Document:

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                                                                     EXHIBIT 4.1

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                                 TRUST INDENTURE

                                     between

                    THE GUILFORD COUNTY INDUSTRIAL FACILITIES
                    AND POLLUTION CONTROL FINANCING AUTHORITY

                                    as Issuer

                                       and

                      U.S. BANK TRUST NATIONAL ASSOCIATION

                                   as Trustee

                          Dated as of September 1, 1999

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                               Securing $5,900.000
                        in aggregate principal amount of
                    The Guilford County Industrial Facilities
                    and Pollution Control Financing Authority
                      Industrial Development Revenue Bonds
                    (Crescent Sleep Products Company Project)
                                   Series 1999

                                               This Instrument was prepared by:
                                               Mary Nash K. Rusher, Esq.
                                               Hunton & Williams
                                               One Hanover Square, Suite 1400
                                               Raleigh, North Carolina 27601

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                              TABLE OF CONTENTS

                             TRUST INDENTURE PAGE

                               TRUST INDENTURE

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GRANTING CLAUSES..................................................................................................2

ARTICLE I  Definitions and Interpretation.........................................................................4

         Section 1.01.  Definitions...............................................................................4
         Section 1.02.  Characteristics of Certificate or Opinion................................................11
         Section 1.03.  Additional Provisions as to Interpretation...............................................12

ARTICLE II  Form, Execution and Registration of Bonds............................................................13

         Section 2.01.  Form, Maturities and Numeration of Bonds.................................................13
         Section 2.01.  Variable Rate; Optional Tenders..........................................................14
         Section 2.03.  Fixed Rate...............................................................................15
         Section 2.04.  Conversion; Notices......................................................................16
         Section 2.05.  Execution of Bonds.......................................................................18
         Section 2.06.  Authentication of Bonds..................................................................18
         Section 2.07.  Registration, Transfers and Exchange.....................................................18
         Section 2.08.  Payment of Interest On Bonds; Interest Rights Preserved..................................19
         Section 2.09.  Ownership of Bonds.......................................................................20
         Section 2.10.  Reissuance of Mutilated, Destroyed, Stolen or Lost Bonds.................................20
         Section 2.11.  Conditions for Authentication of Bonds...................................................20
         Section 2.12.  Book-entry Provisions....................................................................20

ARTICLE III  Redemption of Bonds.................................................................................22

         Section 3.01.  Operational Redemption...................................................................22
         Section 3.01.  Mandatory Redemption.....................................................................23
         Section 3.03.  Extraordinary Redemption.................................................................23
         Section 3.04.  Method of Selecting Bonds................................................................23
         Section 3.05.  Notice of Redemption.....................................................................23
         Section 3.06.  Bonds Due and Payable on Redemption Date; Interest
                          Ceases to Accrue.......................................................................24
         Section 3.07.  Cancellation.............................................................................24
         Section 3.08.  Partial Redemption of Bonds..............................................................24

ARTICLE IV  Tender and Purchase..................................................................................25

         Section 4.01.  Mandatory Tender of Bonds................................................................25
         Section 4.02.  [INTENTIONALLY OMITTED]..................................................................25
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         Section 4.03.  Trustee as Tender Agent..................................................................25
         Section 4.04.  Tender and Purchase of Bonds.............................................................25
         Section 4.05.  Purchase Fund............................................................................26
         Section 4.06.  No Remarketing Under Certain Conditions..................................................27

ARTICLE V  General Covenants and Provisions......................................................................28

         Section 5.01.  Payment of Bonds.........................................................................28
         Section 5.02.  Performance of Issuer's Covenants........................................................28
         Section 5.03.  Rights under Agreement and Letter of Credit..............................................29
         Section 5.04.  Reports of Trustee.......................................................................29

ARTICLE VI  Revenues and Funds...................................................................................30

         Section 6.01.  Bond Fund................................................................................30
         Section 6.02.  Project Fund; Disposition of Proceeds of Bonds...........................................30
         Section 6.03.  Rebate...................................................................................31
         Section 6.04.  Investment of Funds......................................................................31

ARTICLE VII  Events of Default; Remedies on Default..............................................................32

         Section 7.01.  Events of Default........................................................................32
         Section 7.02.  Enforcement of Covenants and Conditions..................................................33
         Section 7.03.  Application of Moneys....................................................................34
         Section 7.04.  Right of Trustee to Act Without Possession of Bonds......................................34
         Section 7.05.  Power of Majority of Owners of Bonds.....................................................35
         Section 7.06.  Limitation on Suits by Owners............................................................35
         Section 7.07.  Waiver by Owners of Bonds................................................................35
         Section 7.08.  Remedies Cumulative, Delay Not To Constitute Waiver......................................35
         Section 7.09.  Restoration of Rights Upon Discontinuance of Proceedings.................................36

ARTICLE VIII  Concerning the Trustee; Tender Agent; Remarketing Agent, Letter of Credit
Custodian........................................................................................................37

         Section 8.01.  Acceptance of Trust and Prudent Performance Thereof......................................37
         Section 8.02.  Trustee May Rely Upon Certain Documents and Opinions.....................................37
         Section 8.03.  Trustee Not Responsible for Indenture Statements, Validity...............................38
         Section 8.04.  Limits on Duties and Liabilities of Trustee..............................................38
         Section 8.05.  Money Held in Trust......................................................................38
         Section 8.06.  Obligation of Trustee and Letter of Credit Custodian.....................................38
         Section 8.07.  Notice to Owners.........................................................................39
         Section 8.08.  Intervention in Judicial Proceedings.....................................................39
         Section 8.09.  Further Investigation by Trustee.........................................................39
         Section 8.10.  Trustee to Retain Financial Records......................................................39
         Section 8.11.  Compensation of Trustee..................................................................39
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         Section 8.12.  Trustee May Hold Bonds...................................................................40
         Section 8.13.  Appointment of Trustee...................................................................40
         Section 8.14.  Merger of Trustee........................................................................40
         Section 8.15.  Resignation or Removal of Trustee........................................................40
         Section 8.16.  Appointment of Successor Trustee.........................................................41
         Section 8.17.  Transfer of Rights and Property to Successor Trustee.....................................41
         Section 8.18.  Co-Trustee...............................................................................43
         Section 8.19.  Remarketing Agent; Resignation; Removal..................................................43
         Section 8.20.  Qualifications of Remarketing Agent......................................................43
         Section 8.21.  Rights and Duties of Tender Agent........................................................43
         Section 8.22.  Resignation or Removal of Tender Agent; Appointment of Successor.........................44
         Section 8.23.  Several Capacities.......................................................................44
         Section 8.24.  Letter of Credit Custodian...............................................................44

ARTICLE IX  Concerning the Owners of Bonds.......................................................................46

         Section 9.01.  Execution of Instruments by Owners of Bonds..............................................46
         Section 9.02.  Waiver of Notice.........................................................................46
         Section 9.03.  Determination of Owner Concurrence.......................................................46
         Section 9.04.  Revocation by Owners of Bonds............................................................46

ARTICLE X  Payment, Defeasance and Release.......................................................................48

         Section 10.01. Payment and Discharge of Indenture.......................................................48
         Section 10.02. Bonds Deemed Not Outstanding After Deposits..............................................49
         Section 10.03. Non-Presentment of Bonds.................................................................49

ARTICLE XI  Supplemental Indentures..............................................................................50

         Section 11.01. Purposes for Which Supplemental Indentures May Be Executed...............................50
         Section 11.02. Execution of Supplemental Indenture......................................................51
         Section 11.03. Discretion of Trustee....................................................................51
         Section 11.04. Modification of Indenture with Consent of Owners.........................................51
         Section 11.05. Supplemental Indentures to be Part of Indenture..........................................52
         Section 11.06. Consent of the LGC.......................................................................52

ARTICLE XII  Amendment of Agreement and Letter of Credit.........................................................53

         Section 12.01. Amendments, etc., to Agreement or Letter of Credit Not Requiring
                              Consent of Owners..................................................................53
         Section 12.02. Amendments, etc., to Agreement or Letter of Credit Requiring
                              Consent of Owners..................................................................53
         Section 12.03. Limitation on Amendments to Agreement or Letter of Credit................................53
         Section 12.04. Amendment by Unanimous Consent...........................................................54
         Section 12.05. Opinion of Counsel Required..............................................................54
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         Section 12.06.  Amendment of Agreement by Trustee.......................................................52

ARTICLE XIII  Letter of Credit...................................................................................55

         Section 13.01.  Maintenance of Letter of Credit.........................................................55
         Section 13.02.  Drawings under Letter of Credit.........................................................55
         Section 13.03.  Substitute Letter of Credit.............................................................56
         Section 13.04.  Notice to Rating Agencies...............................................................57
         Section 13.05.  Bank Bonds Not Secured by Letter of Credit..............................................57

ARTICLE XIV  Miscellaneous.......................................................................................58

         Section 14.01.  Covenants of Issuer Bind Successors and Assigns.........................................58
         Section 14.02.  Immunity of Officers....................................................................58
         Section 14.03.  No Benefits to Outside Parties..........................................................58
         Section 14.04.  Separability of Indenture Provisions....................................................58
         Section 14.05.  Execution of Indenture in Counterparts..................................................58
         Section 14.06.  Headings Not Controlling................................................................58
         Section 14.07.  Notices.................................................................................58
         Section 14.08.  References to Bank and Letter of Credit.................................................59

EXHIBIT A Variable Rate Form of Bond..............................................................................1
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                                TRUST INDENTURE

      THIS TRUST INDENTURE (this "Indenture") is dated as of September 1, 1999,
between The Guilford County Industrial Facilities and Pollution Control
Financing Authority, a political subdivision of the State of North Carolina
(the "Issuer"), and U.S. Bank Trust National Association, a national banking
association organized and existing under the laws of the United States of
America with its principal office in St. Paul, Minnesota (the "Trustee").

                              W I T N E S S E T H

      WHEREAS, the Industrial and Pollution Control Facilities Financing Act,
Chapter 159C of the General Statutes of North Carolina, as amended (the "Act"),
authorizes the creation of industrial facilities and pollution control
financing authorities by the several counties in North Carolina and empowers
such authorities to acquire, construct, own, repair, maintain, extend, improve,
rehabilitate, renovate, furnish, equip and sell, lease, exchange, transfer or
otherwise dispose of industrial or manufacturing facilities to the end that
such authorities may be able to promote the right to gainful employment
opportunity and private industry, and thereby promote the general welfare of
the inhabitants of North Carolina, by exercising such powers to aid in
financing industrial or manufacturing facilities for the purpose of alleviating
unemployment or raising below average manufacturing wages and further
authorizes such authority to loan to others the proceeds of bonds issued for
the purpose of paying for all or any part of an industrial or manufacturing
facility, to mortgage and pledge any or all of such facilities, whether then
owned or thereafter acquired, as security for the payment of the principal of,
premium, if any, and interest on any such bonds and any agreements made in
connection therewith and to pledge or assign the revenues and receipts from
such facilities or loan or from any other source to the payment of such bonds;
and

      WHEREAS, the Issuer has been duly organized under the Act; and

      WHEREAS, under the Act, the Issuer has been given the power to issue its
revenue bonds from time to time and to use the proceeds thereof for the purpose
of paving all or part of the cost of any project and of all other costs
incident to or necessary and appropriate to achieve the foregoing; and

      WHEREAS, Crescent Sleep Products Company, a Delaware corporation (the
"Company") has requested that the Issuer issue and sell a series of industrial
development revenue bonds for the purpose of financing the acquisition,
rehabilitation and equipping of a 133,000 square foot facility to be owned and
operated by the Company for the purpose of manufacturing mattresses (such
facility, including the site on which it is located, and equipment, being
hereinafter referred to as the "Project"); and

      WHEREAS, after careful study and investigation of the nature of the
proposed issuance, the Issuer has determined that, in issuing its industrial
development revenue bonds, it will be acting in furtherance of the public
purposes intended to be served by the Act; and

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      WHEREAS, the Issuer has authorized the issuance and sale of $5,900,000 in
aggregate principal amount of its Industrial Development Revenue Bonds
(Crescent Sleep Products Company Project) Series 1999 (the "Bonds"), the
proceeds of which will be used to finance the qualified costs of the Project;
and

      WHEREAS, the Issuer has entered into a Loan Agreement, dated as of
September 1, 1999 (the "Agreement"), with the Company under the terms of which
the Issuer has agreed to finance the costs of the Project through the issuance
of the Bonds and, in consideration thereof, the Company has agreed to pay or to
cause to be paid to the Issuer monies sufficient to pay the principal and
purchase price of and premium, if any, and interest on the Bonds as the same
become due and payable and to pay certain administrative expenses in connection
with the Bonds, and

      WHEREAS, as further security for the payment of the Bonds, the Issuer has
agreed to assign and pledge to the Trustee all right, title, and interest of
the Issuer in and to the Trust Estate (as hereinafter defined); and

      WHEREAS, contemporaneously with the issuance of the Bonds, U.S. Bank
National Association (the "Bank") will issue its irrevocable direct-pay Letter
of Credit (the "Letter of Credit"), in favor of the Letter of Credit Custodian
(as defined below), for the account of the Company, obligating the Bank to pay
to the Trustee, in accordance with the terms thereof upon presentation of
drafts and certificates as required therein, certain amounts specified therein
for payment of the principal and purchase price of and interest on the Bonds;
and

      WHEREAS, pursuant to the terms of a Reimbursement Agreement dated as of
the date hereof, the Company is obligated to reimburse the Bank, with interest,
for the amount of any drawing under the Letter of Credit as defined herein, and

      WHEREAS, the Bonds were authorized pursuant to a resolution (the "Bond
Resolution") duly adopted by the Issuer on September 15, 1999; and

      WHEREAS, it is the intention of the Issuer and the Trustee to enter into
this Indenture (the "Indenture") to provide for, among other things (i) the
deposit into, and administration of any sums deposited in, the Bond Fund, (ii)
the payment of principal and interest due on the Bonds, (iii) purchase of the
Bonds upon demand of the Owner thereof for mandatory purchase thereof, (iv)
calculation and payment of the interest on the Bonds, (v) draws under the
Letter of Credit to pay principal of and interest on, or, if necessary, the
Purchase Price of, the Bonds as provided herein and under the terms of the
Letter of Credit, and (vi) application of all payments due under the Agreement
to secure the foregoing; and

      WHEREAS, all things necessary to make the Bonds when authenticated by the
Trustee and issued as in this Indenture provided, the valid, binding and legal
obligations of the Issuer according to the import thereof, and to constitute
this Indenture a valid assignment of the Agreement for payment of the principal
of, premium, if any, and interest on the Bonds, have been done and performed,
and the creation, execution and delivery of this Indenture, and the issuance of
the Bonds, subject to the terms hereof, have in all respects been duly
authorized.

                                       2

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      NOW, THEREFORE, THIS INDENTURE WITNESSETH:

                               GRANTING CLAUSES

      That the Issuer, in consideration of the premises and the acceptance by
the Trustee of the trusts hereby created and of the purchase and acceptance of
the Bonds by the Owners thereof, and of the sum of one dollar, lawful money of
the United States of America, to it duly paid by the Trustee at or before the
execution and delivery of these presents, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, in order to secure
the payment of the principal of, premium, if any, and interest on the Bonds
according to their tenor and effect and to secure the performance and
observance by the Issuer of all the covenants expressed herein and in the
Bonds, does hereby assign and grant a security interest in the following to the
Trustee, and its successors in trust and assigns forever, for the securing of
the performance of the obligations of the Issuer hereinafter set forth:

                             GRANTING CLAUSE FIRST

      All right, title and Interest of the Issuer in and to the Agreement
(except for the unassigned rights of, and amounts payable to, the Issuer under
Sections 4.2(b). 7.2, 8.4 and 10.10 of the Agreement);

                            GRANTING CLAUSE SECOND

      All right, title and interest of the Issuer in and to all money and
securities from time to time held by the Trustee under the terms of this
Indenture, and all earnings thereon;

                             GRANTING CLAUSE THIRD

      Any and all other property rights and interests of every kind and nature
from time to time hereafter by delivery or by writing of any kind granted,
bargained, sold, alienated, demised, released, conveyed, assigned, transferred,
mortgaged, pledged, hypothecated or otherwise subjected hereto, as and for
additional security, herewith, by the Issuer or any other person on its behalf
or with its written consent, including but not limited to the Letter of Credit
and all amounts drawn thereunder, and the Trustee is hereby authorized to
receive any and all such property at any and all times and to hold and apply
the same subject to the terms hereof,

      TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned
or hereafter acquired, unto the Trustee and its successors in said trust and
assigns forever;

      IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the
equal and proportionate benefit, security and protection of all present and
future Owners of the Bonds, from time to time, issued under and secured by this
Indenture without privilege, priority or distinction as to the lien or
otherwise of any of the Bonds over any of the other Bonds except in the case of
funds held hereunder for the benefit of particular Owners of Bonds, and for the
benefit of the Bank to the extent provided herein;

                                       3
<PAGE>   9

      PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall
well and truly pay, or cause to be paid, the principal of, premium, if any, and
interest on the Bonds due or to become due thereon, at the times and in the
manner set forth in the Bonds according to the true intent and meaning thereof,
or shall provide, as permitted hereby, for the payment thereof by depositing
with the Trustee the entire amount due or to become due thereon, and shall well
and truly cause to be kept, performed and observed all of its covenants and
conditions pursuant to the terms of this Indenture, and shall pay or cause to
be paid to the Trustee all sums of money, due or to become due to it in
accordance with the terms and provisions hereof, then upon the final payment
thereof this Indenture and the rights hereby granted shall cease, determine and
be void, except to the extent specifically provided in Article X hereof;
otherwise this Indenture shall remain in full force and effect.

      THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all
Bonds issued and secured hereunder are to be issued, authenticated and
delivered and all said property, rights and interests, including, without
limitation, amounts payable under the Agreement and any other amounts hereby
assigned and pledged are to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, covenants, agreements, trusts,
uses and purposes as herein expressed, and the Issuer has agreed and
covenanted, and does hereby agree and covenant with the Trustee, and with the
respective Owners of the Bonds as following:

                                       4
<PAGE>   10

                                   ARTICLE I

                        DEFINITIONS AND INTERPRETATION

      Section 1.01. Definitions. Unless the context otherwise requires, the
terms defined in this Article I and in the recitals and succeeding Articles of
this Indenture shall, for all purposes of this Indenture and of any indenture
supplemental hereto, have the meanings herein specified, such definitions to be
equally applicable to both the singular and plural forms of any of the terms
defined:

      "Act" means the Industrial and Pollution Control Facilities Financing Act,
Chapter 159C of the North Carolina General Statutes, as amended from time to
time.

      "Act of Bankruptcy" means the filing of a petition in bankruptcy (or the
commencement of a bankruptcy or similar proceeding) by or against any person or
entity under any applicable bankruptcy, insolvency, receivership,
reorganization or similar law, now or hereafter in effect.

      "Affiliate" means any person or entity that directly, or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with the Issuer or Company.

      "Agreement" means the Loan Agreement between the Issuer and the Company,
dated as of September 1, 1999, as such document may be amended and
supplemented.

      "Authenticating Agent" means, with respect to Bonds in the Variable Rate
Mode, the Tender Agent, and, with respect to Bonds in the Fixed Rate Mode, the
Trustee.

      "Authorized Denomination" means: (i) $100,000 or any greater integral
multiple of $5,000 in the case of Bonds in the Variable Rate Mode; or (ii)
$5,000 or any integral multiple thereof in the case of Bonds in the Fixed Rate
Mode.

      "Authorized Representative" means the person at the time designated to
act on behalf of the Issuer by written certificate furnished to the Trustee,
and signed on behalf of the Issuer by its Chairman or Vice Chairman.

      "Authorized Representative of the Company" shall mean such person or
persons as may be designated to act on behalf of the Company by certificate
signed by the secretary of the board of directors of the Company and filed with
the Issuer and the Trustee.

      "Bank" means (i) the Initial Bank, (ii) any Replacement Bank, and (iii)
any Substitute Bank.

      "Bank Bond" means any Bond purchased on a Mandatory Tender Date or
Optional Tender Date, or upon the occurrence of an Event of Default if so
directed by the Bank pursuant to Section 7.02 hereof, with funds drawn under
the Letter of Credit, if such Bond is not concurrently remarketed, redeemed or
retired.

                                       5

<PAGE>   11

      "Beneficial Owner" means the person for which a Participant in a
Depository acquires an Interest in the Bonds.

      "Bond Fund" means the Bond Fund created under Section 6.01 of this
Indenture.

      "Bond Purchase Agreement" means the Bond Purchase Agreement dated
September 17, 1999 by and between the Issuer, the Company and the Underwriter.

      "Bond Resolution" means the resolution adopted by the Issuer on September
15, 1999, authorizing the issuance of the Bonds in accordance with the terms of
this Indenture.

      "Bonds" shall have the meaning specified in the second recital hereto.

      "Business Day" means any day which is not a Saturday or Sunday and is not
a day on which banking institutions in Minnesota, or the city in which the
principal office of the Trustee is located, are authorized or required by law
to close, or on which the New York Stock Exchange is closed.

      "Calendar Week" means the period of seven days from and including
Thursday to and including the following Wednesday.

      "Cede & Co." means Cede & Co. or Cede & Co.'s successor as nominee of
DTC.

      "Certificate" means a certification in writing required or permitted by
the provisions of this Indenture, signed and delivered to the Trustee or other
proper person or persons. If and to the extent required by the provisions of
Section 1.02 hereof, each Certificate shall include the statements provided for
in said Section 1.02.

      "Certified Resolution" means a cop), of a resolution of the Issuer,
certified to have been duly adopted by the Issuer and to be in full force and
effect on the date of such certification.

      "Cessation of Operation" shall have the meaning given such term in the
Agreement.

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Company'" shall mean Crescent Sleep Products Company, a Delaware
corporation, its successors and assigns, and any surviving, resulting or
transferee entity as provided by the Agreement.

      "Conversion Date" means the date on which Bonds are converted to the
Fixed Rate Mode.

      "County" means Guilford County, North Carolina, a political subdivision
of the State of North Carolina.

      "Daily Rate" means the Variable Rate on the Bonds established pursuant to
Section 2.02(a) hereof.

                                       6

<PAGE>   12

      "Daily Rate Period" means any period during which the Bonds bear interest
at the Daily Rate.

      "DTC" shall mean The Depository Trust Company, located in New York, New
York, a limited purpose trust company organized under the laws of the State of
New York.

      "Default" means default by the Issuer in the performance or observance of
any of the covenants, agreements, or conditions on its part contained in this
Indenture, exclusive of any notice or period of grace required for a default to
constitute an "Event of Default" as described in Section 7.01 of this
Indenture.

      "Delivery Service" means a carrier or delivery service which guarantees
delivery of documents to the city of destination on the Business Day
immediately following the Business Day on which such documents are sent.

      "Depository" means any securities depository that is a clearing agency
under federal law, operating and maintaining, with its participants or
otherwise, a book entry system to record ownership of book entry interests in
the Bonds, and to effect transfers of book entry, interests in the Bonds in
book entry form, and includes and means initially DTC.

      "Determination of Taxability" means the issuance of a statutory notice of
any District Office of the Internal Revenue Service, or a final decision of a
court of competent jurisdiction, which holds in effect, or an opinion of
nationally recognized bond counsel stating, that, by reason of a breach by the
Company of any agreement, covenant or representation in the Agreement, the
interest payable on the Bonds is includible for federal income tax purposes in
the gross income of an Owner of the Bonds, after the period, if any, for
contest or appeal of such action, ruling or decision by the Company and any
Owner has expired without any such contest or appeal having been properly
instituted by the Company or the Owner; provided that no Determination of
Taxability shall arise from the interest on the Bonds being included (1) In
income for purposes of calculating alternative minimum taxable income of any
corporation pursuant to Section 55 of the Code; (2) in earnings and profits of
branches of foreign corporations for purposes of calculating the "branch
profits tax"; (3) within gross income to certain recipients of social security
benefits; or (4) as passive investment income to certain subchapter S
corporations which have subchapter C earnings and profits.

      "Discharge Expenses" means expenses not to exceed $9,000 payable to the
Trustee upon discharge hereunder.

      "Eligible Funds" shall mean (a) proceeds of the Bonds and the proceeds
from the investment or remarketing thereof to a person other than the Issuer,
the Company, any guarantor of the Company, or any Affiliate of any of the
foregoing, (b) any amounts which have been on deposit with the Trustee for a
period of at least ninety-one (91) days during which time no Act of Bankruptcy
has occurred with respect to the person or entity making such deposit, or in
the event of a deposit of funds, directly or indirectly, by an Affiliate, such
funds have been on deposit with the Trustee for a period of at least 367 days
during which time no Act of bankruptcy has occurred with respect to such
Affiliate, the Issuer or the Company; (c) monies (exclusive of funds drawn
under the Letter of Credit) with respect to which the Trustee receives a
written opinion of nationally-recognized counsel

                                       7

<PAGE>   13

experienced in bankruptcy matters to the effect that payment of such monies to
the Owners of the Bonds would not constitute a voidable preference under
Section 544 or 547 of the Bankruptcy Code and would not be recoverable under
Section 550 of the Bankruptcy Code in the event the Company, the Issuer or an
Affiliate was to become a debtor under the Bankruptcy Code; or (d) monies
derived from the Letter of Credit. In determining whether at the time of
deposit of any funds and for the specified period thereafter as described in
this definition, any petition or similar act was on file or was filed, the
Trustee shall receive and may rely on a written certificate of an Authorized
Representative of the Company stating that no such petition was on file or was
filed with respect to the Company, and a written certificate of an Authorized
Representative of the Issuer stating that no such petition was on file or was
filed with respect to the Issuer, provided that if the Company or the Issuer,
as applicable, shall not provide such a certification, the Trustee shall act as
if the funds with respect to which such certification was not made are not
Eligible Funds.

      "Event of Default" means an Event of Default described in Section 7.01 of
this Indenture which has not been cured.

      "Federal Funds Rate" means, with respect to any day, the rate of interest
published by the Federal Reserve Bank of New York as being the average
overnight federal funds rate for such day; provided, however, that the Federal
Funds Rate for any day which is not a Business Day shall be equal to the
Federal Funds Rate in effect on the immediately preceding Business Day.

      "Financial Newspaper" or "Financial Journal" means any newspaper or
journal devoted to financial news circulated in the English language in
Minneapolis and in St. Paul, Minnesota.

      "Fixed Rate" means the interest rate on any Bond in effect after the
Conversion Date, as said rate is determined in accordance with Section 2.03
hereof.

      "Fixed Rate Interest Payment Date" means the first March 1 or September 1
which is at least three (3) months after the Conversion Date and each March 1
and September 1 thereafter.

      "Fixed Rate Mandatory Tender Date" means any mandatory tender date
selected by the Company, for Bonds in the Fixed Rate Mode.

      "Fixed Rate Mode" means the aggregate of the characteristics which apply
to Bonds which have been converted to bear interest at the Fixed Rate.

      "Government Obligations" means direct obligations of, or obligations the
principal of and the interest on which are fully and unconditionally guaranteed
by, the United States of America.

      "Immediate Notice" means notice delivered on the day of occurrence of the
event being reported by telephone, telex or telecopier to such address, or
telephone number, as the case may be, as the addressee shall have directed in
writing, and if notice is delivered by telephone or telex, promptly followed by
written notice by Delivery Service or by first class mail, postage prepaid.

                                       8

<PAGE>   14

      "Indenture" means this Trust Indenture between the Issuer and the
Trustee, dated as of September 1, 1999, and any amendments or supplements
hereto.

      "Independent Counsel" means an attorney duly admitted to practice law
before the highest court of any state and who is not a full-time employee or
officer of the Issuer or the Company.

      "Initial Bank" means U.S. Bank National Association, a national banking
association, in its capacity as provider of the Initial Letter of Credit.

      "Initial Letter of Credit" means the Irrevocable Letter of Credit No.
SLCMMSP00711 issued by the Initial Bank to secure the Bonds.

      "Interest Payment Date" means (i) with respect to Bonds in the Variable
Rate Mode, the first day of each month, commencing October 1, 1999; (ii) each
Mandatory Tender Date; and (iii) after the Conversion Date, each Fixed Rate
Interest Payment Date. With respect to any of the above, if any date so
specified is not a Business Day, the interest shall be paid on the immediately
following Business Day with the same effect as if paid on the stated Interest
Payment Date.

      "Interest Rate Determination Method'" means any of the methods of
determining the Variable Rate on the Bonds described in Section 2.02 hereof.

      "Internal Revenue Code" or "Code" means the Internal Revenue Code of 1986
and all rules and regulations promulgated thereunder, as amended from time to
time.

      "Investment Grade Rating" means a rating assigned to the Bonds within the
top four (4) rating categories of Moody's or S&P or a comparable rating from
another nationally recognized rating agency.

      "Issuer" means The Guilford County Industrial Facilities and Pollution
Control Financing Authority, a political subdivision of the State of North
Carolina and its successors and assigns.

      "Letter of Credit" means (i) the Initial Letter of Credit; (ii) any
Replacement Letter of Credit; and (iii) any Substitute Letter of Credit.

      "Letter of Credit Custodial Agreement" means the Letter of Credit
Custodial Agreement of even date herewith among the Trustee, the Letter of
Credit Custodian and the Company.

      "Letter of Credit Custodian" means Bank One Colorado, N.A., Denver,
Colorado, a national banking association, or any successor entity unrelated to
the Bank under the Letter of Credit Custodial Agreement.

      "Letter of Credit Period" means any period prior to the time the Bonds
bear a Fixed Rate to their maturity.

                                       9

<PAGE>   15

      "Letter of Credit Termination Date" means the stated expiration date of a
Letter of Credit, including any extensions thereof, or such earlier date as a
Letter of Credit terminates according to the terms thereof.

      "LGC" means the Local Government Commission of North Carolina, a division
of the North Carolina Department of State Treasurer, and any successor or
successors thereto.

      "Mandatory Tender Date" means (i) any Proposed Conversion Date; (ii) any
Letter of Credit Termination Date; (iii) any Fixed Rate Mandatory Tender Date;
(iv) the proposed effective date of a change in the Interest Rate Determination
Method; as provided in Section 2.04(a) hereof; and (v) the date established for
mandatory purchase of the Bonds by the Bank under Section 7.02 hereof.

      "Maximum Rate" means the lesser of (i) the interest rate used to
determine the interest coverage provided by the Letter of Credit, or (ii)
11.00% per annum.

      "Monthly Rate" means the Variable Rate on the Bonds established pursuant
to Section 2.02(c).

      "Monthly Rate Period" means any period during which the Bonds bear
interest at the Monthly Rate.

      "Moody's" means Moody's Investors Service, Inc., a corporation organized
and existing under the laws of the State of Delaware, its successors and
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Company, with the consent of the Bank, by notice to the
Trustee.

      "Opinion of Counsel" means a written opinion of counsel (who need not be
independent Counsel unless so specified) appointed by the Company and
acceptable to the Trustee and Bank or appointed by the Trustee and Bank. If and
to the extent required by the provisions of Section 1.02 hereof, each Opinion
of Counsel shall include the statements provided for in said Section 1.02.

      "Optional Tender Date" means (i) during any Daily Rate Period or Weekly
Rate Period, each Business Day, and (ii) during any Monthly Rate Period, each
Interest Payment Date or, if such day is not a Business Day, the next
succeeding Business Day.

      "Outstanding"' when used as of any particular time with reference to
Bonds, means (subject to the provisions of Section 9.03 of this Indenture
pertaining to Bonds held by the Company) all Bonds theretofore authenticated
and delivered by the Trustee under the Indenture except: (i) Bonds theretofore
canceled by the Trustee or surrendered to the Trustee for cancellation; (ii)
Bonds for the payment or redemption of which funds or direct obligations of or
obligations fully guaranteed by the United States of America in the necessary
amount shall have theretofore been deposited with the Trustee by the Issuer,
provided that if such Bonds are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given pursuant to Article III of this
Indenture, or provision satisfactory to the Trustee shall have been made for
the giving of such notice; and (iii) Bonds in lieu

                                      10
<PAGE>   16

of or in substitution for which other Bonds shall have been authenticated and
delivered by the Trustee pursuant to the terms of Section 2. 10 of this
Indenture pertaining to replacement of Bonds.

      "Owner" means the person or persons in whose name a Bond is registered.

      "Participants" means those broker-dealers, banks and other financial
institutions from time to time for which the Depository holds Bonds as
securities depository and for whom the Depository effects book entry transfers
and pledges of securities deposited with the Depository.

      "Predecessor Bonds" of any particular Bond means every previous Bond
evidencing all or a portion of the same debt as that evidenced by such
particular Bond, and for purposes of this definition, any Bond authenticated
and delivered under Section 2.10 hereof in lieu of a lost, destroyed or stolen
Bond shall be deemed to evidence the same debt as the lost, destroyed or stolen
Bond.

      "Principal Payment Date" means the stated maturity of principal of any
Bonds.

      "Project" shall have the meaning specified in the Agreement.

      "Project Costs" shall have the meaning specified in the Agreement.

      "Project Fund" shall mean the Project Fund created under Section 6.02 of
this Indenture.

      "Proposed Conversion Date" means the Business Day stated in the written
notice of conversion given by the Company to the Trustee in which the Company
elects to convert Bonds to a Fixed Rate.

      "Purchase Fund" means the Purchase Fund created in Section 4.05 of this
Indenture.

      "Purchase Price" means the price at which Bonds are to be purchased which
shall, in each case, be all amount equal to 100% of the outstanding principal
amount of the Bonds plus, for any purchase on an Optional Tender Date that is
not an Interest Payment Date, interest accrued but not paid thereon to but not
on or after such tender date.

      "Qualified Investments" means investments authorized and described in
Section 6.04 hereof.

      "Record Date" means (i) with respect to Bonds in the Variable Rate Mode,
the Business Day preceding the Interest Payment Date, Redemption Date, or
maturity date; and (ii) with respect to Bonds in the Fixed Rate Mode, the
fifteenth day (whether or not a Business Day) of the calendar month next
preceding an Interest Payment Date, Redemption Date, or maturity date.

      "Receipt Mail" means return-receipt-registered mail, certified mail,
express mail, Delivery Service or any other reliable system of delivery,
provided that such system provides the sender with written confirmation of
receipt by the recipient.

                                      11

<PAGE>   17

      "Redeem" or "redemption" means, with respect to a Bond registered as to
principal, "prepay" or "prepayment" as the case may be.

      "Redemption Date" means the date fixed for redemption of a Bond pursuant
to this Indenture.

      "Reference Rate" means the interest rate from time to time publicly
announced by the Bank as its "reference" or "base" rate of interest.

      "Register" means the registration books of the Issuer kept, with respect
to all Bonds which are in the Variable Rate Mode, by the Tender Agent as agent
for the Issuer and, with respect to Bonds in the Fixed Rate Mode, kept by the
Trustee as agent for the Issuer to evidence the registration and transfer of
Bonds.

      "Registrar" means the keeper of the Register, which with respect to all
Bonds which are in the Variable Rate Mode, shall be the Tender Agent and which,
with respect to Bonds in the Fixed Rate Mode, shall be the Trustee.

      "Reimbursement Agreement" means any reimbursement agreement or similar
instrument between the Company and the Bank, pursuant to which the Company
agrees to reimburse the Bank for draws on its Letter of Credit, as such
instrument may be amended, supplemented, renewed or substituted from time to
time.

      "Remarketing Agent" means any member firm of the National Association of
Securities Dealers or any national bank designated in writing by the Company to
the Trustee, the Tender Agent and the Bank, provided that, initially, the
Remarketing Agent shall be U.S. Bancorp Piper Jaffray Inc., as provided in the
Remarketing Agreement.

      "Remarketing Agreement" means the Remarketing Agreement dated as of
September 1, 1999 between the Remarketing Agent and the Company, as amended,
supplemented or substituted from time to time.

      "Replacement Bank" means a commercial bank, savings and loan association,
insurance company, or other financial institution which has issued a
Replacement Letter of Credit, which must be the same financial institution that
issued the most recently expiring Letter of Credit.

      "Replacement Letter of Credit" means a letter of credit delivered to the
Trustee to replace an expiring Letter of Credit, and which letter of credit
shall meet the requirements of Section 13.01(b) hereof.

      "Responsible Officer" means and includes the chairman of the board of
directors, the president, every vice president, every assistant vice president,
every corporate trust officer, and every officer and assistant officer, other
than those specifically above mentioned, to whom any corporate trust matter is
referred because of the knowledge of, and familiarity with, a particular
subject of such officer or assistant officer.

                                      12

<PAGE>   18

      "S&P" means Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, a corporation organized and existing under the laws of
the State of New York, its successors and assigns, and, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, S&P shall be deemed to refer to any other nationally
recognized securities rating agency designated by the Issuer, with the consent
of the Bank, by notice to the Trustee.

      "Special Record Date" for the payment of any Defaulted Interest (as
defined in Section 2.08 hereof) on fully registered Bonds means a date fixed by
the Registrar pursuant to Section 2.08 hereof.

      "Stated Expiration Date" means the stated expiration date of a Letter of
Credit, without regard to any extensions thereof.

      "Substitute Bank" means a commercial bank, savings and loan association,
insurance company, or other financial institution which has issued a Substitute
Letter of Credit.

      "Substitute Letter of Credit" means a letter of credit (other than a
Replacement Letter of Credit) delivered to the Trustee in accordance with
Section 13.03 hereof and meeting the requirements of Section 13.01 (b) and
Section 13.03 hereof.

      "Tender Agent" means any entity which shall be named to provide the
services assigned to the Tender Agent in this Indenture. The Trustee shall
serve as the initial Tender Agent for the Bonds in the Variable Rate Mode
pursuant to the terms of Section 8.21 hereof, and shall serve as the Tender
Agent when the Bonds are in the Fixed Rate Mode.

      "Tender Notice" shall have the meaning assigned in Section 2.02(d)
hereof.

      "Trustee" means the trustee at the time serving as such under this
Indenture. To the extent provided in Section 8.18, the term "Trustee" includes
or refers to the Co-Trustee.

      "Trust Estate" means the revenues, monies, investments, contract rights,
general intangibles, and instruments and proceeds, products and accessions
thereof as set forth in the Granting Clauses of this Indenture, and such other
collateral, security and guarantees as shall from time to time be pledged to
the Trustee by the Issuer as security for its obligations under the Bonds.

      "Underwriter" means U.S. Bancorp Piper Jaffray Inc.

      "Variable Rate" means that annual rate of interest, expressed as a
percentage and rounded to the nearest one-hundredth of one percent, which, in
the judgment of the Remarketing Agent (having due regard to the prevailing
market conditions), is the lowest rate which would enable the Bonds in the
Variable Rate Mode to be sold at 100% of the outstanding principal amount
thereof on the next Business Day, not exceeding the Maximum Rate; the Variable
Rate at any given point in time will be determined in accordance with Section
2.02 hereof and will be either the Daily Rate, the Weekly Rate or the Monthly
Rate.

                                      13

<PAGE>   19

      "Variable Rate Mode" means the aggregate of the characteristics which
apply to Bonds which bear interest at the Variable Rate.

      "Weekly Rate" means the Variable Rate on the Bonds established pursuant
to Section 2.02(b).

      "Weekly Rate Period" means any period during which the Bonds bear
interest at the Weekly Rate.

      Section 1.02. Characteristics of Certificate or Opinion. Every
Certificate or Opinion of Counsel with respect to compliance with a condition
or covenant provided for in this Indenture shall include: (i) a statement that
the person or persons making such certificate or opinion have read such
covenant or condition and the definitions herein relating thereto; (ii) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate are based; (iii)
a statement that, in the opinion of the signers, they have made or caused to be
made such examination or investigation as is necessary to enable them to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and (iv) a statement as to whether, in the opinion of the
signers, such condition or covenant has been complied with.

      Any such Certificate made or given by an officer of the Company may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such officer knows that the opinion with respect to the matters upon
which his Certificate may be based as aforesaid is erroneous, or, in the
exercise of reasonable care, should have known that the same was erroneous. Any
such Opinion of Counsel may be based, insofar as it relates to factual matters
or information which is in the possession of the Company, upon the Certificate
of an officer or officers of the Company, unless such counsel knows that the
Certificate with respect to the matters upon which his opinion may be based as
aforesaid is erroneous, or, in the exercise of reasonable care, should have
known that the same was erroneous.

      Section 1.03. Additional Provisions as to Interpretation. All references
herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Indenture; and the
words "herein," "hereof," "hereunder" and other words of similar import refer
to this Indenture as a whole and not any particular Article, Section or
subdivision hereof.

      This Indenture is governed by and shall be construed in accordance with
the laws of the State of North Carolina.

      Any capitalized terms used but not defined herein shall have the meanings
specified in the Agreement.

                                      14

<PAGE>   20

                                  ARTICLE II

                   FORM, EXECUTION AND REGISTRATION OF BONDS

      Section 2.01. Form, Maturities and Numeration of Bonds.

      (a)    Bonds in the Variable Rate Mode shall be in substantially the form
set forth in Exhibit A hereto, Bonds in the Fixed Rate Mode shall be in
substantially the same form, with appropriate variations, omissions and
insertions as permitted or required by this Indenture. The Bonds shall be
issued only in Authorized Denominations. The Bonds shall be initially numbered
R-1 upwards in order of issuance or such other order as the Trustee may
determine. The Bonds originally issued, and not in exchange for Predecessor
Bonds, shall be dated as of September 17, 1999. Bonds issued in exchange for
Predecessor Bonds shall be dated the date of their authentication and delivery.

      (b)    With respect to Bonds in the Variable Rate Mode, interest on the
Bonds shall be calculated on the basis of actual days elapsed and a year of 365
or 366 days, as appropriate. With respect to Bonds in the Fixed Rate Mode,
interest on the Bonds shall be calculated on the basis of a year of 360 days
and twelve 30-day months.

      (c)    Each Bond will initially bear interest at the Weekly Rate which
will initially be the rate of three and sixty-five one hundredths percent
(3.65%) per annum, through and including September 21, 1999, from and after
which the Bonds will continue to bear interest at the Weekly Rate as in effect
from time to time, unless converted to bear interest at a Daily Rate, Monthly
Rate or Fixed Rate as provided herein. Conversion from one interest rate to
another is subject to the terms and conditions provided in Section 2.04 of this
Indenture.

      (d)    If for any reason the Variable Rate for any period is not
established by the Remarketing Agent, no Remarketing Agent shall be serving as
such hereunder, or the established rate is held to be invalid or unenforceable
with respect to any period, then the Variable Rate for such period shall be the
Variable Rate which was in effect on the date such Variable Rate was last
determined in accordance with Section 2.02.

      (e)    The principal of, premium, if any, and interest on the Bonds shall
be payable in any currency of the United States of America which, at the
respective dates of payment thereof, is legal tender for the payment of public
and private debts. The interest to be paid on each Interest Payment Date shall
be the amount of interest due on the Bonds from the last Interest Payment Date
to, but not including, the current Interest Payment Date. Interest on the
Bonds, except interest due on a Mandatory Tender Date, an Optional Tender Date
that is an Interest Payment Date, or on the maturity date, shall be paid on
each Interest Payment Date:

             (i)    by check or draft of the Tender Agent with respect to Bonds
      in the Variable Rate Mode, or by check or draft of the Trustee with
      respect to Bonds in the Fixed Rate Mode, in each case mailed to such
      registered owner at such owner's address as it appears on the Register or
      at such other address as is furnished to the Tender Agent or the Trustee
      in writing by such owner; or

                                      15

<PAGE>   21

             (ii)   with respect to Bonds in the Variable Rate Mode, by wire
      transfer to registered owners of at least $1,000,000 in aggregate
      principal amount of Bonds, upon such prior notice from the registered
      owner as may be satisfactory to the Tender Agent.

Interest payable with respect to Bonds in the Variable Rate Mode on an Optional
Tender Date that is an interest Payment Date, a Mandatory Tender Date, or their
maturity date, shall be paid only upon presentation of the Bond to the Tender
Agent, Interest payable with respect to Bonds in the Fixed Rate Mode on their
maturity date or a Mandatory Tender Date shall be paid only upon presentation
of the Bond to the Trustee.

      (f)    With respect to Bonds in the Variable Rate Mode, the principal of
and Purchase Price of the Bonds are payable at the principal corporate trust
office of the Tender Agent. With respect to Bonds in the Fixed Rate Mode, the
principal of and premium, if any, on the Bonds and any Purchase Price of the
Bonds are payable at the principal corporate trust office of the Trustee.

      (g)    Notwithstanding the foregoing, for as long as DTC or its nominee,
Cede & Co., is the Owner, payment of principal and interest will be made
directly to such Owner. Disbursal of such payments to the DTC Participants is
the responsibility of DTC; disbursal of such payment to the Beneficial Owners
is the responsibility of the DTC Participants.

      (h)    The Bonds shall be issued in the aggregate principal amount of
Five Million Nine Hundred Thousand Dollars ($5,900,000), and shall mature on
September 1, 2019; provided, that the Bonds shall be subject to optional and
mandatory redemption as provided in Article III hereof. The Bonds shall bear
interest as provided in Sections 2.02 or 2.03 hereof.

      Section 2.02. Variable Rate, Optional Tenders.

      (a)    During any Daily Rate Period, the Bonds will bear interest at the
Daily Rate. During any Daily Rate Period, the Daily Rate shall be determined by
the Remarketing Agent by 9:30 a.m., New York City time, on each Business Day.
The Daily Rate for any non-Business Day will be the rate for the last Business
Day on which a Daily Rate was set.

      (b)    During any Weekly Rate Period, the Bonds will bear interest at the
Weekly Rate. During any Weekly Rate Period, the Remarketing Agent will set a
Weekly Rate by 5:00 p.m., New York City time, on each Wednesday (or the
immediately preceding Business Day if such Wednesday is not a Business Day) for
the next ensuing Calendar Week, provided that the Weekly Rate for the first
Calendar Week (or portion thereof) following a change in the Interest Rate
Determination Method to a Weekly Rate shall be set by the Remarketing Agent on
the Business Day immediately preceding the effective date thereof.

      (c)    During any Monthly Rate Period the Bonds will bear interest at the
Monthly Rate. In each Monthly Rate Period, the Remarketing Agent will set a
Monthly Rate by 5:00 p.m., New York City time, on the day preceding the first
day of each month (or the immediately preceding Business Day if such day is not
a Business Day) for the next month, provided that the Monthly Rate for the
first month (or portion thereof) following a change in the Interest Rate
Determination Method

                                      16

<PAGE>   22

to a Monthly Rate shall be set by the Remarketing Agent on the Business Day
immediately preceding the effective date thereof

      (d)    Bonds in the Variable Rate Mode shall, as provided in this
paragraph, be purchased by the Tender Agent at the option of the Owner. Any
Owner of a Bond which is in the Variable Rate Mode may exercise such option,
and the Bonds shall be purchased by the Tender Agent, but solely from the
sources of funds described in Section 4.04(a) of this Indenture. In order to
exercise this option, the Owner shall deliver Immediate Notice (the "Tender
Notice") thereof to the Tender Agent and the Remarketing Agent not later than
(i) 10:00 a.m., Minneapolis time, on the Business Day prior to the Optional
Tender Date, during the Daily Rate Period, and (ii) 4:00 p.m., Minneapolis
time, on a Business Day not less than seven calendar days prior to the Optional
Tender Date, during the Weekly Rate Period or Monthly Rate Period. The Tender
Notice must state:

             (i)    the principal amount of Bonds which are to be purchased
      (which amount shall be at least $100,000 in principal amount and in an
      Authorized Denomination); and the portion retained, if any (which must be
      at least $100,000 in principal amount and in an Authorized Denomination):

             (ii)   the Optional Tender Date; and

             (iii)  if less than all of the Owner's Bonds are to be purchased,
      the numbers of the Bonds to be purchased.

