Document:

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                                                                   Exhibit 10.12

                         TVGATEWAY MANAGEMENT AGREEMENT

      THIS TVGATEWAY MANAGEMENT AGREEMENT (this "Agreement") is made effective
as of July 24, 2000, by and between TVGATEWAY, LLC, a Delaware limited liability
company (the "Company"), and WORLDGATE SERVICE, INC., a Delaware corporation
("Manager").

      WHEREAS, Manager has licensed to the Company certain technology (the
"Licensed Technology") pursuant to that certain Service and License Agreement
between Manager and the Company dated the date hereof (the "License Agreement");

      WHEREAS, the Company plans to develop, for use by operators of
multi-channel video programming distribution systems ("MSOs"), server based
electronic television program guides, with the ability to link MSOs' customers
to the Internet, video on demand services and other products and such other
lines of business as the Company may engage in (the "Company Business") based
upon the Licensed Technology; and

      WHEREAS, the Company and Manager desire that Manager provide certain
management services to the Company in accordance with the terms and provisions
of this Agreement;

      THEREFORE, it is agreed as follows:

1.    APPOINTMENT. The Company hereby appoints Manager to supervise, manage and
conduct the day-to-day operations of the Company Business (the "Services") on
the terms and conditions set forth herein. Manager agrees to use its reasonable
best efforts to perform the Services in a businesslike manner in accordance, in
all material respects, with all policies and procedures concerning the Company
Business as may be established by the Company from time to time and in
accordance with customary professional standards.

2.    TERM. The initial term of this Agreement shall be effective as of the date
hereof (the "Effective Date") and shall expire on [information redacted] ##,
unless extended, terminated or amended as hereinafter provided (the "Initial
Term"). This Agreement shall automatically be renewed for up to two (2)
successive additional terms of one (1) year upon the same terms and conditions
set forth herein, unless the Company provides written notice to Manager at least
90 days prior to the expiration of the then-current term of its election not to
renew this Agreement.

3.    DUTIES OF MANAGER.

      3.1 During the term of this Agreement, Manager agrees, and is expressly
authorized on behalf of the Company, subject to the terms and conditions of this
Agreement and subject to further direction from the Board of Directors of the
Company, to take all steps reasonably necessary to perform the Budget (as
defined in Section 5), including, but not limited to, the following:

--------
## The information contained in this portion of the Management Agreement has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment.

<PAGE>

          (a) to provide engineering and technical services to develop the
TVGateway Product and the Services Technology and to perform the porting
services, each as defined or as provided in the License Agreement;

          (b) to provide access to and use of its network operating center for
monitoring and otherwise administering the deployment and use of the TVGateway
Product, the Services Technology and for the Company Business;

          (c) to provide marketing, sales, customer service and administrative
services and support for the Company Business;

          (d) to provide access to and use of its office space for the conduct
of the Company Business;

          (e) to supervise the collection of income and other amounts due to the
Company;

          (f) to pay, in conformity with the Budget or otherwise in accordance
with Section 5, all expenditures incurred by Manager or the Company in the
ordinary course of operating the Company Business (including, without
limitation, payments with respect to revenue sharing, as set forth in Sections
I.B.6 and I(F) of the License Agreement); and to make all capital expenditures
in conformity with the Budget or otherwise in accordance with Section 5;

          (g) to implement and maintain such accounting and administrative
records, procedures and reports as is reasonable and customary and to keep, in
the name and for the account of the Company, full and adequate books of account
and other records (the "Records") reflecting the results of the operation of the
Company Business in accordance with generally accepted accounting principles and
procedures consistently applied;

          (h) to prepare, as necessary, any reports and other documents required
to be filed with governmental and regulatory agencies (other than with respect
to income or property tax matters), and act as liaison with federal, state and
local governmental and regulatory officials with respect thereto, and to provide
the Company on a timely basis all information necessary to prepare its federal,
state and local income tax and property tax returns;

          (i) to manage and operate the Company Business in compliance with
applicable law, in all material respects, including, but not limited to, the
Communications Act of 1934, as amended, and all rules and regulations
promulgated by the Federal Communications Commission thereunder; and

          (j) to employ, at its own discretion and as its employees or its
independent contractors (subject to budgeted expenses in accordance with Section
5), such persons ("Agents") as Manager should determine may be required in order
for Manager to efficiently perform its obligations under this Agreement;
provided, however, that the Company's Board of Directors may determine that any
prospective new Agent should be retained as an employee or independent
contractor of the Company in which case Manager shall use reasonable efforts to
retain such Agent as a Company employee or independent contractor.

<PAGE>

4.    LIMITATIONS ON THE POWER OF MANAGER.

      4.1 The Company will continue to own (subject to the intellectual property
licensed to the Company under the License Agreement) the Company Business and to
exercise ultimate control of the operation thereof.

      4.2 Manager shall not, without prior written authorization of the Company,
take any action that is not in the ordinary course of business (except as
contemplated in the Budget) for the Company Business. Without limiting the
foregoing, Manager agrees that it will not, without prior written authorization
from the Company:

          (a) cause the Company to institute, defend or settle litigation
involving the Company or apply for injunctive relief or give releases and
discharges with respect to any of the foregoing;

          (b) cause the Company to enter into any contract with Manager or any
affiliate of Manager;

          (c) incur indebtedness for borrowed money on behalf of or for which
the Company is liable;

          (d) sell or pledge any of the assets of the Company, other than the
sale of inventory in the ordinary course of business or the sale of worn out or
obsolete materials;

          (e) enter into (1) any affiliation agreement providing for operations
by the Company outside of the United States, (2) any affiliation agreement on
behalf of the Company with any of the companies (or their respective affiliates
or successors) listed on EXHIBIT A attached hereto, or (3) any other affiliation
agreement which is not substantially in a form which has already been approved
by the Company or at rates less favorable to the Company than rates which have
already been approved by the Company; or

          (f) subject to Section 5.2, incur any expenditure on the Company's
behalf not authorized in the Budget.

5.    BUDGET; REPORTS; RECORDS.

      5.1 Manager agrees to operate the Company Business in the ordinary course
of business consistent with the monthly operating budget (the "Budget") setting
forth the proposed expenditures for the development and operation of the Company
Business. The Budget through December 31, 2000 is set forth as EXHIBIT B
attached hereto. The Board of Directors, in its discretion and in consultation
with Manager, may determine to accelerate or decelerate the implementation of
its business plan or otherwise make additions or modifications to the Company's
business plan (collectively, "Business Plan Modifications"). Upon reasonable
notice to Manager that the Board of Directors has adopted a Business Plan
Modification, Manager shall revise the Budget (if applicable) commensurate with
any changes thereto, which changes shall be made in a manner consistent with the
methodology and assumptions used in the existing Budget. The revised Budget
shall then be presented to the Board of Directors for approval. If so approved,
Manager agrees to use its reasonable best efforts to implement the revised
Budget.

                                      -3-
<PAGE>

Manager shall not be obligated or authorized to take any action or incur any
expenses not contemplated in the Budget.

