust for holders of Senior Indebtedness of the Company and pay
 it over to them as their interests may appear.  As intended beneficiaries
 of the subordination provisions of this Note, any holder of any Senior
 Indebtedness can enforce such provisions directly, in its own name, against
 Payee.

           (e) Prior to the Subordination Termination Date, the Payee shall
 not accelerate or collect or attempt to collect any part of this Note -
 whether through the commencement or joinder of an action or proceeding
 (judicial or otherwise) or a Proceeding, the enforcement of any rights
 against any property of the Company (including any such enforcement by
 foreclosure, repossession or sequestration proceedings), or otherwise -
 without the prior written consent of the holders of the Senior Indebtedness.

           (f) No payment or distribution to the holders of Senior
 Indebtedness pursuant to the provisions of this Note shall entitle the
 Payee to exercise any rights of subrogation in respect thereof prior to the
 Subordination Termination Date, and until such time the Payee shall not have
 any right of subrogation to such holders of Senior Indebtedness on account
 of this Note.  After the Subordination Termination Date, and provided that
 no payments received by the holders of Senior Indebtedness are voidable or
 must otherwise be returned, the Payee shall be subrogated to the rights of
 such holders of Senior Indebtedness to receive distributions applicable to
 Senior Indebtedness to the extent that distributions otherwise payable to
 the Payee have been applied to the payment of the Senior Indebtedness.

           (g) In the event of any conflict between the terms of this Note
 and any written subordination agreement between Payee and a holder of any
 Senior Indebtedness, the terms of such written subordination agreement will
 control.

 THIS NOTE, THE SERIES C WARRANT  AND THE SETTLEMENT AGREEMENT REPRESENT  THE
 FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY  EVIDENCE
 OF PRIOR, CONTEMPORANEOUS,  OR SUBSEQUENT  ORAL AGREEMENTS  OF THE  PARTIES.
 THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

      IN WITNESS WHEREOF, the Company has executed and delivered this
 Promissory Note as of the date first written above.

                                    CARRINGTON LABORATORIES, INC.

                                    By: /s/ Carlton E. Turner
                                       --------------------------
                                    Name:  Carlton E. Turner
                                    Title: President and CEO

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