The delivery of the Tender Notice by an Owner of a Bond in the Variable Rate
Mode shall be irrevocable and binding on such Owner and cannot be withdrawn.

      Promptly upon its receipt of any Tender Notice, the Tender Agent shall
give Immediate Notice to the Trustee, the Bank and the Company of its receipt
of such Tender Notice.

      The Owner of any Bond in the Variable Rate Mode who has delivered a
Tender Notice must present such Bond to the Tender Agent to receive payment of
the Purchase Price on the Optional Tender Date and the Owner must present such
Bond to the Tender Agent by 11:00 a.m., Minneapolis time on the Optional Tender
Date in order to receive payment on that date. Interest on such Bond will cease
to accrue to such Owner on the Optional Tender Date.

      Section 2.03. Fixed Rate. With respect to Bonds in the Fixed Rate Mode,
the Fixed Rate applicable to the Bonds shall be the rate or rates determined by
the Remarketing Agent on a date not more than 35 days nor less than 10 days
prior to the Proposed Conversion Date or Fixed Rate Mandatory Tender Date;
provided that no such rate shall exceed the Maximum Rate and all Bonds of the
same maturity shall bear the same rate. The Fixed Rate applicable to each Bond
shall be the lowest rate which, in the judgment of the Remarketing Agent
(having due regard to the prevailing market conditions), would be necessary to
enable the Bonds of such maturity (or with such Fixed Rate Mandatory Tender
Date) to be sold at 100% of the principal amount thereof on the Proposed
Conversion Date or Fixed Rate Mandatory Tender Date. Notwithstanding the
foregoing, in the event all of the Bonds are not sold or remarketed on a
Proposed Conversion Date, the interest rate on the

                                      17

<PAGE>   23

Bonds will not be converted to the Fixed Rate, and the Bonds will continue in
the Variable Rate Mode, subject to the right of the Company subsequently to
elect to convert the Bonds to a Fixed Rate or to so convert the Bonds upon the
termination of the Letter of Credit, upon compliance with the terms of Section
2.04 of this Indenture.

      Bonds in the Fixed Rate Mode are subject to mandatory tender for purchase
on the Fixed Rate Mandatory Tender Date. The Trustee shall give written notice
of the Fixed Rate Mandatory Tender Date to the Owners of the Bonds at least 30
days prior to the Fixed Rate Mandatory Tender Date. The notice shall state that
on the Fixed Rate Mandatory Tender Date the Bonds will be subject to mandatory
tender and shall state:

             (1)    the Fixed Rate Mandatory Tender Date;

             (2)    that the Purchase Price of the Bonds will be 100% of the
      principal amount thereof,

             (3)    that the Bonds must be surrendered by 11:00 a.m.
      Minneapolis Time on the Fixed Rate Mandatory Tender Date to collect the
      Purchase Price on such date;

             (4)    the address at which the Bonds must be surrendered; and

             (5)    that interest on the Bonds will cease to accrue to such
      Owner on the Fixed Rate Mandatory Tender Date, and the Owner will be
      entitled only to the Purchase Price and interest accrued to the Fixed
      Rate Mandatory Tender Date.

      Section 2.04. Conversions; Notices.

      (a)    When the Bonds are in the Variable Rate Mode, the Company may from
time to time request the Remarketing Agent to change the Interest Rate
Determination Method from one Variable Rate to another by so requesting the
Remarketing Agent by written notice or by telephone notice promptly confirmed
by facsimile transmission or other writing with a copy (or by telephone,
confirmed by facsimile transmission as aforesaid) to the Trustee, the Tender
Agent, the Bank and the Issuer, received by the Remarketing Agent at least 35
days prior to the proposed effective date thereof. The effective date for a
change from a Daily Rate to a Weekly Rate must be a Wednesday. The Company's
notice must specify (i) the proposed effective date and (ii) the new Interest
Rate Determination Method.

      Upon receipt of the notice from the Company as described above, together
with a written consent of the Bank to the change in the Interest Rate
Determination Method (which written consent of the Bank must be delivered to
the Tender Agent as a condition precedent to the change in the Interest Rate
Determination Method), the Tender Agent shall give written notice to the Owners
of the Bonds at least 30 days prior to the Mandatory Tender Date.

The notice shall state that on the Mandatory Tender Date such Bonds will be
subject to mandatory tender and shall state:

                                      18

<PAGE>   24

             (1)    the Mandatory Tender Date;

             (2)    that the Purchase Price of the Bonds will be 100% of the
      principal amount thereof;

             (3)    that the Bonds must be surrendered by 11:00 a.m.
      Minneapolis Time on the Mandatory Tender Date to collect the Purchase
      Price on such date;

             (4)    the address at which the Bonds must be surrendered; and

             (5)    that interest on the Bonds will cease to accrue to such
      Owner on the Mandatory Tender Date, and the Owner will be entitled only
      to the Purchase Price and interest accrued to the Mandatory Tender Date.

From and after the Mandatory Tender Date as described in this Section 2.04(a),
the Bonds shall bear interest calculated in accordance with the new Interest
Rate Determination Method.

      (b)    The Company may give written notice at any time to the Bank, the
Tender Agent, the Letter of Credit Custodian, the Remarketing Agent, the
Trustee and the Issuer that it intends to effect a conversion of the Bonds to a
Fixed Rate on a Proposed Conversion Date as specified in such written notice,
which Proposed Conversion Date shall be not less than 35 days from the date of
such notice; provided however, that (i) in the event the Letter of Credit
securing the Bonds prior to the Conversion Date is to continue to secure the
Bonds after the Conversion Date or (ii) in the event the Bonds are to be
secured by other than the Letter of Credit securing the Bonds prior to the
Conversion Date and such notice of the Company is not accompanied by either
cash sufficient to pay the Purchase Price of the Bonds on the Conversion Date
or a Replacement Letter of Credit or Substitute Letter of Credit, then the
Company must obtain the prior written consent of the Bank to the conversion of
the Bonds to a Fixed Rate, which written consent of the Bank must be delivered
to the Trustee as a condition precedent to conversion of the Bonds to a Fixed
Rate. Such notice shall set the next Fixed Rate Mandatory Tender Date, which
shall not be later than the Stated Expiration Date, or shall provide for a
fixed rate to maturity. In the event of a fixed rate to maturity, there shall
be no Letter of Credit in effect with respect to the Bonds after the Conversion
Date, unless specifically allowed by the Opinions of Counsel described below in
this paragraph. Together with such notice, the Company shall also file with the
Trustee and Bank an Opinion of Counsel, which counsel shall be a nationally
recognized municipal bond counsel, to the effect that the conversion of such
Bonds to a Fixed Rate will not adversely affect the validity of the Bonds or
the exclusion of the interest on the Bonds from federal gross income. The
conversion of the Bonds to the Fixed Rate Mode under this Section 2.04(b) shall
not become effective unless the Company shall, on the date such conversion is
to occur, file with the Trustee and Bank an Opinion of Counsel, which counsel
shall be a nationally recognized municipal bond counsel, dated as of such date,
confirming the opinions which were delivered with the Company's notice.

      Upon receipt of the written notice of the Company stating its election to
effect a conversion of Bonds to the Fixed Rate Mode and the Opinion of Counsel,
the Tender Agent shall give written notice to the Owners of the Bonds at least
30 days prior to the Proposed Conversion

                                      19

<PAGE>   25

Date. The notice shall state that on the Proposed Conversion Date such Bonds
will be subject to mandatory tender and shall state:

             (1)    the Proposed Conversion Date;

             (2)    that the Purchase Price of the Bonds will be 100% of the
      principal amount thereof;

             (3)    that the Bonds must be surrendered by 11:00 a.m.
      Minneapolis Time on the Proposed Conversion Date to collect the Purchase
      Price on such date;

             (4)    the address at which the Bonds must be surrendered; and

             (5)    that interest on the Bonds will cease to accrue to such
      Owner on the Proposed Conversion Date; and the Owner will be entitled
      only to the Purchase Price and interest accrued to the Proposed
      Conversion Date.

      (c)    If the Company fails to furnish the Tender Agent with a
satisfactory extension of the Letter of Credit or a satisfactory Replacement
Letter of Credit at least 35 days prior to any Letter of Credit Termination
Date hereunder, all Bonds shall be subject to mandatory tender for purchase on
the Letter of Credit Termination Date in accordance with Section 4.01(c).

      At least 30 days prior to the Letter of Credit Termination Date the
Tender Agent or Trustee shall mail to the Owners a notice stating that on the
Letter of Credit Termination Date such Bonds will be subject to mandatory
tender. In addition, such notice shall state:

             (1)    the Letter of Credit Termination Date;

             (2)    that the Purchase Price of the Bonds will be 100% of the
      principal amount thereof;

             (3)    that the Bonds must be surrendered by 11:00 a.m.
      Minneapolis Time on the Letter of Credit Termination Date to collect the
      Purchase Price on such date;

             (4)    the address at which the Bonds must be surrendered; and

             (5)    that interest on the Bonds will cease to accrue to such
      Owner on the Letter of Credit Termination Date, and the Owner will be
      entitled only to the Purchase Price and interest accrued to the Letter of
      Credit Termination Date.

      Notwithstanding any of the foregoing to the contrary, no conversion of
the Bonds to the Fixed Rate Mode shall be effective without a Letter of Credit
securing payment of principal, interest and premium, if any, on the Bonds,
unless the Bonds are rated and the rating on the Bonds without a Letter of
Credit is an investment Grade Rating.

                                      20

<PAGE>   26

      Section 2.05. Execution of Bonds. The Bonds shall be signed in the name
of the Issuer by the manual or facsimile signatures of the Chairman or
Vice-Chairman of the Issuer and said signatures shall be authenticated by the
Authenticating Agent, and shall have the official seal of the Issuer or a
facsimile thereof imprinted thereon. In the event that any of the officers who
shall have signed any of the Bonds shall cease to be officers of the Issuer
before the Bonds shall have been authenticated or delivered by the Trustee, or
issued by the Issuer, such Bonds may, nevertheless, be authenticated, delivered
and issued, and upon such authentication, delivery and issue, shall be binding
upon the Issuer as though those officers who signed the same had continued to
be such officers of the Issuer; and, also, any Bond may be signed on behalf of
the Issuer by such person who, at the actual date of execution of such Bond,
shall be the proper officer of the Issuer, although at the date of such Bond
such person shall not have been such an officer of the Issuer. Upon the
execution and delivery of this Indenture, the Issuer shall execute and deliver
the Bonds to the Trustee for authentication.

      Section 2.06. Authentication of Bonds. No Bond shall be valid or
obligatory for any purpose or shall be entitled to any right or benefit
hereunder or under the Letter of Credit unless a Responsible Officer of the
Authenticating Agent shall manually endorse and execute on such Bond a
certificate of authentication substantially in the form of the certificate set
forth in Exhibit A hereto. Such certificate upon any Bond executed on behalf of
the Issuer shall be conclusive evidence that the Bond so authenticated has been
duly issued under this Indenture and that the Owner thereof is entitled to the
benefits of this Indenture and the Letter of Credit.

      No Bonds shall be authenticated by the Authenticating Agent except in
accordance with this Article.

      Section 2.07. Registration, Transfers and Exchange. As long as any of the
Bonds issued hereunder shall remain outstanding, the Issuer shall maintain and
keep the offices of the Registrar an office or agency for the payment of the
principal of and interest on such Bonds, as in this Indenture provided, and for
the registration and transfer of such Bonds, and shall also keep at said
offices of the Registrar books for such registration and transfer. The Issuer
does hereby appoint the Registrar, and its successor from time to time, as its
agent to maintain said office and agency.

      Upon surrender for transfer of any fully registered Bond at the office of
the Registrar with a written instrument of transfer satisfactory to the
Registrar, duly executed by the Owner or his duly authorized attorney, and upon
payment of any tax, fee or other governmental charge required to be paid with
respect to such transfer, the Issuer shall execute and the Registrar shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more fully registered Bonds of the same series, of any
Authorized Denominations and of a like aggregate principal amount, interest
rate and maturity.

      All Bonds, upon surrender thereof at the office of the Registrar may, at
the option of the Owner thereof, be exchanged for an equal aggregate principal
amount of Bonds of the same series and maturity and interest rate of any
Authorized Denominations.

                                      21

<PAGE>   27

      In all cases in which the privilege of exchanging Bonds or transferring
fully registered Bonds is exercised, the Issuer shall execute and the Registrar
shall deliver Bonds in accordance with the provisions of this Indenture. For
every such exchange or transfer of Bonds, whether temporary or definitive, the
Issuer or the Registrar may make a charge sufficient to reimburse it for any
tax, fee or other governmental charge required to be paid with respect to such
exchange or transfer, which sum or sums shall be paid by the person requesting
such exchange or transfer as a condition precedent to the exercise of the
privilege of making such exchange or transfer. Notwithstanding any other
provision of this Indenture, the cost of preparing each new Bond upon each
exchange or transfer, and any other expenses of the Issuer or the Registrar
incurred in connection therewith (except applicable tax, fee or other
governmental charge) shall be paid by the Company. At any time the Bonds are in
the Fixed Rate Mode, the Issuer and the Registrar shall not be obligated to
make any such exchange or transfer of Bonds during the fifteen (15) days next
preceding the date of the first publication or the mailing (if there is no
publication) of notice of redemption in the case of a proposed redemption of
Bonds, nor shall the Issuer and Registrar be required to make any transfer or
exchange of any Bonds called for redemption.

      Section 2.08. Payment of Interest On Bonds, Interest Rights Preserved.
Interest on any Bond which is payable, and is punctually paid or duly provided
for, on any Interest Payment Date shall be paid to the person in whose name
that Bond (or one or more Predecessor Bonds) is registered at the close of
business on the Record Date for such interest.

      Any interest on any Bond which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Owner on the
relevant Record Date solely by virtue of such Owner having been such Owner; and
such Defaulted Interest may be paid by the Issuer, at the election of the
Company in each case, as provided in Subsection A or B below:

             A.     The Issuer, at the election of the Company, may make
      payment of any Defaulted Interest on the Bonds to the persons in whose
      names such Bonds (or their respective Predecessor Bonds) are registered
      at the close of business on a Special Record Date for the payment of such
      Defaulted Interest, which shall be fixed in the following manner. The
      Company shall notify the Registrar in writing of the amount of Defaulted
      Interest proposed to be paid on each Bond and the date of the proposed
      payment (which date shall be such as will enable the Registrar to comply
      with the next sentence hereof), and at the same time the Company shall
      deposit with the Registrar an amount of money equal to the aggregate
      amount proposed to be paid in respect of such Defaulted Interest or shall
      make arrangements satisfactory to the Registrar for such deposit prior to
      the date of the proposed payment, such money when deposited to be held in
      trust for the benefit of the persons entitled to such Defaulted Interest
      as in this Subsection provided and not to be deemed part of the Trust
      Estate. Thereupon the Registrar shall fix a Special Record Date for the
      payment of such Defaulted Interest which shall be not more than 15 nor
      less than 10 days prior to the date of the proposed payment and not less
      than 10 days after the receipt by the Registrar of the notice of the
      proposed payment. The Registrar shall promptly notify the Company of such
      Special Record Date and, in the name of the Issuer and at the expense of
      the Company, shall cause notice of the proposed payment of such Defaulted
      Interest and the Special Record

                                      22

<PAGE>   28

      Date therefor to be mailed, first class postage prepaid, to each Owner of
      a Bond of such series at his address as it appears in the registration
      books not less than 10 days prior to such Special Record Date. The
      Registrar may, in its discretion in the name of the Issuer and at the
      expense of the Company, cause a similar notice to be published at least
      once in a Financial Newspaper, but such publication shall not be a
      condition precedent to the establishment of such Special Record Date.
      Notice of the proposed payment of such Defaulted Interest and the Special
      Record Date therefor having been mailed as aforesaid, such Defaulted
      Interest shall be paid to the persons in whose names the Bonds of such
      series (or their respective Predecessor Bonds) are registered on such
      Special Record Date and shall not longer be payable pursuant to the
      following Subsection B.

             B.     The Issuer, at the election of the Company, may make
      payment of any Defaulted Interest on the Bonds in any other lawful
      manner, if, after notice given by the Company to the Registrar of the
      proposed payment pursuant to this Subsection, such manner of payment
      shall be deemed practicable by the Registrar.

      Subject to the foregoing provisions of this Section, each Bond delivered
under this Indenture upon transfer of or in exchange for or in lieu of any
other Bond shall carry all the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Bond and each such Bond shall bear
interest from such date that neither gain nor loss in interest shall result
from such transfer, exchange or substitution.

      Section 2.09. Ownership of Bonds. The Issuer, the Company, the Trustee
and the Tender Agent and their respective successors, each in its discretion,
may deem and treat the person in whose name any Bond shall for the time being
be registered as the absolute owner thereof for all purposes, and neither the
Issuer, the Company, the Trustee nor the Tender Agent nor their respective
successors shall be affected by any notice to the contrary. Payment of or on
account of the principal of and interest on any such Bond shall be made only to
or upon the order of the Owner thereof, but such registration may be changed as
above provided. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Bond to the extent of the sum or sums so
paid.

      Section 2.10. Reissuance of Mutilated, Destroyed, Stolen or Lost Bonds.
In case any outstanding Bond shall become mutilated or be destroyed, stolen or
lost, the Authenticating Agent shall authenticate and deliver a new Bond of
like series, tenor, number and amount as the Bond so mutilated, destroyed,
stolen or lost, in exchange and substitution for such mutilated Bond, upon the
Owner's surrender of such mutilated Bond, or in lieu of and substitution for
the Bond destroyed, stolen or lost, upon filing with the Trustee evidence
satisfactory to the Issuer and the Trustee that such Bond has been destroyed,
stolen or lost and proof of ownership thereof, and upon furnishing the Issuer
and the Trustee with indemnity satisfactory to them and complying with such
other reasonable regulations as the Trustee may prescribe and paying such
reasonable expenses as the Issuer and the Trustee may incur in connection
therewith. In the event any such Bond shall have matured, instead of issuing a
new Bond, the Issuer may pay the same without surrender thereof.

                                      23

<PAGE>   29

      Section 2.11. Conditions for Authentication of Bonds. The Trustee shall
not authenticate and deliver the Bonds to be delivered pursuant to this
Indenture unless theretofore or simultaneously therewith there shall have been
delivered to the Trustee the following:

      (a)    A certified copy of the Bond Resolution authorizing the issuance
of the Bonds;

      (b)    Executed counterparts of this Indenture, the Agreement, the
Remarketing Agreement and the Bond Purchase Agreement;

      (c)    The original of the Initial Letter of Credit;

      (d)    The manually signed approving opinion of Hunton & Williams,
Raleigh, North Carolina, as bond counsel, concerning the validity, legality and
tax exemption of the Bonds; and

      (e)    Such further certifications, documents and Opinions of Counsel as
the Trustee, the Bank, the Issuer or bond counsel may require.

      Section 2.12. Book-entry Provisions. The Bonds shall originally be issued
solely in book-entry form to a Depository to be held in a book-entry system in
which event: (i) the Bonds shall be registered in the name of the Depository or
its nominee, as Owner, and immobilized in the custody of the Depositor; (ii)
there shall, unless otherwise requested by the Depository, be a single Bond
certificate representing the aggregate principal amount of the Bonds; and (iii)
the Bonds shall not be transferable or exchangeable, except for transfer to
another Depository or another nominee of a Depository without further action by
the Issuer as set forth in the third succeeding paragraph of this Section.

      While the Bonds are held in book-entry form, (i) the principal and
Purchase Price of and any premium on any Bond shall be payable when due in next
day or federal funds by check or wire transfer delivered or transmitted to the
Depository or its authorized representative, and (ii) interest on any Bond
shall be paid on each Interest Payment Date in next day or federal funds by
check or wire transfer delivered or transmitted to the Depository or its
authorized representative. Upon a partial payment of a Bond which results in
the stated amount thereof being reduced, the Owner may, in its discretion, make
notation on a register of partial payments maintained by the Owner with respect
to the Bond of such payment, stating the amount so paid, but such notation, if
made by the Owner, shall be for reference only and may not be relied upon by
any person as being in any way determinative of the principal amount of the
Bond Outstanding.

      Anything herein to the contrary notwithstanding, in the case of any Bonds
registered in the name of the Depository or its nominee, the Trustee, the
Tender Agent and the Remarketing Agent shall comply with the applicable
operational arrangements of the Depository. Specifically, the Trustee shall
make payments on the Bonds and will provide notices of redemption to the
Depository in the manner and at the times set forth in such operational
arrangements and shall regard the Depository as the Owner of such Bonds for all
purposes hereunder, except for the purposes of giving any consent requested of
Owners of Bonds pursuant to this Indenture and receiving or giving any notices
related to the tender rights of the Owners of the Bonds, the giving and
receiving of which

                                      24

<PAGE>   30

consents and notices related to tender rights shall be governed by the last
paragraph of this Section 2.12.

      If any Depository determines not to continue to act as a Depository for
the Bonds held in a book-entry system, the Issuer may attempt to have
established a securities depository/book-entry system relationship with another
Depository under this Indenture. If the Issuer does not or is unable to do so,
the Issuer and the Trustee, after the Trustee has made provision for
notification of the owners of book-entry interests by appropriate notice to the
then Depository, shall permit withdrawal of the Bonds from the Depository and
shall authenticate and deliver Bond certificates in fully registered form to
the assignees of the Depository or its nominee. If the event is not the result
of Issuer action or inaction, such withdrawal, authentication and delivery
shall be at the cost and expense (including costs of printing or otherwise
preparing, and delivering, such replacement Bonds), of those persons requesting
that authentication and delivery. Such replacement Bonds shall be in Authorized
Denominations.

      While the Bonds are registered in the name of a Depository or the nominee
of a Depository, the Depository will mail an omnibus proxy to the Trustee.
Pursuant to the omnibus proxy, the Depository will assign the rights of the
Depository to consent to matters relating to the Bonds, and to receive or give
notices related to the tender rights with respect to the Bonds, to those
Participants having the Bonds credited to their accounts as of the record date
for mailing of requests for consents or receiving or giving notices related to
the tender rights. The Participants shall be identified in a list attached to
the omnibus proxy. The Trustee shall then treat the Participants as the Owners
of the Bonds for purposes of obtaining such consents and receiving or giving
notices related to the tender rights.

                                      25

<PAGE>   31

                                  ARTICLE III

                              REDEMPTION OF BONDS

      Section 3.01. Optional Redemption.

      (a)    All Bonds in the Variable Rate Mode may be redeemed, in whole or
in part, on any Interest Payment Date, in each case by the Issuer at the option
of the Company but only with prior written consent of Bank and at a redemption
price equal to 100% of the principal amount of the Bonds being redeemed plus
accrued interest, if any, to the Redemption Date. In order to exercise its
option to so redeem Bonds in the Variable Rate Mode, the Company shall deliver
to the Trustee by facsimile transmission notice of its election to so redeem,
accompanied by the written consent of the Bank to such redemption, at least
thirty-five (35) days prior to the proposed Redemption Date.

      (b)    All Bonds in the Fixed Rate Mode may be redeemed in whole or in
part, on any date for which proper notice of redemption can be given, in each
case by the Issuer at the option of the Company but only with prior written
consent of Bank. The redemption price for any such redemption shall be the
respective percentage of the principal amount of the Bonds or portions thereof
so redeemed for the applicable Redemption Dates set forth in the applicable
tables below, plus accrued interest to the Redemption Date.

             (i)    If the next Fixed Rate Mandatory Tender Date, or, if none,
      the final maturity of the Bonds is three (3) years or less from the
      immediately preceding Mandatory Tender Date, the Bonds are subject to
      redemption on and after any date during the period commencing on the date
      which is one-half of the total number of days from the immediately
      preceding Mandatory Tender Date to the next Fixed Rate Mandatory Tender
      Date, at a redemption price equal to 100% of the principal amount of the
      Bonds to be redeemed.

             (ii)   If the next Fixed Rate Mandatory Tender Date, or, if none,
      the final maturity of the Bonds is more than three (3) years but less
      than ten (10) years from the immediately preceding Mandatory Tender Date,
      the Bonds are subject to redemption after the third year of such period
      as follows:

<TABLE>
<CAPTION>
             Redemption Dates                                       Redemption
                                                                      Prices
             -------------------------------------------------------------------
            <S>                                                        <C>
             During the fourth year of such period                     102%

             During the fifth year of such period                      101%

             During the sixth year of such period and                  100%
             thereafter
</TABLE>

             (iii)  If the next Fixed Rate Mandatory Tender Date, or, if none,
      the final maturity of the Bonds is ten (10) years or more from the
      immediately preceding Mandatory Tender Date, Bonds are subject to
      redemption after the sixth year of such period as follows:

                                      26

<PAGE>   32

<TABLE>
<CAPTION>
             Redemption Dates                                           Redemption
                                                                          Prices
             ----------------------------------------------------------------------
           <S>                                                        <C>
             During the seventh year of such period                        103%

             During the eighth year of such period                         102%

             During the ninth year of such period                          101%

             During the tenth year of such period and                      100%
             thereafter
</TABLE>

      In order to exercise its option to so redeem Bonds in the Fixed Rate
Mode, the Company shall deliver to the Trustee notice of its election to so
redeem at least thirty-five (35) days prior to the proposed Redemption Date,
accompanied by the written consent of the Bank to such redemption.

      Section 3.02. Mandatory Redemption.

      (a)    Determination of Taxability. Upon a Determination of Taxability,
all Bonds shall be redeemed on the Interest Payment Date 60 days following such
Determination of Taxability at a redemption price equal to 103% of the
principal amount of the Bonds being redeemed plus accrued interest, if any, to
the Redemption Date.

      (b)    Cessation of Operation. Upon a Cessation of Operation, all Bonds
shall be redeemed on the Interest Payment Date 60 days following such Cessation
of Operation at a redemption price equal to 100% of the principal amount of the
Bonds being redeemed plus accrued interest, if any, to the Redemption Date.

      (c)    Downgrade of Rating. During any period in which a Letter of Credit
is not in effect, if the rating on the Bonds shall be downgraded below an
Investment Grade Rating, all Bonds shall be redeemed on the Interest Payment
Date 60 days following such downgrade at a redemption price equal to 100% of
the principal amount of the Bonds being redeemed plus accrued interest, if any,
to the Redemption Date.

      (d)    Sinking Fund Redemption. The Bonds are not subject to sinking fund
redemption.

      Section 3.03. Extraordinary Redemption. The Bonds are subject to
redemption, in whole or in part, at any time, by the Trustee at the direction
of the Bank, or in the event the Bonds are not secured by a Letter of Credit,
at the direction of the Company, from insurance proceeds or condemnation awards
upon the damage or destruction or condemnation of the Project, if such amounts
are not applied to the reconstruction of the Project. In the event of a partial
redemption of the Bonds pursuant to this Section 3.03, the Bank, or in the
event the Bonds are not secured by the Letter of Credit, the Company, shall
direct which Bonds are to be redeemed.

      Section 3.04. Method of Selecting Bonds. In the event that less than all
of the Outstanding Bonds are to be redeemed, the Trustee shall select the
particular Bonds to be redeemed in any

                                      27
<PAGE>   33

manner it deems fair; provided however, that upon a partial redemption of the
Bonds pursuant to Section 3.03, the particular Bonds to be redeemed shall be
selected as set forth in such Section 3.03.

      In case a Bond is of a denomination larger than the minimum denomination
then permitted, a portion of such Bond may be redeemed provided that the amount
redeemed and the amount remaining shall be an Authorized Denomination. If Bonds
are in the Variable Rate Mode, the Trustee may appoint the Tender Agent as
agent of the Trustee for the purpose of selecting such Bonds for redemption.

      Section 3.05. Notice of Redemption.

      (a)    Except as hereinafter provided, a copy of the notice of the call
for any such redemption identifying the Bonds to be redeemed shall be given by
the Trustee with respect to Bonds in the Fixed Rate Mode or by the Tender Agent
with respect to Bonds in the Variable Rate Mode, in each case by first class
mail, postage prepaid, to the registered owners of Bonds to be redeemed at
their addresses as shown on the Register and to the LGC, not less than 30 days
prior to the Redemption Date.

      (b)    Failure to give notice in the manner prescribed hereunder with
respect to any Bond, or any defect in such notice, shall not affect the
validity of the proceedings for redemption for any Bond with respect to which
notice was properly given.

      (c)    Each notice of redemption shall specify the date fixed for
redemption, the principal amount of Bonds or portions thereof to be redeemed,
the redemption price, the place or places of payment, that payment of the
principal amount and premium, if any, will be made upon presentation and
surrender to the Trustee or Tender Agent, as appropriate of the Bonds to be
redeemed, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest on Bonds
which have been redeemed will cease to accrue. If less than all the Outstanding
Bonds are to be redeemed, the notice of redemption shall specify the numbers of
the Bonds or portions thereof to be redeemed.

      (d)    If any Bond is transferred or exchanged on the Register by the
Registrar after notice has been given calling such Bond for redemption, the
Trustee or the Registrar will attach a copy of such notice to the Bond issued
in connection with such transfer.

      Section 3.06. Bonds Due and Payable on Redemption Date; Interest Ceases
To Accrue. On the Redemption Date specified in the notice of redemption, funds
sufficient to redeem the Bonds called for redemption at the appropriate
redemption price shall be on deposit with the Trustee. On the Redemption Date
the principal amount of each Bond to be redeemed, together with the accrued
interest thereon to such date, shall become due and payable; and, from and
after such date, the deposit having been made in accordance with the provisions
of this Article III, then, notwithstanding that any Bonds called for redemption
shall not have been surrendered, no further interest shall accrue on any of
such Bonds. From and after such date of redemption (such deposit having been
made) the Bonds to be redeemed shall not be deemed to be Outstanding hereunder
nor will such Bonds be

                                      28

<PAGE>   34

entitled to the benefits of the Letter of Credit, and neither the Issuer shall
nor the Company be under any further liability in respect thereof.

      Section 3.07. Cancellation. All Bonds which have been redeemed, and all
Bonds delivered by the Issuer for cancellation shall be canceled and destroyed
by the Registrar and a certificate of destruction shall be delivered to the
Issuer.

      Section 3.08. Partial Redemption of Bonds. Upon surrender of any Bond for
redemption in part only, the Issuer shall execute and the Authenticating Agent
shall authenticate and deliver to the Owner thereof, the cost of which shall be
paid by the Company, a new Bond or Bonds of an Authorized Denomination of the
same mode in an aggregate principal amount equal to the portion of the Bond not
redeemed.

                                      29

<PAGE>   35

                                  ARTICLE IV

                              TENDER AND PURCHASE

      Section 4.01. Mandatory Tender of Bonds. The Bonds are subject to
mandatory tender and shall be purchased by the Trustee or the Tender Agent from
the sources and as provided in Section 4.04 of this Indenture on any Mandatory
Tender Date as follows:

      (a)    All Bonds are subject to mandatory tender and purchase on the
effective date of a change in the Interest Rate Determination Method. Notice of
such mandatory tender and purchase shall be given as provided in Section
2.04(a) hereof.

      (b)    All Bonds are subject to mandatory tender and purchase on the
Proposed Conversion Date. Notice of such mandatory tender and purchase shall be
given as provided in Section 2.04(b) hereof.

      (c)    All Bonds are subject to mandatory tender and purchase on the
Letter of Credit Termination Date. Notice of such mandatory tender and purchase
shall be given as provided in Section 2.04(c) hereof.

      (d)    All Bonds which are in the Fixed Rate Mode are subject to
mandatory tender and purchase on any Fixed Rate Mandatory Tender Date. Notice
of such mandatory tender and purchase shall be given as provided in Section
2.03 of this Indenture.

The Bonds are also subject to mandatory tender and may be called for purchase
by the Bank as provided in Section 7.02 hereof.

      Section 4.02. [Intentionally Omitted].

      Section 4.03. Trustee as Tender Agent. Whenever in this Indenture,
certain rights or duties are conferred upon the Tender Agent, and no Tender
Agent is appointed, such rights and duties shall be performed by the Trustee.

      Section 4.04. Tender and Purchase of Bonds.

      (a)    Bonds for which a Tender Notice has been received and Bonds which
are subject to mandatory tender shall be purchased from the Owners thereof on
the Optional Tender Date or Mandatory Tender Date, as the case may be, at the
Purchase Price which shall be payable solely from the following sources and in
the order of priority listed:

      (1)    proceeds of the remarketing or purchase of Bonds pursuant to the
      Remarketing Agreement, which proceeds shall in no event include amounts
      provided by the Company, any guarantor of the Company, the Issuer or any
      Affiliate of any of the foregoing; and

      (2)    amounts drawn under the Letter of Credit in accordance with
      Section 13.02(a)(iii).

                                      30

<PAGE>   36

      (b)    At or prior to 12:00 Noon, Minneapolis time, one Business Day
prior to each Optional Tender Date and each Mandatory Tender Date, the
Remarketing Agent will give Immediate Notice to the Trustee and Tender Agent
specifying the principal amount of Bonds, if any, which have been remarketed,
the principal amount of Bonds which have not been remarketed, the amount of
remarketing proceeds on hand and specifying, for any Optional Tender Date that
is not an Interest Payment Date, the amount of interest accrued to the Optional
Tender Date with respect to Bonds, if any, which have been remarketed, and
Bonds which have not been remarketed. If all or a portion of the Bonds subject
to purchase have not been remarketed, the Tender Agent shall give Immediate
Notice thereof to the Bank, the Letter of Credit Custodian and the Company. The
Letter of Credit Custodian shall, in accordance with Section 13.02 hereof, on
the Business Day prior to such Optional Tender Date or Mandatory Tender Date,
draw funds under the Letter of Credit in accordance with the terms of the
Letter of Credit in an amount equal to the Purchase Price of the Bonds subject
to purchase less proceeds of remarketing actually on deposit with the
Remarketing Agent, as specified by the Remarketing Agent in its notice
delivered in accordance with this subsection, and transfer such funds to the
Tender Agent for deposit in the Purchase Fund as provided in Section 13.02(c).

      (c)    The Remarketing Agent shall deliver to the Tender Agent, no later
than 9:30 a.m. Minneapolis time, on each such Optional Tender Date or Mandatory
Tender Date, in immediately available funds, an amount equal to the principal
amount of Bonds set forth in the Remarketing Agent's notice as having been
remarketed plus accrued interest thereon to, but not including, such date, if
any.

      (d)    If on the Business Day prior to any Optional Tender Date or
Mandatory Tender Date, the Letter of Credit Custodian is required to draw funds
under the Letter of Credit in order to provide for all or a portion of the
Purchase Price, unless the Letter of Credit Custodian rescinds the drawing as
set forth in Section 13.02(d), the Registrar shall on the Optional Tender Date
or Mandatory Tender Date register in the name of the Bank or its nominee the
Bonds that were not remarketed; provided, however, that no Bank Bond shall be
released until the Bank delivers to the Registrar written notice that a
corresponding amount of the Letter of Credit has been reinstated. Subject to
the provisions of Section 13.05 hereof, the Registrar shall hold such Bank
Bonds as agent for the Bank, unless the Bank shall provide alternate delivery
instructions. Upon any reimbursement by the Company to the Bank for amounts
which were drawn under the Letter of Credit to pay any portion of the Purchase
Price, Bank Bonds in an amount corresponding to the amount of the reimbursement
from the Company to the Bank shall be delivered to the Company.

      (e)    The Tender Agent shall pay the Purchase Price for each Bond at or
prior to 2:00 p.m. Minneapolis time, on the Optional Tender Date or Mandatory
Tender Date only after receipt of such Bond prior to 11:00 a.m., Minneapolis
time, on such date properly endorsed either in blank or to the Tender Agent.
Payment of the Purchase Price of any Bond tendered for purchase shall be made
in immediately available funds in such manner as such Owner and the Tender
Agent shall agree.

      (f)    Notwithstanding anything to the contrary contained herein, (i) on
any Optional Tender Date all Bonds for which a Tender Notice has been received,
and (ii) on a Mandatory Tender Date, all Bonds shall be deemed to have been
tendered for purchase, regardless of whether such

                                      31
<PAGE>   37

Bond shall physically have been so tendered, and regardless of what appears on
the records of the Depository.

      Section 4.05. Purchase Fund. The Purchase Fund shall be held by the
Tender Agent, and upon receipt of the proceeds of a remarketing of Bonds, the
Tender Agent shall deposit such money in the Remarketing Proceeds Account of
the Purchase Fund for application to the Purchase Price of the Bonds. Upon
receipt of monies from the Bank by the Trustee upon a draw by the Letter of
Credit Custodian on the Letter of Credit to be used to purchase Bonds, and
transfer of such funds to the Tender Agent, the Tender Agent shall deposit such
money in the Letter of Credit Account of the Purchase Fund for application to
the Purchase Price of the Bonds. To the extent funds remain in the Purchase
Fund after the Tender Agent has paid (or has reserved sufficient amounts for
payment to) the respective Owners the Purchase Price for all Bonds then subject
to purchase, the Tender Agent shall immediately pay such proceeds to the Bank
to the extent of any amount owing to the Bank.

      On any Optional Tender Date or Mandatory Tender Date, the Tender Agent
shall transfer on the Register ownership of all of the Bonds tendered or
required to be tendered to the name of the purchaser thereof, including without
limitation, registration of Bank Bonds in the name of the Bank or its nominee.
From and after such dates, interest on such Bonds shall be payable solely to
such purchaser. Its transferees or the successors thereto.

      Amounts held by the Tender Agent to pay the Purchase Price of the Bonds
shall be held uninvested or shall be invested in Government Obligations and
which in either case may be liquidated at the original principal amount thereof
on no more than one Business Day's prior notice. Amounts held to pay the
Purchase Price for more than five (5) years shall be applied as provided under
Section 10.03 hereof

      Section 4.06. No Remarketing Under Certain Conditions. Notwithstanding
anything to the contrary herein provided, the Bonds shall not be remarketed
unless (i) a Letter of Credit providing for the payment of the principal of and
interest on, and purchase price of, the Bonds will be in effect following the
remarketing of such Bonds, or (ii) no such Letter of Credit will be in effect,
but at the time of such remarketing, the Bonds are rated, such rating is
satisfactory to the Remarketing Agent in its sole discretion, and such rating
is an Investment Grade Rating.

                                      32

<PAGE>   38

                                   ARTICLE V

                       GENERAL COVENANTS AND PROVISIONS

      Section 5.01. Payment of Bonds. The Issuer shall promptly pay when due
the principal of (whether at maturity, by acceleration or redemption or
otherwise), premium, if any, and interest on the Bonds at the places, on the
dates and in the manner provided herein and in the Bonds according to the true
intent and meaning thereof; provided, however, that such obligations are not
general obligations of the Issuer but are limited obligations payable solely
from the revenues and receipts derived pursuant to the Agreement, which
revenues and receipts are hereby specifically pledged to such purposes in the
manner and to the extent provided herein. The Bonds, the premium, if any, and
the interest thereon shall not be deemed to constitute a pledge of the full
faith and credit of the State of North Carolina or any political subdivision
thereof, including the Issuer. Neither the State of North Carolina nor any
political subdivision thereof, including the Issuer shall be obligated to pay
the principal of, premium, if any, or interest on the Bonds and or other costs
incident thereto except from the revenues and receipts pledged therefor, and
neither the full faith and credit nor the taxing power of the State of North
Carolina or any political subdivision thereof, including the Issuer, is pledged
to the payment of the principal of, premium, if any, or interest on the Bonds
or other costs incident thereto.

THE BONDS AND THE INTEREST THEREON AND REDEMPTION PREMIUM, IF ANY, SHALL NOT BE
DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF
NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING, WITHOUT
LIMITATION, THE ISSUER AND GUILFORD COUNTY, NORTH CAROLINA. NEITHER THE STATE
OF NORTH CAROLINA NOR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING, WITHOUT
LIMITATION, THE ISSUER AND GUILFORD COUNTY, NORTH CAROLINA, SHALL BE OBLIGATED
TO PAY THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR OTHER
COSTS INCIDENT THERETO EXCEPT FROM THE REVENUES ASSIGNED AND PLEDGED THEREFOR,
AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF NORTH
CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING, WITHOUT LIMITATION,
THE ISSUER AND GUILFORD COUNTY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF
OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR OTHER COSTS INCIDENT THERETO,
THE ISSUER HAS NO TAXING POWER.

      Section 5.02. Performance of Issuer's Covenants. The Issuer shall
faithfully observe and perform all covenants, conditions and agreements on its
part contained in this Indenture, in every Bond executed, authenticated and
delivered hereunder and in all proceedings of its governing body pertaining
thereto; provided, however, that the liability of the Issuer under any such
covenant, condition or agreement for any breach or default by the Issuer
thereof or thereunder shall be limited solely to the revenues and receipts
derived from the Agreement. In entering into this Indenture, the Issuer has not
obligated itself except with respect to the application of the revenues derived
from the Agreement, the net proceeds of insurance or condemnation awards, the
proceeds from the issuance and sale of the Bonds, or from the disposition of
the property subject to the lien of any collateral

                                      33

<PAGE>   39

document existing hereby upon default by the Company under the Agreement. It is
specifically recognized that the obligations of the Issuer under this
Indenture, to the extent involving any monetary cost, are to be performed only
out of the above described revenues. Certain of the covenants of the Issuer
hereunder will be assumed by the Company in the Agreement, and, while the
Agreement remains in full force and effect, the obligations shall be the
responsibility of the Company. However, such covenants are enforceable only to
the extent of the revenues derived from the property subject to the lien of any
collateral document or from the monies in the funds and accounts held by the
Trustee pursuant to this Indenture. The rights and duties given under this
Indenture to the Company shall be applicable only while the Agreement is in
full force and effect. The Issuer represents that it is undertaking, pursuant
to the Act, to issue, sell and deliver the Bonds authorized hereby and to
execute this Indenture, to execute and assign the Agreement, to pledge the
revenues and receipts thereunder in the manner and to the extent herein set
forth; that all action on its part for the issuance, sale and delivery of the
Bonds, the execution and delivery of this Indenture, and the execution and
assignment of the Agreement has been duly and effectively taken; and that the
Bonds, in the hands of the Owners thereof, are and will be valid and
enforceable obligations of the Issuer according to the import thereof.

      Section 5.03. Rights under Agreement and Letter of Credit. The Trustee in
its own name or in the name of the Issuer may enforce all rights of the Issuer
and all obligations of the Company under and pursuant to the Agreement, and the
Letter of Credit Custodian may enforce all rights and obligations of the
Company and the Bank under the Letter of Credit, in each case for and on behalf
of the Owners, whether or not the Issuer is in default hereunder.

      Section 5.04. Reports of Trustee. The Trustee shall make periodic reports
to the Issuer and the Company of all monies received and expended by it. The
Trustee shall furnish to the Issuer, upon request of the Issuer, (a) a
statement of the amount of principal of Bonds outstanding and unpaid and (b)
such information as may be necessary to complete any audit of the Issuer.

                                      34

<PAGE>   40

                                  ARTICLE VI

                              REVENUES AND FUNDS

      Section 6.01. Bond Fund. The Issuer hereby establishes and shall
maintain, so long as any of the Bonds are outstanding, with the Trustee a trust
fund to be designated the Bond Fund into which the Issuer and Trustee shall
deposit all payments made by the Issuer pursuant to Section 5.01 hereof for
payment of the principal of, premium, if any, and interest on the Bonds,
accrued interest, if any, received upon issuance of the Bonds, amounts
transferred to the Trustee by the Bank and derived from draws under the Letter
of Credit in accordance with Section 13.02(a)(i), (ii), (iv) or (v), and all
other monies required to be deposited in the Bond Fund pursuant to any
provision of this Indenture. The Trustee shall establish separate accounts
within the Bond Fund designated the Letter of Credit Account and the General
Account. Proceeds of a draw on the Letter of Credit shall be deposited in the
Letter of Credit Account and applied to the payment of principal or Purchase
Price of, premium (if any if provided for under the Letter of Credit) on, and
interest on the Bonds then due or to become due on the next Interest Payment
Date or which have been called for prior redemption, as and when such principal
or Purchase Price, premium and interest shall become due and payable.

      All other monies directed to be deposited in the Bond Fund shall be
deposited in the General Account and, subject to Sections 7.03 and 8.11,
applied as follows:

      FIRST:        To reimburse the Bank for draws under the Letter of Credit.

      SECOND:       For the payment of principal of, premium, (if any) on, and
      interest on the Bonds then due or to become due on the next Interest
      Payment Date or which have been called for prior redemption, as and when
      such principal, premium, and interest shall become due and payable; and

      THIRD:        To be used to pay the reasonable fees and expenses of the
      Trustee in connection with this Indenture.

      While the Bonds are in the Variable Rate Mode, the Trustee shall transmit
to the Tender Agent from time to time the amounts on deposit in the Bond Fund
which the Tender Agent determines to be required to pay the principal of and
interest on such Bonds when due.

      Section 6.02. Project Fund; Disposition of Proceeds of Bonds. The Issuer
hereby establishes and orders created by the Trustee a trust fund designated
the Project Fund. Upon issuance and sale of the Bonds to the Underwriter for a
purchase price equal to $5,841,000, the proceeds of the Bonds shall be
deposited in the Project Fund. The Trustee shall disburse on the date of
issuance of the Bonds $0 for the purpose of financing Project Costs. The
Trustee shall disburse remaining amounts in the Project Fund to pay for Project
Costs upon receipt of a requisition pursuant to the terms of the Agreement.
Bond proceeds shall be deemed to be disbursed from the Project Fund prior to
other monies deposited therein. After the Project has been completed as
certified to the Trustee in accordance with the Agreement, amounts remaining in
the Project Fund shall be applied as provided in the Agreement.

                                      35

<PAGE>   41

      Section 6.03. Rebate. The Company shall provide for the rebate of
arbitrage earnings in accordance with Section 148(f) of the Code, as provided
in Section 2.3 of the Agreement. The Trustee shall, 60 days prior to September
1, 2004 and each September 1 that is five years thereafter, notify the Company
of its obligations under Section 2.3 of the Agreement.

      Section 6.04. Investment of Funds. Any monies held as a part of the Bond
Fund and Project Fund shall be invested or reinvested by the Trustee upon the
written request and direction of the Authorized Representative of the Company,
to the extent then permitted by law, in the following investments ("Qualified
Investments"):

      (a)    Direct obligations of the United States of America (including
obligations issued or held in book-entry form on the books of the Department of
the Treasury of the United States of America) or debentures the principal of
and interest which are fully guaranteed by the United States of America; (b)
Bonds, debentures, notes or other evidences of indebtedness issued or
guaranteed by any of the following federal agencies or certificates of
beneficial ownership or participation in obligations or other securities
thereof as indicated: United States Export Import Bank (direct obligations or
fully guaranteed certificates of beneficial ownership), Farmers Home
Administration (certificates of beneficial ownership), Federal Financing Bank,
Federal Housing Administration (debentures), General Services Administration
(participation certificates), Government National Mortgage Association (GNMA
guaranteed mortgage backed bonds and pass-through obligations), United States
Maritime Administration (guaranteed Title XI financing), Public Housing
Authorities (United States guaranteed notes and bonds), and Federal Farm Credit
Bank; (c) mutual funds and/or unit trusts which invest solely in obligations
described in (a) and (b) including funds managed by the Trustee, (d) direct and
general obligations of any state of the United States of America or any
municipality or political subdivision of such state, or obligations of any
corporation, if such obligations are rated in one of the two highest rating
categories by S&P or Moody's; and (e) if a Letter of Credit is in effect, any
other investment permitted by the Bank, and during any other period, any other
investment permitted by the Remarketing Agent.