      5.2 To the extent that Manager reasonably believes that aggregate actual
expenditures for the fiscal year will exceed the aggregate budgeted amount or
the legal expenses will exceed the budgeted amount by 15% or more or capital
expenditures will exceed the budgeted amount by 5% or more, Manager shall submit
a written notice to the Company. Such written notice will state the reasons why
such excess expenditures are believed to be necessary, the amount by which the
expenditures are expected to exceed the budgeted amounts and the time frame
within which the excess expenditures are reasonably expected to become
necessary. The Company may reject or accept Manager's recommendations in whole
or in part by written notice to Manager. If the Company does not respond to
Manager's request within 20 days, the recommendations shall be deemed rejected.
To the extent that the Company accepts Manager's recommended changes, the Budget
then in effect will be deemed to be amended to reflect such changes. To the
extent that the Company rejects Manager's recommended changes, Manager shall not
be obligated or authorized to make such additional expenditures.

      5.3 By October 15, 2000, and by October 15th of each calendar year
thereafter during the term of this Agreement, Manager shall prepare and present
to the Board of Directors of the Company for its approval a Budget for the next
calendar year. The Budget shall describe how the Budget for the next calendar
year relates to the Company's rolling three-year business plan. In the event
that the Board of Directors of the Company cannot agree on an approved Budget
for the coming year, Manager shall operate the Company Business with respect to
the coming year under the last approved annual Budget, as adjusted to reflect
any commitments made with the approval of the Board of Directors of the Company
with respect to the coming calendar year.

      5.4 During the term of this Agreement, Manager shall prepare and deliver
to the Company, on a monthly basis, management and financial reports describing
the status of the operation of the Company Business, including compliance with
the Budget, and such other reports as may be reasonably requested by the
Company.

      5.5 Manager shall (a) make the Records available to the Company, its
agents, accountants and attorneys, during normal business hours, (b) promptly
respond to any questions of the Company with respect thereto and (c) assist and
cooperate with the Company's auditors in the conduct of any audit of the
Company.

      5.6 The Company may cause an audit to be made of the Records. At the
Company's option, any such audit may be conducted by a certified public
accountant of the Company's choice. Any such audit shall be conducted during
regular business hours at Manager's offices, upon the provision of notice of not
less than five business days to Manager, and in such manner so as not to
interfere with Manager's normal business activities. The Company shall bear the
cost of any such audit.

6.    COMPANY ACCOUNT. Persons designated by Manager (and approved by the
Company's Board of Directors) shall be authorized to draw checks or drafts upon
and make withdrawals from a bank account in the name of the Company for Company
expenditures up to such amount and according to procedures as may be determined
by the Board of Directors of the Company.

                                      -4-
<PAGE>

7.    INSURANCE. Manager shall maintain and manage on behalf of the Company,
during the term of this Agreement, general commercial liability insurance,
workers' compensation coverage (to the extent the Company has employees),
professional liability, errors and omissions and such other insurance coverages,
including insurance coverage for the protection of the Company's assets, as are
reasonably prudent and customary in light of the scope of its responsibilities
hereunder. This insurance shall be maintained at the cost and expense of the
Company and in accordance with the Budget.

8.    COMPENSATION OF MANAGER. In consideration for the performance of the
Services and the other agreements and covenants contained herein, the Company
shall pay Manager the fees set forth on EXHIBIT C attached hereto and
incorporated herein by this reference (the "Management Fee"). The Management Fee
shall be paid as set forth on EXHIBIT C.

9.    WORK MADE FOR HIRE. The "work made for hire" provisions in Section I.D of
the License Agreement shall be deemed to apply to the Services provided
hereunder.

10.   INDEMNIFICATION.

      10.1 BY THE COMPANY. The Company shall indemnify, defend and hold harmless
Manager and its owners, officers, directors, agents and employees from and
against any claims, losses, liabilities and demands of every kind and nature
whatsoever, including, without limitation, the costs of defending any such
claims, liabilities and demands, including, without limitation, attorneys' and
accountants' fees therefor, arising in connection with (a) a breach of this
Agreement by the Company or (b) Manager's authorized activities set forth
herein; provided, however, that the Company shall not be required to indemnify
or hold harmless Manager from any claims, losses, liabilities or demands which
arise from actions (or failures to act) which are performed in bad faith or
which arise out of willful misconduct, negligence or fraud by Manager, or any of
its owners, agents or employees.

      10.2 BY MANAGER. Manager shall indemnify, defend and hold harmless the
Company and its owners, officers, directors, agents and employees from and
against any claims, losses, liabilities and demands of every kind and nature
whatsoever, including, without limitation, the costs of defending any such
claims, liabilities and demands, including, without limitation, attorneys' and
accountants' fees therefor, arising in connection with (a) a breach of this
Agreement by Manager or (b) Manager's actions (or failure to act) which are
performed in bad faith or which arise out of gross negligence, willful
misconduct or fraud by Manager, or any of its owners, agents or employees.

      10.3 LIMITATION OF LIABILITY. THE COMPANY WILL NOT ASSERT ANY CLAIM
WHATSOEVER AGAINST MANAGER FOR LOSS OF ANTICIPATORY PROFITS OR ANY OTHER SPECIAL
OR CONSEQUENTIAL DAMAGES, UNLESS ANY SUCH CLAIM IS CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF MANAGER. MANAGER WILL NOT ASSERT ANY CLAIM
WHATSOEVER AGAINST THE COMPANY FOR LOSS OF ANTICIPATORY PROFITS OR ANY OTHER
SPECIAL OR CONSEQUENTIAL DAMAGES, UNLESS ANY SUCH CLAIM IS CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE COMPANY.

                                      -5-
<PAGE>

11.   TERMINATION.

      11.1 This Agreement may be terminated by the Company upon the occurrence
of any of the following events:

           (a) Manager breaches any of the terms of this Agreement (subject to
the right of Manager to cure within 30 days after written notice of such breach
is received by Manager from the Company);

           (b) Manager commits any act constituting bad faith, fraud, gross
negligence or willful misconduct or makes a material misrepresentation to the
Company;

           (c) the bankruptcy or dissolution of Manager;

           (d) the expiration of the Transition Period (as defined in Section
12);

           (e) upon 30 days' written notice, in the event that the Board of
Directors of the Company has resolved to dissolve the Company; or

           (f) upon 60 days' written notice, in the event that the Board of
Directors determines to sell the Company or substantially all of its assets.

      11.2 This Agreement may be terminated by Manager upon the occurrence of
any of the following events:

           (a) the Company breaches any of the terms of this Agreement (subject
to the right of the Company to cure within 30 days (10 days for payment
defaults) after written notice of such breach is received by the Company from
Manager);

           (b) the Company commits any act constituting bad faith, fraud, gross
negligence or willful misconduct or makes a material misrepresentation to
Manager;

           (c) the expiration of the Transition Period (as defined in Section
12);

           (d) upon 30 days written notice, in the event that the Board of
Directors of the Company has resolved to dissolve the Company; or

           (e) the bankruptcy or dissolution of the Company.

      11.3 Subject to any special instructions by the Company, upon termination
of this Agreement, Manager shall immediately relinquish to the Company, or its
designee, possession and control of all property of the Company, including, but
not limited to, (a) the physical plant and equipment and (b) all documents,
records and data pertaining to the Company Business. With respect to any
property jointly owned by the Company and Manager, the parties shall make
reasonable arrangements such that both parties receive the benefits of such
jointly-owned property.

                                      -6-
<PAGE>

12.   TRANSITION. Upon the receipt of notice after [information redacted] ##
from the Company's Board of Directors from time to time or at any time, Manager
agrees that it will take all reasonably necessary steps to provide for a
transition (a "Transition") of some or all of the Services provided hereunder
from Manager and its Agents to the Company and its Agents within 120 days from
the receipt of such notice (the "Transition Period"); provided, however, that
the Transition Period may be extended (subject to Section 2) as reasonably
determined by the Company in consultation with the Manager. The Company agrees
to cooperate with Manager in implementing each Transition. As part of the
Transition, Manager and the Company shall determine which employees of Manager
shall be transferred to the Company, and Manager shall recruit (in accordance
with the Budget) any additional employees required by the Company. As part of
each Transition, Manager shall establish, in consultation with the Company,
payroll and accounting systems, employee benefit plans and other required
administrative and technical systems. Except for those services for which the
Company determines shall continue after a Transition Period (the "Retained
Services") (which shall include, but may not be limited to, the Services set
forth in Section 3.1(b)), this Agreement shall expire and be of no further force
and effect at the end of the Transition Period. After the Transition Period,
Manager shall receive a reasonable Management Fee to be agreed to by the parties
in good faith, commensurate with the level of Retained Services and consistent
with the methodology of determining the Management Fee for the Services under
this Agreement. In addition to the foregoing, the Company shall have the right
to have Manager continue to provide the Services set forth in Section 3.1(b) for
a period of five (5) years from the Effective Date at a reasonable Management
Fee to be agreed to by the parties in good faith, commensurate with the level of
3.1(b) Services being provided and consistent with the methodology of
determining the Management Fee for the Services provided under this Agreement.

13.   CONFIDENTIALITY.

      13.1 The recipient of any information of the other party hereunder that is
marked or otherwise indicated in advance of the receipt thereof as being
confidential, including for purposes hereof the terms of this Agreement (the
"confidential information"), agrees to safeguard the confidentiality of such
confidential information by applying policies and procedures adequate for that
purpose, including, without limitation, restricting the disclosure of this
confidential information to employees and consultants needing to know the same
for the purpose of this Agreement, who have agreed in writing to safeguard such
confidential information in a manner consistent with the provisions of this
Section 13. The recipient shall not disclose any such confidential information
to any other person, firm or corporation, or use the same except for the purpose
stated hereinabove, and shall exercise at least the same degree of care to guard
against disclosure or unauthorized use of such confidential information, as the
recipient employs with respect to its own confidential information, but in no
event less than reasonable care.

      13.2 The recipient shall have no obligation of confidentiality hereunder
with respect to any information which:

----------------------
## The information contained in this portion of the Management Agreement has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment.

                                      -7-
<PAGE>

           (a) is already properly known to the recipient other than as a result
of a prior confidential disclosure by the disclosing party;

           (b) is or becomes publicly known otherwise than by the recipient's
(or someone receiving the information from the recipient) fault or breach of
this Agreement;

           (c) is rightfully received by the recipient without restriction from
a third party who is not under an obligation of confidentiality, directly or
indirectly, to the disclosing party;

           (d) is independently developed by the recipient without benefit of
the confidential information received hereunder;

           (e) is approved for release in writing by the disclosing party; or

           (f) is required to be disclosed by the recipient pursuant to law or
judicial or regulatory action; provided that the disclosing party is promptly
notified at the time such action is initiated and the recipient fully cooperates
with the disclosing party in seeking continued confidential treatment of such
information to the extent possible.

      13.3 Except as may be reasonably required by applicable law, regulation or
court order, the parties agree that neither of them shall publicly divulge or
announce, or in any manner disclose to any third party, other than its attorneys
and accountants and other than in connection with a proposed business
combination or other proposed sale of a party or all or substantially all the
assets of a party, the existence of this Agreement or any of the specific terms
and conditions of this Agreement, including, without limitation, the fees
payable hereunder, and the parties further warrant and agree that none of their
officers, directors or employees will do so without the prior written consent of
the other party.

14.   MISCELLANEOUS.

      14.1 All notices and communications hereunder shall be in writing and
shall be deemed to have been duly given to a party hereunder when delivered in
person, via messenger service or by telecopy to such party, or three (3)
business days after being deposited in the U.S. Mail, registered or certified,
with postage prepaid, addressed as follows (or such other address as the parties
may designate in writing):

      If to Manager:          WorldGate Service, Inc.
                              3190 Tremont Avenue, Suite 100
                              Trevose, PA 19053
                              Attn:  General Counsel
                              Facsimile:  215-354-1049

                                      -8-
<PAGE>

      with a copy to (which shall not constitute notice):

                              Drinker Biddle & Reath LLP
                              1000 Westlakes Drive, Suite 300
                              Berwyn, PA 19312-2409
                              Attn:  Walter J. Mostek, Jr., Esq.
                              Facsimile:  610-993-8585

      If to the Company:      TVGateway, LLC
                              3190 Tremont Avenue, Suite 100
                              Trevose, PA 19053
                              Attn:  General Manager
                              Facsimile:  215-354-1049

      with a copy to counsel as designated by the Company from time to time
      (which shall not constitute notice).

      14.2 Any consent or approval of the Company required pursuant to the terms
of this Agreement shall be in writing.

      14.3 No party hereto shall have the right to assign this Agreement without
the written consent of the other party, except that either party shall have a
right to assign this Agreement to any Affiliate of or successor entity to such
party or, in the case of the Company, to the Company Business.

      14.4 This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.

      14.5 This Agreement may not be modified, altered or amended in any manner
except by an agreement in writing, duly executed by all parties hereto.

      14.6 The relationship of Manager and the Company established by this
Agreement is one of independent contractors. Manager and the Company shall not
by virtue of this Agreement, be deemed partners, joint venturers or
co-employers, nor shall Manager be deemed to be the agent or employee of the
Company. Manager shall not, by entering into and performing this Agreement,
incur any liability for any of the existing obligations, liabilities or debts of
the Company, and Manager shall not, by acting hereunder, assume or become liable
for any of the future obligations, liabilities or debts of the Company. It is
understood and agreed that all Agents employed by Manager pursuant to Section
3.1(j) shall be Agents of and under the sole supervision, direction and control
of Manager. Manager further agrees (a) to comply, as an employer, with all of
the applicable requirements of federal, state and local laws, rules and
regulations, including, without limitation, all applicable social security,
unemployment compensation and workers' compensation laws, and (b) to collect,
report and pay all taxes required to be paid pursuant to such laws by reason of
the employment of such Agents.

                                      -9-
<PAGE>

      14.7 All matters affecting the interpretation of this Agreement and the
rights of the parties hereto shall be governed by the laws of the State of
Delaware, without regard to its conflict of law principles.

      14.8 Each of the respective rights and obligations of the parties
hereunder shall be deemed independent and may be enforced independently
irrespective of any of the other rights and obligations set forth herein. No
waivers, express or implied, by either party of any breach of any of the
covenants, agreements or duties hereunder of the other party shall be deemed to
be a waiver of any other breach thereof or the waiver of any other covenant,
agreement or duty.