      The Trustee shall make all investments in accordance with written
instructions received from an Authorized Representative of the Company. In the
absence of any such written instructions, the funds in the Bond Fund and
Project Fund shall be invested in obligations described in clause (c) of the
paragraph above. Investments permitted hereunder may be purchased from or
through the Trustee or from or through any of its affiliates. Obligations so
purchased shall be deemed at all times to be a part of the fund from which the
money used to purchase such obligations was derived, and may from time to time
be sold or otherwise converted into cash. The Trustee shall redeem or sell any
obligations so purchased, whenever it shall be necessary to do so in order to
provide monies to meet any payment from the applicable fund. The Trustee shall
not be liable for any loss resulting from any such investment, nor from failure
to preserve rights against endorsers or other prior parties to instruments
evidencing any such investment.

      Notwithstanding the foregoing provisions of this Section 6.04, any monies
held by the Trustee which are the proceeds of a draw on the Letter of Credit
shall only be invested in Qualified Investments, which investments shall mature
on the earlier of (i) 30 days from the date of acquisition, or (ii) the date on
which the Trustee anticipates that cash will be required.

                                      36

<PAGE>   42

      Investment earnings on amounts held in the Bond Fund shall be retained
therein. Investment earnings on amounts held in the Project Fund shall be
transferred to the Bond Fund.

                                      37

<PAGE>   43

                                  ARTICLE VII

                    EVENTS OF DEFAULT; REMEDIES ON DEFAULT

      Section 7.01. Events of Default. Each of the following events is hereby
defined as, and is declared to be and to constitute, an "Event of Default":

      (a)    If default shall be made in the due and punctual payment of any
interest on any Bond hereby secured and Outstanding; or

      (b)    If default shall be made in the due and punctual payment of the
principal, or redemption premium, if any, of any Bond hereby secured and
Outstanding whether at the stated maturity thereof or at the date fixed for
redemption thereof, or upon the maturity thereof by declaration; or

      (c)    If default shall be made in the due and punctual payment of the
Purchase Price of any Bond on any Optional Tender Date or Mandatory Tender
Date; or

      (d)    If a breach, default or event of default (following expiration of
any applicable grace period) shall occur under the Agreement; provided however,
that the foregoing shall not constitute an Event of Default during the Letter
of Credit Period; or

      (e)    Receipt by the Trustee of notice from the Bank stating that an
"Event of Default" under the Reimbursement Agreement has occurred and directing
the Trustee either to accelerate payment on the Bonds or to call the Bonds for
mandatory purchase by the Bank; or

      (f)    A failure by the Issuer to observe and perform any covenant,
condition, agreement or provision (other than as specified in clauses (a)
through (d) of this Section 7.01) contained in the Bonds or this Indenture on
the part of the Issuer to be observed or performed, which failure shall
continue for a period of thirty (30) days after written notice, specifying such
failure and requesting that it be remedied, shall have been given to the Issuer
by the Trustee, and the Trustee shall give such notice at the written request
of the Owners of not less than a majority in principal amount of the Bonds then
Outstanding, unless the Trustee and the Owners of a principal amount of Bonds
not less than the principal amount of Bonds the Owners of which requested such
notice shall agree in writing to an extension of such period prior to its
expiration; provided however, that the events described in this clause (f)
shall not constitute an Event of Default during the Letter of Credit Period;
provided further, however, that the Trustee and the Owners of such principal
amount of Bonds shall be deemed to have agreed to an extension of such period
(but in no event shall such extension be greater than ninety (90) days) if
corrective action is initiated by the Issuer within such period and is being
diligently pursued; or

      (g)    If within ten (10) Business Days after a draw on the Letter of
Credit, the Trustee receives written notice from the Bank that the Bank will
not reinstate the interest portion of the Letter of Credit to the full amount.

                                      38

<PAGE>   44

      The Trustee shall provide written notice to the Issuer, the Bank, the
Company, the Letter of Credit Custodian, the LGC and the Remarketing Agent, as
appropriate, promptly upon receipt of actual notice of any of the events
described in this Section 7.01.

      Section 7.02. Enforcement of Covenants and Conditions. Upon the
occurrence and continuance of (i) any Event of Default described in clause (d)
or (f) of Section 7.01, the Trustee may, and at the written request of not less
than a majority in principal amount of the Bonds then Outstanding shall (but
only with the consent of the Bank during a Letter of Credit Period), or (ii)
any Event of Default described in Clause (a), (b), (c), (e) or (g) of Section
7.01, the Trustee shall, by Immediate Notice to the Issuer, the Letter of
Credit Custodian, the LGC, the Company, the Tender Agent and the Bank, declare
the Bonds to be immediately due and payable, whereupon they shall, without
further action, become and be immediately due and payable, anything in this
Indenture or in the Bonds to the contrary notwithstanding; provided however,
that upon the occurrence and continuance of any Event of Default described in
clause (e) or (g) of Section 7.01, the Bank may direct by written notice that
the Bonds be accelerated or may direct by written notice that the Bonds be
called for mandatory purchase by the Bank. Upon the occurrence of an Event of
Default as described in the preceding sentences of this paragraph, and in the
absence of any written direction or notice from the Bank, the Trustee shall
accelerate the Bonds as required by the terms of this Section 7.02. Upon any
declaration of acceleration hereunder, the Trustee shall immediately exercise
such rights as it may have under the Agreement to declare all payments
thereunder to be immediately due and payable and, if a Letter of Credit is in
effect, the Letter of Credit Custodian shall immediately draw upon the Letter
of Credit.

      Any Bonds which the Bank directs be called for purchase by the Bank, as
permitted by the preceding paragraph, shall become Bank Bonds, and shall be
registered in the name of the Bank in the same manner and subject to the same
terms and conditions as set forth in Section 4.04(d) hereof. Any Bonds which
the Bank directs be called for purchase shall be deemed to have been tendered
for purchase by the Owners thereof, regardless of whether such Bonds shall
physically have been so tendered, and regardless of what appears on the records
of the Depository.

      Notwithstanding anything to the contrary contained in the preceding
paragraphs, upon the occurrence and continuance of an Event of Default
described in clause (e) of Section 7.01, the Bank may deliver a written
direction to the Trustee to declare only a portion of the Bonds to be
immediately due and payable, or to require the mandatory purchase of only a
portion of the Bonds, whereupon only such Bonds so designated shall become
immediately due and payable or subject to mandatory purchase, as applicable,
and any remaining Bonds shall remain outstanding and secured by this Indenture;
provided however, that the Bank may deliver such written direction to the
Trustee only if such direction is accompanied by written notice that an amount
of the Letter of Credit, corresponding to the amount of the Bonds which will
remain outstanding and the interest related thereto, has been reinstated.

      In addition to acceleration, in the event the Bank is in default with
respect to its obligations under the Letter of Credit and there occurs and
continues any Event of Default, then and in every such case the Trustee or the
Letter of Credit Custodian, as applicable, may, and upon the written request of
the Owners of not less than a majority in principal amount of the Bonds then
Outstanding

                                      39

<PAGE>   45

and the receipt of indemnity to its satisfaction shall, in its own name and as
the Trustee of an express trust:

      (a)    by mandamus, or other suit, action or proceeding at law or in
equity, enforce all rights of the Owners, and require the Issuer, the Company,
and the Bank to carry out any agreements with or for the benefit of the Owners
and to perform its or their respective duties under the Act, the Letter of
Credit, the Agreement and this Indenture, as applicable;

      (b)    by action or suit in equity require the Company to account as if
it were the trustee of an express trust for the Owners; or

      (c)    by action or suit in equity enjoin any acts or things which may be
unlawful or in violation of the rights of the Owners.

      Notwithstanding the foregoing provisions of this paragraph, the Trustee
shall not take any action which is inconsistent with the provisions of the
first paragraph of this Section 7.02.

      Section 7.03. Application of Monies. All monies received by the Trustee
pursuant to any right given or action taken under the provisions of this
Article VII of this Indenture, after payment (from sources other than proceeds
drawn under the Letter of Credit) of the cost and expenses of the proceedings
resulting in the collection of such monies and of the expenses, liabilities and
advances incurred or made by the Trustee, shall be deposited in the Bond Fund
and all monies in the Bond Fund maintained with the Trustee (other than monies
for the payment of Bonds which had matured or otherwise become payable prior to
such Event of Default or for the payment of interest due prior to such Event of
Default) shall be applied as follows:

             FIRST:     To the payment to the persons entitled thereto of all
      installments of interest then due on the Bonds, in the order of the
      maturity of the installments of such interest, and, if the amount
      available shall not be sufficient to pay in full any particular
      installment, then to the payment ratably, according to the amounts due on
      such installment, to the persons entitled thereto, without any
      discrimination or privilege,

             SECOND:    To the payment to the persons entitled thereto of the
      unpaid principal of any of the Bonds which shall have become due (other
      than Bonds called for redemption for the payment of which monies are held
      pursuant to the provisions of this Indenture), in the order of their due
      dates, and, if the amount available shall not be sufficient to pay in
      full Bonds due on any particular date, then to the payment ratably,
      according to the amount of principal due on such date, to the persons
      entitled thereto without any discrimination or privilege;

             THIRD:     To reimburse the Bank (to the extent not reimbursed by
      the Company or from security provided from the Company) for drawings
      under the Letter of Credit, and for all other amounts owing under the
      Reimbursement Agreement or any related notes, documents or instruments;
      and

                                      40

<PAGE>   46

             FOURTH:    To the Company (subject to Section 10.02 hereof) or any
      other person lawfully entitled thereto, or as directed by any court or
      tribunal having jurisdiction.

      Whenever monies are to be applied by the Trustee pursuant to the
provisions of this Section, such monies shall be applied by it at such times,
and from time to time, as this Indenture shall require.

      Section 7.04. Right of Trustee to Act Without Possession of Bonds. All
rights of action (including the right to file proof of claim) under this
Indenture or under any of the Bonds may be enforced by the Trustee without the
possession of any of the Bonds or the production thereof in any trial or other
proceeding relating thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its name as Trustee, without the necessity of
joining as plaintiffs or defendants any Owners of the Bonds hereby secured, and
any recovery of judgment shall be for the equal benefit of the Owners of the
outstanding Bonds.

      Section 7.05. Power of Majority of Owners of Bonds. Anything in this
Indenture to the contrary notwithstanding, the Owners of a majority in
aggregate principal amount of Bonds outstanding hereunder shall have the right,
at any time, by an instrument or instruments in writing executed and delivered
to the Trustee, to direct the method and place of conducting all proceedings to
be taken under this Indenture provided that such direction shall not be
otherwise than in accordance with the provisions of law and that the Trustee
shall be indemnified as provided in Section 8.06 hereof.

      Section 7.06. Limitation on Suits by Owners. No Owner of Bonds shall have
any right to institute any suit, action or proceeding in equity or at law for
the enforcement of this Indenture or for the execution of any trust hereof or
for any other remedy hereunder, unless a Default has occurred of which the
Trustee has been notified or of which it is deemed to have notice; nor unless
also such Default shall have become an Event of Default and the Owners of a
majority in aggregate principal amount of Bonds Outstanding hereunder shall
have made written request to the Trustee or the Letter of Credit Custodian and
shall have offered it reasonable opportunity either to proceed to exercise the
powers hereinbefore granted or to institute such action, suit or proceeding in
its own name; nor unless also they shall have offered to the Trustee or the
Letter of Credit Custodian indemnity as provided hereinafter; and such
notification, request and offer of indemnity are hereby declared in every such
case at the option of the Trustee or the Letter of Credit Custodian to be
conditions precedent to the execution of the powers and trusts of this
Indenture, and to any action or cause of action for enforcement or for any
other remedy hereunder; it being understood and intended that no one or more
Owners of the Bonds shall have any right in any manner whatsoever to affect,
disturb, or prejudice the lien of this Indenture by his or their action or to
enforce any right hereunder except in the manner herein provided, and that all
proceedings at law or in equity shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of the Owners of all Bonds
Outstanding hereunder. Nothing in this Indenture contained shall, however,
affect or impair the right of any Owner, which is absolute and unconditional,
to enforce and bring suit for the payment of the principal of and interest on
any Bond at and after the maturity thereof or the obligations of the Issuer to
pay the principal of, Purchase Price of, and interest on each of the

                                      41
<PAGE>   47

Bonds issued hereunder to the respective Owners thereof at the time and place
in said Bonds expressed, in accordance with the terms of the Bonds.

      Section 7.07. Waiver by Owners of Bonds. The Trustee, upon the written
request of the Owners of not less than a majority in principal amount of the
Bonds at the time Outstanding hereunder, shall waive any Default hereunder,
except a Default pursuant to Section 7.01(e) or (g) hereof, and except a
Default in the payment of the principal of the Bonds at the date of maturity
specified therein; provided, however, that a Default in the payment of interest
on the Bonds shall not be waived unless, prior to such waiver, all arrears of
interest, and all expenses of the Trustee shall have been paid or shall have
been provided for by deposit with the Trustee of a sum sufficient to pay the
same. In case of any such waiver, the Issuer, the Trustee and the Owners of the
Bonds shall be restored to their former positions and rights hereunder
respectively. No such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.

      Section 7.08. Remedies Cumulative, Delay Not To Constitute Waive. No
right or remedy by the terms of this Indenture conferred upon or reserved to
the Trustee or the Letter of Credit Custodian (or to the Owners or Bank) is
intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.

      No delay or omission to exercise any right or power accruing upon any
Default or Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such Default or Event of Default or
acquiescence therein, and every such right and power may be exercised from time
to time and as often as may be deemed expedient.

      No waiver of any Default or Event of Default hereunder, whether by the
Trustee or the Bank or by the Owners, shall extend to or shall affect any
subsequent Default or Event of Default or shall impair any rights or remedies
consequent thereon.

      Section 7.09. Restoration of Rights Upon Discontinuance of Proceedings.
In case the Trustee, the Letter of Credit Custodian or Owners shall have
instituted proceedings to enforce any right under this Indenture and such
proceedings shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to the Trustee or Owners, then and in every such
case the Issuer, the Trustee, the Letter of Credit Custodian and the Owners
shall be restored to their former positions and rights hereunder with respect
to the Trust Estate, and all rights, remedies and powers of the Trustee, the
Letter of Credit Custodian or Owners shall continue as if no such proceedings
had been taken.

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<PAGE>   48

                                 ARTICLE VIII

                     CONCERNING THE TRUSTEE; TENDER AGENT;
                 REMARKETING AGENT; LETTER OF CREDIT CUSTODIAN

      Section 8.01. Acceptance of Trust and Prudent Performance Thereof. The
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. The Trustee shall during the
existence of any Event of Default (which has not been cured) exercise such of
the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.

      The Trustee shall not be required to take notice or be deemed to have
notice of any Default hereunder, except as provided in Section 7.01 hereof or
unless the Trustee shall be specifically notified in writing of such Default by
the Bank or by the Owners of at least a majority in aggregate principal amount
of Bonds Outstanding hereunder, and all notices or other instruments required
by this Indenture to be delivered to the Trustee must, in order to be
effective, be delivered at the office of the Trustee, and in the absence of
such notice so delivered, the Trustee may conclusively assume that there is no
Default, except as aforesaid.

      No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:

      (a)    the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee;

      (b)    in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and to the
correctness of the opinions expressed therein, upon any, certificate or opinion
furnished to the Trustee conforming to the requirements of this Indenture; but
in the case of any such certificate or opinion which by any provision hereof is
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not it conforms to the
requirements of this Indenture;

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

      (d)    the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Owners of not less than a majority in aggregate principal amount of all the
Bonds at the time Outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this Indenture.

                                      43
<PAGE>   49

      None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur individual financial
liability in the performance of any of its duties or in the exercise of any of
its rights or power, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

      Section 8.02.  Trustee May Rely Upon Certain  Documents and Opinions.
Except as otherwise provided in Section 8.01:

      (a)    the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report. notice,
request, consent, order, bond, or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;

      (b)    any request, direction, election, order, certification or demand
of the Issuer or the Company shall be sufficiently evidenced by an instrument
signed by an Authorized Representative or an Authorized Representative of the
Company, as the case may be, (unless otherwise in this Indenture specifically
prescribed), and any resolution of the Issuer or the Company may be evidenced
to the Trustee by a Certified Resolution or a resolution of the board of
directors of the Company, certified by the secretary of the Company, as the
case may be;

      (c)    the Trustee may consult with counsel (who may be counsel for the
Company) and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel; and

      (d)    whenever, in the administration of the trusts of this Indenture,
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Trustee, be
deemed to be conclusively proved and established by a Certificate of the
Company and such Certificate of the Company shall, in the absence of negligence
or bad faith on the part of the Trustee, be full warrant to the Trustee for any
action taken or suffered by it under the provisions of this Indenture upon the
faith thereof.

      Section 8.03. Trustee Not Responsible for Indenture Statements, Validity.
The Trustee shall not be responsible for any recital or statement herein, or in
the Bonds (except in respect of the certificate of the Trustee endorsed on such
Bonds), or for the validity of the execution by the Issuer of this Indenture or
the validity or execution of the Letter of Credit or the Bond Resolution or of
any supplemental instrument, or for the sufficiency of the security of the
Bonds issued hereunder or intended to be secured hereby, or for the value or
title of any of the Trust Estate, or otherwise as to the maintenance of the
security hereof; and the Trustee shall not be bound to ascertain or inquire as
to the performance or observance of any covenant, condition or agreement on the
part of the Issuer except as herein set forth; but the Trustee may require of
the Issuer and the Company full information and advice as to the performance of
the covenants, conditions and agreements aforesaid

                                      44

<PAGE>   50

and of the condition of the physical property included in the Trust Estate. The
Trustee shall not be accountable for the use of any Bonds authenticated or
delivered hereunder.

      Section 8.04. Limits on Duties and Liabilities of Trustee. The permissive
right of the Trustee to do things enumerated in this Indenture shall not be
construed as a duty of the Trustee and the Trustee shall be answerable only for
its own negligence or willful default. The Trustee shall not be required to
give any bond or surety in respect of the execution of the said trusts and
powers or otherwise in respect of the premises.

      Section 8.05. Money Held in Trust. Money held by the Trustee hereunder is
held in trust but need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.

      Section 8.06. Obligation of Trustee and Letter of Credit Custodian.
Neither the Trustee nor the Letter of Credit Custodian shall be under any
obligation to institute any suit, or to take any proceeding under this
Indenture, or to enter any appearance or in any way defend in any suit in which
it may be defendant, or to take any steps in the execution of the trusts hereby
created or in the enforcement of any rights and powers hereunder, until it
shall have reasonable grounds for believing that repayment of all costs and
expenses, outlays and counsel fees and other reasonable disbursements in
connection therewith and adequate indemnity against all risk and liability is
reasonably assured to it; the Trustee or the Letter of Credit Custodian may,
nevertheless, begin suit, or appear in and defend suit, or do anything else in
its judgment proper to be done by it as such Trustee or Letter of Credit
Custodian, without assurance of reimbursement or indemnity, and in such case
the Trustee or the Letter of Credit Custodian, as applicable, shall be
reimbursed for all costs and expenses, outlays and counsel fees and other
reasonable disbursements properly incurred in connection therewith. If the
Company shall fail to make such reimbursement, the Trustee or the Letter of
Credit Custodian may reimburse itself from any monies in its possession under
the provisions of this Indenture (except for monies derived from a draw under
the Letter of Credit) and shall be entitled to a preference therefor over any
of the Bonds Outstanding hereunder.

      Section 8.07. Notice to Owners. The Trustee shall give to the Owners of
the Bonds written notice of all Defaults known to the Trustee by virtue of
actual knowledge of a Responsible Officer, within sixty (60) days after the
occurrence of an Event of Default, unless such Default shall have been cured
before the giving of such notice.

      Section 8.08. Intervention in Judicial Proceedings. In any judicial
proceeding to which the Company is a party and which in the opinion of the
Trustee has a substantial bearing on the interest of owners of Bonds issued
hereunder, the Trustee may intervene on behalf of Owners and shall do so if
requested by the Owners of at least a majority in the aggregate principal
amount of Bonds Outstanding hereunder. The rights and obligations of the
Trustee under this Section are subject to the approval of the court having
jurisdiction in the premises.

      Section 8.09. Further Investigation by Trustee. The resolutions,
opinions, certificates and other instruments provided for in this Indenture may
be accepted by the Trustee as conclusive

                                      45
<PAGE>   51

evidence of the facts and conclusions stated therein and shall be in full
warrant, protection and authority to the Trustee for its actions hereunder; but
the Trustee may, in its unrestricted discretion, and shall, if requested in
writing so to do by the Owners of not less than a majority in aggregate
principal amount of Bonds Outstanding hereunder, cause to be made such
independent investigation as it may see fit, and in that event may decline to
release any property, or pay over cash, or take other action unless satisfied
by such investigation of the truth and accuracy of the matters so investigated.
The expense of such investigation shall be paid by the Company, or, if paid by
the Trustee, shall be repaid to it with interest at the Reference Rate, by the
Issuer or from the Trust Estate.

      Section 8.10. Trustee to Retain Financial Records. The Trustee shall
retain all financial statements furnished by the Company in accordance with the
Agreement so long as any of the Bonds shall be outstanding.

      Section 8. 11. Compensation of Trustee. All advances, counsel fees, fees
and expenses of the Letter of Credit Custodian and other expenses reasonably
made or incurred by the Trustee in and about the execution of the trust hereby
created and reasonable compensation to the Trustee for its services in the
premises shall be paid by the Company. The compensation of the Trustee shall
not be limited to or by any provision of law in regard to the compensation of
trustees of an express trust (other than monies derived from a draw under the
Letter of Credit). If not paid by the Company, the Trustee shall have a first
lien on all sums held by it under the terms of this Indenture, other than sums
derived from a drawing on the Letter of Credit with right of payment prior to
payment on account of interest or principal of any Bond issued hereunder for
reasonable compensation, expenses, advances and counsel fees incurred in and
about the execution of the trusts hereby created and exercise and performance
of the powers and duties of the Trustee hereunder and the cost and expense
incurred in defending against any liability in the premises of any character
whatsoever (unless such liability is adjudicated to have resulted from the
negligence or willful default of the Trustee).

      Section 8.12. Trustee May Hold Bonds. The Trustee and its officers and
directors may acquire and hold, or become the pledgee of Bonds and otherwise
deal with the Issuer and the Company in the same manner and to the same extent
and with like effect as though it were not Trustee hereunder.

      Section 8.13. Appointment of Trustee. There shall at all times be a
trustee hereunder which shall be an association or corporation organized and
doing business under the laws of the United States of America or any State
thereof, authorized under such laws to exercise corporate trust powers subject
to supervision or examination by Federal or State authority, provided that any
successor Trustee shall have combined capital and surplus of at least
$100,000,000. If such association or corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purposes of this Section
the combined capital and surplus of such association or corporation shall be
deemed to be in combined capital and surplus as set forth in its most recent
report of condition so published.

      Section 8.14. Merger of Trustee. Any corporation or association into
which the Trustee may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its trust business and assets
as a whole or substantiative as a whole, or any corporation or association,

                                      46
<PAGE>   52

resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, ipso facto, shall be and become successor trustee
hereunder and vested with all of the title to the Trust Estate and all the
trusts, powers, discretion, immunities, privileges and all other matters as was
its predecessor, without the execution or filing of any instrument or any
further act, deed or conveyance on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.

      Section 8.15. Resignation or Removal of Trustee. The Trustee may resign
and be discharged from the trusts created by this Indenture by giving to the
Issuer, the LGC, the Company, and the Bank thirty (30) days' notice in writing,
and to the Owners notice by first class mail addressed to each Owner at its or
his address as set forth on the registration books, of such resignation.
specifying a date when such resignation shall take effect. In the event a
successor trustee has been appointed and has accepted, such resignation or
removal shall take effect on the day specified in such notice, unless
previously a successor trustee shall have been appointed as hereinafter
provided, in which event such resignation or removal shall take effect
immediately on the appointment of such successor trustee. In the event a
successor trustee has not been appointed and has not accepted on the day
specified in such notice, the Trustee shall remain until such date as a
successor Trustee has been appointed and has accepted.

      The Bank may remove the Trustee for cause. Subject to the terms of
Section 8.16 hereof requiring the consent of the Bank, any Trustee hereunder
may be removed at any time with or without cause by an instrument or
instruments in writing. appointing a successor to the Trustee so removed, filed
with the Trustee and executed by the Company (so long as no "Event of Default"
under the Agreement has occurred and is continuing) or by the Owners of a
majority in principal amount of the Bonds hereby secured and then Outstanding.

      Section 8.16. Appointment of Successor Trustee. In case at any time the
Trustee shall resign or shall be removed or otherwise shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or if a receiver of the
Trustee or of its property shall be appointed, or if a public supervisory
office shall take charge or control of the Trustee or of its property or
affairs, a vacancy shall forthwith and ipso facto be created in the office of
such Trustee hereunder, and a successor (reasonably acceptable to the Bank and
the LGC) may be appointed by the Owners of a majority in principal amount of
the said Bonds hereby secured and then outstanding, by an instrument or
instruments in writing filed with the Trustee and the Bank and executed by such
Owners, notification thereof being given to the Issuer and the Company, but
until a new Trustee shall be appointed by the Owners as herein authorized, the
Issuer shall, at the direction of the Company and subject to the provisions
hereof, appoint a Trustee (reasonably acceptable to the Bank and the LGC) to
fill such vacancy. After any such appointment by the Issuer at the direction of
the Company, the Company shall cause notice of such appointment to be published
at least once within 30 days of such appointment in a Financial Journal, but
any new Trustee so appointed shall immediately and without further act be
superseded by a Trustee appointed in the manner above provided by the Owners of
a majority in principal amount of said Bonds whenever such appointment by said
Owners shall be made.

      If, in a proper case, no appointment of a successor Trustee shall be made
pursuant to the foregoing provisions of this Section within six months after a
vacancy shall have occurred in the

                                      47

<PAGE>   53

office of Trustee. the Bank or any retiring Trustee may apply to any court of
competent jurisdiction to appoint a successor trustee. Said court may
thereupon, after such notice, if any, as such court may deem proper and
prescribe, appoint a successor trustee.

      Section 8.17. Transfer of Rights and Proper to Successor Trustee. Every
successor trustee appointed hereunder shall execute, acknowledge and deliver to
its predecessor and also to the Issuer, the Company and to the Bank an
instrument in writing accepting such appointment hereunder, and thereupon such
successor. without any further act, deed or conveyance, shall become fully
vested with all the estates, properties, rights, powers, trusts, duties and
obligations of its predecessor; but such predecessor shall, nevertheless, on
the written request the Issuer, given at the direction of the Company, or of
its successor execute and deliver an instrument transferring to such successor
all the estate, properties, rights, powers and trusts of such predecessor
hereunder, and every predecessor trustee shall deliver all securities and
monies held by it as Trustee hereunder and the Letter of Credit to its
successor. Should any assignment, conveyance or instrument in writing from the
Issuer be required by any successor trustee for more fully and certainly,
vesting in such successor trustee the estates, rights, powers and duties hereby
vested or intended to be vested in the predecessor trustee, any and all such
assignments, conveyances and instruments in writing shall, all request, be
executed, acknowledged and delivered by the Issuer. The resignation of any
Trustee and the instrument or instruments removing any Trustee and appointing a
successor hereunder, together with all assignments, conveyances and other
instruments provided for in this Article shall, at the expense of the Company,
be forthwith filed and/or recorded by the successor trustee in each recording
office where the Indenture shall have been filed and/or recorded.

      Section 8.18. Co-Trustee.

      (a)    If, by any present or future law in any jurisdiction in which it
may be necessary for the Trustee to perform any act in the execution of the
trusts hereby created, as trustee, and the Trustee or its successor or
successors, may be incompetent or unqualified to act as such Trustee, then an
individual or other Co-Trustee may be appointed hereunder, with full power and
authority to perform all the acts required to be performed in such
jurisdiction, to the extent of said disqualification, in the execution of the
trusts hereby created, and such acts shall and will be performed by said
Co-Trustee, or his successor or successors acting alone. The rights, powers and
obligations of the Trustee and its successors as Trustee hereunder shall inure
to the benefit of and be binding on such Co-Trustee and his successors as
Co-Trustee and, in that connection, each reference herein to the Trustee shall,
unless the context otherwise requires, be deemed to refer as well to the
Co-Trustee.

      (b)    Anything in the preceding paragraph to the contrary
notwithstanding, the Co-Trustee and his successors shall act subject to the
following conditions and provisions, namely:

             (1)    The Bonds shall be authenticated and delivered and all
      rights, powers, trusts, duties and obligations by this Indenture
      conferred upon the Trustee in respect of the custody, control or
      management of moneys, papers, securities, the Letter of Credit and other
      personal property shall be exercised, solely by the Trustee.

                                      48

<PAGE>   54

             (2)    All rights, powers, trusts, duties and obligations
      conferred or imposed upon the Trustee hereunder shall be conferred or
      imposed upon and exercised or performed by the Trustee, or by the Trustee
      and the Co-Trustee or by a separate trustee or separate trustees jointly,
      if so provided in any instrument appointing such Co-Trustee or separate
      trustee or trustees, except to the extent that, under the law of any
      jurisdiction in which any, particular act or acts are to be performed,
      the Trustee shall be incompetent or unqualified to perform such act or
      acts or incompetent to bring suit to enforce the terms hereof in which
      event such act or acts shall be performed by the Co-Trustee or separate
      trustee or trustees.

             (3)    Any request in writing by the Trustee to any Co-Trustee or
      separate trustee to take or to refrain from taking any action hereunder
      shall be sufficient warrant for the taking, or the refraining from
      taking, of such action by the Co-Trustee or separate trustee.

             (4)    Any Co-Trustee or separate trustee may delegate to the
      Trustee the exercise of any right, power, trust, duty or obligation,
      discretionary or otherwise.

             (5)    The Trustee at any time, by an instrument in writing, with
      the concurrence of the Issuer and the Company, may accept the resignation
      of or remove any, Co-Trustee or separate trustee appointed under this
      Section and in case an Event of Default shall have occurred and be
      continuing, the Trustee shall have power to accept the resignation of, or
      remove, any such Co-Trustee or separate trustee without the concurrence
      of the Issuer and the Company. Upon the request of the Trustee, the
      Issuer and the Company shall join with the Trustee in the execution,
      deliver,, and performance of all instruments and agreements necessary or
      proper to effectuate such resignation or removal.

             (6)    No trustee hereunder shall be personally liable by reason
      of any act or omission of any other trustee hereunder.

             (7)    Any demand, request, direction, appointment, removal,
      notice, consent, waiver or other action in writing delivered to the
      Trustee shall be deemed to have been delivered to each such Co-Trustee or
      separate trustee.

             (8)    Any moneys, papers, securities or other items of personal
      property, received by any such Co-Trustee or separate trustee hereunder
      shall forthwith, so far as may be permitted by law, be turned over to the
      Trustee.

      (c)    Subject to subsection (b) above, any Co-Trustee shall be vested,
jointly with the Trustee, with title to the Trust Estate and with the rights,
powers and duties herein provided. Upon the acceptance in writing of such
appointment by the Co-Trustee or any separate trustee, it shall be vested with
such title to the Trust Estate or any part thereof, and with such rights,
powers, duties and obligations, as shall be specified in any instrument of
appointment jointly with the Trustee (except insofar as local law makes it
necessary for any such Co-Trustee or separate trustee to act alone) subject to
all the terms of this Indenture. Every such acceptance shall be filed with the
Trustee. Any Co-Trustee or separate trustee may, at any time by an instrument
in writing, constitute the Trustee,

                                      49
<PAGE>   55

its attorney-in-fact and agent, with full power and authority to do all acts
and things and to exercise all discretion on its behalf and in its name.

      In case any Co-Trustee or separate trustee shall die, become incapable of
acting, resign or be removed, the title to the Trust Estate, and all rights,
powers, trusts, duties and obligations of said Co-Trustee or separate trustee
shall, so far as permitted by law, vest in and be exercised by the Trustee
unless and until a successor Co-Trustee or separate Trustee shall be appointed
in the manner herein provided.

      Section 8. 19. Remarketing Agent; Resignation; Removal. Notwithstanding
anything to the contrary contained in the Remarketing Agreement, the Bank shall
have the ability, subject to the terms of this Section 8.19 and Section 8.20
hereof, to remove the Remarketing Agent for cause, including but not limited to
the failure of the Remarketing Agent to remarket the Bonds at a rate or rates
of interest comparable to the rate or rates of interest borne by other
tax-exempt bonds bearing terms comparable to the terms of the Bonds, and which
other tax exempt bonds are secured by a letter of credit from the Bank with
terms comparable to the Letter of Credit. Upon the resignation or removal of
the Remarketing Agent prior to the Conversion Date, the Company shall appoint a
successor Remarketing Agent (acceptable to the Bank) for the Bonds, subject to
the conditions set forth in Section 8.20 hereof. Notwithstanding anything
contained herein to the contrary, no Remarketing Agent may resign or be removed
unless and until a successor Remarketing Agent has been appointed and is
prepared to act as such from and after the date of such resignation or removal.
Any successor Remarketing Agent shall designate to the Trustee its principal
office for purposes hereof, which shall be the office of such Remarketing Agent
at which all notices and other communications in connection herewith may be
delivered to it, and signify its acceptance of the duties and obligations
imposed upon it hereunder by a written instrument of acceptance delivered to
the Company and the Trustee (with a copy, sent to the Bank) under which such
Remarketing Agent will agree to undertake the duties thereof set forth in the
Remarketing Agreement.

      Section 8.20. Qualifications of Remarketing Agent. The Remarketing Agent
shall be a member of the National Association of Securities Dealers, Inc.
having excess net capital (as defined in Rule l5c-3 of the Securities Exchange
Act of 1934, as amended) of at least $25,000,000 or, in the alternative, a
national banking association having a combined capital stock, surplus and
undivided profits of at least $100,000,000 and shall be an institution
authorized by law to perform all the duties imposed upon it by this Indenture
and the Remarketing Agreement.

      Section 9.2 1. Rights and Duties of Tender Agent. At any time that the
Bonds are in the Variable Rate Mode, there shall be a Tender Agent appointed
for the Bonds. The Trustee shall serve as the initial Tender Agent and perform
all duties and responsibilities of the Tender Agent pursuant to this Indenture.
The Trustee may at any time, with the prior written consent of the Company and
the Bank, appoint another entity to serve as the Tender Agent with respect to
the Bonds. In the event the Company and/or the Bank do not object within five
(5) days from the date notice is given of the intent to appoint another Tender
Agent, such consent shall be presumed to have been given. The Tender Agent
shall, in all events, be a bank or trust company meeting the requirements set
forth in Section 8.13 hereof. The Tender Agent shall:

                                      50

<PAGE>   56

      (a)    hold all Bonds delivered to it for purchase pursuant to the
provisions of this Indenture in trust solely for the benefit of the respective
Owners which shall have tendered such Bonds for purchase until payment of the
Purchase Price with respect to such Bonds; and

      (b)    hold all monies delivered to it hereunder for the purchase of
Bonds in trust solely for the benefit of the Owners which shall have tendered
or deemed to have tendered such Bonds for purchase until such monies shall have
been delivered to or for the account of such Owners; and

      (c)    hold all Bank Bonds in trust solely for the benefit of the Bank
until a corresponding amount of the Letter of Credit has been reinstated, as
evidenced by written notice delivered to the Tender Agent from the Bank.

      In purchasing Bonds hereunder, the Tender Agent shall be acting as a
conduit and shall not be purchasing Bonds for its own account and, in the
absence of written notice from the Trustee or the Bank, shall be entitled to
assume that any Bond tendered to it, or deemed tendered to it for purchase, is
entitled under this Indenture to be so purchased. The Issuer and the Company
shall cooperate with the Trustee and the Bank to cause the necessary
arrangements to be made and thereafter to be continued whereby funds will be
made available for payment of the Purchase Price of the Bonds to be purchased
pursuant to the provisions of this Indenture.

      The rights, duties, obligations, immunities and the standard of care of
the Tender Agent in the performance of its role hereunder shall be governed by
and construed in accordance with the laws of the jurisdiction in which is
located its principal office.

      Section 8.22. Resignation or Removal of Tender Agent, Appointment of
Successor. The Tender Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least sixty (60)
days' written notice to the Company, the Remarketing Agent, the Bank and the
Trustee. The Tender Agent may be removed, with the prior consent of the Bank,
which consent shall not be unreasonably withheld, at any time by an instrument,
signed by the Company, filed with the Tender Agent, the Trustee and the Bank.

      In the event of the resignation or removal of the Tender Agent prior to
the Conversion Date, the Company shall appoint as its successor a bank or trust
company meeting the same requirements applicable to the Trustee set forth in
Section 8.13 hereof and qualified to perform the duties of Tender Agent, and
the Tender Agent shall pay over, assign and deliver any monies or Bonds held by
it in such capacity to such successor or, if there be no successor, to the
Trustee. Any such successor shall be acceptable to the Bank and shall agree to
be bound by all of the provisions of the Letter of Credit.

      If the Company shall fall to appoint a Tender Agent hereunder, or in the
event that the Tender Agent shall resign or be removed, or be dissolved, or if
the property or affairs of the Tender Agent shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and the Company shall not have appointed a
successor Tender Agent, the Trustee shall ipso facto be deemed to be the Tender
Agent for all

                                      51

<PAGE>   57

purposes of this Indenture until the appointment by the Company of a Tender
Agent or successor Tender Agent.

      Section 8.23. Several Capacities. Anything in this Indenture to the
contrary notwithstanding, the same entity may serve hereunder in multiple
capacities, provided that, the same entity shall in no event serve concurrently
hereunder as Trustee and Bank unless there is in place a Letter of Credit
Custodian.

      Section 8.24 Letter of Credit Custodian. The Issuer hereby appoints Bank
One Colorado, N.A., Denver, Colorado, as the Letter of Credit Custodian under
this Indenture. The Letter of Credit Custodian and any successor Letter of
Credit Custodian shall accept the duties and obligations imposed on it under
this Indenture in accordance with the Letter of Credit Custodial Agreement. The
Letter of Credit Custodian shall be obligated to make drawings under the Letter
of Credit as provided under the terms of this Indenture, the Letter of Credit
and the Letter of Credit Custodial Agreement. The Letter of Credit Custodian
may resign or be removed in accordance with the terms of the Letter of Credit
Custodial Agreement; provided that no such resignation or removal shall be
effective until a successor Letter of Credit Custodian has been appointed in
accordance with the Letter of Credit Custodial Agreement and such successor has
made written acceptance of such appointment. The Letter of Credit Custodial
Agreement may be terminated in the event that a Substitute Letter of Credit is
issued by a bank other than U.S. Bank National Association (or any other bank
related thereto), which does not result in a conflict of interest, or potential
conflict of interest, between the Issuer of the Substitute Letter of Credit and
the Trustee. Upon any termination of the Letter of Credit Custodial Agreement,
all duties, obligations and rights of the Letter of Credit Custodian shall be
assumed and performed by the Trustee.

                                      52

<PAGE>   58

                                  ARTICLE IX

                        CONCERNING THE OWNERS OF BONDS

      Section 9.01. Execution of Instruments by Owners of Bonds. Any request,
direction, consent or other instrument in writing required by this Indenture to
be signed or executed by Owners may be in any number of concurrent instruments
of similar tenor and may be signed or executed by such Owners in person or by
agent duly appointed by an instrument in writing. Proof of the execution of any
such instrument and of the ownership of Bonds shall be sufficient for any
purpose of this Indenture and shall be conclusive in favor of the Trustee with
regard to any action taken by it under such instrument if made in the following
manner:

      (a)    The fact and date of the execution by any person or any such
instrument may be proved by the certificate of any officer in any jurisdiction
who, by the laws thereof has power to take acknowledgments of deeds to be
recorded within such jurisdiction, to the effect that the person signing such
instrument acknowledged to him the execution thereof, or by an affidavit of a
witness to such execution.

      (b)    The ownership of Bonds shall be proved by the registration books
kept under the provisions of this Indenture.

Nothing contained in this Article shall be construed as limiting the Trustee to
the proof above specified, it being intended that the Trustee may accept any
other evidence of the matters herein stated which to it may seem sufficient.

      Section 9.02. Waiver of Notice. Any notice or other communication
required by this Indenture to be given by delivery, publication or otherwise to
the Owners or any one or more thereof may be waived at any time before such
notice or communication is so required to be given, by a writing mailed or
delivered to the Trustee by the Owner or Owners of all of the Bonds entitled to
such notice or communication.

      Section 9.03. Determination of Owner Concurrence. In determining whether
the Owners of the requisite aggregate principal amount of Bonds have concurred
in any demand, request, direction, consent or waiver under this Indenture for
which their concurrence is required. Bonds which are owned by the Company shall
be disregarded and deemed not to be outstanding for the purpose of any such
determination, provided that for the purpose of determining whether the Trustee
shall be protected in relying on any such demand, request, direction, consent
or waiver only Bonds which the Trustee knows to be so owned shall be
disregarded. Bonds so owned which have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section if the pledges shall
establish to the satisfaction of the Trustee the pledges's right to vote such
Bonds and that the pledges is not a person directly or indirectly controlling
or controlled by or under common control with the Company. In case of a dispute
as to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee.

                                      53

<PAGE>   59

      Section 9.04. Revocation by Owners of Bonds. At any time prior to (but
not after) the evidencing to the Trustee of the taking of any action by the
Owner of the percentage in aggregate principal amount of the Bonds specified in
this Indenture in connection with such action, any Owner of a Bond may, by
filing written notice with the Trustee at its principal office, revoke any
consent given by such Owner or the predecessor Owner of such Bond. Except as
aforesaid, any such consent given by the Owner of any Bond shall be conclusive
and binding upon such Owner and upon all future Owners of such Bond and of any
Bond issued in exchange therefor or in lieu thereof, irrespective of whether or
not any notation in regard thereto is made upon such Bond. Any action taken by
the Owners of the percentage in aggregate principal amount of the Bonds
specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the Owners of all the
Bonds.

                                      54

<PAGE>   60

                                   ARTICLE X

                        PAYMENT, DEFEASANCE AND RELEASE

      Section 10.01. Payment and Discharge of Indenture.  If the Issuer shall:

      (a)    pay or cause to be paid the principal of and premium, if any, and
interest on the Bonds at the time and in the manner stipulated therein and
herein, or

      (b)    provide for the payment of principal and premium, if any, of the
Bonds and interest thereon by depositing with the Trustee at or any time before
maturity funds sufficient either in the form of (i) Eligible Funds or (ii)
direct obligations of or obligations the principal of and interest on which is
fully guaranteed by the United States of America, which obligations are
noncallable at the option of the issuer thereof and which have been purchased
with Eligible Funds, the principal and interest on which when due and payable
(or redeemable at the option of the holder thereof) and without consideration
of any reinvestment thereof shall be sufficient to pay the entire amount due or
to become due thereon for principal and premium, if any, and interest to
maturity, or the Purchase Price, of all said Bonds outstanding as evidenced by
a Certificate of a firm of independent certified public accountants, or

      (c)    deliver to the Trustee (1 ) proof satisfactory to the Trustee that
notice of redemption of all of the outstanding callable Bonds not surrendered
or to be surrendered to it for cancellation has been given or waived as
provided in Article III hereof, or that arrangements satisfactory to the
Trustee have been made insuring that such notice will be given or waived, or
(2) a written instrument executed by the Issuer under its official seal and
expressed to be irrevocable, authorizing the Trustee to give such notice for
and on behalf of the Issuer, or (3) file with the Trustee a waiver of such
notice of redemption signed by the Owners of all of such Outstanding Bonds, and
in any such case, deposit with the Trustee funds before the date on which such
Bonds are to be redeemed, as provided in said Article III, constituting the
entire amount of the redemption price, including accrued interest, and premium,
if any, either in cash or direct obligations of or obligations the principal of
and interest on which is fully guaranteed by the United States of America
(which do not permit the redemption thereof at the option of the issuer) in
such aggregate face amount, bearing interest at such rates and maturing at such
dates as shall be sufficient to provide for the payment of such redemption
price on the date such Bonds are to be redeemed, and on such prior dates when
principal of and interest on the Outstanding Bonds are due and payable, or

      (d)    surrender to the Trustee for cancellation all Bonds, for which
payment is not so provided, and shall also pay all other sums due and payable
hereunder by the Issuer, then and in that case, all the Trust Estate shall
revert to the Issuer, and the entire estate, right, title and interest of the
Trustee and of the Owners of the Bonds shall thereupon cease, determine and
become void; and the Trustee in such case, upon the deposit of cash or
securities in accordance with the provisions of this Indenture, shall, upon
receipt of a written request of the Issuer and of a Certificate of the Issuer
and an Opinion of Counsel as to compliance with conditions precedent, and at
the Issuer's cost and

                                      55

<PAGE>   61

expense, execute to the Issuer, or its order, proper instruments acknowledging
satisfaction of this Indenture, surrender to the Issuer all cash and deposited
securities, if any (other than cash or securities for the payment of the
Bonds), which shall then be held hereunder as a part of the Trust Estate, and
surrender the Letter of Credit to the Bank, provided, however, that the Trustee
may surrender the Letter of Credit to the Bank prior to receiving a written
request of the Issuer in the event all other conditions precedent to such
surrender have been met.

      Section 10.02. Bonds Deemed Not Outstanding After Deposits. When there
shall have been deposited at any time with the Trustee in trust for the
purpose, cash or direct obligations of or obligations fully guaranteed by the
United States of America the principal and interest on which shall be
sufficient to pay the principal of any Bonds (and premium, if any) when the
same become due, either at maturity or otherwise, or at the date fixed for the
redemption thereof and to pay all interest with respect thereto at the due
dates for such interest or to the date fixed for redemption, for the use and
benefit of the Owners thereof, then upon such deposit all such Bonds shall
cease to be entitled to any lien, benefit or security of this Indenture except
the right to receive the funds so deposited, and such Bonds shall be deemed not
to be outstanding hereunder, and it shall be the duty of the Trustee to hold
the cash and securities so deposited for the benefit of the Owners of such
Bonds and from and after such date, redemption date or maturity, interest on
such Bonds thereof called for redemption shall cease to accrue.

      Section 10.03. Non-presentment of Bonds. In the event any Bond shall not
be presented for payment when the principal thereof becomes due, either at
maturity or at the date fixed for redemption thereof or otherwise, if funds
sufficient to pay the principal of, premium (if any) and interest on such Bond
shall have been made available to the Trustee for the benefit of the Owner or
Owners thereof, payment of such Bond or portion thereof as the case may be,
shall forthwith cease, terminate and be completely discharged, and thereupon it
shall be the duty of the Trustee to hold such fund or funds uninvested in the
Bond Fund, without liability to the Owner of such Bond for interest thereon,
for the benefit of the Owner of such Bond, who shall thereafter be restricted
exclusively to such fund or funds, for any claim of whatever nature on his/her
part on, or with respect to, said Bond, or portion thereof, or premium, if any.