      14.9 This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof, and the parties hereto hereby acknowledge
that there have not been, and are no, representations, warranties, covenants or
understandings other than those expressly set forth herein and therein which
relate to the subject matter hereof.

                      [Signatures Appear on Following Page]

                                      -10-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this TVGateway
Management Agreement as of the date first written above.

                                    TVGATEWAY, LLC

                                    By:  /s/ Randall J. Gort
                                        -------------------------------
                                    Name:    Randall J. Gort
                                          -----------------------------
                                    Title:   Agent
                                          -----------------------------

                                    WORLDGATE SERVICE, INC.

                                    By:  /s/ Peter Mondics
                                        -------------------------------
                                    Name:    Peter Mondics
                                          -----------------------------
                                    Title:   Vice President
                                          -----------------------------

                                      -11-
<PAGE>

                                    EXHIBIT A
                                    ---------

                           [Information redacted] # #

--------------------
## The information contained in this portion of the Exhibit has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment.

<PAGE>

                                    EXHIBIT B
                                    ---------

                                 Initial Budget

                           [Information redacted] # #

---------------------
## The information contained in this portion of the Exhibit has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment.

<PAGE>

                                    EXHIBIT C
                                    ---------

                         TVGATEWAY MANAGEMENT AGREEMENT

1.    MANAGEMENT FEE. In accordance with the initial Budget, the Company shall
pay Manager a monthly management fee (the "Management Fee") equal to the amount
of the management fee provided for in the initial Budget divided by the number
of months contemplated by such budget. On a quarterly basis, the Manager will
receive (to the extent applicable) an adjustment of the year-to-date Management
Fees paid pursuant to the initial Budget computation. The adjustment will be
paid in an amount calculated as [information redacted] ## of the increase in the
variable costs of [information redacted] ## plus [information redacted] ## of
any budget increases to the initial Budget amounts for other "Applicable
Component" expense categories. As part of the annual Budget process set forth in
Section 5.3 of this Agreement, the parties shall in good faith negotiate any
increase or decrease in the Management Fee for the next year to reflect any
increase or decrease in the level of Services to be provided by Manager. In the
event that the parties cannot reach agreement in any year, the Management Fee
for such year shall be equal to [information redacted] ## of the aggregate
amount of the "Applicable Components" in the Budget. "Applicable Components"
shall mean the components or categories of the Budget listed on Annex 1 to this
Exhibit C.

2.    The Management Fee shall be paid on the 15th day of each month. Manager
may pay itself the Management Fee from the Company's bank account; provided,
however, that such payment shall not preclude further review by the Board of
Directors of the Management Fees paid hereunder.

-------------------------
## The information contained in this portion of the Exhibit has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment.

<PAGE>

                              ANNEX 1 TO EXHIBIT C
                              --------------------

                              APPLICABLE COMPONENTS

                           [Information redacted] # #

-------------------------
## The information contained in this portion of the Annex to the Exhibit has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment.<PAGE>

                                                                   Exhibit 4.4

          THIS SENIOR NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM AND IN ANY
EVENT MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH THE PAYING
AGENCY AGREEMENT, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE CORPORATE
TRUST OFFICE OF THE PAYING AGENT IN NEW YORK CITY.

          EACH HOLDER OF THIS SENIOR NOTE REPRESENTS TO THE ISSUER THAT (A) SUCH
HOLDER WILL NOT SELL OR OTHERWISE TRANSFER THIS SENIOR NOTE (WITHOUT CONSENT OF
THE ISSUER) OTHER THAN (I) TO A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
COMPLYING WITH RULE 144A UNDER THE 1933 ACT, (II) IN AN OFFSHORE TRANSACTION
COMPLYING WITH RULE 904 UNDER THE 1933 ACT, (III) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT WITH THE PRIOR APPROVAL OF THE
ISSUER OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT (WHICH THE ISSUER
HAS NO OBLIGATION TO PREPARE OR FILE) AND THAT (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SENIOR NOTE FROM
IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE AND TO DELIVER TO THE
TRANSFEREE PRIOR TO SALE A COPY OF A NOTICE TO INVESTORS (COPIES OF WHICH MAY BE
OBTAINED FROM THE PAYING AGENT).

                             MISSION ENERGY COMPANY

                           8-1/8% Senior Note Due 2002

No. R-                                                                $
                                                             CUSIP No. 605051AB7

          MISSION ENERGY COMPANY, a corporation duly organized under the laws of
the State of California (herein called the "Issuer"), for value received, hereby
promises to pay to ______________________________ or registered assigns, the
principal sum of _____________________________ on June 15, 2002, and to pay
interest thereon from June 29, 1992 or from the most recent Interest Payment
Date (as defined below) to which interest has been paid or duly provided for,
semiannually in arrears on June 15 and December 15 in each year, commencing
December 15, 1992 (each

<PAGE>

an "Interest Payment Date"), at the rate of 8-1/8% per annum, until the
principal hereof is paid or made available for payment and (to the extent that
the payment of such interest shall be legally enforceable) at the rate per annum
equal to the above rate plus 2% per annum on any overdue principal and on any
overdue installment of interest. Interest on this Security shall be computed on
the basis of a 360-day year of twelve 30-day months. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Paying Agency Agreement hereinafter referred to, be paid to the
person (the "registered holder") in whose name this Security is registered at
the close of business on the June 1 or December 1 (whether or not a business
day), as the case may be (each a "Regular Record Date"), next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the registered holder on such Regular
Record Date and shall be paid to the person in whose name this Security is
registered at the close of business on a special record date for the payment of
such interest to be fixed by the Issuer, notice of which shall be given to
registered holders of Securities not less than 10 days prior to such special
record date.

          Principal of this Security shall be payable against surrender hereof
at the corporate trust office of the Paying Agent hereinafter referred to or at
such other offices or agencies as the Issuer may designate by written notice to
the registered holders. Payments of principal and interest on this Security
shall be made, in accordance with the foregoing and subject to applicable laws
and regulations, 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, by
check mailed on or before the due date for such payment to the person entitled
thereto at such person's address appearing on the aforementioned register or, in
the case of payments of principal to such other address as the registered holder
may specify upon surrender of the Security for payment; PROVIDED, HOWEVER, that
any payments shall be made, in the case of a registered holder of at least
$5,000,000 aggregate principal amount of Securities, by wire transfer of
immediately available funds to an account maintained by the payee with a bank
located in the United States of America if such registered holder so elects by
giving written notice to the Paying Agent, not less than 15 days (or such fewer
days as the Paying Agent may accept at its discretion) prior to the date of the
first payment to be made to such registered holder, of such election and of the
account to which payments are to be made.

          Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

          Unless the certificate of authentication hereon has been executed by
the Paying Agent by manual signature, this Security shall not be valid or
obligatory for any purpose.

                                        2

<PAGE>

          IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile and a facsimile of its corporate seal to be
affixed hereto.

Dated:
                                      MISSION ENERGY COMPANY

                                      By
                                          -----------------------------
                                          Name:  Michael L. Noel
                                          Title: Senior Vice President and Chief
                                                 Financial Officer

Attest:

By
     -----------------------------
     Name:  Howard L. Mortensen
     Title:    Secretary

Certificate of Authentication:

         This is one of the Securities referred to in the within-mentioned
Issuing and Paying Agency Agreement.

                                      THE FUJI BANK AND TRUST COMPANY

                                      as Paying Agent

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

                                        3

<PAGE>

          1. This Security is one of a duly authorized issue of securities of
the Issuer designated as its 8-l/8% Senior Notes Due 2002 (herein called the
"Securities"), limited in aggregate principal amount to $100,000,000, issued and
to be issued in accordance with an Issuing and Paying Agency Agreement, dated as
of June 15, 1992 (herein called the "Paying Agency Agreement"), between the
Issuer and The Fuji Bank and Trust Company, as Paying Agent (herein called the
"Paying Agent", which term includes any successor paying agent under the Paying
Agency Agreement), copies of which Paying Agency Agreement are on file and
available for inspection at the corporate trust office of the Paying Agent in
the Borough of Manhattan, the City of New York.

          The Securities are unsecured direct, unconditional and general
obligations of the Issuer and will rank equally with all other unsecured and
unsubordinated indebtedness of the Issuer.

          2. The Securities are issuable only in fully registered form, without
coupons, in minimum denominations of U.S.$100,000 and integral multiples of
$1,000 above that amount.

          3. So long as this Security is outstanding, the Issuer shall maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Securities may be surrendered for registration of transfer or exchange. The
Issuer has initially appointed the corporate trust office of the Paying Agent as
its agent in the Borough of Manhattan, The City of New York, for such purpose
and has agreed to cause to be kept at such office a register in which, subject
to such reasonable restrictions as it may prescribe, the Issuer will provide for
the registration, registration and exchange of Securities and of transfers of
Securities. The Issuer reserves the right to vary or terminate the appointment
of The Fuji Bank and Trust Company as security registrar and paying agent or to
appoint additional or other registrars and paying agents or to approve any
change in the office through which any security registrar and paying agent acts,
provided that there will at all times be a security registrar or paying agent in
the Borough of Manhattan, The City of New York. The Company shall give prompt
written notice to the holder of this Security of any appointment or termination
of appointment of the Paying Agent as security registrar or paying agent, or any
change in the location of the office of any paying agent or security registrar.

          Subject to the transfer restrictions set forth on the face hereof and
in the Paying Agency Agreement, the transfer of a Security is registrable on the
aforementioned register upon surrender of such Security at the corporate trust
office of the Paying Agent duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Paying Agent
duly executed by, the registered holder thereof or its attorney duly authorized
in writing, in each case with signature guaranteed. Upon such surrender of this
Security for registration of transfer, the Issuer shall execute, and the

                                        4

<PAGE>

Paying Agent shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities, dated the date of
authentication thereof, of any authorized denominations and of a like aggregate
principal amount.

          The Paying Agent shall not make any registration of transfer unless
the proposed transferee of the Security has provided to the Paying Agent a
representation that such proposed transferee is either a (i) Qualified
Institutional Buyer as defined in Rule 144A under the 1933 Act and has provided
to the Paying Agent a letter in the form of Exhibit B to the Paying Agency
Agreement, or (ii) is transferring the Securities in an offshore transaction
complying with the provisions of Rule 904 under the Act and has provided to the
Paying Agent a letter in the form of Exhibit C to the Paying Agency Agreement.

          At the option of the registered holder upon request confirmed in
writing, Securities may be exchanged for Securities of any authorized
denominations and of a like tenor, form and aggregate principal amount upon
surrender of the Securities to be exchanged at the corporate trust office of the
Paying Agent. Whenever any Securities are so surrendered for exchange, the
Issuer shall execute, and the Paying Agent shall authenticate and deliver, the
Securities which the registered holder making the exchange is entitled to
receive. Any registration of transfer or exchange will be effected upon the
Paying Agent being satisfied with the documents of title and identity of the
person making the request and subject to such reasonable restrictions as may be
prescribed by the Issuer.

          All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits, as the Securities surrendered upon such
registration of transfer or exchange. No service charge shall be made for any
registration of transfer or exchange, but the Issuer may require payment of a
sum sufficient to cover any stamp or other tax or other governmental charge
payable in connection therewith.

          Prior to due presentment of this Security for registration of
transfer, the Issuer, the Paying Agent and any agent of the Issuer or the Paying
Agent may treat the person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Issuer nor the Paying Agent nor any such agent shall be affected by
notice to the contrary.

          4. (a) The Issuer shall pay to the Paying Agent at its principal
office in the Borough of Manhattan, The City of New York, on or prior to each
Interest Payment Date and the maturity date of the Securities, monies in such
amounts sufficient (with any amounts then held by the Paying Agent and available
for the purpose) to pay the interest on and the principal of the Securities due
and payable on such Interest Payment Date or

                                        5

<PAGE>

maturity date, as the case may be. The Paying Agent shall apply the amounts so
paid to it to the payment of such interest and principal in accordance with the
terms of the Securities. Any monies paid by the Issuer to the Paying Agent for
the payment of the principal of or interest on any Securities and remaining
unclaimed at the end of two years after such principal or Interest shall have
become due and payable (whether at maturity or otherwise) shall then be repaid
to the Issuer upon its written request, and upon such repayment all liability of
the Paying Agent with respect thereto shall cease, without, however, limiting in
any way any obligation the Issuer may have to pay the principal of and interest
on this Security as the same shall become due.

          (b) In any case where the due date for the payment of the principal of
or interest on any Security shall be at any place of payment a day on which
banking institutions are authorized or obligated by law to close, then payment
of principal or interest need not be made on such date at such place but may be
made on the next succeeding day at such place which is not a day on which
banking institutions are authorized or obligated by law to close, with the same
force and effect as if made on the date for such payment, and no interest shall
accrue for the period after such date.

          5. Except as set forth in Paragraph 3, the Issuer shall pay all stamp
and other duties, if any, which may be imposed by the United States of America
or any political subdivision thereof or taxing authority of or in the foregoing
with respect to the Paying Agency Agreement or the original issuance of this
Security.

          6. In the event of any of the following, there shall be an "Event of
Default" under this Security:

                    (a) default in the payment of any interest on any Security
          for a period of 30 days after the date when due; or

                    (b) default in the payment of the principal of any Security
          when due (whether at maturity or otherwise); or

                    (c) default in the performance or breach of any other
          covenant or agreement contained in the Securities for a period of 90
          days after the date on which written notice of such default requiring
          the Issuer to remedy the same and stating that such notice is a
          "Notice of Default" shall first have been given to the Issuer and the
          Paying Agent by the holders of at least 25% in principal amount of the
          Securities at the time Outstanding; or

                    (d) an event of default occurring under any instrument of
          the Issuer under which there may be issued, or by which there may
          secured or evidenced, any indebtedness for money borrowed resulting in
          the acceleration of

                                        6

<PAGE>

          such indebtedness, or any default occurring in payment of any such
          indebtedness at final maturity (and after the expiration of any
          applicable grace periods and the presentation of any debt instruments,
          if required); other than such indebtedness (i) which is payable solely
          out of the property or assets of a partnership, joint venture or
          similar entity of which the Issuer is a participant, or which is
          secured by a lien on the property or assets owned or held by such
          entity, without further recourse to or liability of the Issuer, or
          (ii) the principal of, and interest on, which, when added to the
          principal of and interest on all other such indebtedness (exclusive of
          indebtedness under clause (i) above), does not exceed $20,000,000; or