      Any monies deposited with the Trustee or then held by the Trustee in
trust for the payment of the principal of and redemption premium, if any, or
interest on the Bonds and remaining unclaimed for five years after such
principal and premium, if any, or interest has become due shall be treated as
abandoned property pursuant to the provisions of Section 116B-18 of the North
Carolina General Statutes and the Trustee shall report and remit this property
to the Escheat Fund according to the requirements of Article 3 of Chapter 116B
of the North Carolina General Statutes, and thereafter the Owners shall look
only to the Escheat Fund, or to any successor fund, as the case may be, for
payment and then only to the extent of the amounts so received, without any
interest thereon, and the Issuer, the Remarketing Agent, the Trustee and the
Company shall have no responsibility with respect to such money.

                                      56

<PAGE>   62

                                  ARTICLE XI

                            SUPPLEMENTAL INDENTURES

      Section 11.01. Purposes for Which Supplemental Indentures May be
Executed. The Issuer, upon resolution, and the Trustee from time to time and at
any time, subject to the conditions and restrictions in this Indenture
contained, may, with written consent of the Bank, enter into such indentures
supplemental hereto as may or shall by them be deemed necessary or desirable
without the consent of any Owner for any one or more of the following purposes:

      (a)    To correct the description of any property hereby pledged or
intended so to be, or to assign, convey, pledge or transfer and set over unto
the Trustee, subject to such liens or other encumbrances as shall be therein
specifically described, additional property or properties of the Issuer for the
equal and proportional benefit and security of the Owners of all Bonds at any
time issued and outstanding under this Indenture.

      (b)    To add to the covenants and agreements of the Issuer in this
Indenture contained, other covenants and agreements thereafter to be observed,
or to surrender any, right or power reserved to or conferred upon the Issuer or
to or upon any successor;

      (c)    To evidence the succession or successive successions of any other
department, agency, body or corporation to the Issuer and the assumption by
such successor of the covenants, agreements and obligations of the Issuer in
the Bonds hereby secured and in this Indenture and in any and every
supplemental indenture contained or the succession, removal or appointment of
any trustee hereunder;

      (d)    To cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indentures which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture or any supplemental indenture as the Issuer may
deem necessary or desirable and which shall not be inconsistent with the
provisions of this Indenture or any, supplemental indenture and which shall not
impair the security of the same;

      (e)    To modify, eliminate and/or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the Trust Indenture Act of 1939, as then amended, or under
any, similar Federal statute hereafter enacted, and to add to this Indenture
such other provisions as may be expressly permitted by said Trust Indenture Act
of 1939, excluding, however, the provisions referred to in Section 3 16(a) (2)
of said Trust Indenture Act of 1939;

      (f)    To modify, eliminate and/or add to the provisions of this
Indenture to allow for the delivery of a Replacement Letter of Credit or
Substitute Letter of Credit;

      (g)    To modify, eliminate and/or add to the provisions of this
Indenture to allow the Bonds to be registered in the name of DTC;

                                      57

<PAGE>   63

      (h)    To provide for an increase in the interest coverage provided by
the Letter of Credit, or to provide for advance draws on the Letter of Credit;

      (i)    To provide for compliance with the continuing disclosure rules of
the Securities and Exchange Commission;

      (j)    To make modifications or amendments which are effective following
a Mandatory Tender Date; and

      (k)    To make such other modifications or amendments which are
determined by the Trustee, not to be prejudicial to the rights of the Trustee,
the Bank or the Owners of the Bonds.

      Section 11.02. Execution of Supplemental Indenture. The Trustee is
authorized to join with the Issuer in the execution of any such supplemental
indenture, to make the further agreements and stipulations which may be therein
contained, and accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects its rights, duties or immunities under
this Indenture.

      Section 11.03. Discretion of Trustee. In each and every case provided for
in this Article (other than a supplemental indenture approved by the Owners of
a majority in aggregate principal amount of the Bonds pursuant to Section 11.04
hereof), the Trustee shall be entitled to exercise its unrestricted discretion
in determining whether or not any proposed supplemental indenture or any, term
or provisions therein contained is necessary or desirable, having in view the
needs of the Issuer and the respective rights and interests of the Owners of
Bonds theretofore issued hereunder; and the Trustee shall be under no
responsibility or liability to the Issuer or to any Owner of any Bond, or to
anyone whatever, for any act or thing which it may do or decline to do in good
faith subject to the provisions of this Article, in the exercise of such
discretion.

      Section 11.04. Modification of Indenture with Consent of Owners. Subject
to the terms and provisions contained in this Section, the Owners of not less
than a majority in aggregate principal amount of the Bonds then Outstanding
shall have the right, from time to time, with written consent of the Bank, to
consent to and approve the execution by the Issuer and the Trustee of such
indenture or indentures supplemental hereto as shall be deemed necessary or
desirable by the Issuer for the purpose of modifying, altering, amending,
adding to or rescinding in any particular, any of the terms or provisions
contained in this Indenture or In any supplemental indenture; PROVIDED,
HOWEVER, that nothing herein contained shall permit or be construed as
permitting, without the consent of the Owners of all Outstanding Bonds:

      (a)    an extension of the maturity of any Bond issued hereunder; or

      (b)    a reduction in the principal amount of any Bond or the redemption
premium or the rate of interest thereof; or

      (c)    the creation of a lien upon the Trust Estate or a pledge of
revenues ranking prior to the lien or pledge created by this Indenture; or

                                      58

<PAGE>   64

      (d)    a preference or priority of any Bond or Bonds over any other Bond
or Bonds; or

      (e)    a reduction in the aggregate principal amount of the Bonds
required to consent to supplemental indentures; or

      (f)    a reduction in the aggregate principal amount of the Bonds
required to waive an Event of Default; or

      (g)    a change in purchase or tender rights with respect to the Bonds.

Subject to the terms of the preceding proviso and clauses (a) through (g) which
require the consent of the Owners of all Outstanding Bonds, whenever there is
delivered to the Trustee an instrument or instruments purporting to be executed
by or on behalf of the Owners of not less than a majority in aggregate
principal amount of the Bonds then Outstanding, which instrument or instruments
shall refer to the proposed supplemental indenture, shall specifically consent
to and approve the execution thereof, and shall be signed by the Bank as a
reflection of its consent thereto, thereupon, the Issuer and the Trustee may
execute such supplemental indenture without liability or responsibility to any
Owner of any Bond, whether or not such Owner shall have consented thereto.

      If the Owners of not less than a majority in aggregate principal amount
of the Bonds outstanding at the time of the execution of such supplemental
indenture shall have consented to and approved the execution thereof as herein
provided, no Owner of any Bond shall have any right to object to the execution
of such supplemental indenture, or to object to any of the terms and provisions
contained therein or the operation thereof, or in any manner to question the
propriety of the execution thereof, or to enjoin or restrain the Trustee or the
Issuer from executing the same or from taking any action pursuant to the
provisions thereof.

      Section 11.05. Supplemental Indentures to be Part of Indenture. Any
supplemental indenture executed in accordance with any of the provisions of
this Article shall thereafter form a part of this Indenture; and all the terms
and conditions contained in any such supplemental indenture as to any
provisions authorized to be contained therein shall be and be deemed to be part
of the terms and conditions of this Indenture for any and all purposes, and the
respective rights, duties and obligations under this Indenture of the Issuer,
the Trustee and all Owners of Bonds then Outstanding shall thereafter be
determined, exercised and enforced hereunder, subject in all respects to such
modifications and amendments, If deemed necessary or desirable by the Trustee,
reference to any such supplemental indenture or any of such terms or conditions
thereof may be set forth in reasonable and customary manner in the text of the
Bonds or in a legend stamped on the Bonds. Any supplemental indenture that
affects the Company shall require the written consent of the Company.

      Section 11.06. Consent of the LGC. Notwithstanding any other provision
this Indenture, with respect to this Indenture, the definitions of "Authorized
Denominations," "Maximum Rate, " the maturity date for the Bonds, the rights of
the Issuer reserved under Granting Clause First, Section 4.06 (relating to
certain conditions to remarketing of the Bonds), Section 13.03 (relating to
requirements for a Substitute Letter of Credit), Section 8.13 (relating to the
eligibility of the Trustee) and Section 8.23 (relating to the proscription on
the concurrent service of any entity as theTrustee

                                      59

<PAGE>   65

and the Bank unless a Letter of Credit Custodian is In place), may not be
amended or modified without the prior written consent of the Secretary of the
LGC.

                                      60

<PAGE>   66

                                  ARTICLE XII

                  AMENDMENT OF AGREEMENT AND LETTER OF CREDIT

      Section 12.01. Amendments, etc., to Agreement or Letter of Credit Not
Requiring Consent of Owners. The Issuer and the Trustee shall without the
consent of or notice to the Owners consent to any amendment, change or
modification of the Agreement or the Letter of Credit as may be required:

      (a)    by the provisions of the Agreement or the Letter of Credit or this
Indenture;

      (b)    for the purpose of curing any ambiguity or formal defect or
omission therein;

      (c)    in connection with the Project described in the Agreement so as to
identify the same more precisely or substitute or add additional property
acquired with the proceeds of the Bonds:

      (d)    to permit a rating to be obtained for the Bonds; provided that the
Trustee is first provided with the consent of the Bank (if the Letter of Credit
is outstanding) and an opinion of a firm of attorneys whose opinion is
recognized on the subject of tax-exempt obligations to the effect that such
changes do not adversely affect the tax-exempt status of the Bonds;

      (e)    in connection with any other change therein, which, in the opinion
of the Trustee, shall not prejudice in any material respect the rights of the
Owners of the Bonds then outstanding;

      (f)    to extend the Letter of Credit Termination Date;

      (g)    to provide for an increase in the interest coverage provided by
the Letter of Credit, or to provide for advance draws on the Letter of Credit;
or

      (h)    to provide for compliance with the continuing disclosure rules of
the Securities and Exchange Commission.

      Section 12.02. Amendments. etc., to Agreement or Letter of Credit
Requiring Consent of Owners. Except for amendments, changes or modifications as
provided in Section 12.01, neither the Issuer nor the Trustee shall consent to
(i) any amendment, change or modification of the Agreement without the written
approval or consent of the Bank and of the Owners of a majority in aggregate
principal amount of bonds then outstanding given and procured as provided in
Section 11.04 or (ii) any amendment, change or modification of the Letter of
Credit without the written approval or consent of the Bank and all of the
Owners of the Bonds then outstanding. If at any time the Issuer and the Company
shall request the consent of the Trustee to any, such proposed amendment,
change or modification of the Agreement or Letter of Credit the Trustee shall,
upon being satisfactorily indemnified with respect to expenses, cause notice of
such proposed amendment, change or modification to be given in the same manner
as provided by Section 11.04 with respect to supplemental indentures. Such
notice shall briefly set forth the nature of such proposed amendment,

                                      61
<PAGE>   67

change or modification and shall state that copies of the instrument embodying
the same are on file at the principal corporate trust office of the Trustee for
inspection by all Owners.

      Section 12.03. Limitation on Amendments to Agreement or Letter of Credit.
No amendment, change or modification may decrease the obligation of the Company
under the Agreement to pay amounts sufficient to pay the principal of, premium,
if any, and interest on the Bonds as the same become due or decrease the
obligation of the Bank under the Letter of Credit. The Trustee shall not be
obligated to consent to any, such amendment, change or modification which
affects its rights, duties or immunities under the Indenture.

      Section 12.04. Amendment by Unanimous Consent. Anything contained in this
Indenture to the contrary notwithstanding, the Issuer and the Trustee may
consent to any amendment, change or modification of the Agreement or the Letter
of Credit upon receipt of the consent of the Owners of all Bonds then
outstanding, and the Bank.

      Section 12.05. Opinion of Counsel Required. The Trustee may decline to
execute any amendment, change or modification to the Agreement or Letter of
Credit without an Opinion of Counsel stating that such proposed amendment,
change or modification of the Agreement or Letter of Credit is authorized or
permitted by, this Indenture and complies with its terms and that upon
execution it will be valid and binding upon the party or parties executing it
in accordance with its terms and shall not, without the consent of the Company
and the Bank, execute any such amendment, change or modification which
adversely affects any rights of the Company or the Bank, as the case may be.

      Section 12.06. Amendment of Agreement by Trustee. In the event the Issuer
is unwilling or unable to enter into any amendment, change or modification of
the Agreement as permitted by this Article, the Trustee may, without the
consent of the Issuer, amend, change or modify the Agreement in any manner
otherwise permitted by this Article so long as such amendment, change or
modification does not adversely affect the rights of the Issuer, as stated in
an opinion of Issuer's counsel addressed to the Trustee and the Issuer, or
result in the interest in the Bonds losing their tax exempt status under the
Code, in the opinion of nationally recognized bond counsel.

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<PAGE>   68

                                 ARTICLE XIII

                               LETTER OF CREDIT

      Section 13.0 1. Maintenance of Letter of Credit.

      (a)    Contemporaneously with the delivery of this Indenture, the Company
has obtained the Initial Letter of Credit from the Initial Bank, and has caused
it to be issued to the Letter of Credit Custodian. The Company is required to
maintain a Letter of Credit meeting the requirements of subsection (b) below
throughout the Letter of Credit Period.

      (b)    Each Letter of Credit shall be a letter of credit, the terms of
which shall in all material respects be the same as the Initial Letter of
Credit, representing the obligation of the provider thereof to pay to the
Trustee amounts necessary to pay the principal of, interest on, and Purchase
Price of the Bonds. Each Letter of Credit must be in an amount at least equal
to the aggregate principal amount of Bonds then Outstanding, plus 51 days'
interest thereon calculated at the Maximum Rate if the Bonds are in the
Variable Rate Mode (or such lesser or greater amount as is necessary to
maintain the rating on the Bonds in connection with a change in the Interest
Rate Determination Method) plus Discharge Expenses, or plus 210 days' interest
thereon if the Bonds are in the Fixed Rate Mode plus Discharge Expenses. In
order for a letter of credit to qualify as a Letter of Credit hereunder, the
Company shall deliver to the Tender Agent and the Trustee (a) a copy of the
related Reimbursement Agreement pursuant to which the Bank is issuing the
Letter of Credit, and (b) an Opinion of Counsel stating that such proposed
Letter of Credit qualifies as a Letter of Credit under this Indenture and
complies with the terms hereof.

      (c)    The Company may not take any action, or omit to take any action
which results in the cancellation of a Letter of Credit prior to its Stated
Expiration Date without first obtaining a Substitute Letter of Credit, except
in connection with a Conversion Date. The Company may not reduce the amount of
the Letter of Credit to an amount less than the aggregate principal amount of
Outstanding Bonds, plus the interest coverage described in subsection (b)
above.

      Section 13.02.  Drawings under Letter of Credit.

      (a)    The Letter of Credit Custodian shall draw monies under the Letter
of Credit for the benefit of the Owners of the Bonds in the following
circumstances and only in the following circumstances: On or before 1:00 p.m.,
Minneapolis time on the Business Day prior to the date any payment referred to
in this section is required to be made under this Indenture, the Letter of
Credit Custodian shall, without making any prior demand or claim upon the
Issuer or the Company, make a drawing under and in accordance with the Letter
of Credit so as to be able to deliver to the Trustee, by 1:00 p.m., Minneapolis
time on the next succeeding Business Day monies thereunder in an amount which
will be sufficient for the payment in full of (i) accrued interest on the Bonds
on any Interest Payment Date, (ii) the principal of the Bonds upon the stated
maturity thereof, (iii) the Purchase Price of the Bonds on any Optional Tender
Date or Mandatory Tender Date in the event remarketing proceeds are not on hand
with the Remarketing Agent as provided in Section 4.04(b) hereof, (iv) the
principal of and accrued interest on the Bonds on any redemption date, and (v)
the

                                      63
<PAGE>   69

principal of and accrued interest on the Bonds, or the Purchase Price of the
Bonds, as applicable, on any date established pursuant to Section 7.02 hereof.
The Trustee shall give the Company Immediate Notice of the amount of each
drawing under the Letter of Credit in order to permit the Company to fulfill
its obligations under the Reimbursement Agreement.

      (b)    All amounts drawn under the Initial Letter of Credit or any
Replacement Letter of Credit or Substitute Letter of Credit provided to secure
the Bonds shall be used solely for the payment of the principal and Purchase
Price of, and premium, if any, and interest on the Bonds.

      (c)    All amounts drawn by the Letter of Credit Custodian under the
Letter of Credit pursuant to clause (i), (ii), (iv) or (v) of paragraph (a)
above shall be delivered by the Bank to the Trustee and deposited by the
Trustee in the Bond Fund and applied as provided in Section 6.01. All amounts
drawn by the Letter of Credit Custodian under the Letter of Credit pursuant to
clause (iii) of paragraph (a) above shall immediately be delivered by the Bank
to the Trustee and deposited by the Trustee in the Purchase Fund and applied as
provided in Section 4.05.

      (d)    The Letter of Credit Custodian shall by telecopy (followed by
original documentation) delivered to the Bank rescind any draw under the Letter
of Credit to pay the Purchase Price of Bonds by 10:00 a.m. Minneapolis time on
the day the draw is to be paid by the Bank if it has received notice that
remarketing proceeds from the source identified in Section 4.04(a)(1) have been
deposited with the Tender Agent prior to 9:30 a.m. Minneapolis time on such
date in the full amount of the Purchase Price due on that date.

      Section 13.03. Substitute Letter of Credit. Subject to the terms and
conditions of the Letter of Credit, the Company may, at its option, obtain a
Substitute Letter of Credit from any commercial bank meeting the conditions
contained herein, in substitution for or replacement of the Letter of Credit.
On or prior to the substitution of such Substitute Letter of Credit for the
Letter of Credit, the provider of such Substitute Letter of Credit shall
purchase all Outstanding Bank Bonds, at a purchase price equal to their
principal amount plus accrued interest.

      The Substitute Letter of Credit shall be a letter of credit, the terms of
which shall in all material respects be the same as the Initial Letter of
Credit representing the obligation of the provider thereof to pay to the
Trustee amounts necessary to pay the principal of interest on, and Purchase
Price of the Bonds. The Substitute Letter of Credit must be in an amount at
least equal to the aggregate principal amount of Bonds then Outstanding, plus
the interest coverage and Discharge Expenses described in Section 13.01(b)
above. In order for such letter of credit to qualify and be effective as a
Substitute Letter of Credit hereunder, the Company shall at least 45 days prior
to the date such Substitute Letter of Credit is to become effective deliver to
the Letter of Credit Custodian, Tender Agent and the Trustee (a) a copy of the
agreement pursuant to which Substitute Letter of Credit is issued, and (b) an
Opinion of Counsel stating that such proposed Substitute Letter of Credit
qualifies as a Substitute Letter of Credit under this Indenture and complies
with the terms thereof. In addition to all other requirements to be met
therefor, a draft of such Substitute of Credit, a draft of the related
Reimbursement Agreement and appropriate information concerning the Bank which
will issue such Substitute Letter of Credit shall have been submitted to
Moody's, if Moody's is then maintaining a rating for the Bonds and S&P, if S&P
is then maintaining a rating for the Bonds, and

                                      64
<PAGE>   70

Moody's and S&P, as applicable, shall have given written notice to the Company
at least 35 days prior to the date such Substitute Letter of Credit is to
become effective that, upon the issuance of such Substitute Letter of Credit,
the Bonds will bear the rating specified in such notice which shall be at least
equal to the rating borne by the Bonds prior to such substitution. If the Bonds
are unrated at the time of any proposed substitution, the Company shall obtain
the written consent of the Secretary of the LGC as to the acceptance by the
Letter of Credit Custodian of the Substitute Letter of Credit, unless the
Company shall have provided to the Letter of Credit Custodian written evidence
that the bank deposit obligations or other long-term debt of the Substitute
Bank are rated at least as high as the bank deposit obligations or other
long-term debt of the Initial Bank. In connection with such substitution, the
Letter of Credit Custodian shall also receive an opinion of counsel for the
Bank issuing the Substitute Letter of Credit in substantially the form
delivered to the Letter of Credit Custodian and the Trustee upon issue of the
Initial Letter of Credit.

      The Tender Agent shall give written notice of the Substitute Letter of
Credit to the Trustee, the Letter of Credit Custodian, the Remarketing Agent
and the Owners at least 30 days prior to the date any such Substitute Letter of
Credit is to become effective.

      The Tender Agent shall furnish written notice by first-class mail,
postage prepaid, of the planned substitution of the Substitute Letter of Credit
to the Owners no later than thirty (30) days prior to such substitution
becoming effective.

      Upon the effective date of the Substitute Letter of Credit and receipt of
such Substitute Letter of Credit and accompanying opinions of counsel, the
Letter of Credit Custodian may surrender the Letter of Credit previously in
effect to the Bank which issued it.

      Section 13.04. Notice to Rating Agencies. Upon any expiration or
termination of a Letter of Credit or the obtaining by the Company of a
Replacement Letter of Credit or Substitute Letter of Credit, the Company agrees
to promptly notify the Trustee and Moody's, if the Bonds are rated by Moody's,
and/or S&P, if the Bonds are rated by S&P, of any expiration or termination of
a Letter of Credit or the obtaining by the Company of a Replacement Letter of
Credit or Substitute Letter of Credit. The Trustee shall also notify, Moody's,
if the Bonds are rated by Moody's, and/or S&P, if the Bonds are rated by S&P,
of (i) any conversion of Bonds to a Fixed Rate, or any change in the Interest
Rate Determination Method, (ii) any amendments or modifications of this
Indenture, the Letter of Credit, or the Remarketing Agreement, (iii) the
appointment of a new Remarketing Agent or Tender Agent or (iv) the purchase or
redemption of all the Bonds.

      Section 13.05. Bank Bonds Not Secured by Letter of Credit. In no event
shall the Letter of Credit secure any Bank Bonds, and further, in no event
shall the proceeds of a draw on the Letter of Credit be applied to payment of
principal of, interest on, or Purchase Price of Bank Bonds.

                                      65

<PAGE>   71

                                  ARTICLE XIV

                                 MISCELLANEOUS

      Section 14.01. Covenants of Issuer Bind Successors and Assign. All the
covenants, stipulations, promises and agreements in this Indenture contained,
by or in behalf of the Issuer, shall bind and inure to the benefit of its
successors and assigns, whether so expressed or not.

      Section 14.02. Immunity of Officers. No recourse for the payment of any
part of the principal of, interest on or Purchase Price for any Bond or for the
satisfaction of any liability arising from, founded upon or existing by reason
of the issue, purchase or ownership of the Bonds shall be had against any
director, commissioner, officer, employee, member or agent of the Issuer, the
Trustee, the Bank, or the Company, the LGC, or the State of North Carolina, as
such, all such liability being hereby expressly released and waived as a
condition of and as a part of the consideration for the execution of this
Indenture and the issuance of the Bonds.

      Section 14.03. No Benefits to Outside Parties. Nothing in this Indenture,
express or implied, is intended or shall be construed to confer upon or to give
to any person or corporation, other than the parties hereto, the Owners of the
Bonds issued hereunder and the Bank, any right, remedy or claim under or by
reason of this Indenture or covenant, condition or stipulation thereof; and the
covenants, stipulations and agreements in this Indenture contained are and
shall be for the sole and exclusive benefit of the parties hereto, their
successors and assigns, the Owners of the Bonds and the Bank.

      Section 14.04. Separability of Indenture Provisions. In case any one or
more of the provisions contained in this Indenture or in the Bonds shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Indenture, but this Indenture shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein.

      Section 14.05. Execution of Indenture in Counterpart . This Indenture may
be simultaneously executed in several counterparts, each of which, when so
executed, shall be deemed to be an original, and such counterparts shall
together constitute one and the same instrument.

      Section 14.06. Headings Not Controlling. The headings of the several
Articles and Sections hereof are inserted for the convenience of reference only
and shall not control or affect the meaning or construction of any of the
provisions hereof.

      Section 14.07. Notices. Any request, demand, authorization, direction,
notice, consent of Owners or other document provided or permitted by this
Indenture shall be sufficient for any purpose under this Indenture, when mailed
registered or certified mail, return receipt requested, postage prepaid (except
as otherwise provided in this Indenture) (with a copy to the other parties) at
the following addresses (or such other address as may be provided by any party
by notice) and shall be deemed to be effective upon receipt:

                                      66

<PAGE>   72

<TABLE>
<S>                                       <C>
If to the Company:                           Crescent Sleep Products Company
                                             1931 Freeman Mill Road
                                             Greensboro, North Carolina 27406
                                             Attention:  President
                                             Telecopier Number:  (336) 273-3025

If to the Issuer:                            The Guilford County Industrial Facilities and
                                             Pollution Control Financing Authority
                                             c/o Edwin Pons, Esq.
                                             Post Office Box 3427
                                             Greensboro, North Carolina 27402
                                             Facsimile Number:  (336)373-3872

If to the Trustee:                           U.S. Bank Trust National Association
                                             180 East Fifth Street
                                             St. Paul, Minnesota 55101
                                             Attention: Corporate Trust Department
                                             Telecopier Number:  (651)244-071

If to the                                    U.S. Bancorp Piper Jaffray Inc.
Remarketing Agent:                           222 South Ninth Street
                                             Minneapolis, Minnesota 55402
                                             Attention: Head of Municipal Underwriting
                                             Telecopier Number:  (612) 342-6966

If to the                                    U.S. Bank National Association
Initial Bank:                                90 South Sixth Street
                                             Minneapolis, Minnesota 55402
                                             Attention: Civic/Nonprofit Banking Group Telecopier
                                             Number:  (612) 973-8368

If to the Letter                             Bank One, Colorado
of Credit Custodian                          1125 17th Street, 4th Floor
                                             Denver, Colorado 80202
                                             Attention: _____________________
                                             Telecopier Number:  (303) 244-5906
</TABLE>

      Section 14.08. References to Bank and Letter of Credit. All references
herein to the Bank, Letter of Credit, Reimbursement Agreement and all
requirements imposed herein with respect thereto shall be of no force and
effect after termination of the Letter of Credit Period and reimbursement to
the Bank of all amounts owing to the Bank pursuant to the terms of the
Reimbursement Agreement.

                                      67

<PAGE>   73

      IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Trust
Indenture to be executed in their respective corporate names and their
respective corporate seals to be hereunto affixed and attested by their duly
authorized officers, all as of the date first above written.

                                       U.S. BANK TRUST NATIONAL ASSOCIATION,
                                       as Trustee

                                       By /s/
                                         ---------------------------------------
                                         Its   Assistant Vice President
                                            ------------------------------------

                                      68

<PAGE>   74

<TABLE>
<S>                                  <C>
                                       THE GUILFORD COUNTY INDUSTRIAL
                                       FACILITIES AND POLLUTION CONTROL
                                       FINANCING AUTHORITY

                                       By:  /s/
                                          --------------------------------------
                                                       Chairman

Attest:

/s/
-----------------------------
Secretary

</TABLE>

                                      69
<PAGE>   75

                                   EXHIBIT A

                          Variable Rate Form of Bond

                           UNITED STATES OF AMERICA

                            STATE OF NORTH CAROLINA
                              COUNTY OF GUILFORD

                   THE GUILFORD COUNTY INDUSTRIAL FACILITIES
                   AND POLLUTION CONTROL FINANCING AUTHORITY

                      INDUSTRIAL DEVELOPMENT REVENUE BOND
                    (CRESCENT SLEEP PRODUCTS COMPANY PROJECT)

                                  Series 1999
<TABLE>
<S>                                                           <C>
No. R-I                                                          $5,900,000
</TABLE>

      THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME AND IN
THE MANNER HEREINAFTER DESCRIBED, AND MUST BE SO TENDERED OR WILL BE DEEMED TO
HAVE BEEN SO TENDERED UNDER CERTAIN CIRCUMSTANCES DESCRIBED HEREIN.

<TABLE>
<CAPTION>
Interest Mode          Maturity Date           Date of Issuance        CUSIP
-------------          -------------           ----------------        -----
<S>                  <C>                      <C>                     <C>
Variable               September 1, 2019       September 17, 1999
</TABLE>

<TABLE>
<S>               <C>
Registered Owner:    CEDE & CO.

Principal Amount:  FIVE MILLION NINE HUNDRED THOUSAND DOLLARS ($5,900,000)
</TABLE>

      The Guilford County Industrial Facilities and Pollution Control Financing
Authority, a political subdivision of the State of North Carolina (the
"Issuer"), for value received, promises to pay to the registered owner named
above or registered assigns, on the maturity date specified above, upon
surrender hereof, the principal sum stated above, and to pay interest on said
sum at the rate and at the times described herein.

      The principal of this Bond, while in the Variable Rate Mode, is payable
in lawful money of the United States of America at the principal corporate
trust office of U.S. Bank Trust National Association in St. Paul, Minnesota, as
Tender Agent (together with its successors, the "Tender Agent") or at the duly
designated office of any successor Tender Agent under the Trust Indenture dated
as of September 1, 1999 between the Issuer and U.S. Bank Trust National
Association, as trustee (the "Trustee") having its principal corporate trust
office in St. Paul, Minnesota (which Trust Indenture, as from time to time
amended and supplemented, is hereinafter referred to as the "Indenture"). The
principal of this Bond, while in the Fixed Rate Mode, is payable in lawful
money of the United States of America at the principal corporate trust office
of the Trustee.

                                      A 1

<PAGE>   76

      Interest shall be paid hereon on the following dates (the "Interest
Payment Dates"): (i) when this Bond is in the Variable Rate Mode, the first day
of each month, commencing October 1, 1999; (ii) each Mandatory Tender Date (as
herein defined); and (iii) when this Bond is in the Fixed Rate Mode, the first
March 1 or September 1 which is at least three (3) months after the Conversion
Date and each March 1 and September 1 thereafter. With respect to any of the
above, if any date so specified is not a Business Day, interest shall be paid
on the immediately following Business Day with the same effect as if paid on
the stated Interest Payment Date.

      Interest on this Bond, except interest due on a Mandatory Tender Date, an
Optional Tender Date that is an Interest Payment Date, or on the maturity date,
shall be paid on each Interest Payment Date:

      (i)    by check or draft of the Tender Agent with respect to Bonds in the
Variable Rate Mode, or by check or draft of the Trustee with respect to Bonds
in the Fixed Rate Mode, in each case mailed to such registered owner at such
owner's address as it appears on the Register or at such other address as is
furnished to the Tender Agent or the Trustee in writing by such owner; or

      (ii)    with respect to Bonds in the Variable Rate Mode, by wire transfer
to registered owners of at least $1,000,000 in aggregate principal amount of
Bonds, upon such prior notice from the registered owner as may be satisfactory
to the Tender Agent.

Interest payable with respect to Bonds in the Variable Rate Mode on an Optional
Tender Date that is an Interest Payment Date, a Mandatory Tender Date, or their
maturity date, shall be paid only upon presentation of this Bond to the Tender
Agent, except as otherwise provided in Section 2.12 of the Indenture. Interest
payable with respect to Bonds in the Fixed Rate Mode on their maturity date or
a Mandatory Tender Date, shall be paid only upon presentation of this Bond to
the Trustee.

      This Bond is one of an authorized issue of Bonds designated Industrial
Development Revenue Bonds (Crescent Sleep Products Company Project) Series 1999
in the aggregate principal amount of $5,900,000 (the "Bonds") issued by the
Issuer to provide funds to finance the acquisition, construction and equipping
of 133,000 square foot facility for the purpose of manufacturing mattresses
located on an approximately 14.8 acre site in Guilford County, pursuant to and
in full conformity with the Constitution and laws of the State of North
Carolina, including the Industrial and Pollution Control Facilities Financing
Act, Chapter 159C of the North Carolina General Statutes, as amended, and an
authorizing resolution adopted by the Issuer on September 15, 1999. The Issuer
has entered into a Loan Agreement dated as of September 1, 1999 with Crescent
Sleep Products Company, a Delaware corporation (the "Company"), with respect to
the proceeds of the Bonds.

      The Bonds are all issued under and are equally and ratably secured by and
entitled to the protection of the Indenture. The Bonds are special obligations
of the Issuer to which the payments paid by the Company pursuant to the Loan
Agreement have been and are hereby irrevocably pledged. The Bonds do not
constitute a debt of the Issuer within the meaning of any constitutional or
statutory limitations, and neither the full faith and credit nor the taxing
power of the Issuer, the State of North Carolina, or any political subdivision
thereof is pledged to the payment of the Bonds.

                                      A-2

<PAGE>   77

      THE BONDS AND THE INTEREST THEREON AND REDEMPTION PREMIUM, IF ANY, SHALL
NOT BE DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE
STATE OF NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING,
WITHOUT LIMITATION, THE ISSUER AND GUILFORD COUNTY, NORTH CAROLINA. NEITHER THE
STATE OF NORTH CAROLINA NOR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING,
WITHOUT LIMITATION, THE ISSUER AND GUILFORD COUNTY, NORTH CAROLINA, SHALL BE
OBLIGATED TO PAY THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS
OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE REVENUES ASSIGNED AND PLEDGED
THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF
NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING, WITHOUT
LIMITATION, THE ISSUER AND GUILFORD COUNTY, IS PLEDGED TO THE PAYMENT OF THE
PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR OTHER COSTS
INCIDENT THERETO. THE ISSUER HAS NO TAXING POWER.

      The Company has obtained an initial letter of credit (the "Initial Letter
of Credit" and together with any Substitute Letter of Credit or Replacement
Letter of Credit (as such terms are defined in the Indenture, the "Letter of
Credit") from U.S. Bank National Association (together with the issuer of any
Substitute Letter of Credit or Replacement Letter of Credit, the "Bank"), which
Initial Letter of Credit will expire, unless extended or renewed, on March 31,
2003. The Letter of Credit will be held and drawn upon by Bank One, Colorado,
N.A., as letter of credit custodian (the "Letter of Credit Custodian") pursuant
to the Indenture and a Letter of Credit Custodian Agreement among the Trustee,
the Company and the Letter of Credit Custodian dated as of September 1, 1999.
The Letter of Credit Custodian is authorized and instructed to draw upon the
Letter of Credit amounts sufficient to pay principal of, up to 51 days' accrued
interest on, and the Purchase Price of the Bonds together with Discharge
Expenses. Reference is hereby made to the Indenture for a description of the
property pledged and assigned, the provisions, among others, with respect to
the nature and extent of the security, the rights, duties and obligations of
the Issuer, the Trustee, the Company, the Bank and the owners of the Bonds and
the terms upon which the Bonds are issued and secured.

      At the time of issuance, the Bonds will bear interest at the Weekly Rate.
The Bonds may subsequently bear interest at the Daily Rate, the Monthly Rate,
or the Fixed Rate. All of such terms are as defined and described herein.

      During any period when this Bond bears interest at the Variable Rate as
provided in the Indenture (consisting of the Weekly Rate, the Daily Rate or the
Monthly Rate), this Bond shall be in the "Variable Rate Mode". If this Bond has
been converted as provided in the Indenture to bear interest at a Fixed Rate,
this Bond shall be in the "Fixed Rate Mode."

      As used herein, "Business Day" means any day which is not a Saturday or
Sunday and is not a day on which banking institutions in Minnesota or the city
in which the principal office of the Trustee is located, are authorized or
required by law to close, or on which the New York Stock Exchange is closed.

                                      A-3

<PAGE>   78

      When this Bond bears interest at the Weekly Rate, the Remarketing Agent
(as defined in the Indenture) shall on the date of issuance and on Wednesday of
each week, or if Wednesday is not a Business Day, the immediately preceding
Business Day, determine the Weekly Rate which shall become effective on the
following Thursday and will be effective through the Wednesday thereafter. When
this Bond bears interest at the Daily Rate or the Monthly Rate, the Remarketing
Agent shall set the applicable rate on the dates described in the Indenture.
Each Variable Rate shall be the lowest rate which, in the judgment of the
Remarketing Agent (having due regard to prevailing market conditions) would
enable the Bonds to be sold at 100% of the principal amount thereof on the next
Business Day provided that such rate shall not exceed the Maximum Rate as
defined in the Indenture, and provided that, in the event of a failure to make
any such determination, then the Variable Rate shall be the Variable Rate in
effect immediately prior thereto.

      If Bonds are converted to bear interest at a Fixed Rate, the Fixed Rate
applicable to the Bonds shall be the rate or rates determined by the
Remarketing Agent on a date not more than 35 days nor less than 10 days prior
to the Proposed Conversion Date or Fixed Rate Mandatory Tender Date (such terms
as defined in the Indenture); provided that such rate shall not exceed the
Maximum Rate as defined in the Indenture. The Fixed Rate applicable to each
Bond shall be the lowest rate which, in the judgment of the Remarketing Agent
(having due regard to the prevailing market conditions), would be necessary to
enable the Bonds to be sold at 100% of the principal amount thereof on the
Proposed Conversion Date or Fixed Rate Mandatory Tender Date.

      Interest on Bonds in the Variable Rate Mode shall be calculated on the
basis of actual days elapsed and a year of 365 or 366 days, as appropriate.
Interest on Bonds in the Fixed Rate Mode shall be calculated on the basis of a
year of 360 days and twelve 30-day months.

      The Bonds shall, when issued, bear interest from the date of issuance,
and any Bond which is subsequently authenticated and delivered shall bear
interest from the most recent Interest Payment Date on which interest has been
paid with respect to that Bond or the Bond for which it is exchanged. Each Bond
shall bear the date of its authentication.

      During any period when this Bond is in the Variable Rate Mode, the owner
of this Bond shall have the right to require that this Bond be purchased on any
Optional Tender Date at the Purchase Price. The owner may demand that this Bond
be purchased in whole or in part, provided that if it is to be purchased in
part, the owner must demand purchase of Bonds in the amount of at least
$100,000 in principal amount, and the portion retained, if any, must be at
least $100,000 in principal amount. In order to demand purchase of this Bond
when it is in the Variable Rate Mode, the owner hereof must deliver to the
Tender Agent and the Remarketing Agent, a written notice (a "Tender Notice").
"Optional Tender Date" means the day set forth in the Tender Notice, which day
shall be a Business Day not less than (a) one Business Day after the delivery
of the Tender Notice if the Bonds bear interest at the Daily Rate, or (b) seven
calendar days after the delivery of the Tender Notice if the Bonds bear
interest at the Weekly Rate or Monthly Rate. The Tender Notice must state (i)
the principal amount of this Bond to be purchased, (ii) the Optional Tender
Date and (iii) if less than all of the owner's Bonds are to be purchased, the
numbers of the Bonds to be purchased. The "Purchase Price" of this Bond shall
be 100% of the principal amount hereof plus, for any purchase on an Optional
Tender Date that is not an Interest Payment Date, accrued interest to the
Optional

                                      A-4
<PAGE>   79

Tender Date. THE EXERCISE OF AN OPTION BY THE OWNER OF THIS BOND TO HAVE THIS
BOND PURCHASED BY DELIVERY OF A TENDER NOTICE IS IRREVOCABLE AND BINDING ON
SUCH OWNER AND CANNOT BE WITHDRAWN WHETHER OR NOT THIS BOND IS TENDERED FOR
PAYMENT ON THE OPTIONAL TENDER DATE.

      If the owner of this Bond has duly delivered a Tender Notice, then, on
the Optional Tender Date, a new Bond in replacement hereof will be
authenticated and delivered to the new owner, and this Bond or the portion
subject to the Tender Notice will cease to bear interest and, under the terms
of the Indenture, will be deemed to be no longer outstanding, and, from that
date, the owner hereof will be entitled only to the payment of the Purchase
Price.

      The owner of this Bond is required to tender this Bond for purchase at a
purchase price of 100% of the principal amount thereof plus accrued interest,
if any, on the following dates (each of which is a "Mandatory Tender Date"):

      (a)    any Proposed Conversion Date, whether or not the Bonds are
converted to the Fixed Rate Mode on such date;

      (b)    the day on which the Letter of Credit, by its terms, expires (the
"Letter of Credit Termination Date");

      (c)    if this Bond is in the Fixed Rate Mode, on the Fixed Rate
Mandatory Tender Date;

      (d)    on the proposed effective date of a change in the type of Variable
Rate (Weekly Rate, Daily Rate or Monthly Rate) to be borne hereby; and

      (e)    on the date of purchase by the Bank in lieu of acceleration under
Section 7.02 of the Indenture.

When this Bond is in the Variable Rate Mode, tender of this Bond shall be made
to the Tender Agent; when this Bond is in the Fixed Rate Mode, tender of this
Bond shall be made to the Trustee.

      If this Bond is subject to mandatory tender, then on the Mandatory Tender
Date, a new Bond in replacement hereof will be authenticated and delivered to
the new owner, and this Bond will cease to bear interest and, under the terms
of the Indenture, will be deemed to be no longer outstanding, and, from that
date, the owner hereof will be entitled only to the payment of the Purchase
Price.

      Optional Redemption. Bonds in the Variable Rate Mode may be redeemed, in
whole or in part, on any Interest Payment Date, in each case at the option of
the Company but only with the prior written consent of the Bank and at a
redemption price equal to 100% of the principal amount of the Bonds being
redeemed plus accrued interest, if any, to the redemption date. In order to
exercise its option to so redeem Bonds in the Variable Rate Mode, the Company
shall deliver to the Trustee notice of its election to so redeem, accompanied
by the written consent of the Bank to such redemption, at least thirty-five
(35) days prior to the proposed redemption date.

                                      A-5

<PAGE>   80

      Bonds in the Fixed Rate Mode may be redeemed in whole or in part on any
date for which proper notice of redemption can be given, in each case by the
Issuer at the option of the Company, as provided in the Indenture.

      Extraordinary Redemption. The Bonds are subject to redemption, in whole
or in part, at any time, by the Trustee at the direction of the Bank, or in the
event the Bonds are not secured by a Letter of Credit, at the direction of the
Company, from insurance proceeds or condemnation awards upon the damage or
destruction or condemnation of the Project, if such amounts are not applied to
the reconstruction of the Project. In the event of a partial redemption of the
Bonds pursuant to this paragraph, the Bank, or in the event the Bonds are not
secured by the Letter of Credit, the Company, shall direct which Bonds are to
be redeemed.

      Notice of Redemption. Notice of the call for redemption shall be given as
provided in the Indenture to the registered owner of the Bonds to be redeemed
at the address last shown on the registration books. Failure to give such
notice by mailing, or any defect therein, shall not affect the validity of any
proceedings for the redemption of any other Bonds. Bonds called for redemption
will cease to bear interest after the date specified for their redemption,
provided funds for the payment thereof are then on deposit at the place of
payment.

      This Bond is fully transferable by the registered owner hereof in person
or by his duly authorized attorney on the registration books kept at the
principal office of the Trustee, while the Bonds are in the Fixed Rate Mode or
the Tender Agent, while the Bonds are in the Variable Rate Mode, upon surrender
of this Bond, together with a duly executed written instrument of transfer;
subject, however, to the terms of the Indenture which limit the transfer and
exchange of Bonds during certain periods. Upon such transfer, a new fully
registered Bond or Bonds of the same maturity and of Authorized Denominations
for the same aggregate principal amount will be issued to the transferee in
exchange herefor, all subject to the terms and conditions set forth in the
Indenture. As used herein, "Authorized Denominations" means, with respect to
Bonds in the Variable Rate Mode, denominations of $100,000 and greater integral
multiples of $5,000, and with respect to Bonds in the Fixed Rate Mode,
denominations of $5,000 and integral multiples thereof. The Issuer, the Trustee
and the Tender Agent may deem and treat the person in whose name this Bond is
registered as the absolute owner hereof, whether or not this Bond shall be
overdue, for the purpose of receiving payment and for all other purposes, and
neither the Issuer, the Trustee nor the Tender Agent shall be affected by any
notice to the contrary.

      The registered owner of this Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the pledge,
assignment or covenants made therein or to take any action with respect to an
event of default under the Indenture or to institute, appear in or defend any
suit, action or other proceeding at law or in equity with respect thereto,
except as provided in the Indenture.

      It is hereby certified, recited and declared that all conditions, acts
and things required by the Constitution or statutes of the State of North
Carolina or the Indenture to exist, to have happened or to have been performed
precedent to or in the issuance of this Bond exist, have happened and have been
performed.

                                      A-6

<PAGE>   81

      This Bond shall not be entitled to any benefit under the Indenture or any
indenture supplemental thereto, or become valid or obligatory for any purpose
until the Authenticating Agent shall have signed the certificate of
authentication hereon.

                                      A-7

<PAGE>   82

      IN WITNESS WHEREOF, The Guilford County Industrial Facilities and
Pollution Control Financing Authority has caused this Bond to be executed in
its behalf by the manual or facsimile signatures of its authorized officers and
sealed with its corporate seal or a facsimile thereof.

<TABLE>
<S>                                   <C>
                                       THE GUILFORD COUNTY INDUSTRIAL
                                       FACILITIES AND POLLUTION CONTROL
                                       FINANCING AUTHORITY

(SEAL)                                 By
                                         ---------------------------------------
                                                         Chairman

Attest:

----------------------------------
Secretary

Authentication Date:
                    --------------
</TABLE>

                         CERTIFICATE OF AUTHENTICATION

      This is one of the Bonds referred to in the within mentioned Trust
Indenture.

                                       U.S. BANK TRUST NATIONAL ASSOCIATION,
                                       as Authenticating Agent

                                       By
                                         ---------------------------------------
                                         Authorized Signature

                                      A-8

<PAGE>   83

                                  ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the within bond and all rights thereunder, and
hereby irrevocably ______________________constitutes and appoints to transfer
the within bond on the books kept for registration thereof with full power of
substitution in the premises.

Dated:

Signature Guaranteed:
                     -----------------------------------------------------------
Address of transferee:
                     -----------------------------------------------------------

Social security or other tax identification number of transferee:

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

NOTICE: The signature to this assignment must correspond with the name as it
appears on the face of the within bond in every particular without alteration
or enlargement or any change whatever.

                                      A-9<PAGE>   1

                                                                     EXHIBIT 4.2

                               INDENTURE OF TRUST

                                 by and between

                      FIRST-CITIZENS BANK & TRUST COMPANY,

                                   as Trustee

                                       and

                             IOWA FINANCE AUTHORITY

                            Dated as of March 1, 1995

                           Relating to the Issuance of
                      $3,000,000 TAX-EXEMPT ADJUSTABLE MODE
                      INDUSTRIAL DEVELOPMENT REVENUE BONDS
                         (DIXIE BEDDING COMPANY PROJECT)
                                   SERIES 1995

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page

                                    ARTICLE I

                                   DEFINITIONS

                                   ARTICLE II

                                    THE BONDS

<S>                                                                     <C>
Section 2.1. Authorized Amount of Bonds                                     17
Section 2.2. Issuance of Bonds                                              17
Section 2.3. Interest Rates on Bonds                                        18
Section 2.4. Conversion of Interest Rate Determination Method               23
Section 2.5. Issuance of a Credit Facility                                  26
Section 2.6. Tender of Bonds for Purchase                                   28
Section 2.7. Remarketing of Bonds                                           31
Section 2.8. Delivery of Purchased Bonds                                    33
Section 2.9. Execution; Limited Obligation                                  34
Section 2.10.Certificate of Authentication                                  35
Section 2.11.Form of Bonds                                                  35
Section 2.12.Delivery of Bonds                                              35
Section 2.13.Mutilated, Lost, Stolen or Destroyed Bonds                     37
Section 2.14.Exchangeability and Transfer of Bonds; Persons
               Treated as Owners                                            37
Section 2.15.Replacement Bonds                                              38
Section 2.16.Cancellation                                                   38
Section 2.17.Ratably Secured                                                39
Section 2.18.Redemption of Bonds; Partial Redemption of Bonds               39
Section 2.19.Notice of Redemption                                           43
Section 2.20.Book Entry System                                              43

                                   ARTICLE III

                                    SECURITY

Section 3.1. Security                                                       45
Section 3.2. Payment of Bonds and Performance of Covenants                  46
Section 3.3. Authority                                                      46
Section 3.4. No Litigation                                                  46
Section 3.5. Further Assurances                                             47
Section 3.6. No Other Encumbrances                                          47
Section 3.7. No Personal Liability                                          47
Section 3.8. Credit Facility                                                47
</TABLE>

<PAGE>   3

<TABLE>

                                   ARTICLE IV

                                      FUNDS

<S>                                                                       <C>
Section 4.1. Establishment and Use of Bond Fund and Current Account         50
Section 4.2. Establishment and Use of Initial Fund                          52
Section 4.3. Establishment and Use of Surplus Fund                          52
Section 4.4. Establishment and Use of Bond Purchase Fund                    52
Section 4.5. Deposit of Bond Proceeds                                       53
Section 4.6. Records                                                        54
Section 4.7. Investment of Initial Fund, Surplus Fund, Bond Fund
               and Bond Purchase Fund Moneys                                54
Section 4.8. Arbitrage; Arbitrage Rebate Fund                               55
Section 4.9. Non-presentment of Bonds                                       56

                                    ARTICLE V

                                DISCHARGE OF LIEN

Section 5.1. Discharge of Lien and Security Interest                        56
Section 5.2. Provision for Payment of Bonds                                 57
Section 5.3. Discharge of this Indenture                                    58

                                   ARTICLE VI

                         DEFAULT PROVISIONS AND REMEDIES

Section 6.1. Events of Default                                              58
Section 6.2. Acceleration                                                   59
Section 6.3. Other Remedies; Rights of Holders                              60
Section 6.4. Right of Holders and Credit Issuer to Direct Proceedings       60
Section 6.5. Discontinuance of Default Proceedings                          61
Section 6.6. Waiver                                                         61
Section 6.7. Application of Moneys                                          62
Section 6.8. Rights of a Credit Issuer                                      63

                                   ARTICLE VII

                THE TRUSTEE; THE PAYING AGENT; THE TENDER AGENT;
                      THE REGISTRAR; THE REMARKETING AGENT

Section 7.1. Appointment of Trustee                                         63
Section 7.2. Compensation and Indemnification of Trustee,
               Paying Agent, Tender Agent and Registrar;
               Trustee's Prior Claim                                        66
Section 7.3. Intervention in Litigation                                     67
Section 7.4. Resignation                                                    67
Section 7.5. Removal of Trustee                                             68
Section 7.6. Paying Agent                                                   68
Section 7.7. Tender Agent                                                   69
Section 7.8. Qualifications of Paying Agent and Tender Agent;
               Resignation; Removal                                         70
</TABLE>

<PAGE>   4

<TABLE>
<S>                                                                         <C>
Section 7.9. Instruments of Holders                                         71
Section 7.10.Power to Appoint Co-Trustees                                   71
Section 7.11.Filing of Financing Statements                                 73
Section 7.12.Remarketing Agent                                              74
Section 7.13.Qualifications of Remarketing Agent; Resignation; Removal      74
Section 7.14.Several Capacities                                             75
Section 7.15.Trustee Not Responsible for Duties of Remarketing Agent,
               Tender Agent, Registrar and Paying Agent                     75
Section 7.16.Cooperation of the Issuer                                      75
Section 7.17.Cooperation of the Trustee, the Tender Agent, the
               Registrar and the Paying Agent                               75

                                  ARTICLE VIII

                       AMENDMENTS, SUPPLEMENTAL INDENTURES

Section 8.1. Supplemental Indentures                                        75
Section 8.2. Amendments to Indenture; Consent of Holders, the Credit
               Issuer and the Company                                       77
Section 8.3. Amendments to the Agreement Not Requiring Consent of
               Holders                                                      78
Section 8.4. Amendments to the Agreement Requiring Consent of Holders
               and the Credit Issuer                                        78
Section 8.5. Amendments, Changes and Modifications to the
               Credit Facility                                              79
Section 8.6. Notice to and Consent of Holders                               79

                                   ARTICLE IX

                                  MISCELLANEOUS

Section 9.1. Right of Trustee to Pay Taxes and Other Charges                79
Section 9.2. Limitation of Rights                                           80
Section 9.3. Severability                                                   80
Section 9.4. Notices                                                        80
Section 9.5. Payments Due on Non-Business Days                              82
Section 9.6. Binding Effect                                                 82
Section 9.7. Captions                                                       82
Section 9.8. Governing Law                                                  82
Section 9.9. Limited Liability of Issuer                                    82
Section 9.10.Notices to Rating Agency                                       82
Section 9.11.Execution in Counterparts                                      83

Signatures                                                                  84
Acknowledgments                                                             85
</TABLE>

EXHIBIT A Form of Bond
EXHIBIT B Form of Conversion Notice
EXHIBIT C Form of Notice of Credit Facility
EXHIBIT D Form of Notice of Credit Modification Date

<PAGE>   5

                               INDENTURE OF TRUST

              THIS INDENTURE OF TRUST (the "Indenture") dated as of the 1st day
of March, 1995, by and between the IOWA FINANCE AUTHORITY, a public
instrumentality and agency of the State of Iowa organized and existing under
Chapter 16 of the Code of Iowa (1995) (the "Issuer"), and FIRST-CITIZENS BANK &
TRUST COMPANY, as trustee, and its successors in trust and assignees (the
"Trustee").

                              W I T N E S S E T H:

              WHEREAS, the Issuer is authorized and empowered by the provisions
of Chapter 16 of the Code of Iowa (1995), as amended (the "Act"), to issue and
sell its revenue bonds for the purpose of financing in whole or in part the cost
of a "project" (as defined in Section 16.102 of the Act) for the purpose of
assisting economic development and the expansion of business, industry and
farming in the State; and

              WHEREAS, the Act provides that the Issuer may issue and sell its
revenue bonds for the purpose of acquiring, constructing, improving and
equipping any such project payable solely out of the revenues derived from the
project to be financed by the bonds so issued; and

              WHEREAS, pursuant to and in accordance with the provisions of the
Act, by Resolution of its board, the Issuer has authorized and undertaken to
issue its Tax-Exempt Adjustable Mode Industrial Development Revenue Bonds (Dixie
Bedding Company Project) Series 1995 (the "Bonds") to provide funds to pay a
portion of the costs of acquiring, constructing, improving and equipping a
mattress manufacturing facility in Clear Lake, Iowa (the "Project") to be owned
and operated by Dixie Bedding Company, a North Carolina corporation (the
"Company"); and

              WHEREAS, the Issuer has undertaken to issue and sell the Bonds and
to loan the proceeds from the sale of the Bonds so as to enable the Company to
acquire, construct, improve and equip the Project, and Company has agreed to
make payments required herein sufficient to pay the principal of and premium, if
any, and interest on the Bonds and related expenses.

              NOW, THEREFORE, in consideration of the premises and of the
covenants and undertakings herein expressed, the parties hereto agree as
follows:

                                      -1-
<PAGE>   6

                                    ARTICLE I

                                   DEFINITIONS

              All terms defined in the Agreement and not defined herein shall
have the meaning ascribed thereto in the Agreement. In addition to terms
elsewhere defined in this Indenture, the following words and terms as used in
this Indenture and the preambles hereto shall have the following meanings unless
the context or use clearly indicates another or different meaning or intent and
such definitions shall be equally applicable to both the singular and plural
forms of the terms and words herein defined:

              "Act" means Chapter 16 of the Code of Iowa (1995), as amended from
time to time.

              "Act of Bankruptcy" means any of the following events:

              (i)    The Company (or any other Person obligated, as guarantor or
otherwise, to make payments on the Bonds or under the Agreement or the Credit
Agreement or an "insider" with respect to the Company within the meaning of
Title 11 of the United States Code, as amended) or the Issuer shall (a) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or the like of the Company (or such
other Person or "insider") or the Issuer or of all or any substantial part of
its property, (b) commence a voluntary case under the United States Bankruptcy
Code (as now or hereafter in effect), or (c) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts; or

              (ii)   A proceeding or case shall be commenced, without the
application or consent of the Company (or any other Person obligated, as
guarantor or otherwise, to make payments on the Bonds or under the Agreement or
the Credit Agreement or an "insider" with respect to the Company within the
meaning of Title 11 of the United States Code, as amended) or the Issuer in any
court of competent jurisdiction, seeking (a) the liquidation, reorganization,
dissolution, winding-up, or composition or adjustment of debts, of the Company
or the Issuer (or any such other Person or "insider"), (b) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Company or the
Issuer (or any such other Person or "insider") or of all or any substantial part
of its respective property, or (c) similar relief in respect of the Company or
the Issuer (or any such other Person or "insider") under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts.

              "Agreement" means the Loan Agreement dated as of March 1, 1995
between the Issuer and the Company, and any amendments and supplements thereto.

                                      -2-
<PAGE>   7

              "Alternate Credit Facility" means any credit facility delivered in
substitution for the Credit Facility delivered to, and accepted by, the Trustee
pursuant to Section 3.8(e).

              "Alternate Medium-Term Index" means the rate of interest per annum
determined by the Remarketing Agent to be equal to 105% of the then current
yield on United States Treasury obligations that have a remaining term
approximately equal to the remaining term of the applicable Medium-Term Rate
Period; provided that, if interest on the Bonds is an item of tax preference in
determining alternative minimum taxable income under the Code, the rate of
interest per annum shall equal 105.40% of the then current yield on such United
States Treasury obligations.

              "Alternate Monthly Index" means the index rate selected by the
Remarketing Agent that is a composite of current bid-side yields of obligations
that are comparable as to credit and of the same general nature as the Bonds (i)
that provide for a monthly adjustment of the interest rate, (ii) that (A) must
be purchased on demand of the owner thereof at any time upon notice of up to
thirty (30) days or (B) are payable in full no later than thirty (30) days after
the date of evaluation and (iii) the interest on which is excluded from gross
income for federal income tax purposes; provided that, if such index rate shall
not be established, the Alternate Monthly Index shall be the sum of (i) the
product of (A) the interest rate for thirty-day taxable commercial paper (prime
paper placed through dealers) announced for the first day of each Interest
Period during a Monthly Rate Period (or, if such day is not a Business Day, the
immediately preceding Business Day) by the Federal Reserve Bank of New York,
converted to a coupon equivalent rate, multiplied by (B) 1 minus the lesser of
(1) the maximum federal income tax rate payable by corporations at the time on
interest income and (2) the maximum federal income tax rate payable by
individuals at the time on interest income, plus (ii) 2.50% or, if interest on
the Bonds is an item of tax preference in determining alternative minimum
taxable income under the Code, 2.90%.

              "Alternate Semiannual Index" means the index rate selected by the
Remarketing Agent that is a composite of current bid-side yields of obligations
that are comparable as to credit and of the same general nature as the Bonds (i)
that provide for a semiannual adjustment of the interest rate, (ii) that (A)
must be purchased on demand of the owner thereof at any time upon notice of up
to six (6) months or (B) are payable in full no later than six (6) months after
the date of evaluation and (iii) the interest on which is excluded from gross
income for federal income tax purposes, provided that, if such index rate shall
not be established the Alternate Semiannual Index shall be the sum of W the
product of (A) the interest rate for ninety-day taxable commercial paper (prime
paper placed through dealers) announced for the first day of each Interest
Period during a Semiannual Rate Period (or, if such day is not a Business Day,
the next succeeding Business Day) by the Federal Reserve Bank of New York
converted to a coupon equivalent rate multiplied by (B) 1 minus the lesser of

                                      -3-
<PAGE>   8

(a) the maximum federal income tax rate payable by individuals at the time on
interest income and (b) the maximum federal income tax rate payable by
corporations at the time on interest income, plus (ii) 3.00% or, if interest on
the Bonds is an item of tax preference in determining alternative minimum
taxable income under the Code, 3.50%.

              "Alternate Weekly Index" means the index rate selected by the
Remarketing Agent that is a composite of current bid-side yields of obligations
that are comparable as to credit and of the same general nature as the Bonds (i)
that provide for a weekly adjustment of the interest rate, (ii) that (A) must be
purchased on the demand of the owner thereof at any time upon notice of up to
seven (7) days or (B) are payable in full no later than seven (7) days after the
date of evaluation and (iii) the interest on which is excluded from gross income
for federal income tax purposes; provided that, if such index rate shall not be
established, the Alternate Weekly Index shall be the sum of (i) the product of
(A) the interest rate for thirty-day taxable commercial paper (prime paper
placed through dealers) announced for the first day of each Interest Period
during a Weekly Rate Period (or, if such day is not a Business Day, the next
succeeding Business Day) by the Federal Reserve Bank of New York, converted to a
coupon equivalent rate multiplied by (B) 1 minus the lesser of (a) the maximum
federal income tax rate payable by individuals at the time on interest income
and (b) the maximum federal income tax rate payable by corporations at the time
on interest income, plus (ii) 2.25% or, if interest on the Bonds is an item of
tax preference in determining alternative minimum taxable income under the Code,
2.50%.

              "Authorized Denomination" means (a) during any ShortTerm Rate
Period or any Medium-Term Rate Period, $100,000 and integral multiples thereof,
and (b) during the Fixed Rate Period, $5,000 or any integral multiple thereof.

              "Authorized Representative" means any officer or other employee of
the Company at the time designated to act on behalf of the Company by written
certificate submitted to the Trustee and signed by the President or a Vice
President of the Company and containing such officer's or employee's specimen
signature.

              "Beneficial Owner" means the Person in whose name a Bond is
recorded as beneficial owner of such Bond by the Securities Depository or a
Participant or an Indirect Participant on the records of such Securities
Depository, Participant or Indirect Participant, as the case may be, or such
Person's subrogee.

              "Bond" or "Bonds" means the Bonds authorized under this Indenture.

              "Bond Counsel" means an attorney, or firm of attorneys, nationally
recognized and experienced in legal work relating to the financing of facilities
through the issuance of tax-exempt bonds.

              "Bond Fund" means the fund created by Section 4.1.

                                      -4-
<PAGE>   9

              "Bond Purchase Fund" means the fund created by Section 4.4.

              "Book Entry System" means a book entry system established and
operated for the recordation of Beneficial Owners of the Bonds pursuant to
Section 2.20.

              "Business Day" means any day on which the offices of the Credit
Issuer at which drawings on the Credit Facility are made (if a Credit Facility
is in effect), the Trustee, the Paying Agent, the Tender Agent, the Registrar
and the Remarketing Agent are each open for business and on which The New York
Stock Exchange is not closed.

              "Ceiling Rate" means 15% per annum.

              "Code" means the Internal Revenue Code of 1986, as amended, and
the rulings and regulations (including temporary and proposed regulations)
promulgated thereunder or under the Internal Revenue Code of 1954, as amended.

              "Company" means Dixie Bedding Company, a North Carolina
corporation, and its successors and assigns.

              "Company Agent" shall have the meaning set forth in Section 7.2.

              "Computation Date" means (a) the Business Day next preceding the
first day of each Interest Period during which the Bonds bear interest at a
Weekly Rate, (b) the last Business Day of the calendar month next preceding each
Interest Period during which the Bonds bear interest at a Monthly Rate, (c) the
Business Day next preceding the first day of each Interest Period during which
the Bonds will bear interest at a Semiannual Rate and (d) a date that is not
more than twenty (20) nor less than two (2) days prior to any Conversion Date
relating to conversion to a Long-Term Rate.

              "Conversion Date" means (i) the Fixed Rate Conversion Date, (ii)
each date on which the Interest Rate Determination Method then in effect is
changed to another Interest Rate Determination Method, (iii) each date on which
the interest rate borne by the Bonds is changed from the interest rate
applicable during a Medium-Term Rate Period to the interest rate applicable
during another Medium-Term Rate Period and (iv) each date on which the interest
rate borne by the Bonds is changed from a Mney Market Rate to another Money
Market Rate (or, with respect to notices, time periods and requirements in
connection with the proceedings for such change, the day on which it is proposed
that such change occur).

              "Conversion Notice" shall have the meaning set forth in Section
2.4(a).

              "Costs of the Project" shall have the meaning specified in the
Agreement.

                                      -5-
<PAGE>   10

              "Counsel" means an attorney, or firm of attorneys, admitted to
practice law before the highest court of any state in the United States of
America or the District of Columbia, including any Bond Counsel.

              "Credit Agreement" means any agreement between the Company and a
Credit Issuer relating to a Credit Facility, as such agreement may be amended or
supplemented from time to time pursuant to its terms.

              "Credit Facility" means a letter of credit, insurance policy,
surety bond or other instrument or device issued by a Credit Issuer on the Issue
Date or pursuant to Section 2.5 in favor of the Trustee, for the account of the
Company, which provides security for the payment of certain payments on or with
respect to the Bonds as contemplated pursuant to Section 3.8 and upon acceptance
by the Trustee of any Alternate Credit Facility, such Alternate Credit Facility.

              "Credit Issuance Date" means any date on which a Credit Facility
is issued pursuant to Section 2.5.

              "Credit Issuance Notice" shall have the meaning set forth in
Section 2.5(a)(1).

              "Credit Issuer" means the issuer of any Credit Facility, its
successors and their respective assigns; provided, however, that in connection
with the acceptance of an Alternate Credit Facility that results in the
occurrence of a mandatory Purchase Date, until the occurrence of such Mandatory
Purchase Date, "Credit Issuer" shall mean the Credit Issuer immediately prior to
acceptance of such Alternate Credit Facility.

              "Credit Modification Date" means the second Business Day next
preceding the day on which a Credit Facility then in effect is to expire (unless
extended) or is to be terminated prior to its stated expiration if:

              (a) the Bonds are then rated by a Rating Agency and (1) the
Company fails to deliver to the Trustee, no more than sixty (60) nor less than
forty (40) days prior to the second Business Day preceding such expiration or
termination date, (A) notice that an Alternate Credit Facility will be delivered
to the Trustee on or prior to the second Business Day preceding such expiration
or termination date, and (B) a letter from any Rating Agency then rating the
Bonds stating that such Rating Agency has reviewed the terms of such Alternate
Credit Facility and the issuer thereof and that acceptance of the Alternate
Credit Facility for the benefit of the Holders will not result in a lowering or
elimination of the rating then assigned by such Rating Agency to the Bonds, (2)
the Company delivers such notice and letter but prior to the date such Alternate
Credit Facility is to be delivered such Rating Agency revokes such letter, or
(3) the Company delivers such notice and letter but such Alternate Credit
Facility is not delivered to, and

                                      -6-
<PAGE>   11

accepted by, the Trustee on or prior to the second Business Day preceding such
expiration or termination date; or

              (b) the Bonds are not then rated and (1) the Company fails to
deliver to the Trustee, not more than sixty (60) nor less than forty (40) days
prior to such expiration or termination date, (A) notice that an Alternate
Credit Facility will be delivered to the Trustee on or prior to the second
Business Day preceding such expiration or termination date, and (B) written
evidence that the issuer of such Alternate Credit Facility is a commercial bank
or insurance company organized and doing business in the United States of
America or a branch or agency of a foreign commercial bank located and doing
business in the United States of America and subject to regulation by state or
federal banking regulatory authorities and that has, as of the date sixty (60)
days prior to such expiration or termination date (i) senior debt or long-term
bank deposits rated by a Rating Agency with a rating at least equivalent to the
senior debt or long-term bank deposits of the Credit Issuer of the Credit
Facility then in effect or (ii) outstanding letters of credit, insurance
policies, surety bonds or other similar instruments that, when supporting debt
obligations, result in such debt obligations being rated by a Rating Agency with
a rating at least the equivalent of the ratings assigned to debt obligations
supported with letters of credit, insurance policies, surety bonds or other
similar instruments or devices issued by such Credit Issuer on the date sixty
(60) days prior to such expiration or termination date or (2) the Company
delivers such notice but such Alternate Credit Facility is not delivered to, and
accepted by, the Trustee on or prior to the second Business Day preceding such
expiration or termination date.

              "Current Account" means the account within the Bond Fund
established pursuant to Section 4.1.

              "Determination of Taxability" means a determination that the
interest accrued or paid on any of the Bonds is included in gross income of the
Holders or former Holders for federal income tax purposes, which determination
shall be deemed to have been made upon the occurrence of the first to occur of
the following:

              (a) the day on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service that the
interest on the Bonds is included in the gross income of any Holder or former
Holder thereof for federal income tax purposes;

              (b) the day on which the Company receives notice from the Trustee
in writing that the Trustee has received (i) notice in writing by any Holder or
former Holder that the Internal Revenue Service has issued a statutory notice of
deficiency or similar notice to such Holder or former Holder that asserts in
effect that the interest on the Bonds received by such Holder or former Holder
is included in the gross income of such Holder or former Holder for federal
income tax purposes, or (ii) an Opinion of Bond Counsel that concludes in effect
that the interest on the Bonds is included

                                      -7-
<PAGE>   12

in the gross income of any Holder or former Holder thereof for federal income
tax purposes;

              (c) the day on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service that there
has been issued a public or private ruling of the Internal Revenue Service or a
technical advice memorandum issued by the national office of the Internal
Revenue Service that the interest on the Bonds is included in the gross income
of any Holder or former Holder thereof for federal income tax purposes; or

              (d) the day on which the Company is advised in writing by Counsel
that a final determination, from which no further right of appeal exists, has
been made by a court of competent jurisdiction in the United States of America
in a proceeding with respect to which the Company has been given written notice
and an opportunity to participate and defend that the interest on the Bonds is
included in the gross income of any Holder or former Holder thereof for federal
income tax purposes;

provided, however, (i) no Determination of Taxability shall occur if the
interest on any of the Bonds is included in the gross income of any Holder or
former Holder for federal income tax purposes solely because such Bond was held
by a Person who is a Substantial User or a Related Person, (ii) no Determination
of Taxability shall occur because interest on the Bonds is an item of tax
preference or is otherwise taken into account in determining alternative minimum
taxable income under the Code and (iii) during any Weekly Rate Period, no
Determination of Taxability shall occur under subparagraphs (a), (b) (i) and
(c) of this paragraph unless the Company has been afforded the opportunity to
contest any such advisement, notice of deficiency, ruling or other conclusion
and such contest by the Company, if made, has been finally determined (with no
further right of appeal) adversely to the Company or until two years shall have
elapsed since receipt of such advisement, notice, ruling or conclusion without
any such final determination.

              "Eligible Funds" means moneys held by the Trustee or the Paying
Agent under this Indenture which consist of any of the following:

              (i)    any moneys if, in the written opinion of Counsel
              experienced in bankruptcy law matters (which opinion shall be
              delivered to the Trustee and the Rating Agency, if any, rating the
              Bonds at or prior to the time of the deposit of such moneys with
              the Trustee and such opinion shall be in a form satisfactory to
              the Rating Agency, if any, rating the Bonds), the deposit and use
              of such moneys will not constitute an avoidable preferential
              payment pursuant to Section 547 of the United States Bankruptcy
              Code, 11 U.S.C. Section 101 et seq., or a post-petition transfer
              in the event the Issuer or the Company were to become a debtor
              under the United States Bankruptcy Code, and if a Rating Agency is
              rating the Bonds, such Rating Agency has confirmed to the Trustee
              in

                                      -8-
<PAGE>   13

              writing that its rating will not be withdrawn or reduced as a
              result of using such moneys;

              (ii)   moneys other than those described in (iii) below, deposited
              in the Bond Fund or the Bond Purchase Fund or transferred into the
              Bond Fund from the Surplus Fund that have been held by the Trustee
              in any such fund for at least 123 (or, if any Person other than
              the Company is obligated as a guarantor on the Bonds or under the
              Agreement or the Credit Agreement, or if the source of such moneys
              is an "insider" with respect to the Company or the Issuer within
              the meaning of Title 11 of the United States Code, as amended,
              367) consecutive days prior to and during which no Act of
              Bankruptcy shall have occurred with respect to the Company or such
              other Person or "insider, " or to the Issuer, as applicable;

              (iii)  moneys paid by the Credit Issuer to the Trustee under the
              Credit Facility; or

              (iv)   moneys derived from the investment of money described in
              clauses (i), (ii) or (iii) above.

              "Event of Default" means any of the events specified in Section
6.1.

              "Financing Statements" means any and all financing statements
(including continuation statements) or other instruments filed or recorded to
protect the Security Interest created in this Indenture.

              "Fixed Rate" means the Fixed Rate established in accordance with
Section 2.3(g).

              "Fixed Rate Conversion Date" means the day on which the Interest
Rate Determination method shall be converted to the Fixed Rate.

              "Fixed Rate Period" means the period from and including the Fixed
Rate Conversion Date to and including the date of payment in full of the Bonds.

              "Government Obligations" means (a) direct obligations of the
United States of America for the full and timely payment of which the full faith
and credit of the United States of America is pledged, and (b) obligations
issued by a Person controlled or supervised by and acting as an instrumentality
of the United States of America, the full and timely payment of the principal
of, premium, if any, and interest on which is fully guaranteed as a full faith
and credit obligation of the United States of America (including any securities
described in (a) or (b) issued or held in book-entry form on the books of the
Department of the Treasury of the United States of America), which obligations,
in either case, are not subject to redemption prior to maturity at less than par
at the option of anyone other than the holder thereof.

                                      -9-
<PAGE>   14

              "Holder" means the Person who shall be the registered owner of any
Bond.

              "Indenture" means this Indenture of Trust, as the same may be
amended or supplemented from time to time as permitted hereby.

              "Indirect Participant" means a broker-dealer, bank or other
financial institution for which the Securities Depository holds Bonds as a
securities depository through a Participant.

              "Initial Fund" means the fund created pursuant to Section 4.2.

              "Interest Payment Date" means (i) during any Weekly Rate Period,
Monthly Rate Period or Money Market Rate Period, each Quarterly Interest Payment
Date, (ii) each Mandatory Purchase Date, and (iii) during any Semiannual Rate
Period, any Medium-Term Rate Period or the Fixed Rate Period, each Semiannual
Interest Payment Date.

              "Interest Period" means (a) with respect to the Bonds bearing
interest at a Weekly Rate, the period from and including the Issue Date to and
including the next Wednesday, the period from and including the Conversion Date
on which the Interest Rate Determination Method is changed to the Weekly Rate to
and including the next Wednesday and, in each case, each succeeding period from
and including each Thursday to and including the following Wednesday, (b) with
respect to the Bonds bearing interest at a Monthly Rate, the period from and
including the Conversion Date on which the Interest Rate Determination Method is
changed to the Monthly Rate to and including the last day of the calendar month
in which such Conversion Date occurred and each succeeding period from and
including the first day of each calendar month to and including the last day of
such calendar month, and (c) with respect to any Bond bearing interest at a
Semiannual Rate, the period from and including the Conversion Date on which the
Interest Rate Determination Method is changed to the Semiannual Rate to and
including the day immediately preceding the next Interest Payment Date and each
succeeding period from and including each Interest Payment Date to and including
the day immediately preceding the next Interest Payment Date.

              "Interest Rate Determination Method" means any of the methods of
determining the interest rate on the Bonds described in Section 2.3.

              "Issue Date" means the date on which the Bonds are delivered to
the purchaser or purchasers thereof upon original issuance.

              "Issuer" means the Iowa Finance -Authority, a public
instrumentality and agency of the State of Iowa duly organized and existing
under the laws of the State of Iowa, including the Act, or

                                      -10-
<PAGE>   15

any successor to its rights and obligations under the Agreement and this
Indenture.

              "Local Time" means eastern time (daylight or standard, as
applicable).

              "Long-Term Rate" means either a Medium-Term Rate or the Fixed
Rate.

              "Long-Term Rate Period" means either a Medium-Term Rate Period or
the Fixed Rate Period.

              "Mandatory Purchase Date" means (i) a Conversion Date, (ii) a
Credit Modification Date, or (iii) a Credit Issuance Date.

              "Medium-Term Rate" means the interest rate on the Bonds
established from time to time pursuant to Section 2.3(f).

              "Medium-Term Rate Period" means any period during which the Bonds
bear interest at a Medium-Term Rate.

              "Money Market Percentage" means any percentage selected as such by
the Remarketing Agent in accordance with Section 2.3(e).

              "Money Market Rate" means the product of (a) the Money Market Rate
Index and (b) the Money Market Percentage.

              "Money Market Rate Index" means (a) the rate of interest publicly
announced by the Remarketing Agent at its principal office from time to time as
its "Prime Rate," or (b) any other index of money market instruments, including,
but not limited to, the federal funds rate, certificate of deposit rates, the
prime rate announced by any other commercial bank and the London Interbank
Offered Rate, selected by the Remarketing Agent pursuant to Section 2.3(e) as
specified in a written notice to the Trustee and the Company.

              "Money Market Rate Period" means any period of not less than forty
(40) days during which the Bonds bear interest at a Money Market Rate.

              "Monthly Rate" means the interest rate on the Bonds established
from time to time pursuant to Section 2.3(c).

              "Monthly Rate Period" means any period during which the Bonds bear
interest at a Monthly Rate.

              "Moody's" means Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and assigns and, if such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating agency, "Moody's" shall
be deemed to refer to any other nationally recognized securities rating agency
designated by the Company with the approval of the Remarketing Agent, by notice
to the Issuer and the Trustee.

                                      -11-
<PAGE>   16

              "Opinion of Bond Counsel" means any opinion of Bond Counsel
required to be delivered pursuant to this Indenture with respect to the
excludability of interest on the Bonds from gross income for federal income tax
purposes. Each such opinion shall be addressed to the Trustee, the Remarketing
Agent, the Company, the Issuer and the Paying Agent. No such opinion delivered
pursuant hereto shall be deemed unsatisfactory when required as a condition to
any provision hereunder because such opinion states that interest on the Bonds
is an item of tax preference or is includable in determining alternative minimum
taxable income under the Code.

              "Optional Tender Date" means (i) during any Weekly Rate Period,
any Business Day selected by the Holder, (ii) during any Monthly Rate Period,
the first Business Day of each Interest Period, and (iii) during any Semiannual
Rate Period, each Interest Payment Date (or, if such Interest Payment Date is
not a Business Day, the next succeeding Business Day).

              "Original Credit Facility" means the Credit Facility issued by the
Credit Issuer to the Trustee on the Issue Date, and any extensions and renewals
thereof.

              "Outstanding" means, when used with reference to the Bonds at any
date as of which the amount of outstanding Bonds is to be determined, all Bonds
that have been authenticated and delivered by the Trustee hereunder, except:

              (a) Bonds cancelled or delivered for cancellation at or prior to
such date;

              (b) Bonds deemed to be paid in accordance with Section 5.2;

              (c) Bonds in lieu of which others have been authenticated under
Sections 2.13, 2.14 and 2.15;

              (d) Untendered Bonds; and

              (e) For purposes of any consent, request, demand, authorization,
direction, notice, waiver or other action to be taken by the Holders of a
specified percentage of Outstanding Bonds hereunder, all Bonds held by or for
the account of the Issuer or the Company; provided, however, that for purposes
of any such consent, request, demand, authorization, direction, notice, waiver
or action the Trustee shall be obligated to consider as not being outstanding
only Bonds known by the Trustee by actual notice thereof to be so held.

              "Participant" means a broker-dealer, bank or other financial
institution for which the Securities Depository holds Bonds as a securities
depository.

              "Paying Agent" means Wachovia Bank of North Carolina, National
Association, and its successors appointed and serving under this Indenture.

                                      -12-
<PAGE>   17

              "Permitted Investments" means any one or more of the following
investments, if and to the extent the same are then legal investments under the
applicable laws of the State for moneys proposed to be invested therein:

              (a) Bonds or other obligations of the United States;

              (b) Bonds or other obligations, the payment of the principal and
interest of which is unconditionally guaranteed by the United States;

              (c) Direct obligations issued by the United States or obligations
guaranteed in full as to principal and interest by the United States or
Repurchase Agreements with a qualified depository bank fully collateralized by
such obligations, maturing on or before the date when such funds will be
required for disbursement;

              (d) Obligations of state and local government and municipal bond
issuers, which are rated investment-grade by either S&P or Moody's or other
non-rated obligations guaranteed or credit enhanced by a Person whose long-term
debt or long-term deposits or other obligations are rated investment-grade by
either S&P or Moody's;

              (e) Prime commercial paper;

              (f) Bankers, acceptances drawn on and accepted by commercial
banks;

              (g) Interests in any money market fund or trust, the investments
of which are restricted to obligations described in clauses (a), (b), (c), (d),
(e) or (f) of this definition; and

              (h) Such other obligations as may at any time hereafter be
authorized by applicable law.

              "Person" means any natural person, firm, partnership, association,
corporation or public body.

              "Placement Agent" means Wachovia Bank of Georgia, National
Association.

              "Placement Agreement" means the Placement Agreement, dated March
__ 1995 among the Issuer, the Company and the Placement Agent, relating to the
initial placement of the Bonds.

              "Project" means the Project as defined in the Agreement.

              "Proposed Rate" means, with respect to any Monthly Rate or
Semiannual Rate, the rate of interest, determined on the applicable Proposed
Rate Computation Date, that the Remarketing Agent, having due regard for
prevailing market conditions for revenue bonds or other securities of the same
general nature as the Bonds or securities that are comparable as to credit and
maturity (or comparable with respect to optional tender provisions) with the

                                      -13-
<PAGE>   18

credit and maturity and optional tender provisions of the Bonds and taking into
account interest rate trends, market trends, general economic conditions and
such other factors as the Remarketing Agent deems appropriate (including the
excludability of interest on such revenue bonds and other securities from gross
income for federal income tax purposes), anticipates to be the interest rate
necessary to place the Bonds on the effective date of such Monthly Rate or
Semiannual Rate at a price of par (plus accrued interest, if any).

              "Proposed Rate Computation Date" means each date that is (a) six
(6) days prior to each Computation Date (or if such day is not a Business Day,
the next preceding Business Day) with respect to any Monthly Rate Period, or (b)
twenty (20) days prior to each Computation Date with respect to any Semiannual
Rate Period (or if such day is not a Business Day, the next preceding Business
Day).

              "Purchase Price" means an amount equal to 100% of the principal
amount of any Bond tendered or deemed tendered for purchase pursuant to Section
2.6, plus accrued and unpaid interest thereon to the date of purchase.

              "Quarterly Interest Payment Date" means each January 1, April 1,
July 1 and October 1.

              "Rate" means any Short-Term Rate or any Long-Term Rate.

              "Rate Index" means any of the Alternate Medium-Term Index, the
Alternate Monthly Index, the Alternate Semiannual Index, the Alternate Weekly
Index or any combination of any thereof, as the context may require.

              "Rate Period" means any Weekly Rate Period, Monthly Rate Period,
Semiannual Rate Period, Money Market Rate Period, Medium-Term Rate Period or
Fixed Rate Period.

              "Rating Agency" means Moody's when the Bonds are rated by Moody's,
and S&P when the Bonds are rated by S&P.

              "Record Date" means with respect to each Interest Payment Date (i)
during any Short-Term Rate Period, the Trustee's close of business on the
Business Day next preceding such Interest Payment Date, and (ii) during any
Long-Term Rate Period, the Trustee's close of business on the fifteenth (15th)
day of the calendar month next preceding the calendar month during which such
Interest Payment Date occurs, regardless of whether such day is a Business Day.

              "Register" means the register of the record owners of Bonds
maintained by the Registrar.

              "Registrar" means the Trustee.

                                      -14-
<PAGE>   19

              "Related Person" with reference to any Substantial User, means a
"related person" within the meaning of Section 147(a)(2) of the Code.

              "Remarketing Agent" means Wachovia Bank of Georgia, National
Association and its successors appointed and serving in such capacity under this
Indenture.

              "Remarketing Agreement" means any agreement between the Company
and a Remarketing Agent relating to the Bonds, as such agreement may be amended
or supplemented from time to time pursuant to its terms.

              "Repayments" means all amounts required to be paid by the Company
to the Issuer (and the Trustee, as the assignee of the Issuer) pursuant to
Section 5.2 of the Agreement.

              "Replacement Bonds" means Bonds issued pursuant to Section 2.15,
which Bonds shall contain the terms and provisions specified herein as being
applicable to the Bonds following a Mandatory Purchase Date and have excised
therefrom the terms and provisions that are not so applicable and added thereto
terms that have become applicable.

              "Reserved Rights" means the rights of the Issuer pursuant to
Sections 5.2(b), 5.2(c), 8.1, 8.6, 8.7, 12.6 and 12.7 of the Agreement and the
rights of the Issuer pursuant to other sections of the Agreement providing that
notices, reports and other statements be given to the Issuer and that specified
consents be obtained from the Issuer.

              "S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., its successors and their assigns and, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other nationally
recognized securities rating agency designated by the Company with the approval
of the Remarketing Agent, by notice to the Issuer and the Trustee.

              "Securities Depository" means The Depository Trust Company and any
substitute for or successor to such securities depository that shall maintain a
Book Entry System with respect to the Bonds.

              "Securities Depository Nominee" means the Securities Depository or
the nominee of such Securities Depository in whose name there shall be
registered on the Register the Bonds to be delivered to such Securities
Depository during the continuation with such Securities Depository of
participation in its Book Entry System.

              "Security" means the revenues (including Repayments), funds,
rights and interests specified in Section 3.1.

                                      -15-
<PAGE>   20

              "Security Interest" or "Security Interests" means the security
interests created herein and shall have the meanings set forth in the U.C.C.

              "Semiannual Interest Payment Date" means each January 1 and July
1.

              "Semiannual Rate" means the interest rate on the Bonds established
from time to time pursuant to Section 2.3(d).

              "Semiannual Rate Period" means any period during which the Bonds
bear interest at a Semiannual Rate.

              "Short-Term Rate" means any of the Weekly Rate, the Monthly Rate,
the Semiannual Rate or the Money Market Rate.

              "Short-Term Rate Period" means any period during which the Bonds
bear interest at a Short-Term Rate.

              "State" means the State of Iowa.

              "Substantial User" means, with respect to any "facilities" (as the
term "facilities" is used in Section 144(a) of the Code), a "substantial user"
of such "facilities" within the meaning of Section 147(a) of the Code.

              "Surplus Bond Proceeds" means all moneys and any unliquidated
investments remaining in the Initial Fund on the Completion Date and after
payment in full of the Costs of the Project (except for costs not then due and
payable for which the Trustee shall have retained amounts pursuant to the
Agreement).

              "Surplus Fund" means the fund created pursuant to Section 4.3.

              "Tender Agent" means Wachovia Bank of North Carolina, National
Association, and its successors appointed and serving in such capacity under
this Indenture.

              "Tender Agent Agreement" means any certificate or agreement
executed by a Tender Agent in connection with such Tender Agent's duties
hereunder.

              "Trustee" means First-Citizens Bank & Trust Company, or any
successor trustee appointed under this Indenture.

              "U.C.C." means the Uniform Commercial Code of the State as now in
effect or hereafter amended.

              "Untendered Bond" means any Untendered Bond as defined in Section
2.6(f).

              "Weekly Rate" means the interest rate on the Bonds established
pursuant to Section 2.3(b).

                                      -16-
<PAGE>   21

              "Weekly Rate Period" means any period during which the Bonds bear
interest at a Weekly Rate.

                                   ARTICLE II

                                    THE BONDS

              Section 2.1. Authorized Amount of Bonds. No Bonds may be issued
under the provisions of this Indenture except in accordance with this Article.
The total principal amount of Bonds that may be issued and outstanding hereunder
is expressly limited to $3,000,000, subject to the provisions of Sections 2.13,
2.14 and 2.15. The Bonds shall be designated "Iowa Finance Authority Tax-Exempt
Adjustable Mode Industrial Development Revenue Bonds (Dixie Bedding Company
Project) Series 1995." The form of Bond attached as Exhibit A to this Indenture
shall be the form of Bond referred to herein.

              Section 2.2. Issuance of Bonds. The Bonds shall bear interest from
the date thereof, until paid, at the rates set forth in Section 2.3 (computed on
the basis of a 365-day year (366 days in a leap year) for the actual days
elapsed during any Short-Term Rate Period other than a Money Market Rate Period
or a Semiannual Rate Period, a 360-day year of twelve 30-day months during any
Long-Term Rate Period or Semiannual Rate Period and a 360-day year for actual
days elapsed during any Money Market Rate Period (calculated by multiplying the
principal amount of Bonds by the interest rate, dividing that sum by 360, and
multiplying that amount by the actual days elapsed)), and shall mature, unless
sooner paid, on April 1, 2015 on which date all unpaid principal, redemption
premium, if any, and interest on the Bonds shall be due and payable.

              The Bonds shall be issued as fully registered bonds without
coupons in Authorized Denominations. The Bonds shall be numbered from R-1
upwards bearing numbers not then contemporaneously outstanding (in order of
issuance) according to the records of the Registrar.

              The Bonds shall be dated the Issue Date. Interest on the Bonds
shall be computed from the Interest Payment Date to which interest has been paid
or duly provided for next preceding the date of authentication thereof, unless
(a) such date of authentication shall be prior to the first Interest Payment
Date, in which case interest shall be computed from the Issue Date, or (b) such
date of authentication shall be an Interest Payment Date to which interest on
the Bonds has been paid in full or duly provided for, in which case interest
shall be computed from such date of authentication; provided, however, that if
interest on the Bonds shall be in default, Bonds issued in exchange for Bonds
surrendered for registration of transfer or exchange shall bear interest from
the last date to which interest has been paid or duly provided for on the Bonds
or, if no interest has been paid or duly provided for on the Bonds, from the
Issue Date.

                                      -17-
<PAGE>   22

              The principal of, redemption premium, if any, and the interest on
the Bonds shall be payable in lawful currency of the United States. The
principal of and redemption premium, if any, on the Bonds shall be payable at
the principal office of the Paying Agent upon presentation and surrender of the
Bonds. Payments of interest on the Bonds will be mailed to the persons in whose
names the Bonds are registered on the Register at the close of business on the
Record Date next preceding each Interest Payment Date; provided that, prior to
the Fixed Rate Conversion Date, any Holder of a Bond or Bonds in an aggregate
principal amount of not less than $250,000 may, by prior written instructions
filed with the Paying Agent (which instructions shall remain in effect until
revoked by subsequent written instructions), instruct that interest payments for
any period prior to the Fixed Rate Conversion Date be made by wire transfer to
an account in the continental United States or other means acceptable to the
Paying Agent.

              Section 2.3. Interest Rates on Bonds.

              (a) Initial Rate - General. The Bonds shall bear interest as
provided herein from their respective dates to and including the date of payment
in full of the Bonds. Interest accrued on the Bonds shall be paid on each
Interest Payment Date (or, if such day is not a Business Day, the next
succeeding Business Day) commencing on the earlier of the first Mandatory
Purchase Date or July 1, 1995 (or if such day is not a Business Day, the next
succeeding Business Day). The interest rate on the Bonds will be determined as
provided in this Section except that no rate shall exceed the lesser of (i) the
Ceiling Rate or (ii) the maximum rate permitted by applicable law. The Bonds
shall initially bear interest at a Weekly Rate from the Issue Date until the
date on which the Interest Rate Determination Method is changed as described in
Section 2.4. Such Weekly Rate for the initial Interest Period shall be
determined by the Placement Agent on the Issue Date in the manner set forth in
Section 2.3(b) with respect to subsequent Interest Periods. Thereafter, during
any Weekly Rate Period, the Remarketing Agent will determine a Weekly Rate in
accordance with Section 2.3(b). Notwithstanding anything herein to the contrary,
each Interest Rate Determination Method in effect from time to time shall
continue in effect until the date on which such Interest Rate Determination
Method is changed as described in Section 2.4.

              (b) Weekly Rate. During any Weekly Rate Period the Bonds will bear
interest at the Weekly Rate. During any Weekly Rate Period, the Remarketing
Agent will determine the Weekly Rate for the applicable Interest Period by 4:00
p.m., Local Time, on the applicable Computation Date. Each Weekly Rate shall be
the rate of interest that, if borne by the Bonds, would, in the judgment of the
Remarketing Agent, having due regard for the prevailing financial market
conditions for revenue bonds or other securities the interest on which is
excluded from gross income for federal income tax purposes of the same general
nature as the Bonds or securities the interest on which is excluded from gross
income for federal income tax purposes that are comparable as to credit and
maturity (or comparable with respect to optional tender provisions) with the

                                      -18-
<PAGE>   23

credit and maturity or the optional tender provisions of the Bonds, be the
interest rate necessary, but would not exceed the interest rate necessary, to
enable the Remarketing Agent to place the Bonds at a price of par (plus accrued
interest, if any) on the first Business Day of such Interest Period; provided,
that, if for any reason the Weekly Rate for any Interest Period is not
established as aforesaid by the Remarketing Agent, no Remarketing Agent shall be
serving as such hereunder or the rate so established is held to be invalid or
unenforceable with respect to any Interest Period, then the Weekly Rate for such
Interest Period shall be 100% of the Alternate Weekly Index on the date such
interest rate was (or would have been) determined as provided above. The
Remarketing Agent (or if no Remarketing Agent is serving as such hereunder, the
Trustee) shall notify the Company immediately by telephone if the Alternate
Weekly Index is applicable, with written notice to follow promptly. In
connection with any change in the Interest Rate Determination Method to a Weekly
Rate pursuant to Section 2.4(a), the initial Weekly Rate shall be determined as
provided above on the applicable Computation Date.

              (c) Monthly Rate. During any Monthly Rate Period the Bonds will
bear interest at the Monthly Rate. During any Monthly Rate Period, the
Remarketing Agent will determine the Proposed Rate for the applicable Interest
Period by 2:00 p.m., Local Time, on the Proposed Rate Computation Date.
Thereafter, the Remarketing Agent will determine a Monthly Rate by 4:00 p.m.,
Local Time, on the applicable Computation Date; provided, however, that such
rate shall not be less than the Proposed Rate determined by the Remarketing
Agent on the preceding Proposed Rate Computation Date. Each Monthly Rate shall
be the rate of interest which, if borne by the Bonds, would, in the judgment of
the Remarketing Agent, having due regard for the prevailing financial market
conditions for revenue bonds or other securities the interest on which is
excluded from gross income of the holders thereof for federal income tax
purposes of the same general nature as the Bonds or securities the interest on
which is excluded from gross income of the holders thereof for federal income
tax purposes that are comparable as to credit and maturity (or comparable with
respect to optional tender provisions) with the credit and maturity or the
optional tender provisions of the Bonds, be the interest rate necessary, but
(subject to the foregoing proviso concerning the Proposed Rate) would not exceed
the interest rate necessary, to enable the Remarketing Agent to place the Bonds
at a price of par (plus accrued interest, if any) on the first Business Day of
such Interest Period; provided that, if for any reason the Monthly Rate or the
Proposed Rate for any Interest Period is not established as aforesaid by the
Remarketing Agent, no Remarketing Agent shall be serving as such hereunder or
the rate so established is held to be invalid or unenforceable with respect to
any Interest Period, then the Monthly Rate for such Interest Period shall be
100% of the Alternate Monthly Index on the date such interest rate was (or would
have been) determined as provided above. The Remarketing Agent (or if no
Remarketing Agent is serving as such hereunder, the Trustee) shall notify the
Company immediately by telephone if the Alternate Monthly Index is applicable,
with written notice to

                                      -19-
<PAGE>   24

follow promptly. In connection with any change in the Interest Rate
Determination Method to a Monthly Rate pursuant to Section 2.4(a), the Proposed
Rate shall be determined as provided above on the applicable Proposed Rate
Computation Date and the initial Monthly Rate shall be determined as provided
above on the applicable Computation Date.