                    (e) the entering of any final judgments for the payment of
          money aggregating more than $20,000,000 (not adequately covered by
          insurance) against the Company and remaining undischarged, unvacated,
          unbonded and unstayed for more than 90 days, except while being
          contested in good faith by appropriate proceedings; or

                    (f) the entry by a court having jurisdiction in the premises
          of (i) a decree or order for relief in respect of the Issuer in an
          involuntary case or proceeding under any applicable Federal or state
          bankruptcy, insolvency, reorganization or other similar law or (ii) a
          decree or order adjudging the Issuer a bankrupt or insolvent, or
          approving as properly filed a petition seeking reorganization,
          arrangement, adjustment or composition of or in respect of the Issuer
          under any applicable Federal or state law, or appointing a custodian,
          receiver, liquidator, assignee, trustee, sequestrator or other similar
          official of the Issuer or of any substantial part of the property of
          the Issuer, or ordering the winding up or liquidation of the affairs
          of the Issuer, and any such decree or order for relief or any such
          other decree or order shall continue unstayed and in effect for a
          period of 90 consecutive days; or

                    (g) commencement by the Issuer of a voluntary case or
          proceeding under any applicable Federal or state bankruptcy,
          insolvency, reorganization or other similar law or of any other case
          or proceeding to be adjudicated a bankrupt or insolvent, or the
          consent by the Issuer to the entry of a decree or order for relief in
          respect of the Issuer in an involuntary case or proceeding under any
          applicable Federal or state bankruptcy, insolvency, reorganization or
          other similar law or to the commencement of any bankruptcy or
          insolvency case or proceeding against the Issuer, or the filing by the
          Issuer of a petition or answer or consent seeking reorganization or
          relief under any such applicable Federal or state law, or the consent
          by the Issuer to the filing of such petition or to the appointment of
          or the taking possession by a custodian, receiver, liquidator,
          assignee, trustee, sequestrator or other similar official of the
          Issuer or of any substantial part of its property, or the making by
          the Issuer of an

                                        7

<PAGE>

          assignment for the benefit of creditors, or the taking of action by
          the Issuer in furtherance of any such action;

the registered holder of this Security may, at such holder's option, declare the
principal of this Security and the interest accrued hereon to be due and payable
immediately by written notice to the Issuer and the Paying Agent at its
corporate trust office, and unless all such defaults shall have been cured by
the Issuer prior to receipt of such written notice, the principal of this
Security and the interest accrued thereon shall become and be immediately due
and payable.

          7. So long as any of the Securities are outstanding, the Issuer will
not pledge, mortgage or hypothecate, or permit to exist, any mortgage, pledge or
other lien upon, any property at any time directly owned by the Issuer, to
secure any indebtedness for money borrowed which is incurred, issued, assumed or
guaranteed by the Issuer ("Indebtedness"), without making effective provisions
whereby the Securities shall be equally and ratably secured with any and all
such Indebtedness and with any other Indebtedness similarly entitled to be
equally and ratably secured; PROVIDED, HOWEVER, that this restriction shall not
apply to or prevent the creation or existence of:

                    (a) liens existing at the original date of issuance of the
          Securities;

                    (b) purchase money liens which do not exceed the cost or
          value of the purchased property;

                    (c) other liens not to exceed 10% of Consolidated Net
          Tangible Assets; and

                    (d) liens granted in connection with extending, renewing,
          replacing or refinancing the Indebtedness (including, without
          limitation, increasing the principal amount of such Indebtedness)
          secured by liens described in the foregoing clauses (a) through (c).

          In the event that the Issuer shall propose to pledge, mortgage or
hypothecate any property at any time directly owned by it to secure any
Indebtedness, other than as permitted by subdivisions (a) to (d), inclusive, of
this paragraph 7, the Issuer will prior thereto give written notice thereof to
the Paying Agent, who shall give notice to the registered holders of the
Securities in accordance with Section 13 of the Paying Agency Agreement, and the
Issuer will, prior to or simultaneously with such pledge, mortgage or
hypothecation, effectively secure all the Securities equally and ratably with
such Indebtedness.

                                        8

<PAGE>

          For purposes of the Securities,

          "CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES"
shall mean such assets and liabilities of the Company on a consolidated basis as
shall be determined in accordance with GAAP to constitute current assets and
current liabilities, respectively, provided that inventory shall be valued at
the lower of cost (using the first-in first-out method) or market.

          "CONSOLIDATED NET INCOME" for any period, shall mean the net income of
the Company determined on a consolidated basis in accordance with GAAP.

          "CONSOLIDATED NET TANGIBLE ASSETS" shall mean, as of the date of any
determination thereof, Consolidated Total Assets as of such date less the sum of
(i) Consolidated Current Liabilities, and (ii) assets properly classified as
Intangible Assets.

          "CONSOLIDATED TANGIBLE NET WORTH" shall mean as of the date of any
determination thereof, shareholders equity on a consolidated basis in accordance
with GAAP, less Intangible Assets.

          "CONSOLIDATED TOTAL ASSETS" shall mean, as of the date of any
determination thereof, the total amount of all assets of the Company determined
on a consolidated basis in accordance with GAAP.

          "GAAP" shall mean Generally Accepted Accounting Principles in the
United States at the time of delivery of this Security.

          "INTANGIBLE ASSETS" of any person shall mean, as of the date of any
determination thereof, all assets properly classified as intangible assets in
accordance with GAAP except for any intangible assets which are distribution or
related contracts with an assignable use.

          "TANGIBLE ASSETS" of any person shall mean, as of the date of any
determination thereof, the total amount of all assets (as determined in
accordance with GAAP) of such person (less depreciation, depletion and other
properly deductible valuation reserves) after deducting all Intangible Assets.

          8. (a) The Issuer shall not consolidate with or merge into any other
person or sell, convey, transfer or lease its properties and assets
substantially as an entirety to any person, and the Issuer shall not permit any
person to consolidate with or merge into the Issuer unless: (i) at the time of
such consolidation, merger, sale or lease, no Event of Default hereunder shall
have occurred and be continuing and (ii) the Issuer is the surviving or
continuing corporation or the surviving or continuing corporation or

                                        9

<PAGE>

corporation which acquires by sale, conveyance, transfer or lease is
incorporated in the United States of America or Canada and expressly assumes the
payment and performance of all obligations of the Issuer under the Paying Agency
Agreement and hereunder.

          (b) Except for the sale of all or substantially all of the assets of
the Issuer pursuant to 8(a) above, and other than assets required to be sold to
conform with governmental regulation, the Issuer will not sell or otherwise
dispose of any assets if on a pro forma basis, the aggregate net book value of
all such sales during the most recent 12-month period would exceed 10 percent of
Consolidated Net Tangible Assets computed as of the end of the most recent
quarter preceding such sale; PROVIDED, HOWEVER, that any such sales shall be
disregarded for purposes of this 10 percent limitation if the proceeds are
invested in assets in similar or related lines of business for the Issuer and,
provided further, that the Issuer may sell or otherwise dispose of assets in
excess of such 10 percent if the proceeds from such sales or dispositions, which
are not reinvested as provided above, are retained by the Issuer as cash or cash
equivalents.