              (d) Semiannual Rate. During any Semiannual Rate Period the Bonds
will bear interest at the Semiannual Rate. During any Semiannual Rate Period,
the Remarketing Agent will determine the Proposed Rate for the next Interest
Period by 2:00 p.m., Local Time on the Proposed Rate Computation Date.
Thereafter, the Remarketing Agent will determine a Semiannual Rate for the next
Interest Period by 4:00 p.m., Local Time, on the applicable Computation Date;
provided, however, that such Semiannual Rate shall not be less than the Proposed
Rate determined by the Remarketing Agent on the preceding Proposed Rate
Computation Date. Each Semiannual Rate shall be the rate of interest which, if
borne by the Bonds, would, in the judgment of the Remarketing Agent, having due
regard for the prevailing financial market conditions for revenue bonds or other
securities the interest on which is excluded from gross income of the holders
thereof for federal income tax purposes of the same general nature as the Bonds
or securities the interest on which is excluded from gross income of the holders
thereof for federal income tax purposes that are comparable as to credit and
maturity (or comparable with respect to optional tender provisions) with the
credit and maturity or the optional tender provisions of the Bonds, be the
interest rate necessary, but (subject to the foregoing proviso concerning the
Proposed Rate) would not exceed the interest rate necessary, to enable the
Remarketing Agent to place the Bonds at a price of par (plus accrued interest,
if any) on the first Business Day of such Interest Period. If for any reason the
Semiannual Rate or the Proposed Rate for any Interest Period is not established
as aforesaid by the Remarketing Agent, no Remarketing Agent shall be serving as
such hereunder or the rate so established is held to be invalid or unenforceable
with respect to any Interest Period, then the Semiannual Rate for such Interest
Period shall be 100% of the Alternate Semiannual Index on the date such interest
rate was (or would have been) determined as provided above. The Remarketing
Agent (or if no Remarketing Agent is serving as such hereunder, the Trustee)
shall notify the Company immediately by telephone if the Alternate Semiannual
Index is applicable, with written notice to follow promptly. In connection with
any change in the Interest Rate Determination Method to a Semiannual Rate
pursuant to Section 2.4(a), the Proposed Rate shall be determined as provided
above on the applicable Proposed Rate Computation Date and the initial
Semiannual Rate shall be determined as provided above on the applicable
Computation Date.

              (e) Money Market Rate. During any Money Market Rate Period, the
Bonds shall bear interest at the Money Market Rate. During any Money Market Rate
Period, the Remarketing Agent will, in the exercise of its reasonable judgment,
select the Money Market Rate Period, the Money Market Rate Index and Money
Market Percentage not later than 12:30 p.m., Local Time, on the first day

                                      -20-
<PAGE>   25

of such Money Market Rate Period. The Money Market Rate Index and the Money
Market Percentage applicable to the Bonds shall be selected by the Remarketing
Agent with the intention of yielding the lowest Money Market Rate that would be
necessary for the Remarketing Agent to place all the Bonds at a price of par
(plus accrued interest, if any) on the first day of any Money Market Rate Period
on the first day of each Money Market Rate Period, the Remarketing Agent shall
give written notice to the Trustee and the Company specifying (i) the Money
Market Rate Index selected, (ii) the Money Market Percentage selected, and (iii)
the frequency of change or adjustment in rates established pursuant to such
Money Market Rate Index. If for any reason the Remarketing Agent fails to
determine the Money Market Rate, no Remarketing Agent shall be serving as such
hereunder or the rate so established is held to be invalid or unenforceable,
then the Money Market Rate shall be the Weekly Rate established pursuant to
Section 2.3(b). The Remarketing Agent (or if no Remarketing Agent is serving as
such hereunder, the Trustee) shall notify the Company immediately by telephone
if the Weekly Rate is applicable, with written notice to follow promptly.

              (f) Medium-Term Rate. During any Medium-Term Rate Period, the
Bonds shall bear interest at the Medium-Term Rate. The interest rate to be borne
by the Bonds from the applicable Conversion Date to the last day of the
applicable Medium-Term Rate Period shall be the rate determined by the
Remarketing Agent on the applicable Computation Date to be the rate which, if
borne by the Bonds would, in the judgment of the Remarketing Agent having due
regard for prevailing market conditions for revenue bonds or other securities
the interest on which is excluded from gross income for federal income tax
purposes and that are comparable to the Bonds, be the interest rate necessary,
but would not exceed the interest rate necessary, to enable the Remarketing
Agent to place the Bonds at a price of par on the applicable Conversion Date. If
for any reason the applicable rate is not established as aforesaid by the
Remarketing Agent, no Remarketing Agent shall be serving as such hereunder or
the rate so established is held to be invalid or unenforceable, the interest
rate to be borne by the Bonds from the applicable Conversion Date to the last
day of the applicable Medium-Term Rate Period shall be equal to 100% of the
Alternate Medium-Term Index as of the applicable Computation Date. The
Remarketing Agent (or if no Remarketing Agent is serving as such hereunder, the
Trustee) shall notify the Company immediately by telephone if the Alternate
Medium-Term Index is applicable, with written notice to follow promptly.

              On the Computation Date with respect to a Medium-Term Rate, the
Remarketing Agent shall determine the Medium-Term Rate Period. Each Medium-Term
Rate Period shall be at least 271 days and shall end no later than the date of
maturity of the Bonds or on a day immediately preceding a Business Day. If the
Remarketing Agent fails to determine the Medium-Term Rate Period, no Remarketing
Agent shall be serving as such hereunder or the Medium-Term Rate Period so
established shall be held to be invalid or unenforceable, the Medium-Term Rate
Period shall be (i) if the Interest Rate

                                      -21-
<PAGE>   26

Determination Method in effect immediately prior to such Conversion Date was a
Medium-Term Rate, the shorter of (a) the period equal to the Medium-Term Rate
Period for such Medium-Term Rate (provided, however, that if the last day of
such period would not be a day immediately preceding a Business Day, such period
shall be extended to the next succeeding day that is a day immediately preceding
a Business Day) and (b) the remaining maturity of the Bonds, or (ii) if the
Interest Rate Determination Method in effect immediately prior to such
Conversion Date was not a Medium-Term Rate, the shorter of (a) the period ending
on the first date that is a day immediately preceding a Business Day and is at
least 271 days after the Conversion Date and (b) the remaining maturity of the
Bonds.

              If requested in the Conversion Notice by the Company, the
Remarketing Agent may also determine on the Computation Date redemption
premiums, different from those set forth in Section 2.18, for optional
redemption of the Bonds during the Medium-Term Rate Period. These redemption
premiums shall be consistent with the prevailing market conditions, in the
reasonable judgment of the Remarketing Agent. The Remarketing Agent shall not,
however, establish redemption premiums different from those set forth in Section
2.18 unless an Opinion of Bond Counsel shall be furnished to the effect that
such action will not adversely affect the exclusion from gross income of
interest on the Bonds for federal income tax purposes.

              (g) Fixed Rate. The Bonds shall bear interest at the Fixed Rate
during the Fixed Rate Period. The interest rate to be borne by the Bonds from
the Fixed Rate Conversion Date to the date of payment in full of the Bonds shall
be the rate determined by the Remarketing Agent on the applicable Computation
Date to be the rate which, if borne by the Bonds would, in the judgment of the
Remarketing Agent having due regard for the prevailing market conditions for
revenue bonds or other securities the interest on which is excluded from gross
income for federal income tax purposes and that are comparable to the Bonds, be
the interest rate necessary, but would not exceed the interest rate necessary,
to enable the Remarketing Agent to place the Bonds at a price of par on the
Fixed Rate Conversion Date. If for any reason the Fixed Rate is not established
as aforesaid by the Remarketing Agent or no Remarketing Agent shall be serving
as such hereunder, then the provisions of the last paragraph of Section 2.4(e)
shall apply; if the Fixed Rate established by the Remarketing Agent is held to
be invalid or unenforceable, the interest rate to be borne by the Bonds from the
Fixed Rate Conversion Date to the date of payment in full of the Bonds shall be
determined by the Remarketing Agent based on the criteria in the preceding
sentence and avoiding the cause of invalidity or unenforceability.

              If requested in the Conversion Notice by the Company, the
Remarketing Agent may also determine on the Computation Date redemption
premiums, different from those set forth in Section 2.18, for optional
redemption of the Bonds during the Fixed Rate Period. These redemption premiums
shall be consistent with the prevailing market conditions, in the reasonable
judgment of the

                                      -22-
<PAGE>   27

Remarketing Agent. The Remarketing Agent shall not, however, establish
redemption premiums different from those set forth in Section 2.18 unless an
Opinion of Bond Counsel shall be furnished to the effect that such action will
not adversely affect the exclusion from gross income of interest on the Bonds
for federal income tax purposes.

              (h) Notice of Rates. Promptly following the determination of any
Rate or any Proposed Rate, the Remarketing Agent shall give notice thereof to
the Trustee and the Paying Agent. Promptly upon receipt from the Remarketing
Agent of any Semiannual Rate, Medium-Term Rate or Fixed Rate, the Paying Agent
shall give each Holder notice of the new Rate. The Company and any Holder or
Beneficial Owner may obtain any Proposed Rate on or after the applicable
Proposed Rate Computation Date and may obtain any Rate on or after the
applicable Computation Date upon request to the Remarketing Agent.

              (i) Absence of Remarketing Agent. If no Remarketing Agent shall be
serving hereunder, the determination of the Alternate Weekly Index, the
Alternate Monthly Index, the Alternate Semiannual Index, the Money Market Rate
Index, the Money Market Percentage and the Alternate Medium-Term Index shall be
made by the Trustee.

              (j) Determination of Rate Conclusive. The determination of any
Rate and Proposed Rate by the Remarketing Agent (or the Trustee), shall be
conclusive and binding upon the Issuer, the Company, the Trustee, the Paying
Agent, the Tender Agent, the Remarketing Agent and the Holders or Beneficial
Owners.

              (k) No Liability. In determining the interest rate that the Bonds
shall bear as provided in this Section, neither the Remarketing Agent nor the
Trustee shall have any liability to the Issuer, the Company, the Trustee, the
Tender Agent, the Paying Agent, the Registrar, the Credit Issuer or any Holder
or Beneficial Owners except for its gross negligence or willful misconduct.

              (l) Opinion of Bond Counsel. If at any time, the interest rate on
the Bonds shall be determined by the application of the Alternate Weekly Index,
Alternate Monthly Index, Alternate Semiannual Index or Alternate Medium-Term
Index, the Company shall use its best efforts to cause to be delivered to the
Trustee an opinion of Bond Counsel to the effect that the determination of the
interest rate on the Bonds by the application of any such index shall not
adversely affect the exclusion of interest on the Bonds from gross income of
Holders or former Holders for federal income tax purposes. If the Trustee does
not receive such Opinion of Bond Counsel within ten (10) days after the date on
which the interest rate on the Bonds is first determined by application of such
index, the Trustee shall promptly give notice to the Issuer, the Credit Issuer,
the Company, the Remarketing Agent, the Tender Agent and the Paying Agent of
such failure.

              Section 2.4. Conversion of Interest Rate Determination Method.

                                      -23-
<PAGE>   28

              (a) Conversion Notice. The Interest Rate Determination Method may
be changed from any Short-Term Rate or a Medium-Term Rate to any other Interest
Rate Determination Method or from a Medium-Term Rate to a new Medium-Term Rate
or a Money Market Rate to a new Money Market Rate on any Conversion Date by the
Company giving written notice of such change (a "Conversion Notice") to the
Remarketing Agent and the Trustee with a copy to the Issuer, the Tender Agent,
the Paying Agent, the Rating Agency, if any, rating the Bonds and the Credit
Issuer (if any). The Conversion Notice must be received by the Remarketing Agent
and the Trustee at least forty (40) days prior to the proposed Conversion Date.

              Each Conversion Notice shall state (i) that the Company elects to
change the Interest Rate Determination Method to a new Interest Rate
Determination Method, or from the interest rate applicable during a Medium-Term
Rate Period to a new interest rate during a new Medium-Term Rate Period, or from
a Money Market Rate to a new Money Market Rate, (ii) the proposed Conversion
Date, (iii) the Interest Rate Determination Method to be in effect from and
after such Conversion Date, (iv) whether a Credit Facility is to be in effect
from and after such Conversion Date, and, if so, the terms of such Credit
Facility, and (v) if a Long-Term Rate is to be in effect from and after such
Conversion Date, and if redemption premiums different from those set forth in
Section 2.18 are to be applicable as described in Sections 2.3(f) and 2.3(g),
the redemption premiums to be applicable during such Long-Term Rate Period.

              (b) Opinions With Respect to Conversions. Each Conversion Notice
given to the Remarketing Agent and the Trustee shall be accompanied by an
opinion of Bond Counsel to the effect that the change in the Interest Rate
Determination Method or the change from a Medium-Term Rate to a new Medium-Term
Rate or from a Money Market Rate to a new Money Market Rate will not cause the
interest on the Bonds to be included in the gross income of the recipients
thereof for federal income tax purposes and that such change is permitted under
this Indenture.

              The Company shall deliver to the Remarketing Agent and the
Trustee, by 10:00 a.m., Local Time, on each Conversion Date a supplemental
opinion of Bond Counsel to the effect that the change in the Interest Rate
Determination Method or from a Medium-Term Rate to a new Medium-Term Rate or
from a Money Market Rate to a new Money Market Rate is permitted under this
Indenture and, under the laws existing on such Conversion Date, the change will
not cause the interest on the Bonds to be included in the gross income of the
recipients thereof for federal income tax purposes.

              (c) Conversion Date. if the Interest Rate Determination Method in
effect prior to a Conversion Date is:

              (1) a Weekly Rate or a Monthly Rate, the Conversion Date must be
       the first Business Day of an Interest Period;

                                      -24-
<PAGE>   29

              (2) a Semiannual Rate, the Conversion Date must be a Semiannual
       Interest Payment Date (or, if such day is not a Business Day, the next
       succeeding Business Day);

              (3) a Money Market Rate with respect to which the applicable Money
       Market Rate Index is based on money market instruments not having a fixed
       maturity and the interest rate on which may change at any time, the
       Conversion Date must be a Business Day;

              (4) a Money Market Rate with respect to which the applicable Money
       Market Rate Index is based on money market instruments with a fixed
       maturity or the interest on which may be changed only on a fixed reset
       date, the Conversion Date must be such maturity or reset date; or

              (5) a Medium-Term Rate, the Conversion Date must be the day next
       succeeding the last day of the Medium-Term Rate Period.

              (d) Notice of Conversions to Holders. The Trustee shall give
written notice to the Holders of a Conversion Date, which notice shall be in
substantially the form attached to this Indenture as Exhibit B, appropriately
completed, and shall be sent by first-class mail, postage prepaid, at least
thirty (30) days prior to the Conversion Date.

              (e) Failure or Revocation of Conversion. If (i) the Company fails
to deliver to the Trustee and the Remarketing Agent by 10:00 a.m., Local Time,
on the Conversion Date any supplemental Opinion of Bond Counsel required by
subsection (b) of this Section, or (ii) an Event of Default shall have occurred
and be continuing hereunder, the Interest Rate Determination Method for the
Bonds shall not be changed on the Conversion Date and the Trustee shall
immediately notify by telephone the Credit Issuer, if any, the Remarketing
Agent, the Issuer, the Paying Agent and the Tender Agent that the Interest Rate
Determination Method for the Bonds shall not be changed on the Conversion Date.

              Notwithstanding any other provision in this Indenture to the
contrary, no conversion of the Interest Rate Determination Method to the Fixed
Rate shall occur if the Company, not later than 10:00 a.m., Local Time, on the
Business Day immediately preceding the applicable Computation Date, directs the
Remarketing Agent not to change the Interest Rate Determination Method to the
Fixed Rate by written notice, with a copy to the Trustee, the Issuer, the Paying
Agent, the Tender Agent, the Remarketing Agent and the Credit Issuer, if any.

              If a proposed conversion of the Interest Rate Determination Method
is cancelled pursuant to the provisions of the two preceding paragraphs, all
Bonds shall nevertheless be deemed to have been tendered for purchase on the
Conversion Date and shall be purchased on the Conversion Date. The Bonds shall
continue to bear interest in accordance with the Interest Rate Determination
Method

                                      -25-
<PAGE>   30

in effect prior to the Conversion Date and, in the case of a proposed change
from a Medium-Term Rate or a Money Market Rate, for a Medium-Term Rate Period or
Money Market Rate Period ending on the first day that is a day immediately
preceding a Business Day and that occurs on or after the day that is the same
number of days after the proposed Conversion Date as the number of days in the
immediately preceding Medium-Term Rate Period or Money Market Rate Period, as
the case may be (but in no event later than the maturity of the Bonds);
provided, however, that (i) the rate of interest that the Bonds will bear shall
be determined on the Conversion Date and (ii) if the Interest Rate Determination
Method in effect prior to the Conversion Date is an Interest Rate Determination
Method that requires the Remarketing Agent to set a Proposed Rate, for purposes
of this Section 2.4(e), the provisions of this Indenture requiring the setting
of such Proposed Rate shall not be applicable.

              (f) Failure to Mail Certain Notices. Failure to mail the notice
described in subsection (d), or any defect therein, shall not affect the
validity of any interest rate or change in the Interest Rate Determination
Method on any of the Bonds or the requirement that the Bonds shall be tendered
pursuant to Section 2.6(e) or extend the period for tendering any of the Bonds
for purchase, and the Trustee shall not be liable to any Holder by reason of its
failure to mail such notice or any defect therein.

              Section 2.5. Issuance of Credit Facility.

              (a) Issuance by a Credit Issuer. During any Short-Term Rate Period
or Medium-Term Rate Period during which no Credit Facility is in effect, the
Company may, with the consent of the Remarketing Agent, arrange for issuance by
a Credit Issuer of a Credit Facility, on the terms and subject to the conditions
hereof and upon delivery by the Company to the Trustee, the Remarketing Agent,
the Paying Agent and the Issuer:

              (1) of a notice (the "Credit Issuance Notice") on the first
       Business Day of any calendar month during any Short-Term Rate Period or
       Medium-Term Rate Period, stating that the Company has, with the consent
       of the Remarketing Agent, arranged for the issuance of a Credit Facility
       and specifying the proposed Credit Issuance Date accompanied by an
       Opinion of Bond Counsel to the effect that the issuance of such Credit
       Facility will not cause interest on the Bonds to be included in gross
       income of the recipients thereof for federal income tax purposes and that
       such issuance is permitted under this Indenture; and

              (2) by 10:00 a.m., Local Time, on the applicable Credit Issuance
       Date, of (i) a supplemental Opinion of Bond Counsel stating that under
       the laws existing on the Credit Issuance Date the issuance of the Credit
       Facility will not cause the interest on the Bonds to be included in gross
       income of the recipients thereof for federal income tax purposes, (ii) an
       opinion of Counsel for the Credit Issuer, addressed to the

                                      -26-
<PAGE>   31

       Issuer, the Trustee, the Rating Agency, if any, rating the Bonds, the
       Remarketing Agent and the Paying Agent, to the effect (a) that the Credit
       Facility has been duly executed and delivered by the Credit Issuer and is
       also the legal, valid and binding obligation of the Credit Issuer or, if
       the Credit Facility is issued by a branch or agency of a foreign
       commercial bank, to the effect that the Credit Facility is the legal,
       valid and binding obligation of such branch or agency, and (b) that the
       issuance of the Credit Facility will not cause the Bonds or the Credit
       Facility to be subject to the registration requirements of the Securities
       Act of 1933, as amended, and (iii) an opinion of Counsel addressed to the
       Trustee, the Issuer, the Rating Agency, if any, rating the Bonds, the
       Remarketing Agent and the Paying Agent to the effect that payments of
       principal, premium, if any, or Purchase Price of or interest on the Bonds
       from the proceeds of a drawing on such Credit Facility will not
       constitute avoidable preferential payments pursuant to the provisions of
       Section 547 of the United States Bankruptcy Code, 11 U.S.C. Section 101
       et seq. In addition, if the Credit Facility is issued by a branch or
       agency of a foreign commercial bank, there shall also be delivered an
       opinion of Counsel, licensed to practice law in the jurisdiction in which
       the main office of such bank is located, to the effect that such Credit
       Facility has been duly executed and delivered and is the legal, valid and
       binding obligation of such Credit Issuer.

              (b) Credit Issuance Date. The Credit Issuance Date must be (i)
with respect to a Weekly Rate Period, Monthly Rate Period or Semiannual Rate
Period, an Optional Tender Date or (ii) with respect to any Money Market Rate
Period or Medium-Term Rate Period, a Conversion Date, in either case that occurs
in the second calendar month following the calendar month during which the
Trustee receives the Credit Issuance Notice.

              (c) Notice of Credit Facility to Holders. Upon receipt of a Credit
Issuance Notice from the Company meeting the requirements set forth in
subsection (a) hereof, the Trustee shall give notice by first-class mail,
postage prepaid, to the Holders at least thirty (30) days prior to the proposed
Credit Issuance Date which notice shall be in substantially the form of Exhibit
C hereto, appropriately completed.

              (d) Nonacceptance of Credit Facility. If the Company fails to
deliver to the Trustee, the Paying Agent and the Remarketing Agent by 10:00
a.m., Local Time, on the Credit Issuance Date (i) the opinions of Bond Counsel
and other Counsel required by subsection (a)(2) of this Section or (ii) evidence
that the anticipated ratings specified in the Trustee's notice to Holders
pursuant to subsection (c) of this Section have been received, the Trustee and
the Paying Agent shall not accept the Credit Facility, but all Bonds shall be
deemed to have been tendered for purchase on the proposed Credit Issuance Date
and shall be purchased on such date. The Trustee shall immediately notify by
telephone the Issuer

                                      -27-
<PAGE>   32

and the Company if the Credit Facility is not accepted on the proposed Credit
Issuance Date.

              (e) Failure to Mail Notice. Failure to mail the notice described
in subsection (c), or any defect therein, shall not affect the issuance of the
Credit Facility or extend the period for tendering any of the Bonds for
purchase, and the Trustee shall not be liable to any Holder by reason of its
failure to mail such notice or any defect therein.

              Section 2.6. Tender of Bonds for Purchase.

              (a) Optional Tender During Weekly Rate Period or Monthly Rate
Period. During any Weekly Rate Period or Monthly Rate Period, the Holders of the
Bonds shall have the right to tender any such Bond (or portion thereof in an
Authorized Denomination, provided that any Bond or portion thereof remaining is
also in an Authorized Denomination), for purchase on any Optional Tender Date,
but only upon:

              (1) delivery to the Remarketing Agent at its principal office, not
       later than 4:00 p.m., Local Time, on the seventh (7th) day (or on the
       immediately preceding Business Day, if such seventh (7th) day is not a
       Business Day) next preceding such Optional Tender Date, of an irrevocable
       written, telephonic (followed, if requested by the Remarketing Agent, by
       written or facsimile confirmation delivered to the Remarketing Agent no
       later than the close of business on the next succeeding Business Day),
       facsimile or telegraphic notice (with a written or facsimile copy to the
       Tender Agent) stating (i) that such Holder will tender for purchase all
       or any portion of his/her Bonds in an Authorized Denomination and the
       amount of Bonds to be tendered and (ii) the Optional Tender Date on which
       such Bonds will be tendered; and

              (2) delivery of such Bond (with an appropriate instrument of
       transfer duly executed in blank) to the Tender Agent at its principal
       office at or prior to 10:00 a.m., Local Time, on such Optional Tender
       Date; provided, however, that no Bond shall be purchased unless such Bond
       as delivered to the Tender Agent shall conform in all respects to the
       description thereof in the aforesaid notice.

              (b) Optional Tender During Semiannual Rate Period. During any
Semiannual Rate Period, the Holders of the Bonds shall have the right to tender
any such Bond (or portion thereof in an Authorized Denomination, provided that
any Bond or portion thereof remaining is also in an Authorized Denomination) for
purchase on any Optional Tender Date, but only upon:

              (1) delivery to the Remarketing Agent at its principal office, not
       later than 4:00 p.m., Local Time, on the twentieth (20th) day (or on the
       immediately preceding Business Day if such twentieth day is not a
       Business Day) next preceding such Optional Tender Date of an irrevocable
       written, telephonic

                                      -28-
<PAGE>   33

       (followed, if requested by the Remarketing Agent, by written or facsimile
       confirmation delivered to the Remarketing Agent no later than the close
       of business on the next succeeding Business Day), facsimile or
       telegraphic notice (with a written or facsimile copy to the Tender Agent)
       stating (i) that such Holder will tender for purchase all or any portion
       of his/her Bonds in an Authorized Denomination and the amount of Bonds to
       be tendered and (ii) the Optional Tender Date on which such Bonds will be
       tendered; and

              (2) the delivery of such Bond (with an appropriate instrument of
       transfer duly executed in blank) to the Tender Agent at its principal
       office at or prior to 10:00 a.m., Local Time, on such Optional Tender
       Date; provided, however, that no Bond (or portion thereof) shall be
       purchased unless such Bond as delivered to the Tender Agent shall conform
       in all respects to the description thereof in the aforesaid notice.

              (c) Election to Tender Irrevocable. Any election of a Holder to
tender Bonds for purchase on an Optional Tender Date in accordance with
subsection (a) or (b) above shall be irrevocable and shall be binding on the
Holder making such election and on any transferee of such Holder.

              (d) Notices. The Remarketing Agent shall give the Tender Agent
prompt notice by telephone of receipt of (i) any tender notice received by it in
accordance with paragraph (1) of subsection (a) or (b) above, or (ii) any Credit
Issuance Notice received by it from the Company in accordance with Section
2.5(a). Upon the receipt of any such notice, the Tender Agent shall promptly
notify the Trustee, the Paying Agent and, except in the case of a notice
described in (ii) above, the Credit Issuer, if any, by telephone.

              During any Semiannual Rate Period, the Tender Agent shall give
notice by first-class mail, postage prepaid, to Holders not more than thirty
(30) or less than twenty (20) days prior to each Optional Tender Date, which
notice shall state in substance (i) the next Optional Tender Date, (ii) the next
Proposed Rate Computation Date related thereto, (iii) that the Proposed Rate may
be obtained at the principal office of the Remarketing Agent on or after the
Proposed Rate Computation Date, and (iv) that the Bonds are subject to tender at
the option of the Holder thereof in the manner set forth in subsection (b) of
this Section.

              (e) Mandatory Purchase on Conversion Date or on Credit
Modification Date or on Credit Issuance Date. The Bonds shall be subject to
mandatory tender for purchase on any Conversion Date, on any Credit Modification
Date and on any Credit Issuance Date at the Purchase Price thereof.
Notwithstanding the preceding sentence, there shall be no purchase pursuant to
this subsection of Bonds to be redeemed on the Mandatory Purchase Date, and
Bonds issued in exchange for or upon the registration of transfer of Bonds to be
redeemed on the Mandatory Purchase Date. Holders of Bonds shall

                                      -29-
<PAGE>   34

tender such Bonds to the Tender Agent by 10:00 a.m., Local Time, on each
Mandatory Purchase Date.

              (f) Bonds Deemed Tendered. If (1) with respect to a Mandatory
Purchase Date, a Holder fails to deliver such Bond to the Tender Agent on or
before the Mandatory Purchase Date, or (2) with respect to an Optional Tender
Date, a Holder gives notice pursuant to Section 2.6(a) or (b) to the Remarketing
Agent and thereafter fails to deliver such Bonds (or portion thereof) to the
Tender Agent, as required, then such Bond (or portion thereof), that is not
delivered to the Tender Agent, shall be deemed to have been properly tendered
(such Bond being hereinafter referred to as an "Untendered Bond") and, to the
extent that there shall be on deposit with the Paying Agent on the date purchase
thereof is required as provided herein an amount sufficient to pay the Purchase
Price thereof, such Untendered Bond shall cease to constitute or represent a
right to payment of principal or interest thereon and shall constitute and
represent only the right to the payment of the Purchase Price payable on such
date. The preceding sentence shall not limit the entitlement of any Holder on
any Record Date to receipt of interest due on such Mandatory Purchase Date or
Optional Tender Date, as the case may be.

              (g) Source of Funds for Purchase of Bonds. On each Optional Tender
Date and each Mandatory Purchase Date there shall be purchased (but solely from
funds set forth below) the Bonds (or portions thereof), tendered (or deemed
tendered) to the Tender Agent for purchase in accordance with this section at
the applicable Purchase Price. Funds for the payment of the Purchase Price for
such Bonds (or portions thereof), shall be paid by the Paying Agent solely from
the following sources and in the following order of priority:

              (1) moneys from the Bond Purchase Fund constituting Eligible
       Funds, if any, under clauses (i) or (ii) of the definition of Eligible
       Funds that have been transferred to the Paying Agent pursuant to Section
       4.4;

              (2) proceeds of the remarketing of such Bonds (or portions
       thereof) pursuant to Section 2.7 that have been transferred to the Paying
       Agent pursuant to said Section;

              (3) if a Credit Facility is th6n in effect, moneys drawn under
       such Credit Facility pursuant to Section 3.8(a)(ii); and

              (4) any other moneys furnished by or on behalf of the Company for
       purchase of Bonds.

       Bonds (or portions thereof) purchased as provided above shall be
       delivered as provided in Section 2.8.

              (h) No Purchases During Certain Defaults. The Holders shall not
have the right or be required, as the case may be, to tender any Bond (or
portion thereof) for purchase on an Optional Tender Date or Mandatory Purchase
Date if on such date a Credit

                                      -30-
<PAGE>   35

Facility is in effect and an Event of Default under Section 6.1 shall have
occurred and be continuing and as a result, the Trustee has declared the
principal and premium, if any, of the Bonds and the interest accrued thereon to
be immediately due and payable.

              (i) Notice of Mandatory Purchase Date. Not less than thirty (30)
days prior to each Mandatory Purchase Date occurring as a result of a Credit
Modification Date, the Trustee shall give written notice of such Mandatory
Purchase Date to the Remarketing Agent, the Tender Agent, the Paying Agent and,
by first-class mail, postage prepaid, the Holders, which notice shall be in
substantially the form of Exhibit D hereto, appropriately completed. Failure to
mail such notice or any defect therein shall not affect the rights or
obligations of Holders and the Trustee shall not be liable to any Holder
byreason of its failure to mail such notice or any defect therein. With respect
to a Mandatory Purchase Date that is a Conversion Date, the Trustee shall
provide notice to the Holders as set forth in Section 2.4(d). With respect to a
Mandatory Purchase Date that is a Credit Issuance Date, the Trustee shall
provide notice to the Holders as set forth in Section 2.5(c).

              (j) Purchase Notice. If the Bonds are held in a Book Entry System,
a purchase notice pursuant to Section 2.6(a)(1) may be delivered by a Beneficial
Owner. Such purchase notice must be delivered as set forth in Section 2.6(a)(1)
and must state that such Beneficial Owner will cause its beneficial interest (or
portion thereof in an Authorized Denomination) to be tendered, the amount of
such interest to be tendered, the Optional Tender Date on which such interest
will be tendered and the identity of the Participant through which the
Beneficial owner maintains its interest. Upon delivery of such notice, the
Beneficial Owner must make arrangements to have its beneficial ownership
interest in the Bonds being tendered transferred to the Tender Agent at or prior
to 10:00 a.m., on the Optional Tender Date, but need not otherwise comply with
Section 2.6(a)(2).

              Section 2.7. Remarketing of Bonds.

              (a) Beat Efforts to Place Bonds. The Remarketing Agent shall use
its best efforts to place Bonds (or portions thereof) at a price of par plus
accrued interest, if any, on each date that such Bonds (or portions thereof) are
required to be purchased pursuant to Section 2.6 and if such Bonds are not
placed on such date (such Bonds being hereinafter referred to as "Unremarketed
Bonds"), the Remarketing Agent shall continue, for a period not in excess of
thirty (30) days thereafter, to use its best efforts to place such Unremarketed
Bonds at a price of par plus accrued interest, if any. The Remarketing Agent
shall use its best efforts to place Unremarketed Bonds on a particular date that
is more than thirty (30) days after the date on which such Unremarketed Bonds
were tendered (or deemed tendered) for purchase and became Unremarketed Bonds
upon receipt by the Remarketing Agent and the Trustee by 10:00 a.m., Local Time,
on such date, of an Opinion of Bond Counsel to the effect that under the laws
existing on such

                                      -31-
<PAGE>   36
date, the placement of such Unremarketed Bonds on such date will not adversely
affect the exclusion from gross income of interest on the Bonds for federal
income tax purposes. By 12:00 noon, Local Time, on the Business Day prior to
each date that the Bonds (or portions thereof) are required to be purchased
pursuant to Section 2.6, the Remarketing Agent shall give initial notice by
telephone (promptly confirmed by telecopy) of the principal amount of the Bonds
for which it has arranged placement, together with the principal amount of the
Bonds, if any (and such other particulars with respect thereto as the Trustee or
Tender Agent may deem necessary), for which it has not arranged placement, to
the Trustee, the Tender Agent, the Company, the Credit Issuer, if any, and the
Paying Agent.

              Such initial notice shall be confirmed by telephone notice by 9:00
a.m., Local Time, on the date that such Bonds are to be purchased (such notice
to be promptly confirmed in writing) of the amount of Bonds not remarketed and
the information necessary to enable the Trustee to prepare new Bond certificates
with respect to the Bonds that were remarketed. By 9:30 a.m., Local Time, the
Remarketing Agent shall transfer to the Paying Agent the proceeds of the
remarketing of such Bonds.

              Notwithstanding anything herein to the contrary, Bonds may be
remarketed only at a price of par.

              (b) Draws on Credit Facility. In the event that moneys from the
sources described in Section 2.6(g)(1) and (2) are insufficient to pay the
Purchase Price of Bonds tendered or deemed tendered on an Optional Tender Date
or a Mandatory Purchase Date, the Trustee shall, by 11:00 a.m., Local Time, on
such Optional Tender Date or Mandatory Purchase Date, take all action required
to cause the Purchase Price of such Bonds, to the extent not available from the
sources described in Section 2.6(g)(1) and (2), to be paid from the Credit
Facility. In the event the Purchase Price of Bonds is paid from the Credit
Facility as described herein, and the Company does not reimburse the Credit
Issuer for such Purchase Price, upon the remarketing of such Bonds as described
in Section 2.7 (a), the Paying Agent shall deliver the proceeds of the
remarketing of such Bonds to the Credit Issuer.

              (c) No Remarketing During Default. The Remarketing Agent shall not
be required to remarket any Bonds pursuant to this Section if it has actual
knowledge that an Event of Default shall have occurred and be continuing
hereunder or if the Remarketing Agent determines, in its sole discretion, that
the remarketing of the Bonds would be unlawful or would be likely to result in
the imposition of liability or damages against the Issuer, the Remarketing
Agent, the Paying Agent, the Tender Agent, the Trustee, the Credit Issuer, if
any, or the Company.

              (d) Remarketing to Company or Issuer. If a Credit Facility is then
in effect, the Remarketing Agent shall not remarket any Bonds to the Company or
the Issuer or knowingly remarket any Bonds to an "insider" with respect to the
Issuer or

                                      -32-
<PAGE>   37

the Company within the meaning of Title 11 of the United States Code or to any
other Person obligated (as guarantor or otherwise) to make payments on the Bonds
or under the Agreement or under the Credit Agreement pursuant to this Section
prior to the expiration or earlier termination of the Credit Facility unless
prior to such remarketing, the Trustee, the Rating Agency, if any, rating the
Bonds' and the Remarketing Agent shall have received - an unqualified opinion of
Counsel experienced in bankruptcy law matters to the effect that such placement
would not result in a preferential payment pursuant to the provisions of Section
547 of the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq. upon an
Act of Bankruptcy, and if a Rating Agency is rating the Bonds, such Rating
Agency has confirmed to the Trustee in writing that its rating will not be
withdrawn or reduced as a result of such remarketing.

              (e) Notice to Proposed Purchasers of Bonds. The Remarketing Agent
will give any Person to whom Bonds are proposed to be remarketed written notice
of any Mandatory Purchase Date, acceleration of maturity of Bonds or redemption
of Bonds, notice of which has been given to Holders, prior to remarketing Bonds
to such Person.

              (f) No Remarketing Under Certain Conditions. Notwithstanding
anything to the contrary herein provided, the Bonds shall not be remarketed
unless (i) a Credit Facility providing for the payment of the principal of and
interest on, and Purchase Price of, the Bonds will be in effect following the
remarketing of such Bonds, (ii) no such Credit Facility will be in effect, but
at the time of such remarketing, the Bonds are rated by a Rating Agency and such
long-term and/or short-term rating is satisfactory to the Remarketing Agent in
its sole discretion, or (iii) no such Credit Facility will be in effect, but
following the remarketing of such Bonds, the Bonds will bear interest at a Long
Term Rate.

              Section 2.8. Delivery of Purchased Bonds. Bonds (or portions
thereof) purchased pursuant to Section 2.6 shall be delivered as follows:

              (a) Bonds Purchased from Remarketing Proceeds. Bonds purchased
with moneys described in Section 2.6(g)(2) shall be delivered to the purchasers
thereof upon receipt of payment therefor. Prior to such delivery the Registrar
shall provide for registration of transfer to the Holders, as provided in a
written notice from the Remarketing Agent.

              (b) Bonds Purchased from Draws Under Credit Facility. Bonds (or
portions thereof) purchased with moneys drawn under the Credit Facility shall be
surrendered to the Trustee for registration of transfer to the Company and upon
such registration of transfer, the Bonds issued in respect thereof shall be (i)
delivered to and held by the Trustee for the account of the Company, and no such
Bond shall be released, pledged or otherwise transferred or disposed of until
the Trustee shall have received written notice from the Credit Issuer that the
amounts so drawn under the Credit Facility, together with interest thereon, if
any, due pursuant to any Credit Agreement, have been reimbursed to the Credit
Issuer and that the amount so drawn

                                      -33-
<PAGE>   38

under the Credit Facility with respect to such Bonds has been, or upon such
release will be, correspondingly and fully reinstated, and thereupon shall be
delivered to, or in accordance with the written direction of, the Company or
(ii) if required pursuant to any Credit Agreement, issued to a pledge agent for
the account of the Credit Issuer as pledgee of such Bonds and no such Bond shall
be released, pledged or otherwise transferred or disposed of until the Trustee
shall have received written notice from the Credit Issuer that the amounts so
drawn under the Credit Facility, together with interest thereon, if any, due
pursuant to any Credit Agreement, have been reimbursed to the Credit Issuer and
that the amount so drawn under the Credit Facility with respect to such Bonds
has been, or upon such release will be, correspondingly and fully reinstated.

              (c) Bonds Purchased with Other Moneys. Bonds (or portions thereof)
purchased with any other moneys pursuant to Section 2.6(g) shall be delivered to
the Trustee for cancellation and shall be cancelled.

              (d) During Book Entry System. Notwithstanding anything herein to
the contrary, so long as the Bonds are held under the Book Entry System, Bonds
will not be delivered as set forth in (a) - (c) above; rather, transfers of
beneficial ownership of the Bonds to the persons indicated above will be
effected on the books of the Securities Depository pursuant to its rules and
procedures.

              Section 2.9. Execution Limited Obligation. The Bonds shall be
executed on behalf of the Issuer by the manual or facsimile signature of the
Chairman or Vice Chairman of the Issuer and attested by the manual or facsimile
signature of the Secretary of the Issuer and shall have impressed or imprinted
thereon the seal (or a facsimile thereof), if any, of the Issuer.

              In case the Chairman or Vice Chairman or the Secretary whose
manual or facsimile signature shall appear on the Bonds shall cease to be such
Chairman or Vice Chairman or Secretary before the delivery of such Bonds, such
manual or facsimile signatures shall nevertheless be valid and sufficient for
all purposes.

              The Bonds shall be limited obligations of the Issuer. The Bonds
and the interest thereon and redemption premium, if any, shall not be deemed to
constitute or create an indebtedness, liability or obligation of the Issuer, the
State of Iowa or any political subdivision or agency thereof within the meaning
of any State constitutional provision or statutory limitation or a pledge of the
faith and credit or the taxing power of the State of Iowa or any such political
subdivision or agency. The Bonds and the interest thereon are payable solely
from and secured by the Security, including the moneys available to be drawn by
the Trustee under any Credit Facility that may be in effect from time to time to
support payments due on or with respect to the Bonds, all as described in and
subject to limitations set forth in this

                                      -34-
<PAGE>   39

Indenture, for the equal and ratable benefit of the Holders, from time to time,
of the Bonds.

              Section 2.10. Certificate of Authentication. No Bonds shall be
secured hereby or entitled to the benefit hereof or shall be or become valid or
obligatory for any purpose unless there shall be endorsed thereon a certificate
of authentication, substantially in the form as set forth in the form of Bond
referred to in Section 2.11, executed by an officer of the Trustee; and such
certificate on any Bond issued by the Issuer shall be conclusive evidence and
the only competent evidence that it has been duly authenticated and delivered
hereunder.

              Section 2.11. Form of Bonds.

              The Bonds, the Trustee's certificate of authentication and the
form of assignment shall be in substantially the form set forth as Exhibit A
hereto, with such appropriate variations, omissions, substitutions and
insertions as are permitted or required hereby or are required by law and may
have such letters, numbers or other marks of identification and such legends and
endorsements placed thereon as may be required to comply with any applicable
laws or rules or regulations, or as may, consistent herewith, be determined by
the officers of the Issuer executing such Bonds, as evidenced by their execution
of the Bonds.

              The Bonds shall be in either typewritten or printed form, as the
Company shall direct, on behalf of the Issuer, with approval of the Trustee;
provided that any expenses, including but not limited to expenses of printing,
incurred in connection therewith shall be paid by the Company.

              On and after any Mandatory Purchase Date, Bonds authenticated and
delivered hereunder shall have omitted from the text thereof such provisions
contained in the form of the Bonds set forth as Exhibit A hereto as are not
applicable to the Bonds on and after such date or shall include such provisions
as will become applicable after such date including without limitation, any
reference to entitlement to any benefit of the Credit Facility, if then in
effect, and any redemption provisions made applicable as a result of the
occurrence of a Conversion Date relating to a conversion to a Long-Term Rate.

              Section 2.12. Delivery of Bonds. Upon the execution and delivery
hereof, the Issuer shall execute the Bonds and deliver them to the Trustee, and
the Trustee shall authenticate the Bonds and deliver them to such purchaser or
purchasers as shall be directed in writing by the Issuer as hereinafter in this
Section provided.

              Prior to the direction by the Issuer to the Trustee to deliver any
of the Bonds there shall be filed with the Trustee:

                                      -35-
<PAGE>   40

              (a) A certified copy of all resolutions adopted and proceedings
had by the issuer authorizing execution of the Indenture and the Agreement and
the issuance of the Bonds;

              (b) An original executed counterpart of this Indenture, the
Remarketing Agreement, the Credit Agreement, the Agreement and the Placement
Agreement;

              (c) The original executed Original Credit Facility, if a Credit
Facility is to be issued on the Issue Date;

              (d) Copies of any Financing Statements filed to perfect the
security interests in the Security;

              (e) A copy of completed IRS Form 8038 to be filed by or on behalf
of the Issuer pursuant to Section 149(e) of the Code;

              (f) An original executed counterpart of the certificate of the
Issuer establishing its reasonable expectations to the effect that the Bonds
will not be "arbitrage bonds" within the meaning of Section 148 of the Code;

              (g) An opinion of Counsel to the effect that this Indenture, the
Placement Agreement and the Agreement have been duly authorized, executed and
delivered by the Issuer and are legal, valid and binding agreements of the
Issuer and an approving Opinion of Bond Counsel that interest on the Bonds will
not be included in gross income for federal income tax purposes;

              (h) An opinion of Counsel f or the Company to the effect that the
Agreement, the Remarketing Agreement and the Placement Agreement have been duly
authorized, executed and delivered by the Company and are legal, valid and
binding agreements of the Company;

              (i) An opinion of Counsel for the Credit Issuer of the Original
Credit Facility, if any, addressed to the Issuer, the Company, the Remarketing
Agent, the Trustee and the Paying Agent to the effect that the Original Credit
Facility has been duly executed and delivered by the Credit Issuer and is a
legal, valid and binding obligation of the Credit Issuer or, if the original
Credit Facility is issued by a branch or agency of a foreign commercial bank, to
the effect that the original Credit Facility is the legal, valid and binding
obligation of such branch or agency and there shall also be delivered an opinion
of Counsel licensed to practice law in the jurisdiction in which the main office
of such bank is located, satisfactory to the Trustee, to the effect that such
Original Credit Facility has been duly executed and delivered by such branch or
agency and is the legal, valid and binding obligation of such bank; and

              (j) A request and authorization to the Trustee on behalf of the
Issuer and signed by a duly authorized officer of the Issuer directing the
Trustee to authenticate and deliver the Bonds in such specified denominations as
permitted herein to the initial

                                      -36-
<PAGE>   41

purchaser or purchasers upon payment to the Trustee, but for the account of the
Issuer, of a specified sum of money.

              Upon receipt of the foregoing, the Trustee shall authenticate and
deliver the Bonds as provided above.

              Section 2.13. Mutilated, Lost, Stolen or Destroyed Bonds. If any
Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and the
Trustee may authenticate and deliver a new Bond of the same maturity, interest
rate, principal amount and tenor in lieu of and in substitution for the Bond
mutilated, lost, stolen or destroyed; provided, that there shall be first
furnished to the Trustee evidence satisfactory to it and the Issuer of the
ownership of such Bond and of such loss, theft or destruction (or, in the case
of a mutilated Bond, such mutilated Bond shall first be surrendered to the
Trustee), together with indemnity satisfactory to the Trustee and the Issuer and
compliance with such other reasonable regulations as the Issuer and the Trustee
may prescribe. If any such Bond shall have matured or a redemption date
pertaining thereto shall have passed, instead of issuing a new Bond the Issuer
may pay the same without surrender thereof. The Issuer and the Trustee may
charge the Holder of such Bond with their reasonable fees and expenses in this
connection.

              Section 2.14. Exchangeability and Transfer of Bonds; Persons
Treated as Owners. Books for the registration of the Bonds and for the
registration of transfer of the Bonds as provided herein shall be kept by the
Registrar.

              Any Holder of a Bond, in person or by his/her duly authorized
attorney, may transfer title to his/her Bond on the Register upon surrender
thereof at the principal office of the Trustee, and by providing the Registrar
with a written instrument of transfer (in substantially the form of assignment
attached to the Bond) executed by the Holder or his/her duly authorized
attorney, and thereupon, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new Bond
or Bonds of the same aggregate principal amount and tenor as the Bond
surrendered (or for which transfer of registration has been effected) and of any
Authorized Denomination or Authorized Denominations.

              Bonds may be exchanged upon surrender thereof at the principal
office of the Registrar with a written instrument of transfer satisfactory to
the Registrar executed by the Holder or such Holder's attorney duly authorized
in writing, for an equal aggregate principal amount of Bonds of the same tenor
as the Bonds being exchanged and of any Authorized Denomination or Authorized
Denominations. The Issuer shall execute and the Trustee shall authenticate and
deliver Bonds that the Holder making the exchange is entitled to receive,
bearing numbers not contemporaneously then outstanding.

              Such registrations of transfer or exchanges of Bonds shall be
without charge to the Holders of such Bonds, but any taxes

                                      -37-
<PAGE>   42

or other governmental charges required to be paid with respect to the same shall
be paid by the Holder of the Bond requesting such registration of transfer or
exchange as a condition precedent to the exercise of such privilege. Any service
charge made by the Registrar for any such registration of transfer or exchange
and all reasonable expenses of the Issuer and the Trustee shall be paid by the
Company.

              The Registrar shall not register any transfer of any Bond, except
pursuant to a tender of Bonds on an Optional Tender Date or a Mandatory Purchase
Date, after notice calling such Bond (or portion thereof) for redemption has
been given and prior to such redemption, except in the case of any Bond to be
redeemed in part, the portion thereof not to be redeemed. In connection with any
such transfer pursuant to a tender of Bonds on an Optional Tender Date or a
Mandatory Purchase Date, the Registrar shall deliver to the transferee a copy of
the applicable notice of redemption.

              The person in whose name any Bond shall be registered shall be
deemed and regarded as the absolute owner thereof for all purposes, and payment
of or on account of either principal or interest shall be made only to or upon
the order of the registered owner thereof or his/her duly authorized attorney,
but such registration may be changed as hereinabove provided. All such payments
shall be valid and effectual to satisfy and discharge the liability upon such
Bond to the extent of the sum or sums so paid.

              All Bonds issued upon any registration of transfer or exchange of
Bonds shall be legal, valid and binding limited obligations of the Issuer,
evidencing the same debt, and entitled to the same security and benefits under
this Indenture, as the Bonds surrendered upon such registration of transfer or
exchange.

              Notwithstanding the foregoing, for so long as the Bonds are held
under the Book Entry System, transfers of beneficial ownership will be effected
pursuant to rules and procedures established by the Securities Depository.

              Section 2.15. Replacement Bonds. Except when the Bonds are held in
the Book Entry System, the Issuer shall execute and the Trustee shall
authenticate and deliver Replacement Bonds to replace Untendered Bonds. Any such
Replacement Bond shall be executed and authenticated as provided in this
Indenture. The Company shall bear all expenses in connection with the
preparation and delivery of the Replacement Bonds.

              Section 2.16. Cancellation. All Bonds that have been surrendered
to the Registrar pursuant to Section 2.13, 2.14 or 2.15 of this Indenture or for
the purpose of purchase upon an Optional Tender Date or a Mandatory Purchase
Date, or for payment upon maturity or redemption prior to maturity, shall be
cancelled and destroyed by the Registrar and a certificate of destruction shall
be delivered to the Issuer.

                                      -38-
<PAGE>   43

              Section 2.17. Ratably Secured. All Bonds issued hereunder are and
are to be, to the extent provided in this Indenture equally and ratably secured
by this Indenture without preference, priority or distinction on account of the
actual time or times of the authentication, delivery or maturity of the Bonds so
that subject as aforesaid, all Bonds at any time Outstanding shall have the same
right, lien and preference under and by virtue of this Indenture and shall all
be equally and ratably secured hereby with like effect as if they had all been
executed, authenticated and delivered simultaneously on the date hereof, whether
the same, or any of them, shall actually be disposed of at such date, or whether
they, or any of them, shall be disposed of at some future date. Notwithstanding
the foregoing, any Bond that is registered in the name of the Company or held or
required to be held by the Trustee or any pledge agent under a pledge agreement
pursuant to Section 2.8 shall not be entitled to any benefit of the Credit
Facility, if any.

              Section 2.18. Redemption of Bonds: Partial Redemption of Bonds.

              (a) Optional Redemption. During any Weekly Rate Period, the Bonds
are subject to redemption, at the direction of the Company, in whole on any
Business Day or in part on any Interest Payment Date at a redemption price equal
to the principal amount of the Bonds to be redeemed plus accrued interest
thereon to the redemption date.

              During any Monthly Rate Period the Bonds are subject to
redemption, at the direction of the Company, in whole on the first Business Day
of any calendar month or in part on any Interest Payment Date at a redemption
price equal to the principal amount of the Bonds to be redeemed plus accrued
interest thereon to the redemption date.

              During any Money Market Rate Period with respect to which the
applicable Money Market Rate Index is based on money market instruments not
having a fixed maturity and the interest rate on which may change at any time,
the Bonds are subject to redemption, at the direction of the Company, in whole
on any Business Day or in part on any Interest Payment Date, at a redemption
price equal to the principal amount of the Bonds to be redeemed plus accrued
interest thereon to the redemption date.

              During any Money Market Rate Period with respect to which the
applicable Money Market Rate Index is based on money market instruments with a
fixed maturity or the interest rate on which may be changed only on a fixed
reset date, the Bonds are subject to redemption, at the direction of the
Company, in whole on any such maturity date or fixed reset date or in part on
any Interest Payment Date, at a redemption price equal to the principal amount
of the Bonds to be redeemed plus accrued interest thereon to the redemption
date.

                                      -39-
<PAGE>   44

              During any Semiannual Rate Period the Bonds are subject to
redemption, at the direction of the Company, in whole or in part, on any
Interest Payment Date, at a redemption price equal to the principal amount of
the Bonds to be redeemed plus accrued interest thereon to the redemption date.

              During any Long-Term Rate Period, the Bonds are subject to
redemption, at the direction of the Company, in whole or in part on any Interest
Payment Date occurring on or after the First Day of Redemption Period as
described below, at the principal amount thereof, plus a redemption premium
(expressed as a percentage of principal amount) plus accrued interest thereon to
the redemption date as follows, provided, however, such redemption premium shall
be paid only from Eligible Funds described in subparts (i) and (ii) of the
definition of Eligible Funds on deposit in the Bond Fund, and such Eligible
Funds must be sufficient to pay such redemption premium without any draw on any
Credit Facility then in effect unless such Credit Facility provides for payment
of such premium:

<TABLE>
<CAPTION>
Length of Long-
Term Rate Period
From Conversion
Date Until End                                              Redemption Premium
of Rate Period                                              as a Percentage of
(Expressed in                First Day of                   Principal Amount
Years)                       Redemption Period              of Bonds
----------------             -----------------              ------------------
<S>                          <C>                            <C>
More than 15                 10th Anniversary               3% declining by
                             of Conversion                  1% every year
                             Date                           after the 10th Anni-
                                                            versary of the Con-
                                                            version Date until
                                                            reaching 0%, and
                                                            thereafter 0%

More than 10                 7th Anniversary                3% declining by
but not more                 of Conversion                  1% every year
than 15                      Date                           after the 7th Anni-
                                                            versary of the Con-
                                                            version Date until
                                                            reaching 0%, and
                                                            thereafter 0%

More than 7                  5th Anniversary                2% declining by
but not more                 of Conversion                  1% every year
than 10                      Date                           after the 5th Anni-
                                                            versary of the Con-
                                                            version Date until
                                                            reaching 0%, and
                                                            thereafter 0%

More than 5                  4th Anniversary                1% declining by
but not more                 of Conversion                  1% to 0% the first
than 7                       Date                           year after the 4th
                                                            Anniversary of the
</TABLE>

                                   -40-
<PAGE>   45

<TABLE>
<S>                          <C>                            <C>

5 or less                    Bonds not redeemable           Conversion Date, and
                             pursuant to                    thereafter 0%
                             this paragraph
</TABLE>

              The above premiums may be changed upon the conversion to a
Long-Term Rate upon the receipt of an opinion of Bond Counsel subject to and in
accordance with the provisions of Sections 2.3(f) and 2.3(g).

              (b) Extraordinary Optional Redemption. The Bonds are subject to
redemption in whole, at the direction of the Company, at a redemption price
equal to 100% of the principal amount of the Bonds to be redeemed plus accrued
interest thereon to the redemption date, on any date for which the requisite
notice of redemption can be given, within one hundred eighty (180) days of the
occurrence of any of the following events:

              (i) the Project shall have been damaged or destroyed to such an
              extent that in the judgment of the Company (A) it cannot
              reasonably be restored within a period of three (3) consecutive
              months to the condition thereof immediately preceding such damage
              or destruction, (B) the Company is thereby prevented from carrying
              on its normal operations at the Project for a period of three (3)
              consecutive months, or (C) it would not be economically feasible
              for the Company to replace, repair, rebuild or restore the same;

              (ii) title in and to, or the temporary use of, all or
              substantially all of the Project shall have been taken under the
              exercise of the power of eminent domain by any governmental
              authority or any Person acting under governmental authority
              (including such a taking as, in the judgment of the Company,
              results in the Company being prevented thereby from carrying on
              its normal operations at the Project for a period of three (3)
              consecutive months);

              (iii) as a result of any changes in the Constitution of the State,
              or the Constitution of the United States of America or by
              legislative or administrative action (whether state or federal) or
              by final decree, judgment, decision or order of any court or
              administrative body (whether state or federal), the Agreement
              shall have become void or unenforceable or impossible of
              performance in accordance with the intent and purpose of the
              parties as expressed therein;

              (iv) unreasonable burdens or excessive liabilities shall have been
              imposed on the Company with respect to the operations of the
              Project, including, without limitation

                                      -41-
<PAGE>   46

              federal, state or other ad valorem, property, income or other
              taxes not being imposed on the date of this indenture that, in the
              judgment of the Company, render the continued operation of the
              Project uneconomical;

              (v) changes which the Company cannot reasonably control or
              overcome in the economic availability of materials, supplies,
              labor, equipment and other properties and things necessary for the
              efficient operation of the Project for the purposes contemplated
              by the Agreement shall have occurred or technological changes that
              the Company cannot reasonably overcome shall have occurred that,
              in the judgment of the Company render the continued operation of
              the Project uneconomical;

              (vi) legal curtailment of the Company's use and occupancy of all
              or substantially all of the Project for any reason other than that
              set forth in (ii) above, which curtailment shall, in the judgment
              of the Company, prevent the company from carrying on its normal
              operations at the Project for a period of three (3) consecutive
              months; or

              (vii) the Agreement is terminated prior to its expiration for any
              reason other than the occurrence of an Event of Default under the
              Agreement.

              (c) Mandatory Redemption. The Bonds are subject to mandatory
redemption in whole at a redemption price equal to 100% of the principal amount
of the Bonds to be redeemed plus accrued interest thereon to the redemption date
(and not including any premium that might otherwise be payable during any
Long-Term Rate Period) on any Business Day for which the requisite notice of
redemption can be given (i) within forty-five (45) days after the occurrence of
a Determination of Taxability, and (ii) within forty-five (45) days after the
failure of the Trustee to receive the opinion of Bond Counsel described in
Section 2.3(l); provided, however, if mandatory redemption on account of a
Determination of Taxability of less than all the Bonds would result, in the
Opinion of Bond Counsel, in the interest on the Bonds Outstanding following such
mandatory redemption not being includable in the gross income of the owners of
such Bonds outstanding, then the Bonds are subject to mandatory redemption upon
the occurrence of a Determination of Taxability in the amount specified in such
opinion, provided that such redemption must be in an Authorized Denomination.

              (d) Selection of Bonds to be Redeemed. If less than all the
Outstanding Bonds shall be called for redemption, the Registrar or, if the Bonds
are held in the Book Entry System, the Securities Depository shall first select
and call for redemption Bonds held by the Trustee or a pledge agent for the
account of the Company and pledged to the Credit Issuer as contemplated in
Section 2.8(b). If, following such selection, additional Bonds must be selected
and called for redemption, the Registrar or, if the Bonds are held in the Book
Entry System, the Securities Depository shall select or

                                      -42-
<PAGE>   47

arrange for the selection, in such manner as it shall deem fair and equitable
and pursuant to its rules and procedures, the Bonds, in Authorized
Denominations, provided that any Bond or portion thereof remaining Outstanding
shall be in an Authorized Denomination. If there shall be called for redemption
less than the principal amount of a Bond, the Issuer shall execute and the
Trustee shall authenticate and deliver, upon surrender of such Bond, without
charge to the Holder thereof in exchange for the unredeemed principal amount of
such Bond at the option of such Holder, Bonds in any of the Authorized
Denominations or, if the Bonds are held in the Book Entry System, the Securities
Depository shall, acting pursuant to its rules and procedures, reflect in said
system the partial redemption and the Trustee shall (i) either exchange the Bond
or Bonds held by the Securities Depository for a new Bond or Bonds in the
appropriate principal amount, if such Bond is presented to the Trustee by the
Securities Depository, or (ii) obtain from the Securities Depository a written
confirmation of the reduction in the principal amount of the Bonds held by such
Securities Depository.

              Section 2.19. Notice of Redemption. The Company shall exercise its
option to prepay Repayments (and thereby cause a redemption of Bonds) by giving
written notice to the Remarketing Agent, the Trustee, the Paying Agent and the
Credit Issuer, if a Credit Facility is then in effect, not less than forty-five
(45) days prior to the date selected for redemption; provided, however, that, if
such redemption is pursuant to Section 2.18(b), the Company shall also deliver a
certificate of an Authorized Representative certifying that the conditions
precedent to such redemption have been met. To exercise any optional redemption
pursuant to Section 2.18(a) so long as a Credit Facility is in effect, then at
least one day before the Trustee is to give notice of such redemption, the
Trustee must have received written consent from the Credit Issuer to a draw on
the Credit Facility in the amount of such redemption price to the extent moneys
in the Bond Fund constituting Eligible Funds under clauses (i), (ii) and (iv) of
the definition of Eligible Funds will not be available therefor on the date of
such redemption. Notice of redemption shall be mailed by the Trustee by
first-class mail, postage prepaid, at least thirty (30) days before the
redemption date to each Holder of the Bonds to be redeemed in whole or in part
at his/her last address appearing on the Register, but no defect in or failure
to give such notice of redemption shall affect the validity of the redemption.
All Bonds so called for redemption will cease to bear interest on the date fixed
for redemption, provided funds for their redemption have been duly deposited
with the Trustee and, thereafter, the Holders of such Bonds called for
redemption shall have no rights in respect thereof except to receive payment of
the redemption price from the Trustee and a new Bond for any portion not
redeemed.

              Section 2.20. Book Entry System. The Bonds shall be initially
issued pursuant to a Book Entry System administered by the Securities Depository
with no physical distribution of Bond certificates to be made except as provided
in this Section 2.20.

                                      -43-
<PAGE>   48

Any provision of this Indenture or the Bonds requiring physical delivery of the
Bonds shall, with respect to any Bonds held under the Book Entry System, be
deemed to be satisfied by a notation on he Register maintained by the Registrar
that such Bonds are subject to the Book Entry System.

              So long as a Book Entry System is being used, one Bond in the
aggregate principal amount of the Bonds and registered in the name of the
Securities Depository Nominee will be issued and deposited with the Securities
Depository and held in its custody. The Book Entry System will be maintained by
the Securities Depository and the Participants and Indirect Participants and
will evidence beneficial ownership of the Bonds in Authorized Denominations,
with registration of transfers of ownership effected on the records of the
Securities Depository, the Participants and the Indirect Participants pursuant
to rules and procedures established by the Securities Depository, the
Participants and the Indirect Participants. The principal of and any premium on
each Bond shall be payable to the Securities Depository Nominee or any other
person appearing on the Register as the registered Holder of such Bond or
his/her registered assigns or legal representative at the principal office of
the Registrar. So long as the Book Entry System is in effect, the Securities
Depository will be recognized as the Holder of the Bonds for all purposes
(except as provided in Section 2.6 (j)). Transfer of principal, interest and any
premium payments or notices to Participants and Indirect Participants will be
the responsibility of the Securities Depository, and transfer of principal,
interest and any premium payments or notices to Beneficial Owners will be the
responsibility of the Participants and the Indirect Participants. No other party
will be responsible or liable for such transfers of payments or notices or for
maintaining, supervising or reviewing such records maintained by the Securities
Depository, the Participants or the Indirect Participants. While the Securities
Depository Nominee or the Securities Depository, as the case may be, is the
registered owner of the Bonds, notwithstanding any other provisions set forth
herein, payments of principal of, redemption premium, if any, and interest on
the Bonds shall be made to the Securities Depository Nominee or the Securities
Depository, as the case may be, by wire transfer in immediately available funds
to the account of said Holder as may be specified in the Register maintained by
the Registrar or by such other method of payment as the Trustee may determine to
be necessary or advisable with the concurrence of the Securities Depository.

              In the event that (i) the Securities Depository determines not to
continue to administer a Book Entry System for the Bonds, or (ii) the Company,
with the consent of the Trustee and the Remarketing Agent, determines that
continuation of a Book Entry System of evidence and transfer of ownership of the
Bonds would adversely affect the interests of the Beneficial owners, the Book
Entry System will be discontinued if the Company, with the consent of the
Trustee and the Remarketing Agent, fails to replace or removes the then-acting
Securities Depository, in which case the Trustee will deliver replacement Bonds
in the form of fully

                                      -44-
<PAGE>   49

registered certificates in Authorized Denominations in exchange for the
Outstanding Bonds as required by the Trustee and the Beneficial Owners.

              The Securities Depository may be removed at any time at the
election of the Remarketing Agent, with the consent of the Trustee, and a new
Securities Depository may thereupon be appointed by the Remarketing Agent,
subject to the approval of the Trustee.

                                   ARTICLE III

                                    SECURITY

              Section 3.1. Security. The Bonds and the interest and any premium
thereon shall be a limited obligation of the Issuer as provided in Section 2.9,
and shall be secured by and payable from and the Issuer hereby pledges and
assigns to the Trustee as such security the following:

              (i) all Repayments received by the Issuer under the Agreement,
              which Repayments are to be paid directly by the Company to the
              Trustee and deposited in the Bond Fund or the Bond Purchase Fund
              in accordance with this Indenture;

              (ii) all moneys in the Bond Fund, the Bond Purchase Fund, the
              Surplus Fund and the Initial Fund, including the proceeds of the
              Bonds pending disbursement thereof;

              (iii) all of the Issuer's rights, title and interest in the
              Agreement, except Reserved Rights;

              (iv) all other rights and interests granted to the Issuer in
              connection with the Agreement (except Reserved Rights) as set
              forth herein or granted directly to the Trustee as provided
              herein; and

              (v) all of the proceeds of the foregoing (except the amounts
              payable to or on behalf of the Issuer on account of its Reserved
              Rights), including without limitation investments thereof.

The foregoing are collectively the "Security" and, in consideration of the
purchase of the Bonds and to secure payment of the principal of, premium, if
any, and interest on the Bonds and any other cost or pecuniary liability of the
Issuer relating to the Bonds or any proceeding, document or certification
incidental to the issuance of the Bonds, and to secure performance and
observance of all covenants, terms and conditions upon which the Bonds are to be
issued, including without limitation this Indenture, the Issuer, without
recourse, representation or warranty, pursuant to law hereby conveys, assigns
and pledges all of its right, title and interest in, and grants a security
interest in, the Security to the Trustee, and its successors and assigns, in
trust for the benefit

                                      -45-
<PAGE>   50

of the Holders, and their successors and assigns. For reference purposes, any
Credit Facility shall be deemed a part of the Security during any period during
which it is in effect.

              Section 3.2. Payment of Bonds and Performance of Covenants. The
Issuer shall promptly pay, but only out of the Security, the principal of,
premium, if any, and interest on the Bonds at the place, on the dates and in the
manner provided in the Bonds. The Issuer shall promptly perform and observe all
covenants, undertakings and obligations set forth herein, in the Agreement or
the Bonds on its part to be performed or observed. The Issuer shall fully
cooperate with the Trustee in the enforcement by the Trustee of any such rights
granted to the Issuer under the Agreement.

              Section 3.3. Authority. The Issuer represents and warrants that
(i) it is duly authorized under the Constitution and laws of the State to issue
the Bonds, and to execute, deliver and perform the terms of the Agreement and
this Indenture; (ii) all action on its part for the issuance of the Bonds and
execution and delivery of the Agreement and this Indenture has been duly taken;
(iii) the Bonds, upon issuance and authentication, and the Agreement and this
Indenture upon delivery, assuming that they are the respective legal, valid,
binding and enforceable obligations of the other parties thereto, shall be valid
and enforceable obligations of the Issuer in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles; (iv) it has not heretofore conveyed, assigned, pledged, granted a
security interest in or otherwise disposed of the Security; (v) it has not
received any payments under the Agreement; (vi) without making any independent
investigation, it has no knowledge of any right of set-off, defense or
counterclaim to payment or performance of the terms or conditions of the
Agreement; and (vii) the execution, delivery and performance of the Agreement
and this Indenture and issuance of the Bonds are not in contravention of law or
any agreement, instrument, indenture or other undertaking to which it is a party
or by which it is bound and no other approval, consent or notice from any
governmental agency is required on the part of the Issuer.

              Section 3.4. No Litigation. The Issuer represents and warrants
that (i) no litigation or administrative action of any nature is now pending to
restrain or enjoin the issuance or delivery of the Bonds or the execution and
delivery by the Issuer of this Indenture or the Agreement or in any manner
questioning the proceedings or authority under which the same have been
effected, or affecting the validity of the same; (ii) no contest is pending that
is material to the validity or enforceability of the Bonds, this Indenture or
the Agreement or that contests the Issuer's existence, or the authority of its
present members, elected officials or officers; (iii) no authority or proceeding
for the issuance of the Bonds or for the payment or security thereof has been
repealed, revoked or rescinded; and (iv) to the best of its knowledge, none of
the foregoing actions is threatened.

                                      -46-
<PAGE>   51

              Section 3.5. Further Assurances. Subject to the provisions of
Section 9.9, the Issuer covenants that it will cooperate to the extent necessary
with the Company, the Trustee and any Credit Issuer in their defenses of the
Security against the claims and demands of all Persons and, upon payment or
provision for payment of the fees and expenses to be incurred by the Issuer in
connection therewith, will do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged and delivered such indentures supplemental hereto
and such further acts, instruments and transfers as the Trustee or any Credit
Issuer may reasonably require for the better pledging of the Security. Subject
to the provisions of Section 9.9, the Issuer shall not cause or permit to exist
any amendment, modification, supplement, waiver or consent with respect to the
Agreement without the prior written consent of the Trustee, which consent shall
be governed by Article VIII.

              Section 3.6. No Other Encumbrances. The Issuer covenants that,
except as otherwise provided herein and in the Agreement, it will. not sell,
convey, mortgage, encumber or otherwise dispose of any portion of the Security.

              Section 3.7. No Personal Liability. No recourse shall be had for
the enforcement of any obligation, promise or agreement of the Issuer contained
herein or in the Bonds or the other Bond Documents to which the Issuer is a
party or for any claim based hereon or thereon or otherwise in respect hereof or
thereof against any director, member, officer, agent, attorney or employee, as
such, in his/her individual capacity, past, present or future, of the Issuer or
of any successor entity, either directly or through the Issuer or any successor
entity whether by virtue of any constitutional provision, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise. No
personal liability whatsoever shall attach to, or be incurred by, any member,
officer, agent, attorney or employee as such, past, present or future, of the
Issuer or of any successor entity, either directly or through the Issuer or any
successor entity, under or by reason of any of the obligations, promises or
agreements entered into in the Bonds or between the Issuer and the Trustee,
whether herein contained or to be implied herefrom. as being supplemental
hereto; and all personal liability of that character against every such
director, member, officer, agent, attorney and employee is, by the execution of
this Indenture and as a condition of, and as part of the consideration for, the
execution of this Indenture, expressly waived and released.

              Section 3.8. Credit Facility.

              (a) Draws on Credit Facility. Except with respect to Bonds
registered in the name of the Company, or held or required to be held by the
Trustee or any pledge agent under a pledge agreement pursuant to Section 2.8
(which Bonds shall not be entitled to any benefit of any Credit Facility) at any
time a Credit Facility is in effect (i) the Trustee shall draw moneys under such
Credit Facility to the extent necessary to make timely payments of principal,
premium, if any (if such Credit Facility provides for payment of

                                      -47-
<PAGE>   52

such premium), and interest on the Bonds to the extent other Eligible Funds are
not available to effect such payment, in accordance with Section 4.1, (ii) the
Trustee shall draw moneys, in accordance with Section 2.7, under such Credit
Facility to the extent available in accordance with the terms of the Credit
Facility in order to effect the purchase of Bonds (or portions thereof in
Authorized Denominations) on a Mandatory Purchase Date or an Optional Tender
Date, and (iii) upon the occurrence of an Event of Default specified in Section
6.1(a), (b), (c), (f) or (g) or upon declaration of acceleration of the Bonds
pursuant to any other Event of Default, the Trustee shall draw on the Credit
Facility to the extent available in an amount equal to the full unpaid
principal, accrued interest and premium, if applicable (if, and only if, such
Credit Facility provides for payment of such premium), on the Bonds to the
extent other Eligible Funds are not available therefor. The Paying Agent shall
promptly provide notice to the Trustee of any failure to pay principal of,
premium, if any, or interest on the Bonds or the Purchase Price thereof.

              (b) Reduction of Credit Facility. Upon any redemption or
defeasance of any Bonds or upon cancellation of any Bonds upon purchase thereof
as contemplated by Section 2.8, the Trustee shall send notice to the Credit
Issuer to reduce the amount available to be drawn on the Credit Facility (with
written notice of the same to the Company) and the Trustee shall, upon request,
confirm to the Credit Issuer and the Company the principal amount of Bonds
redeemed, cancelled or defeased.

              (c) Extensions of Credit Facility. In the event that the term of
the Credit Facility is extended, unless it is extended by amendment, the Trustee
shall surrender the instrument evidencing the Credit Facility to the Credit
Issuer in exchange for a new instrument conforming, in the opinion of Counsel,
in all material respects to the instrument evidencing the Credit Facility being
surrendered, except that the term thereof shall reflect the new term of the
Credit Facility. The Trustee shall promptly surrender the instrument evidencing
the Credit Facility to the Credit Issuer for cancellation upon discharge of the
Indenture pursuant to Section 5.1 or following the effective date of an
Alternate Credit Facility (or, if such Alternate Credit Facility results in the
occurrence of a Credit Modification Date, following such Credit Modification
Date). If the Bonds are rated by a Rating Agency, notice of any extension of the
credit Facility shall be furnished to such Rating Agency by the Trustee.

              (d) Expiration or Termination of Credit Facility. The Trustee
shall give notice to the Remarketing Agent and the Paying Agent, in the name of
the Credit Issuer, of the expiration or earlier termination of any Credit
Facility then in effect, which notice shall specify the date of such expiration
or earlier termination of the Credit Facility. If the Bonds are rated by a
Rating Agency, notice of any such expiration or termination of the Credit
Facility shall be furnished to such Rating Agency by the Trustee. In the event
that the expiration or termination of a Credit Facility results in the
occurrence of a Credit Modification

                                      -48-
<PAGE>   53

Date, the Trustee shall not surrender any evidence of the Credit Facility to be
terminated until the Trustee shall have made such drawings, if any, and taken
such other actions, if any, thereunder as shall be required under this Indenture
in order to provide sufficient money for payment of the Purchase Price of Bonds
tendered or deemed tendered on such Credit Modification Date to the extent
necessary pursuant to Section 2.6(g), and shall have received the proceeds of
such drawing from the Credit Issuer. Notwithstanding any provision hereof to the
contrary, the Company may not cause any Credit Facility to be terminated prior
to its stated expiration date (whether in connection with the delivery of an
Alternate Credit Facility or otherwise) if such termination would result in the
occurrence of a Credit Modification Date (1) during a Semiannual Rate Period, at
any time other than an Interest Payment Date (or, if such day is not a Business
Day, the next succeeding Business Day) or (2) during a Long-Term Rate Period.

              (e) Alternate Credit Facility. At any time, upon at least thirty
(30) days prior written notice to the Trustee, the Paying Agent, the Rating
Agency, if any, rating the Bonds, and the Remarketing Agent, the Company may, at
its option, but subject to the approval of the Remarketing Agent, provide for
delivery to the Trustee of an Alternate Credit Facility that shall be effective
on the date such Alternate Credit Facility is accepted by the Trustee in
accordance herewith. An Alternate Credit Facility shall be issued by a
commercial bank, insurance company or other financial institution organized and
doing business in the United States or a branch or agency of a foreign
commercial bank located in the United States and subject to regulation by state
or federal banking regulatory authorities and shall have an expiration date that
shall be at least one (1) year following the effective date thereof or on the
second Business Day following the final maturity date of the Bonds, if sooner.
On or before the date of the delivery of any Alternate Credit Facility to the
Trustee, as a condition to the acceptance of any Alternate Credit Facility by
the Trustee, the Company shall furnish to the Issuer and the Trustee (i) written
evidence that the issuer of such Alternate Credit Facility is a commercial bank,
insurance company or other financial institution organized and doing business in
the United States or a branch or agency of a foreign commercial bank located and
doing business in the United States and subject to regulation by state or
federal banking regulatory authorities, (ii) an Opinion of Bond Counsel stating
that the delivery of such Alternate Credit Facility is authorized under this
Indenture and the Act and complies with the terms hereof and that the delivery
of such Alternate Credit Facility does not adversely affect the exclusion from
gross income of the interest on the Bonds for federal income tax purposes, (iii)
an opinion of Counsel satisfactory to the Trustee, the Rating Agency, if any,
rating the Bonds, the Issuer, and the Remarketing Agent to the effect that the
Alternate Credit Facility is the legal, valid and binding obligation of the
Credit Issuer (or, in the case of a branch or agency of a foreign commercial
bank, the branch or agency) issuing the same, enforceable in accordance with its
terms, that payments of principal, premium, if any, or Purchase Price of or
interest on the Bonds from the proceeds of a drawing on

                                      -49-
<PAGE>   54

the Alternate Credit Facility will not constitute avoidable preferences under
the United States Bankruptcy Code or other applicable laws and regulations and
that it is not necessary to register the Alternate Credit Facility under the
Securities Act of 1933, as amended, or to qualify an indenture with respect
thereto under the Trust Indenture Act of 1939, as amended, and (iv) evidence of
written approval of the Remarketing Agent. In the case of an Alternate Credit
Facility issued by a branch or agency of a foreign commercial bank there shall
also be delivered an opinion of Counsel licensed to practice law in the
jurisdiction in which the head office of such bank is located, satisfactory to
the Trustee, the Issuer and the Remarketing Agent, to the effect that the
Alternate Credit Facility is the legal, valid and binding obligation of such
bank enforceable in accordance with its terms. The Trustee shall accept any such
Alternate Credit Facility only in accordance with the terms, and upon the
satisfaction of the conditions, contained in this section and any other
provisions applicable to acceptance of an Alternate Credit Facility under this
Indenture. Notwithstanding anything to the contrary herein, any Alternate Credit
Facility shall become effective on a day that is an Optional Tender Date.
Notwithstanding the foregoing, no Alternate Credit Facility may be accepted if
the acceptance thereof in substitution for any then-existing Credit Facility
would result in the occurrence of a Credit Modification Date (1) during a
Semiannual Rate Period, at any time other than on an Interest Payment Date (or
if such day is not a Business Day, on the next succeeding Business Day), or (2)
during any Long-Term Rate Period.

                                   ARTICLE IV

                                      FUNDS

              Section 4.1. Establishment and Use of Bond Fund and Current
Account. There is hereby created and established with the Trustee the Bond Fund
and, while a Credit Facility is in effect, within such Fund a special account
designated the "Current Account." The Trustee shall establish with the Paying
Agent a separate subaccount of the Bond Fund that, while a Credit Facility is in
effect, shall be used for depositing moneys drawn by the Trustee under the
Credit Facility for the payment of principal and interest on the Bonds. The
Paying Agent shall not commingle proceeds of a drawing under the Credit Facility
with any other funds. There shall be deposited in the Bond Fund (a) any accrued
interest received on the initial sale of the Bonds, (b) all Repayments specified
in the Agreement to be deposited in the Bond Fund, including all proceeds
resulting from the enforcement of the Security or its realization as collateral,
(c) all other moneys received by the Trustee under the Agreement for deposit by
it in the Bond Fund and (d) all moneys drawn under any Credit Facility to pay
principal, premium, if any, or interest on the Bonds.

              While a Credit Facility is in effect, each deposit into the Bond
Fund not constituting Eligible Funds shall be placed in

                                      -50-
<PAGE>   55

the Current Account within the Bond Fund and shall not be commingled with other
moneys in the Bond Fund until such deposit becomes Eligible Funds. The Trustee
shall establish separate subaccounts within the Current Account for each deposit
(including any investment income thereon) made into the Bond Fund so that the
Trustee may at all times ascertain the date of deposit of the moneys in each
subaccount.

              Moneys in the Bond Fund shall be held in trust for the Holders
and, except as otherwise expressly provided herein, shall be used solely f or
the payment of the interest on the Bonds and for the payment of principal of and
premium, if any, on the Bonds upon maturity, whether stated or accelerated, or
upon mandatory or optional redemption.

              The Issuer hereby authorizes and directs the Trustee, and the
Trustee hereby agrees, to withdraw and make available at the principal office of
the Paying Agent sufficient funds from the Bond Fund to pay the principal of,
premium, if any, and interest on the Bonds as the same become due and payable,
but only in the following order of priority:

              FIRST: If a Credit Facility is then in effect, from the sources
provided in clause (i) and (ii) of the definition of Eligible Funds, other than
amounts received by the Trustee in respect of drawings under the Credit
Facility.

              SECOND: Amounts drawn by the Trustee under a Credit Facility then
in effect (provided, however, that such amounts shall not be used to pay any
premium on the Bonds unless such Credit Facility provides for the payment of
such premium).

              THIRD: Any other amounts (whether or not Eligible Funds) in the
Bond Fund.

              If a Credit Facility is not then in effect, or if, while a Credit
Facility is in effect, moneys in the Bond Fund available pursuant to items FIRST
and SECOND above are insufficient to make any payment of principal of, premium,
if any or interest on the Bonds, whether due by maturity, acceleration,
redemption or otherwise, or if the Credit Issuer has dishonored its obligations
under the Credit Facility, the Trustee, on or after the date such payment is to
be made, shall apply any moneys described in item THIRD above.

              To the extent that a Credit Facility is drawn on to make a payment
to any Holder, the Trustee shall use any moneys in the Bond Fund not then needed
to make payments to Holders, regardless of whether such moneys constitute
Eligible Funds, to reimburse the Credit Issuer.

              After payment in full of the Bonds, or provision for the payment
of the Bonds having been made pursuant to Section 5.2, and the payment of all
other amounts owing hereunder, any amounts remaining in the Bond Fund not
required to provide for payment of

                                      -51-
<PAGE>   56

the Bonds shall be paid first to the Credit Issuer, if any, if there is then any
amount owing by the Company to the Credit Issuer, and, if any amounts still
remain in the Bond Fund, second, to the Company.

              Section 4.2. Establishment and Use of Initial Fund. There is
hereby created and established with the Trustee the Initial Fund. A portion of
the proceeds of the Bonds, as described in Section 4.5, shall be delivered to
the Trustee for deposit into the Initial Fund.

              Funds in the Initial Fund shall be expended and disbursed in
accordance with the provisions of the Agreement.

              Section 4.3. Establishment and Use of Surplus Fund. There is
hereby established and created with the Trustee the Surplus Fund. The Surplus
Fund shall receive all Surplus Bond Proceeds transferred thereto in accordance
with the written directions of the Company. The deposit of Surplus Bond Proceeds
in the Surplus Fund shall be deemed to be a direction by the Company to redeem
the greatest principal amount of the Bonds possible to be redeemed from such
deposit pursuant to Section 2.18(a) on the earliest redemption date on which
such amount constitutes Eligible Funds and Bonds may be redeemed without a
redemption premium, and on such redemption date (or, if such day is not a
Business Day, the immediately preceding Business Day) an amount equal to the
principal amount of Bonds to be redeemed plus interest accrued thereon to the
redemption date shall be transferred from the Surplus Fund to the Bond Fund and
used for such redemption. After such transfer, if and to the extent that there
are moneys in the Surplus Fund constituting Eligible Funds on the date on which
(i) the Bonds are scheduled to mature, or (ii) the Bonds are scheduled to be
redeemed in whole, such moneys in the Surplus Fund shall be transferred to the
Bond Fund and shall be used for such payment or redemption. The foregoing
provisions of this paragraph to the contrary notwithstanding, if while a Credit
Facility is in effect there shall be any moneys on deposit in the Surplus Fund
and there shall occur a drawing on the Credit Facility to pay principal of the
Bonds (but not the Purchase Price of tendered Bonds) the Trustee shall use any
moneys in the Surplus Fund to reimburse the Credit Issuer for such drawing;
provided, further, if any of the events described in clauses (i) and (ii) above
shall occur while a Credit Facility is in effect, the Trustee shall draw on the
Credit Facility to the extent otherwise provided in this Indenture and shall
immediately apply any moneys in the Surplus Fund (whether or not such moneys are
Eligible Funds) to reimburse the Credit Issuer therefor in whole or in part.

              Section 4.4. Establishment and Use of Bond Purchase Fund. There is
hereby established and created with the Trustee the Bond Purchase Fund and,
while a Credit Facility is in effect, within such fund a special account
designated the "Current Purchase Account." There shall be deposited in the Bond
Purchase Fund all moneys required to be paid by the Company to provide for the
payment of the Purchase Price of Bonds pursuant to this Indenture,

                                      -52-
<PAGE>   57

together with any other moneys received by the Trustee pursuant to this
Indenture, the Agreement or otherwise (including draws under the Credit Facility
pursuant to Section 3.8(a)(ii)) that are required or directed to be paid into
the Bond Purchase Fund. The Trustee shall establish with the Paying Agent a
separate subaccount, of the Bond Purchase Fund into which the proceeds of the
remarketing of Bonds to purchasers (other than the Issuer or the Company or any
affiliated entity or an "insider" with respect to the Issuer or the Company
within the meaning of Title 11 of the United States Code or to any other Person
obligated (as guarantor or otherwise) to make payments on the Bonds or under the
Agreement or under the Credit Agreement) will be deposited and a separate
subaccount of the Bond Purchase Fund into which all amounts drawn under the
Credit Facility pursuant to Section 3.8(a)(ii) will be deposited. The Paying
Agent shall not commingle amounts in either of such subaccounts with any other
funds.

              While a Credit Facility is in effect, each deposit into the Bond
Purchase Fund not constituting Eligible Funds shall be placed in the Current
Purchase Account within the Bond Purchase Fund and shall not be commingled with
other moneys in the Bond Purchase Fund until such deposit becomes Eligible
Funds. The Trustee shall establish separate subaccounts within the Current
Purchase Account for each deposit (including any investment income thereon) made
into the Bond Purchase Fund so' that the Trustee may at all times ascertain the
date of deposit of the moneys in each subaccount.

              Moneys in the Bond Purchase Fund shall be held in trust for the
Holders and, except as otherwise expressly provided herein, shall be used solely
for the payment of the Purchase Price of the Bonds required to be purchased as
set forth in Section 2.6(g).

              The Trustee is hereby authorized and directed, and the Trustee
hereby agrees, to withdraw and to transfer to the Paying Agent Eligible Funds
from the Bond Purchase Fund as contemplated by Section 2.6(g)(1) by 9:30 a.m.,
Local Time, on each date that Bonds are to be purchased pursuant to Section 2.6
from the Bond Purchase Fund to pay the Purchase Price of Bonds tendered (or
deemed tendered) for purchase pursuant to Section 2.6. The Trustee shall give
the Remarketing Agent prompt telephonic notice of each such transfer.

              Any amounts remaining in the Bond Purchase Fund after payment in
full of the Bonds, or provision having been made for payment of the Bonds
pursuant to Section 5.2, and payment of all other amounts required to be paid
under this Indenture, shall be paid first to the Credit Issuer, if any, if there
is any amount then owing by the Company to the Credit Issuer and, if any amounts
still remain in the Bond Purchase Fund, second to the Company.

              Section 4.5. Deposit of Bond Proceeds. The proceeds from the
placement of the Bonds shall be deposited as follows:

                                      -53-
<PAGE>   58

              (a) In the Bond Fund an amount equal to the interest accrued on
the Bonds, if any, as of the date of delivery thereof; and

              (b) In the Initial Fund, the balance of such proceeds.

              Section 4.6. Records. The Trustee shall cause to be kept and
maintained records pertaining to the Initial Fund, the Bond Fund, the Bond
Purchase Fund and the Surplus Fund and all disbursements therefrom and shall
periodically deliver to the Company statements of activity and statements
indicating the investments made with moneys in all such funds during the
applicable period. The Trustee shall provide the Company, by July 10 of each
year, with a report stating the principal amount of Bonds outstanding and a list
of the registered owners of the Bonds as of June 30 of each such year.

              The Trustee shall provide the Company with a written report, not
later than January 10 of each year, and not later than thirty (30) days
following the retirement of the last obligation of the Bonds, identifying the
Permitted Investments in which the moneys held as part of the Initial Fund, the
Surplus Fund, the Bond Fund and the Bond Purchase Fund were invested during the
preceding period and the dates of such investment.

              Section 4.7. Investment of Initial Fund, Surplus Fund, Bond Fund
and Bond Purchase Fund Moneys. Moneys held as part of the Initial Fund, the
Surplus Fund, the Bond Fund and the Bond Purchase Fund shall be invested and
reinvested in Permitted Investments as instructed by an Authorized
Representative; provided, however, that (i) any moneys from a drawing under a
Credit Facility and any moneys held by the Trustee to pay the principal or
Purchase Price of, premium, if any, or interest that has become payable with
respect to the Bonds shall not be invested and (ii) the Paying Agent shall not
invest any moneys it receives under this Indenture. All Permitted Investments
shall be held by or under the control of the Trustee and shall be deemed at all
times to be a part of the fund and account which was used to purchase the same.
All interest accruing thereon and any profit realized from Permitted
Investments shall be credited to the respective fund or account and any loss
resulting from Permitted Investments shall be similarly charged. The Trustee is
authorized to cause to be sold and reduced to cash a sufficient amount of
Permitted Investments whenever the cash balance in any fund or account hereunder
is or will be insufficient to make a requested or required disbursement. The
Trustee shall not be responsible for any depreciation in the value of any
Permitted Investment or for any loss resulting from such sale, so long as the
Trustee performs its obligations hereunder in accordance with the provisions of
Section 7.1(e). Absent specific instructions from the Company to invest cash
balances in Permitted Investments hereunder, the Trustee shall invest in
Permitted Investments constituting obligations of the U.S. Treasury or its
agencies having a term to maturity of not more than 30 days or any money market
fund or similar investment fund that purchases and holds exclusively obligations
of the United

                                      -54-
<PAGE>   59

States of America or its agencies that have a term to maturity of not more than
30 days. Notwithstanding anything to the contrary herein provided, moneys
constituting Eligible Funds shall only be invested in Government obligations
maturing on or before the date such Eligible Funds will be required for
disbursement. Notwithstanding anything to the contrary herein provided, moneys
deposited in the Surplus Fund pursuant to Section 3.4 of the Agreement shall not
be invested at a yield exceeding the yield on the Bonds.

              Section 4.8. Arbitrage; Arbitrage Rebate Fund. The Issuer
recognizes that investment of the Bond proceeds will be at the written direction
of the Company but agrees that it will not knowingly commit any act, nor omit to
take any action, that would cause the Bonds to be "arbitrage bonds" within the
meaning of Section 148 of the Code and the applicable regulations thereunder.
There is hereby established with the Trustee a Rebate Fund (the "Rebate Fund").
Any provisions in this Indenture to the contrary notwithstanding, amounts
credited to the Rebate Fund shall be free and clear of any lien hereunder.

              The Trustee shall deposit in the Rebate Fund the amount forwarded
to the Trustee by the Company pursuant to Section 8.9(b) of the Agreement.
Within 30 days after the end of each fifth anniversary of the Issue Date,
commencing on the fifth anniversary of the Issue Date, the Trustee, acting on
behalf of the Issuer, shall pay to the United States in accordance with Section
148(f) of the Code from the moneys then on deposit in the Rebate Fund an amount
equal to 90% (or such greater percentage not in excess of 100% as the Company
may direct the Trustee to pay) of the amount certified by the Company to be the
required rebate to the United States as calculated under Section 148(a)(2) of
the Code (hereinafter called the "Rebate Amount") Within 60 days after the
payment in full of all outstanding Bonds, the Trustee shall pay to the United
States in accordance with Section 148(f) of the Code from the moneys then on
deposit in the Rebate Fund an amount equal to 100% of the Rebate Amount and any
moneys remaining in the Rebate Fund following such payment shall be paid to the
Company.

              The Trustee shall be entitled to rely on the calculations made
pursuant to this Section and neither the Issuer nor the Trustee shall be
responsible for any loss or damage resulting from any good faith action taken or
omitted to be taken in reliance upon such calculations.

              The Trustee shall obtain and keep such records of the computations
made pursuant to this Section as are required under Section 148(f) of the Code.

              If all the gross proceeds of the Bonds are expended for the
governmental purpose for which the Bonds were issued within six months of the
date of issuance of the Bonds, within the meaning of section 148(f) of the Code,
and it is not anticipated that any other gross proceeds will arise during the
remainder of the term of the Bonds, and if no Rebate Amount is otherwise payable
with

                                      -55-
<PAGE>   60

respect to the Bonds, the provisions of this Section shall not be applicable to
the Bonds except to the extent of any gross proceeds that actually become
available more than six months after the date of issuance.

              Moneys in the Rebate Fund may be invested as provided in Section
4.7 for the investment of the Initial Fund, the Surplus Fund, the Bond Fund and
the Bond Purchase Fund.

              Section 4.9. Non-presentment of Bonds. In the event any Bond shall
not be presented for payment when the principal thereof becomes due, either at
maturity or at the date fixed for redemption thereof or otherwise, if funds
sufficient to pay the principal of, premium (if any) and interest on such Bond
shall have been made available to the Trustee for the benefit of the Holder or
Holders thereof, payment of such Bond or portion thereof as the case may be,
shall forthwith cease, terminate and be completely discharged, and thereupon it
shall be the duty of the Trustee, subject to any applicable escheat laws, to
hold such fund or funds uninvested in the Bond Fund, without liability to the
Holder of such Bond for interest thereon, for the benefit of the Holder of such
Bond, who shall thereafter be restricted exclusively to such fund or funds, for
any claim of whatever nature on his/her part on, or with respect to, said Bond,
or portion thereof, or premium, if any.

                                    ARTICLE V

                                DISCHARGE OF LIEN

              Section 5.1. Discharge of Lien and Security Interest. Upon payment
in full of all of the Bonds, these presents and the Security Interests shall
cease, determine and be discharged, and thereupon the Trustee, upon receipt by
the Trustee of an opinion of Counsel stating that all conditions precedent to
the satisfaction and discharge of this Indenture have been complied with shall
(i) cancel and discharge this Indenture and the Security Interests, and (ii)
execute and deliver to the Issuer and the Company, at the Company's expense,
such instruments in writing as shall be required to cancel and discharge this
Indenture and the Security Interests and reconvey to the Issuer and the Company
the Security, and assign and deliver to the Issuer and the Company so much of
the Security as may be in its possession or subject to its control, except for
moneys and Government Obligations held in the Bond Fund for the purpose of
paying Bonds and except for moneys held in the Bond Purchase Fund for the
purpose of paying the Purchase Price of the Bonds which have been purchased
pursuant to Section 2.6(g); and (iii) return any Credit Facility to the Credit
Issuer; provided, however, that the cancellation and discharge of this Indenture
pursuant to Section 5.2 shall not terminate the powers and rights granted to the
Trustee, the Registrar, the Tender Agent and the Paying Agent with respect to
the payment, registration of transfer and exchange of the Bonds; and provided,
further, that the rights of the Issuer, the Trustee, the Registrar, the Tender
Agent and the Paying Agent to indemnity, non-liability and payment of all

                                      -56-
<PAGE>   61

reasonable fees and expenses shall survive the cancellation and discharge of
this Indenture pursuant to Section 5.1 or 5.2. If the Bonds are rated by a
Rating Agency, notice of payment in full of the Bonds shall be furnished to such
Rating Agency.