          9. The Issuer will not permit Consolidated Tangible Net Worth to be
less than $400,000,000 plus 25 percent of Consolidated Net Income earned in and
after the calendar quarter in which this Security is delivered at any time until
the principal of, and interest on, this Security shall have been paid in full to
the registered holder hereof, whether at maturity or otherwise.

          10. As long as the Issuer is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, at anytime, upon the request of a
registered holder of this Security, the Issuer (or the Paying Agent upon request
by and at the expense of the Issuer after being furnished such information by
the Issuer) will promptly furnish or cause to be furnished "Rule 144A
Information" (as defined below) to such holder or to a prospective purchaser of
such Security designated by such holder in order to permit compliance by such
holder with Rule 144A under the Act in connection with the resale of such
Security by such holder. "Rule 144A Information" shall be such information as is
specified pursuant to Rule l44A(d) (4) under the Act (or any successor provision
thereto); PROVIDED, HOWEVER, that the Issuer shall not be required to provide
more information than was required by Rule 144A as in effect on the date of the
original issuance of the Securities but may elect to do so if necessary to
comply with subsequent revisions of Rule 144A. The Issuer (or the Paying Agent
upon request by and at the expense of the Issuer after being furnished such
information by the Issuer) will furnish or cause to be furnished to registered
holders of Securities, annual consolidated financial statements of the Issuer
prepared in accordance with generally accepted accounting principles applied
consistently (except as otherwise noted therein) with those of the prior year
(together with notes thereto and a report thereon by an independent accountant
of established national reputation), such statements to be so furnished as soon
as reasonably available and in any event within 120 days after the end of the
fiscal year covered

                                       10

<PAGE>

thereby. In addition, at the request of the registered holders of Securities,
the Paying Agent (at the expense of the Issuer after being furnished such
information by the Issuer) will furnish or cause to be furnished unaudited
condensed consolidated comparative balance sheets, statements of income and
statements of cash flows of the Issuer for each of the first three fiscal
quarters and the corresponding quarter of the prior year prepared in accordance
with generally accepted accounting principles applied consistently (except as
otherwise noted therein).

          11. If any mutilated Security is surrendered to the Paying Agent, the
Issuer shall execute, and the Paying Agent shall authenticate and deliver in
exchange therefor, a new Security of like tenor and principal amount, bearing a
number not contemporaneously outstanding. If there be delivered to the Issuer
and the Paying Agent (i) evidence to their satisfaction of the destruction, loss
or theft of any Security and (ii) such security or indemnity as may be required
by them to save each of them and any agent of each of them harmless, then, in
the absence of notice to the Issuer or the Paying Agent that such Security has
been acquired by a bona fide purchaser, the Issuer shall execute, and upon its
request the Paying Agent shall authenticate and deliver in lieu of any such
destroyed, lost or stolen Security a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

          Upon the issuance of any new Security under this Paragraph 11, the
Issuer 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 the expenses of the Paying Agent) connected
therewith.

          Every new Security issued pursuant to this Paragraph 11 in lieu of any
destroyed, lost or stolen Security, shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone.

          Any new Security delivered pursuant to this Paragraph 11 shall be so
dated that neither gain nor loss in interest shall result from such exchange.

          The provisions of this Paragraph 11 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 Securities.

          12. Section 11 of the Paying Agency Agreement provides that, with
certain exceptions as therein provided and by written consent of a majority in
the aggregate principal amount of all Outstanding Securities (as defined in the
Paying Agency Agreement), the Issuer and the Paying Agent may modify, amend or
supplement the Paying Agency Agreement or the terms of the Securities or may
give consents or

                                       11

<PAGE>

waivers or take other actions with respect thereto; PROVIDED, HOWEVER, that no
such action may, without the consent of the holder of each Security affected
thereby, (a) change the due date for the payment of the principal of or any
installment of interest on any Security, (b) reduce the principal amount of any
Security or the interest rate thereon, (c) change the coin or currency in which
interest or principal in respect of Securities are payable, (d) modify the
obligation of the Issuer to maintain an office or agency in the Borough of
Manhattan, The City of New York, for the payment of principal and interest with
respect to the Securities, or (e) reduce the proportion of the principal amount
of Securities the consent of the holders of which is necessary to modify, amend
or supplement the Paying Agency Agreement or the terms and conditions of the
Securities or to make, take or give any request, demand, authorization,
direction, notice, consent, waiver or other action provided hereby or thereby to
be made, taken or given. Any such modification, amendment, supplement, consent,
waiver or other action shall be conclusive and binding on the holder of this
Security and on all future holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange for or in lieu hereof,
whether or not notation thereof is made upon this Security. The Issuer and the
Paying Agent may, without the consent of any holder of Securities, amend this
Agreement or the Securities for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision thereof, or in any
manner which the Issuer and the Paying Agent may determine that shall not be
inconsistent with the Securities and shall not adversely affect the interest of
any holder of Securities.

          13. No reference herein to the Paying Agency Agreement and no
provision of this Security or of the Paying Agency Agreement shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to pay
the principal of and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.

          14. A. The Issuer may at its option, by Issuer Order (as defined in
the Paying Agency Agreement) delivered to the Paying Agent, elect to have either
subparagraph (b) or subparagraph (c) of this Paragraph 14 applied to the
Outstanding Securities (as defined in the Paying Agency Agreement) upon
compliance with the conditions set forth below in this Paragraph 14.

          1. Upon the Issuer's exercise of the option provided in subparagraph
(a) hereof applicable to this subparagraph (b), the Issuer shall be deemed to
have been discharged from its obligations with respect to the Outstanding
Securities on the date the conditions set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, defeasance means that the Issuer
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Securities and to have satisfied all its other obligations
under the Securities and the Paying Agency Agreement insofar as the Securities
are concerned (and the Issuer and the Paying Agent shall execute proper
instruments acknowledging the same), except for the following, which shall
survive until

                                       12

<PAGE>

otherwise terminated or discharged hereunder: (i) the rights of holders of the
Securities to receive, solely from the trust fund described in subparagraph (d)
hereof and as more fully set forth in such paragraph, payments in respect of the
principal of and any interest on the Securities when such payments are due, (ii)
the Issuer's obligations with respect to the Securities under Sections 1(d), 2,
4(a), 5, 6, 7, 9, 10 and 14 of the Paying Agency Agreement and Paragraph 3,
4(a), 10 and 11 of the Securities and (iii) this Paragraph 14. Subject to
compliance with this Paragraph 14, the Issuer may exercise its option under this
subparagraph (b) notwithstanding the prior exercise of its option under
subparagraph (c).

          2. Upon the Issuer's exercise of the option provided in subparagraph
(a) applicable to this subparagraph (c), the Issuer shall be released from its
obligations under Paragraphs 6(c), 7, 8 and 9 of the Securities on and after the
date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"). For this purpose, covenant defeasance means that the Issuer may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Paragraph, whether directly or
indirectly by reason of any reference elsewhere herein to any such Paragraph or
by reason of any reference in any such Paragraph to any other provision herein
or in any other document, but the remainder of the Issuer's obligations shall be
unaffected thereby.

          3. The following shall be the conditions to application of either
subparagraph (b) or subparagraph (c) of this Paragraph 14 to the then
Outstanding Securities:

          1. The Issuer shall irrevocably have deposited or caused to be
     deposited with a trustee, who may be the Paying Agent and who shall agree
     to comply with the provisions of this Paragraph 14 applicable to it (the
     "Defeasance Trustee"), as trust funds in trust for the purpose of making
     the following payments, specifically pledged as security for, and dedicated
     solely to, the benefit of the holders of the Securities, (A) money in an
     amount, or (B) U.S. Government Obligations and/or Eligible Obligations (as
     hereinafter defined) which through the scheduled payment of principal and
     interest in respect thereof in accordance with their terms will provide,
     not later than one day before the due date of any payment, money in an
     amount, or (C) a combination thereof, sufficient, in the opinion of a
     nationally recognized firm of independent public accountants expressed in a
     written certification thereof delivered to the Defeasance Trustee, to pay
     and discharge, and which shall be applied by the Defeasance Trustee to pay
     and discharge, the principal of and each installment of interest on the
     Securities on the stated maturity of such principal or installment of
     interest in accordance with the terms of the Paying Agency Agreement and of
     this Security. For this purpose: "U.S. Government Obligations" means
     securities that are (x) direct obligations of

                                       13

<PAGE>

     the United States of America for the payment of which its full faith and
     credit are pledged or (y) obligations of a person controlled or supervised
     by and acting as an agency or instrumentality of the United States of
     America the payment of which is unconditionally guaranteed as a full faith
     and credit obligation by the United States of America, which, in either
     case, are not callable or redeemable at the option of the issuer thereof,
     and shall also include a depository receipt issued by a bank (as defined in
     Section 3(a)(2) of the 1933 Act) as custodian with respect to any such U.S.
     Government Obligation or a specific payment of principal of or interest on
     any such U.S. Government Obligation held by such custodian for the account
     of the holder of such depository receipt, PROVIDED that (except as required
     by law) such custodian is not authorized to make any deduction from the
     amount payable to the holder of such depository receipt from any amount
     received by the custodian in respect of the U.S. Government Obligation or
     the specific payment of principal of or interest on the U.S. Government
     Obligation evidenced by such depository receipt; and "Eligible Obligations"
     means interest bearing obligations as a result of the deposit of which the
     Securities are rated at the time of deposit in the highest generic
     long-term debt rating category assigned to legally defeased debt by one or
     more nationally recognized rating agencies.

          2. In the case of an election under subparagraph (b), the Issuer shall
     have delivered to the Defeasance Trustee an opinion of counsel stating that
     (x) the Issuer has received from, or there has been published by, the U.S.
     Internal Revenue Service a ruling, or (y) since the date of the Paying
     Agency Agreement there has been a change in the applicable U.S. Federal
     income tax law, in either case to the effect that, and based thereon such
     opinion shall confirm that, the holders of the Outstanding Securities will
     not recognize gain or loss for U.S. Federal income tax purposes as a result
     of such deposit, defeasance and discharge and will be subject to U.S.
     Federal income tax on the same amount, in the same manner and at the same
     times as would have been the case if such deposit, defeasance and discharge
     had not occurred.

          3. In the case of an election under subparagraph (c), the Issuer shall
     have delivered to the Defeasance Trustee an opinion of counsel to the
     effect that the holders of the Outstanding Securities will not recognize
     gain or loss for Federal income tax purposes as a result of such deposit
     and covenant defeasance and will be subject to Federal income tax on the
     same amount, in the same manner and at the same times as would have been
     the case if such deposit and covenant defeasance had not occurred.

          4. No Event of Default or event which with notice or lapse of time or
     both would become such an Event of Default (other than the events specified
     in subparagraphs 6(c), (d) and (e) hereof) shall have occurred and be
     continuing on

                                       14

<PAGE>

     the date of such deposit or, insofar as subparagraphs 6(f) and (g) of the
     Securities are concerned, at any time during the period ending on the
     121st day after the date of such deposit (it being understood that this
     condition shall not be deemed satisfied until the expiration of such
     period).

          5. Such defeasance or covenant defeasance shall not result in a breach
     or violation of, or constitute a default under, any other agreement or
     instrument to which the Issuer is a party or by which it is bound.

          6. The Issuer shall have delivered to the Paying Agent and the
     Defeasance Trustee a certificate signed by an Authorized Officer (as
     defined in the Paying Agency Agreement) and an opinion of counsel, each
     stating that all conditions precedent provided for relating to either the
     defeasance under subparagraph (b) or the covenant defeasance under
     subparagraph (c) (as the case may be) have been complied with.

          7. The Issuer shall have delivered to the Defeasance Trustee an
     opinion of counsel to the effect that such defeasance or covenant
     defeasance shall not result in the trust arising from such deposit
     constituting an investment company as defined in the Investment Company Act
     of 1940, as amended, or such trust shall be qualified under such act or
     exempt from regulation thereunder.

          4. All money, U.S. Government Obligations and Eligible Obligations
(including the proceeds thereof) deposited with the Defeasance Trustee pursuant
to subparagraph (d) in respect of the Securities shall be held in trust and
applied by the Defeasance Trustee, in accordance with the provisions of the
Securities and the Paying Agency Agreement, to the payment, directly to the
holders of the Securities, of all sums due and to become due thereon in respect
of principal and any interest, but such money need not be segregated from other
funds except to the extent required by law. Any money deposited with the
Defeasance Trustee for the payment of the principal of or any interest on any
Security and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Issuer upon Issuer Order; and
the holder of such Security shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof, and all liability of the Defeasance
Trustee with respect to such trust money shall thereupon cease.

          5. If the Defeasance Trustee is unable to apply any money in
accordance with subparagraph (b) or (c) by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Issuer's obligations under the Paying
Agency Agreement and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Paragraph 14 until such time as the
Defeasance Trustee is permitted to apply all such

                                       15

<PAGE>

money in accordance with subparagraph (b) or (c); PROVIDED, HOWEVER, that if
the Issuer makes any payment of principal of or interest on any Security
following the reinstatement of its obligations, the Issuer shall be
subrogated to the rights of the holders of such Securities to receive such
payment from the money held by the Defeasance Trustee.

          15. This Security shall be governed by and construed in accordance
with the laws of the State of New York.

                                       16

<PAGE>

                                  ABBREVIATIONS

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.

          TEN-COM -- as tenants in common

          TEN ENT -- as tenants by the entireties

          JT TEN -- as joint tenants with right of survivorship and not as
                    tenants in common

          UNIF GIFT MIN ACT -     . . . . . .Custodian . . . . . .
                                  (Custodian)              (Minor)
                                  Under Uniform Gifts to Minors Act
                                  . . . . . . . . . . . . . . . . .
                                              (State)

          Additional abbreviations may also be used though not in the above
list.

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

(Please print or typewrite name and address including zip code of Assignee and
insert Taxpayer Identification No.)

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _______________________________ attorney to transfer said Note on the
books of the Company, with full power of substitution in the premises.

Date:                                  x
      -----------------                  ---------------------------------------
                                       Notice:  The signature to this assignment
                                       must correspond with the name as written
                                       upon the face of the within instrument in
                                       every particular, without alteration or
                                       enlargement or any change whatever.

                                       17

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