              Section 5.2. Provision for Payment of Bonds. During the Fixed Rate
Period, Bonds shall be deemed to have been paid within the meaning of Section
5.1 if:

              (a) there shall have been irrevocably deposited in the Bond Fund
either:

              (i) sufficient Eligible Funds, or

              (ii) Government obligations purchased with Eligible Funds of such
              maturities and interest payment dates and bearing such interest as
              will, in the opinion of a nationally recognized firm of certified
              public accountants, without further investment or reinvestment of
              either the principal amount thereof or the interest earnings
              thereon (said earnings also to be held in trust), be sufficient
              together with any moneys referred to in subsection (i) above,

for the payment at their respective maturities or redemption dates prior to
maturity of the principal thereof and the redemption premium, if any, and
interest to accrue thereon at such maturity or redemption dates, as the case may
be;

              (b) there shall have been paid or provision duly made for the
payment of all fees and expenses of the Issuer, the Trustee, the Registrar, the
Paying Agent, the Remarketing Agent and the Tender Agent due or to become due;
and

              (c) if any Bonds are to be redeemed on any date prior to their
maturity, the Trustee shall have received in form satisfactory to it irrevocable
instructions from an Authorized Representative to redeem such Bonds on such date
and either evidence satisfactory to the Trustee that all redemption notices
required by this Indenture have been given or irrevocable power authorizing the
Trustee to give such redemption notices has been granted to the Trustee.

              Limitations set forth elsewhere herein regarding the investment of
moneys held by the Trustee in the Bond Fund shall not be construed to prevent
the depositing and holding in the Bond Fund of the obligations described in
paragraph (a) (ii) of this section for the purpose of defeasing the lien of this
Indenture as to Bonds which have not yet become due and payable. In addition,
all moneys so deposited with the Trustee as provided in this Section 5.2 may
also be invested and reinvested, at the direction of the Company, in Government
obligations, maturing in the amounts and times as hereinbefore set forth, and
all income from all Government Obligations in the hands of the Trustee pursuant
to this Section 5.2 which is not required for the payment of the Bonds and
interest

                                      -57-
<PAGE>   62

and redemption premium, if any, thereon with respect to which such moneys shall
have been so deposited shall be deposited in the Bond Fund as and when realized
and collected for use and application as are other moneys deposited in the Bond
Fund.

              If the Bonds are to be rated by a Rating Agency at or prior to the
time provision for payment shall be made there shall be delivered to the Rating
Agency the opinion of nationally recognized certified public accountants
referred to in Section 5.2 (a) (ii) above and a written opinion of counsel
experienced in bankruptcy law matters and in form satisfactory to the Rating
Agency that the deposit and use of such monies will not constitute an avoidable
preferential payment pursuant to Section 547 of the United States Bankruptcy
Code, 11 U.S.C. Section 101 et seq., or a post-petition transfer in the event of
an Act of Bankruptcy.

              Section 5.3. Discharge of this Indenture. Notwithstanding the fact
that the lien of this Indenture upon the Security may have been discharged and
cancelled in accordance with Section 5.1, this Indenture and the rights granted
and duties imposed hereby, to the extent not inconsistent with the fact that the
lien upon the Security may have been discharged and cancelled, shall
nevertheless continue and subsist after payment in full of the Bonds until the
Trustee shall have returned to the Company or the Credit Issuer, as the case may
be, all funds held by the Trustee which the Company is entitled to receive
pursuant to this Indenture.

                                   ARTICLE VI

                         DEFAULT PROVISIONS AND REMEDIES

              Section 6.1. Events of Default. Any one of the following shall
constitute an Event of Default hereunder:

              (a) Default in the payment of any interest on any Bond when and as
the same shall have become due;

              (b) Default in the payment of the principal of or any premium on
any Bond when and as the same shall become due, whether at the stated maturity
or redemption date thereof or by acceleration;

              (c) Default in the payment of the Purchase Price of any Bond
required to be purchased hereunder when and as the same shall become due;

              (d) Default in the observance or performance of any other of the
covenants, agreements or conditions on the part of the Issuer included in this
Indenture or in the Bonds and the continuance thereof for a period of thirty
(30) days after written notice to the Issuer, the Credit Issuer, if a Credit
Facility is then in effect, and the Company has been given by the Trustee,

                                      -58-
<PAGE>   63

provided that the Credit Issuer shall have consented to the same constituting an
Event of Default;

              (e) The occurrence of an Event of Default under the Agreement;

              (f) If a Credit Facility is in effect, the Trustee and the Tender
Agent shall have received a written notice from the Credit Issuer of the
occurrence and continuance of an Event of Default as defined in the Credit
Agreement; or

              (g) If a Credit Facility is in effect, the Trustee and the Tender
Agent shall have received, within 10 calendar days following a drawing under the
Credit Facility to pay interest on the Bonds, written notice from the Credit
Issuer that it has not been reimbursed for the amount of such drawing together
with interest, if any, due pursuant to the Credit Agreement and that the amount
of such drawing will not be reinstated as provided in the Credit Facility.

              Section 6.2. Acceleration. Subject to the requirement that the
consent of the Credit Issuer, if any, to any acceleration must be obtained in
the case of an Event of Default described in Section 6.1(d) or (e), upon the
occurrence of any Event of Default hereunder the Trustee may and upon (i) the
written request of the Holders of not less than twenty-five percent (25%) in
aggregate principal amount of Bonds then Outstanding or (ii) the occurrence of
an Event of Default under Section 6.1(a), (b), (c), (f) or (g), the Trustee
immediately shall, by notice in writing sent to the Issuer, the Company, the
Paying Agent and the Tender Agent, and, if a Credit Facility is then in effect,
the Credit Issuer, declare the principal of and any premium on all Bonds then
Outstanding (if not then due and payable) and the interest accrued thereon to be
due and payable immediately, and, upon said declaration, such principal and
premium, if any, and interest shall become and be immediately due and payable.
Upon any declaration of acceleration hereunder, the Trustee shall immediately
exercise such rights as it may have under the Agreement to declare all payments
thereunder to be immediately due and payable, interest on the Bonds shall cease
to accrue as provided in Section 6.7 and, if a Credit Facility is in effect, to
the extent it has not already done so and to the extent necessary, the Trustee
shall immediately draw upon the Credit Facility as provided in Section 3.8 (a)
(iii) The Trustee shall pay the principal of, premium, if any, and interest on
the Bonds to the Holders as soon as is practicable following the receipt of
funds from such drawing.

              Immediately following any such declaration of acceleration, the
Trustee shall cause to be mailed notice of such declaration by first class mail,
postage prepaid, to each Holder of a Bond at his/her last address appearing on
the Register. Any defect in or failure to give such notice of such declaration
shall not affect the validity of such declaration.

                                      -59-
<PAGE>   64

              Section 6.3. Other Remedies; Rights of Holders. Upon the happening
and continuance of an Event of Default hereunder the Trustee may, only with the
prior written consent of the Credit Issuer, if any, in the case of an Event of
Default described in Section 6.1(d) or (e), with or without taking action under
Section 6.2, pursue any available remedy to enforce the performance of or
compliance with any other obligation or requirement of this Indenture or the
Agreement.

              Subject to the requirement that the consent of the Credit Issuer,
if any, to the exercise by the Trustee of any such available remedy must be
obtained in the case of an Event of Default described in Section 6.1(d) or (e),
upon the happening and continuance of an Event of Default, and if requested to
do so by the Holders of at least twenty-five percent (25%) in aggregate
principal amount of Bonds then outstanding and if the Trustee is indemnified as
provided in Section 7.1, the Trustee shall exercise such of the rights and
powers conferred by this section and by Section 6.2 as the Trustee, being
advised by Counsel, shall deem most effective to enforce and protect the
interests of the Holders and, except to the extent inconsistent with the
interests of the Holders, the Credit Issuer, if any.

              No remedy by the terms of this Indenture conferred upon or
reserved to the Trustee (or to the Holders) is intended to be exclusive of any
other remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given to the Trustee or to the Holders hereunder or
now or hereafter existing.

              No delay or omission to exercise any right or power accruing upon
any default or Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such default or Event of Default or acquiescence
therein and every such right and power may be exercised from time to time and as
often as may be deemed expedient.

              No waiver of any default or Event of Default hereunder, whether by
the Trustee or by the Holders, shall extend to or shall affect any subsequent
default or Event of Default or shall impair any rights or remedies consequent
thereon.

              The Trustee, as the assignee of substantially all right, title and
interest of the Issuer in and to the Agreement, shall be empowered to enforce
each and every right granted to the Issuer under the Agreement other than
Reserved Rights.

              Section 6.4. Right of Holders and Credit Issuer to Direct
Proceedings. Anything in this Indenture to the contrary notwithstanding, and
subject, if a Credit Facility is then in effect, to the rights of the Credit
Issuer as provided in Sections 6.2 and 6.3, the Holders of a majority in
aggregate principal amount of Bonds then Outstanding shall have the right at any
time, by an instrument or instruments in writing executed and delivered to the
Trustee, to direct the method and place of conducting all

                                      -60-
<PAGE>   65

proceedings to be taken in connection with the enforcement of the terms and
conditions of this Indenture, or any other proceedings hereunder; provided that
such direction shall not be otherwise than in accordance with the provisions of
law and of this Indenture, and provided that the Trustee shall be indemnified to
its satisfaction and the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction. No Holder shall
individually have the right to present a draft to, or otherwise make a demand
on, the Credit Issuer to collect amounts available under the Credit Facility.

              No Holder shall have the right to institute any proceeding for the
enforcement of this Indenture unless such Holder has given the Trustee and the
Company written notice of an Event of Default, the Holders of a majority in
aggregate principal amount of the Bonds then outstanding shall have requested
the Trustee in writing to institute such proceeding, the Trustee shall have been
afforded a reasonable opportunity to exercise its powers or to institute such
proceeding, there shall have been offered to the Trustee indemnity satisfactory
to it against the cost, expense and liability to be incurred in connection with
such request and the Trustee shall have thereafter failed or refused to exercise
such powers or to institute such proceeding within sixty days (60) after receipt
of notice with no inconsistent direction given during such sixty days (60) by
the Holders of a majority in aggregate principal amount of the Bonds then
Outstanding. Nothing in this Indenture shall affect or impair any right of
enforcement conferred on any Holder by the Act to enforce (i) the payment of the
principal of and premium, if any, and interest on Bonds at and after the
maturity thereof, or (ii) the obligation of the Issuer to pay the principal of,
premium, if any, and interest on Bonds to such Holder at the time, place, from
the sources and in the manner as provided in this Indenture.

              Section 6.5. Discontinuance of Default Proceedings. Prior to the
drawing on a Credit Facility, if any, pursuant to Section 3.8(a)(iii), in case
the Trustee shall have proceeded to enforce any right under this Indenture by
the appointment of a receiver or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely, then and in every such case the Issuer, the Credit Issuer, if any,
and the Trustee shall be restored to their former positions and rights hereunder
and all rights, remedies and powers of the Trustee and Credit Issuer shall
continue as if no such proceedings had been taken subject to the limits of any
adverse determination.

              Section 6.6. Waiver. The Trustee, with the consent of the Credit
Issuer, if any, may waive any default or Event of Default hereunder and its
consequences and rescind any declaration of acceleration of maturity of
principal, and shall do so upon the written request of the Credit Issuer, if
any; provided, however, that there shall be no such waiver or rescission unless
the Purchase Price and all principal, premium, if any, and interest on the Bonds
in arrears, together with interest thereon (to the extent

                                      -61-
<PAGE>   66

permitted by law) at the applicable rate of interest borne by the Bonds and all
fees and expenses of the Trustee and the Issuer shall have been paid or provided
for. The Trustee may not waive any default or Event of Default until the amount
available to be drawn under any Credit Facility then in effect in respect of the
principal and Purchase Price of and interest on the Bonds has been reinstated in
full.

              Section 6.7. Application of Moneys. All moneys received by the
Trustee pursuant to any right given or action taken under the provisions of this
Article VI shall be deposited in the Bond Fund and, after payment (out of moneys
derived from a source other than the Credit Facility, Eligible Funds, moneys
held for the purchase of Untendered Bonds, moneys held for the redemption of
Bonds and proceeds from the remarketing of Bonds) of (i) the cost and expenses
of the proceedings resulting in the collection of such moneys and of the
expenses, liabilities and advances incurred or made by the Trustee, including
reasonable attorneys' fees, and all other outstanding fees and expenses of the
Trustee, and thereafter any fees, expenses, liabilities and advances due to, or
incurred or made by, the Paying Agent, the Tender Agent and the Registrar and
(ii) any sums due to the Issuer under the Agreement (other than Repayments),
such moneys shall be applied in the order set forth below:

              (a) Unless the principal of all Bonds shall have become or been
declared due and payable, all such moneys shall be applied:

                     First: To the payment of all installments of interest then
              due on the Bonds in order of priority first to installments past
              due for the greatest period and, if the amount available shall not
              be sufficient to pay in full any particular installment, then to
              the ratable payment of the amounts due on such installment; and

                     Second: To the payment of the unpaid principal of and
              premium, if any, of the Bonds which shall have become due (other
              than Bonds called for redemption for the payment of which moneys
              are held pursuant to the provisions of this Indenture), with
              interest on such Bonds from the respective dates upon which they
              became due (at the rate borne by the Bonds, to the extent
              permitted by law) and, if the amount available shall not be
              sufficient to pay in full Bonds due on any particular date,
              together with such premium, then to the ratable payment of the
              amounts due on such date.

              (b) If the principal of all the Bonds shall have become or been
declared due and payable, all such moneys shall be applied to the payment of the
principal, premium, if any, and interest then due and unpaid upon the Bonds,
without preference or priority as between principal, premium, interest,
installments of interest or Bonds, ratably according to the amounts due
respectively for principal, premium and interest to the persons entitled
thereto.

                                      -62-
<PAGE>   67

              (c) If the principal on all Bonds shall have been declared due and
payable, and if such declaration shall thereafter have been rescinded under this
Article then, subject to subsection (b) of this Section in the event that the
principal of all the Bonds shall again become or be declared due and payable,
the moneys shall be applied in accordance with subsection (a) of this Section.

              Notwithstanding the foregoing, unless the Credit Facility permits
drawings to pay premium with respect to Bonds, the Trustee shall be obligated to
apply moneys received under a Credit Facility then in effect and Eligible Funds
taken into account in calculating the required draw under such Credit Facility,
only to principal and Purchase Price of, and interest on the Bonds (except Bonds
that are not entitled to any benefit of the Credit Facility as provided in
Section 3.8). Whenever moneys are to be applied pursuant to this Section, the
Trustee shall fix the date which shall be not more than seven calendar days
after such acceleration upon which such application is to be made and upon such
date interest on the principal amount of Bonds to be paid on such dates shall
cease to accrue. The Trustee shall give such notice as it may deem appropriate
of the deposit with it of any such moneys and of the fixing of any such date.

              Section 6.8 Rights of a Credit Issuer. All rights of any Credit
Issuer under this Indenture to consent to certain extensions, remedies, waivers,
actions and amendments hereunder shall cease, determine and become null and void
(i) for so long as the Credit Issuer wrongfully dishonors any draft (or other
appropriate form of demand) presented in strict conformity with the requirements
of the Credit Facility and has not honored a subsequent draft (or other
appropriate form of demand), if any, thereunder or (ii) if no Credit Facility is
in effect or any Credit Facility terminates in accordance with its terms.

                                   ARTICLE VII

                THE TRUSTEE; THE PAYING AGENT; THE TENDER AGENT;
                      THE REGISTRAR; THE REMARKETING AGENT

              Section 7.1. The Trustee is hereby appointed and does hereby agree
to act in such capacity, and to perform the duties of the Trustee under this
Indenture, but only upon and subject to the following express terms and
conditions (and no implied covenants or other obligations shall be read into
this Indenture against the Trustee):

              (a) The Trustee may execute any of its trusts or powers hereunder
and perform any of its duties by or through attorneys, agents, receivers or
employees and shall not be held liable for their actions if such agents are
selected with reasonable care. The Trustee shall be entitled to advice of
Counsel concerning all matters hereunder, and may in all cases pay such
reasonable compensation to all such attorneys, agents, receivers and employees.
The Trustee may act upon the opinion or advice of Counsel, accountants,
engineers or surveyors selected by it in the

                                      -63-
<PAGE>   68

exercise of reasonable care or, if the same are selected by the Issuer, approved
by the Trustee in the exercise of reasonable care. The Trustee shall not be
responsible for any loss or damage resulting from any action or non-action in
good faith in reliance upon such opinion or advice.

              (b) The Trustee shall not be responsible for any recital herein or
in the Bonds, or for the recording, rerecording, filing or re-filing of this
Indenture, of any financing statements or continuation statements, or for
insuring the Security or the Project or collecting any insurance moneys, or for
the validity of this Indenture or of any supplements hereto or instruments of
further assurance, or for the sufficiency of the security for the Bonds issued
hereunder or intended to be secured hereby, or for the value of or title to the
Project or otherwise as to the maintenance of the Security. The Trustee shall
have no obligation to perform any of the duties of the Issuer under the
Agreement. The Trustee shall not be liable to the Company, any Holder, any
Beneficial owner or any other Person for any loss suffered in connection with
any investment of funds made by it in accordance with Section 4.7. The Trustee
shall not be liable to the Company for any loss suffered as a result of or in
connection with any investment of funds made by the Trustee in good faith as
instructed by or approved by an Authorized Representative.

              (c) The Trustee shall not be accountable for the Use of any Bonds
authenticated or delivered hereunder after such Bonds shall have been delivered
in accordance with instructions of the Issuer or for the use by the Company of
the proceeds of the Bonds advanced to the Company as provided in the Agreement
or for the use or application of any moneys received by the Paying Agent. The
Trustee may become the owner of Bonds secured hereby with the same rights as any
other Holder.

              (d) The Trustee shall be protected in acting upon opinions of
Counsel and upon any notice, request, consent, certificate, order, affidavit,
letter, telegram or other paper or document believed to be genuine and correct
and to have been signed or sent by the proper person or persons. Any action
taken by the Trustee pursuant to this Indenture upon the request or authority or
consent of any person who at the time of making such request or giving such
authority or consent is the Holder of any Bond shall be conclusive and binding
upon all future Holders of the same Bond and upon Bonds issued in exchange
therefor or in place thereof. The Trustee may conclusively rely upon a
certificate furnished by a Credit Issuer as to amounts owing under the Credit
Agreement.

              (e) The permissive right of the Trustee to do things enumerated in
this Indenture or the Agreement shall not be construed as duties. The Trustee
shall only be responsible for the performance of the duties expressly set forth
herein and shall not be answerable for other than its gross negligence or bad
faith in the performance of those express duties.

                                      -64-
<PAGE>   69

              (f) The Trustee shall not be personally liable for any debts
contracted or for damages to persons or to personal property injured or damaged,
or for salaries or non-fulfillment of contracts, relating to the Project.

              (g) The Trustee shall not be required to give any bond or surety
in respect of the execution of the said trust and powers or otherwise in respect
of the premises.

              (h) Before taking any action requested hereunder by the Holders
(except for acceleration of the Bonds as required by Section 6.2, for drawing on
the Credit Facility as required by Section 3.8(a) and with respect to the
payment of principal, interest and Purchase Price to Holders), the Trustee may
require satisfactory security or indemnity bond for the reimbursement of all
expenses to which it may be put and to protect it against all liability, except
liability which is adjudicated to have resulted from its own gross negligence or
bad faith by reason of any action so taken.

              (i) All moneys received by the Trustee or the Paying Agent, until
used or applied or invested as herein provided, shall be held as special trust
funds for the purposes specified in this Indenture and for the benefit and
security of the Holders of the Bonds and the Credit Issuer as herein provided.
Such moneys need not be segregated from other funds except to the extent
required by law or herein provided, and neither the Trustee nor the Paying Agent
shall otherwise be under any liability for interest on any moneys received
hereunder except such as may be agreed upon.

              (j) The Trustee shall not be bound to ascertain or inquire as to
the performance of the obligations of the Company or the Issuer under the
Agreement or this Indenture, and shall not be deemed to have, or be required to
take, notice of default under this Indenture (other than under Section 6.1(a),
(b) or (c) if notice thereof has been received from the Paying Agent or under
Section 6.1(f) or (g)) or the occurrence of a Determination of Taxability by
reason of either the enactment of legislation or the adoption of final
regulations, except (i) if no Credit Facility is in effect, in the event the
Company fails to pay any Repayment when due, (ii) in the event of an
insufficient amount in the Bond Fund (or any account therein) to make a
principal or interest payment on the Bonds, (iii) written notification of a
Determination of Taxability by the Holder of any Bonds, (iv) written
notification of such default by two or more Holders with combined holdings of
not less than twenty-five percent (25%) of the principal amount of Outstanding
Bonds or (v) written notification from the Credit Issuer pursuant to Section 6.1
hereof, and in the absence of such notice the Trustee may conclusively presume
there is no Determination of Taxability and no default except as aforesaid. The
Trustee may nevertheless require the Issuer and the Company to furnish
information regarding performance of their obligations under the Agreement and
this Indenture, but is not obligated to do so.

                                      -65-
<PAGE>   70

              (k) The Trustee shall, prior to any Event of Default and after the
curing of all Events of Default which may have occurred, perform such duties and
only such duties of the Trustee as are specifically set forth in this Indenture.
The Trustee shall, during the existence of any Event of Default which has not
been cured, exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his/her own affairs. The foregoing shall not limit the Trustee's obligations
under Section 3.8(a) or Section 6.2.

              (l) The Paying Agent, the Tender Agent and the Registrar shall
each be entitled to the same rights and immunities with respect to their
respective duties under this Indenture as the Trustee is under this Section 7.1
with respect to its duties hereunder.

              (m) In addition to the Trustee's other duties hereunder, the
Trustee shall authenticate and cancel Bonds as provided herein, keep such books
and records relating to such duties as shall be consistent with prudent industry
practice and make such books and records available for inspection by the Issuer
and the Company at all reasonable times. All Bonds shall be made available for
authentication, exchange and registration of transfer at the principal office of
the Trustee.

              (n) The Trustee shall have no duty to inspect or oversee the
construction or completion of the Project or to verify the truthfulness or
accuracy of the certifications made by the Company with respect to the Trustee's
disbursements for Costs of the Project in accordance with the Agreement and this
Indenture.

              Section 7.2. Compensation and Indemnification of Trustee, Paying
Agent, Tender Agent and Registrar; Trustee's Prior Claim. The Agreement provides
that the Company will pay the reasonable fees and expenses of the Issuer, the
Trustee, the Tender Agent, the Paying Agent, the Placement Agent, the
Remarketing Agent and the Registrar under this Indenture and all other amounts
which may be payable to the Trustee, Paying Agent, Registrar or Tender Agent
under this Section 7.2, and the reasonable fees and expenses of the Remarketing
Agent, such fees and expenses to be paid when due and payable by the Company
directly to the Trustee, Tender Agent, Paying Agent, Registrar and Remarketing
Agent, respectively, for their own account.

              The Company shall (a) pay the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), (b) pay the Paying Agent, the Tender Agent and the Registrar and
any other agent of the Issuer or the Company acting hereunder or under the
Agreement (the Paying Agent, the Tender Agent and the Registrar and any other
agent of the Issuer being herein referred to as a "Company Agent") reasonable
compensation, (c) pay or reimburse each

                                      -66-
<PAGE>   71

of the Trustee and any Company Agent upon request for all reasonable expenses,
disbursements and advances incurred or made, in accordance with any of the
provisions of this Indenture and the Agreement (including the reasonable
compensation and the reasonable expenses and disbursements of its Counsel and of
all agents and other persons not regularly in its employ), except to the extent
that any such expense, disbursement or advance is due to its own gross
negligence or bad faith, and (d) indemnify each of the Trustee and any Company
Agent for, and to hold it harmless against, any loss, liability or expense
incurred by it, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder or the performance of
its duties hereunder or under the Agreement, including the reasonable costs and
expenses of defending itself against or investigating any claim of liability in
the premises, except to the extent that any such loss, liability or expense was
due to its own gross negligence or bad faith. The obligations of the Company
under the Agreement referred to in this Section 7.2 shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior claim to that of the
Bonds upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of the Bonds, funds
held with respect to Untendered Bonds and unredeemed Bonds for which notice of
redemption has been given, and except for any arbitrage rebate fund or account
established pursuant hereto or pursuant to any arbitrage regulatory agreement.

              Notwithstanding the foregoing, neither the Trustee nor any Company
Agent shall have any claim upon or shall be paid, prior to any Holder, from any
Credit Facility, Eligible Funds or proceeds from the remarketing of Bonds, or
the proceeds thereof, with respect to any such compensation, payment,
reimbursement or indemnity. "Trustee", "Company Agent", "Paying Agent", "Tender
Agent" and "Registrar" for purposes of this Section 7.2 shall include any
predecessor Trustee, Company Agent, Paying Agent, Tender Agent and Registrar but
the gross negligence or bad faith of any Trustee, Company Agent, Paying Agent,
Tender Agent or Registrar shall not affect the indemnification of any other
Person.

              Section 7.3. Intervention in Litigation. In any judicial
proceedings to which the Issuer is a party, the Trustee may intervene on behalf
of Holders, and shall intervene if requested in writing by the Holders of at
least twenty-five percent (25%) in aggregate principal amount of Bonds then
Outstanding.

              Section 7.4. Resignation. The Trustee and any successor Trustee
may resign only upon giving sixty (60) days prior written notice to the Issuer,
the Credit Issuer, if any, the Company and each Holder of Bonds then Outstanding
as shown on the Register. Such resignation shall take effect only upon the
appointment of a successor Trustee by the Issuer with the written consent of the
Company and the Credit Issuer, if any. If no successor is appointed within sixty
(60) days after the notice of resignation, the resigning party may appoint a
successor or petition any court of competent jurisdiction to appoint a
successor. Upon appointment of

                                      -67-
<PAGE>   72

a successor Trustee, the resigning Trustee shall assign all of its right, title
and interest in the Security, including its right, title and interest in any
Credit Facility then in effect and the Indenture, to the successor Trustee. The
successor Trustee shall be a national banking association or a bank or trust
company organized under the laws of the United States of America or any state of
the United States, or the District of Columbia, having a combined capital stock,
surplus and undivided profits aggregating at least $50,000,000, and, if the
Bonds are rated by a Rating Agency, the successor Trustee must be a bank or
trust company whose outstanding bank deposit obligations are rated at least
Baa3/P-3 or otherwise be acceptable to such Rating Agency. Any successor Trustee
shall accept in writing its duties and responsibilities hereunder and such
writing shall be filed with the Issuer, the Credit Issuer, if any, and the
Company.

              Section 7.5. Removal of Trustee. The Trustee may be removed at any
time, by an instrument or concurrent instruments in writing delivered to the
Trustee, the Credit Issuer, if any, the Issuer and the Company and signed by the
Holders of a majority in aggregate principal amount of Bonds then Outstanding.
Upon such removal, the Trustee shall assign to the successor Trustee all of its
right, title and interest in the Security in the same manner as provided in
Section 7.4. If the Bonds are rated by a Rating Agency, notice concerning any
change in the Trustee shall be furnished to such Rating Agency.

              Section 7.6. Paying Agent. Wachovia Bank of North Carolina,
National Association, is hereby appointed by the Issuer as the initial Paying
Agent. The Issuer, at the direction of the Company and with the approval of the
Remarketing Agent and the Credit Issuer, if any, shall appoint any successor
Paying Agent for the Bonds, subject to the conditions set forth in Section 7.8.
The Paying Agent shall designate to the Issuer and the Trustee its principal
office for all purposes hereof and signify its acceptance of the duties imposed
upon it hereunder by a written instrument of acceptance delivered to the Issuer
and the Trustee under which the Paying Agent shall agree, particularly:

                     (i) to hold all sums held by it for the payment of the
                     principal of, premium, if any, or interest on the Bonds in
                     trust for the benefit of the Holders of the Bonds until
                     such sums shall be paid to such Holders of the Bonds or
                     otherwise disposed of as herein provided;

                     (ii) to perform its obligations under Article II of this
                     Indenture; and

                     (iii) to keep such books and records relating to its duties
                     as Paying Agent as shall be consistent with prudent
                     industry practice and to make such books and records
                     available for inspection by the Issuer, the Trustee and the
                     Company at all reasonable times.

                                      -68-
<PAGE>   73

The Issuer shall cooperate with the Trustee, the Paying Agent and the Company to
cause the necessary arrangements to be made and to be thereafter continued
whereby:

              (a) funds derived from the sources specified in this Indenture
will be made available at the principal office of the Paying Agent for the
timely payment of principal, premium, if any, and interest on the Bonds; and

              (b) the Paying Agent shall be furnished such records and other
information, at such times, as shall be required to enable the Paying Agent to
perform the duties and obligations imposed upon it hereunder.

              In carrying out its responsibilities hereunder the Paying Agent
will act for the benefit of the Holders. Notwithstanding anything to the
contrary in this Indenture, the Paying Agent shall not invest any moneys it
receives from a draw on the Credit Facility if any.

              No purchase of Bonds by the Paying Agent shall constitute a
redemption of Bonds or any extinguishment of the debt represented thereby or
constitute the Paying Agent the owner of such Bonds for any purpose whatsoever.

              Section 7.7. Tender Agent. Wachovia Bank of North Carolina,
National Association, is hereby appointed by the Issuer as the initial Tender
Agent. The Issuer, at the direction of the Company and with the approval of the
Remarketing Agent and the Credit Issuer, shall appoint any succeeding Tender
Agent for the Bonds, subject to the conditions set forth in Section 7.8. The
Tender Agent shall designate to the Issuer and the Trustee its principal office
for all purposes hereof and signify its acceptance of the duties imposed upon it
hereunder by a written instrument of acceptance delivered to the Issuer and the
Trustee under which the Tender Agent shall agree, particularly:

                     (i) to hold all sums held by it for the payment of the
                     principal of, premium, if any, or interest on the Bonds in
                     trust for the benefit of the Holders of the Bonds until
                     such sums shall be paid to such Holders of the Bonds or
                     otherwise disposed of as herein provided;

                     (ii) to perform its obligations under this Indenture; and

                     (iii) to keep such books and records relating to its duties
                     as Tender Agent as shall be consistent with prudent
                     industry practice and to make such books and records
                     available for inspection by the Issuer, the Trustee and the
                     Company at all reasonable times.

                                      -69-
<PAGE>   74

              The Issuer shall cooperate with the Trustee and the Company to
cause the necessary arrangements to be made and to be thereafter continued
whereby the Tender Agent shall be furnished such records and other information,
at such times, as shall be required to enable the Tender Agent to perform the
duties and obligations imposed upon it hereunder.

              No delivery of Bonds to the Tender Agent shall constitute a
redemption of Bonds or any extinguishment of the debt represented thereby or
constitute the Tender Agent the owner of such Bonds for any purpose whatsoever.

              Section 7.8. Qualifications of Paying Agent and Tender Agent;
Resignation; Removal.

              (a) The Paying Agent and the Tender Agent shall each be a bank or
trust company duly organized under the laws of the United States of America or
any state or territory thereof, having a combined capital stock, surplus and
undivided profits of at least $15,000,000 and authorized by law to perform all
the duties imposed upon it by this Indenture. The principal office of each of
the Paying Agent and the Tender Agent for all purposes hereof shall be the off
ice of the Paying Agent or the Tender Agent, as the case may be, at which all
deliveries to it hereunder shall be made and any and all notices and other
communications in connection herewith shall be delivered. The Paying Agent or
the Tender Agent may at any time resign and be discharged of its duties and
obligations created by this Indenture by giving at least sixty (60) days' notice
to the Issuer, the Company and the Trustee. The Paying Agent or the Tender Agent
may be removed at any time, at the direction of the Company, by an instrument,
signed by the Issuer, filed with such Paying Agent or Tender Agent, as the case
may be, and with the Trustee.

              (b) In the event of the resignation or removal of the Paying Agent
or the Tender Agent, the Paying Agent or the Tender Agent, as the case may be,
shall deliver any moneys and any Bonds and any related books and records held by
it in such capacity to its successor or, if there be no successor, to the
Trustee.

              (c) In the event that the Paying Agent or the Tender Agent shall
resign or be removed, or be dissolved, or if the property or affairs of the
Paying Agent or the Tender Agent shall be taken under the control of any state
or federal court or administrative body because of bankruptcy or insolvency, or
for any other reason, and the Issuer shall not have appointed a successor Paying
Agent or Tender Agent (any appointment by the Issuer shall be with the prior
written consent of the Company), as the case may be, the Trustee shall, upon
receiving written notice from the Issuer that the Issuer has not appointed a
successor Paying Agent or Tender Agent, as the case may be, ipso facto be deemed
to be the Paying Agent or Tender Agent, as the case may be, for all purposes of
this Indenture until the appointment by the Issuer of a successor Paying Agent
or Tender Agent, as the case may be. If the Bonds are rated by a Rating Agency,
any successor Paying Agent or Tender Agent shall be a bank or trust company
whose outstanding

                                      -70-
<PAGE>   75

bank deposit obligations are rated at least Baa3/P-3 or otherwise be acceptable
to such Rating Agency.

              Section 7.9. Instruments of Holders. Any instrument required by
this Indenture to be executed by Holders may be in any number of writings of
similar tenor and may be executed by Holders in person or by agent appointed in
writing. Proof of the execution of any such instrument or of the writing
appointing any such agent and of the ownership of Bonds given in any of the
following forms shall be sufficient for any of the purposes of this Indenture:

                     (i) A certificate of any officer in any jurisdiction who by
                     law has power to take acknowledgements within such
                     jurisdiction that the person signing such writing
                     acknowledged before him/her the execution thereof.

                     (ii) A certificate executed by any trust company or bank
                     stating that at the date thereof the party named therein
                     did exhibit to an officer of such trust company or bank, as
                     the property of such party, the Bonds therein mentioned.

              The Trustee may rely on such an instrument of Holders unless and
until the Trustee receives notice in the form specified in (i) or (ii) above
that the original such instrument is no longer reliable. In the event that the
Trustee shall receive conflicting directions from two or more groups of Holders,
each with combined holdings of not less than twenty-five percent (25%) of the
principal amount of Outstanding Bonds, the directions given by the group of
Holders which holds the largest percentage of Bonds shall be controlling and the
Trustee shall follow such directions to the extent required herein.

              Section 7.10. Power to Appoint Co-Trustees. At any time or times,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Project may at the time be located, the Issuer and the Trustee
shall have power to appoint and, upon the request of the Trustee or of the
Holders of a majority of the aggregate principal amount of the Bonds then
Outstanding, the Issuer shall for such purpose join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint, one or more persons approved by the Trustee and the
Company either to act as co-trustee or co-trustees, jointly with the Trustee of
all or any part of the Project, or to act as separate trustee or separate
co-trustees of all or any part of the Project, and to vest in such person or
persons, in such capacity, such title to the Project or any part thereof, and
such rights, powers, duties, trusts or obligations as the Issuer and the Trustee
may consider necessary or desirable, subject to the remaining provisions of this
section.

              The Trustee and co-trustee, if any, may by written instrument
between them designate and assign either the Trustee or

                                      -71-
<PAGE>   76

the co-trustee or both of them to perform all or any part of the
responsibilities and duties of the Trustee under this Indenture.

              If the Issuer shall not have joined in such appointment within
thirty (30) days after the receipt by it of a written request to do so, or in
case an Event of Default shall have occurred and be continuing, the Trustee and
the Company shall have the power to make such appointment.

              The Issuer shall execute, acknowledge and deliver all such
instruments as may be required by any such co-trustee or separate trustee for
more fully confirming such title, rights, powers, trusts, duties and obligations
to such co-trustee or separate trustee.

              Every co-trustee or separate trustee appointed pursuant to this
section, to the extent permitted by law or any applicable contract, shall be
subject to the following terms, namely:

              (a) This Indenture shall become effective at the time the Bonds
shall be authenticated and delivered, and thereupon such co-trustee or separate
trustee shall have all rights, powers, trusts, duties and obligations by this
Indenture conferred upon the Trustee in respect of the custody, control or
management of moneys, papers, securities and other personal property.

              (b) All rights, powers, trusts, duties and obligations conferred
or imposed upon the trustees shall be conferred or imposed upon and exercised or
performed by the Trustee, or by the Trustee and such co-trustee or co-trustees,
or separate trustee or separate trustees, as shall be provided in the instrument
appointing such co-trustee or co-trustees or separate trustee or separate
trustees, except to the extent that, under the law of any jurisdiction in which
any particular act or acts are to be performed, the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such act or acts
shall be performed by such co-trustee or co-trustees or separate trustee or
separate trustees.

              (c) Any request in writing by the Trustee to any cotrustee or
separate trustee to take or to refrain from taking any action hereunder shall be
sufficient warrant for the taking, or the refraining from taking, of such action
by such co-trustee or separate trustee.

              (d) Any co-trustee or separate trustee, to the extent permitted by
law, may delegate to the Trustee the exercise of any right, power, trust, duty
or obligation, discretionary or otherwise.

              (e) The Trustee at any time, by an instrument in writing, with the
concurrence of the Company and the Issuer evidenced by a resolution, may accept
the resignation of any cotrustee or separate trustee appointed under this
Section 7.10, and, in case an Event of Default shall have occurred and be
continuing, the Trustee shall

                                      -72-
<PAGE>   77

have power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Issuer and the Company. Upon the
request of the Trustee, the Issuer and the Company shall join with the Trustee
in the execution, delivery and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A successor to
any co-trustee or separate trustee so resigned or removed may be appointed in
the manner provided in this Section 7.10.

              (f) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of any other trustee
hereunder.

              (g) Any moneys, paper, securities or other items of personal
property received by any such co-trustee or separate trustee hereunder shall
forthwith, so far as may be permitted by law, be turned over to the Trustee.

              Upon the acceptance in writing of such appointment by any such
co-trustee or separate trustee, it or he shall be vested with the security
interest in the Security and with such rights, powers, duties, trusts or
obligations, as shall be specified in the instrument of appointment jointly with
the Trustee (except insofar as applicable law makes it necessary for any such
cotrustee or separate trustee to act alone) subject to all the terms of this
Indenture. Every such acceptance shall be filed with the Trustee. If the Bonds
are rated by a Rating Agency, any cotrustee and separate trustee shall be a bank
or trust company whose bank deposit obligations are rated at least Baa-3/P-3 or
otherwise be acceptable to such Rating Agency.

              In case any co-trustee or separate trustee shall die, become
incapable of acting, resign or be removed, the security interest in the Security
and all rights, powers, trusts, duties and obligations of said co-trustee or
separate trustee shall, so far as permitted by law, vest in and be exercised by
the Trustee unless and until a successor co-trustee or separate trustee shall be
appointed in the same manner as provided for with respect to the appointment of
a successor Trustee pursuant to Section 7.4 hereof.

              Section 7.11. Filing of Financing Statements. The Company shall
file or record or cause to be filed or recorded all Financing Statements that
are required in order fully to protect and preserve the security interests and
the priority thereof and the rights and powers of the Trustee in connection
therewith, including without limitation all continuation statements for the
purpose of continuing without lapse the effectiveness of (i) those Financing
Statements which shall have been filed at or prior to the issuance of the Bonds
in connection with the security for the Bonds pursuant to the authority of the
U.C.C., and (ii) any previously filed continuation statements that shall have
been filed as required herein. The Issuer and the Trustee shall sign, and the
Trustee shall deliver to the Company or its designee, all such Financing
Statements as may be required for the purposes specified in the preceding
sentence. Upon the filing of any such Financing Statement

                                      -73-
<PAGE>   78

the Company shall immediately notify the Issuer and the Trustee that the same
has been accomplished and deliver to the Issuer and the Trustee an opinion of
Counsel to the effect that such filings are sufficient to maintain perfection
and priority of the security interests granted in this Indenture.

              Section 7.12. Remarketing Agent. At the request of the Company,
Wachovia Bank of Georgia, National Association is hereby appointed as the
initial Remarketing Agent. The Issuer, at the direction of the Company, and with
the consent of the Credit Issuer, which consent shall not be unreasonably
withheld, shall appoint any successor Remarketing Agent for the Bonds, subject
to the conditions set forth in Section 7.13. Any Remarketing Agent shall
designate to the Issuer and the Trustee its principal office for purposes
hereof, which shall be the office of such Remarketing Agent at which all notices
and other communications in connection herewith may be delivered to it, and
signify its acceptance of the duties and obligations imposed upon it hereunder
by a written instrument of acceptance delivered to the Issuer, the Company, the
Trustee and the Credit Issuer under which such Remarketing Agent shall agree
particularly (i) to hold all Bonds delivered to it hereunder in trust for the
benefit of the respective Holders of Bonds that delivered such Bonds until
moneys representing the Purchase Price of such Bonds are delivered to or for the
account of or to the order of such Holders of Bonds; (ii) to hold all moneys
delivered to it hereunder for the purchase of Bonds in trust for the benefit of
the person or entity that has delivered such moneys until the Bonds purchased
with such moneys are delivered to or for the account of such person or entity;
and (iii) to keep books and records with respect to its activities hereunder
available for inspection by the Issuer, the Trustee, the Company and the Credit
Issuer, if any, at all reasonable times.

              Section 7.13. Qualifications of Remarketing Agent; Resignation;
Removal. The Remarketing Agent shall be a financial institution or registered
broker/dealer authorized by law to perform all the duties imposed upon it by
this Indenture. The Remarketing Agent may at any time resign and be discharged
of its duties and obligations created by this Indenture by giving at least
thirty (30) days notice to the Issuer, the Company, the Tender Agent, the Paying
Agent, the Trustee and the Credit Issuer, if any. The Remarketing Agent may be
removed at any time, upon not less than thirty (30) days' notice, at the
direction of the Company, by an instrument signed by the Issuer and the Company
and filed with the Remarketing Agent, the Trustee, the Paying Agent, the Tender
Agent and the Credit Issuer, if any; provided that no such removal shall be
effective until a successor Remarketing Agent has been appointed in accordance
with this Section and Section 7.12. If the Bonds are rated by a Rating Agency,
any successor Remarketing Agent shall be a bank or trust company whose
outstanding bank deposit obligations are rated at least Baa-3/P-3 or otherwise
be acceptable to such Rating Agency.

              Section 7.14. Several Capacities. Anything in this Indenture to
the contrary notwithstanding, the same entity may

                                      -74-
<PAGE>   79

serve hereunder as the Trustee, the Credit Issuer, the Paying Agent, the Tender
Agent, the Registrar and the Remarketing Agent and in any other combination of
such capacities, to the extent permitted by law.

              Section 7.15. Trustee Not Responsible for Duties of Remarketing
Agent, Tender Agent, Registrar and Paying Agent. Notwithstanding anything to the
contrary in this Indenture, the Trustee shall not be liable or responsible for
any of the duties or obligations of the Remarketing Agent, the Tender Agent, the
Registrar or the Paying Agent under this Indenture (or be liable or responsible
for the acts or omissions of the Paying Agent, the Tender Agent, the Registrar
or the Remarketing Agent or any action taken by the Trustee or failure to act in
reasonable reliance upon any action or failure to act by the Paying Agent, the
Tender Agent, the Registrar or the Remarketing Agent) except for the duties
imposed upon, or the acts and omissions of, the Trustee as the Tender Agent or
the Paying Agent after receipt of the written notice provided for in Section
7.8(c) to the effect that a successor agent has not been appointed by the
Issuer. The Trustee shall not be bound to ascertain or inquire as to the truth
or accuracy of any information provided to it by the Paying Agent, the Tender
Agent, the Registrar or the Remarketing Agent but may for any purpose
conclusively rely upon any information given to the Trustee by the Paying Agent,
the Tender Agent, the Registrar or the Remarketing Agent.

              Section 7.16. Cooperation of the Issuer. Subject to the provisions
of Section 9.9, the Issuer shall cooperate with the Trustee, the Paying Agent,
the Tender Agent, the Registrar, the Remarketing Agent and the Company, if
requested to do so by the Trustee or the Company and to the extent it may
lawfully do so, to cause the necessary arrangements to be made and to be
thereafter continued whereby funds from the sources specified in Section 4.4
will be made available to pay the Purchase Price of Bonds presented to the
Tender Agent.

              Section 7.17. Cooperation of the Trustee, the Tender Agent, the
Registrar and the Paying Agent. The Trustee, the Tender Agent, the Registrar and
the Paying Agent shall cooperate in all respects and shall provide to the other
in a timely fashion the information and knowledge each possesses so that the
Trustee and each of such parties may faithfully exercise their respective
obligations hereunder.

                                  ARTICLE VIII

                       AMENDMENTS, SUPPLEMENTAL INDENTURES

              Section 8.1. Supplemental Indentures. The Issuer and the Trustee,
with the consent of the Credit Issuer, if any, but without the consent of or
notice to any Holders, may enter into an indenture or indentures supplemental to
this Indenture that do not

                                      -75-
<PAGE>   80

materially adversely affect the interest of the Holders for one or more of the
following purposes:

              (a) to grant to or confer upon the Trustee for the benefit of the
Holders and the Credit Issuer, if any, any additional rights, remedies, powers
or authority that may lawfully be granted to or conferred upon the Holders or
the Trustee;

              (b) to grant or pledge to the Trustee for the benefit of Holders
and such Credit Issuer, if any, any additional security other than that granted
or pledged under this Indenture; provided that no additional security shall be
granted or pledged to the Trustee for the benefit of such Credit Issuer unless
such Credit Issuer agrees that the Trustee shall hold such security in trust for
the equal or ratable benefit of such Credit Issuer, on the one hand, and the
Holders, on the other hand;

              (c) to modify, amend or supplement this Indenture or any indenture
supplemental hereto in such manner as to permit the qualification thereof under
the Trust Indenture Act of 1939 or any similar federal statute then in effect or
to permit the qualification of the Bonds for sale under the securities laws of
any of the states of the United States;

              (d) to appoint a successor Trustee, separate trustees or
co-trustees in the manner provided in Article VII hereof;

              (e) to modify, amend or supplement this Indenture for the purpose
of obtaining or retaining a rating on the Bonds from a Rating Agency;

              (f) to modify, amend or supplement this Indenture to provide that
the Bonds will be registered under a Book Entry System and to facilitate the
registration of the Bonds under such a system;

              (g) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture that may be
defective or inconsistent with any provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture which shall not materially adversely
affect the interest of the Holders or such Credit Issuer, if any;

              (h) to modify, amend or supplement this Indenture to permit the
Paying Agent, the Tender Agent or the Registrar to assume any administrative
duties of the Trustee hereunder (except any duties of the Trustee with respect
to the acceptance, modification, reduction or release of or drawing on, any
Credit Facility) or for the Trustee to assume any administrative duties of the
Paying Agent or the Registrar hereunder;

              (i) to make any change herein necessary, in the opinion of Bond
Counsel, to maintain the exclusion from gross income for

                                      -76-
<PAGE>   81

federal income tax purposes of the interest on any Outstanding Bonds; and

              (j) to make any change to the administrative provisions hereof, to
accommodate the provisions of an Alternate Credit Facility.

              When requested by the Issuer, and if all conditions precedent
under this Indenture have been met, the Trustee shall join the Issuer in the
execution of any such supplemental indenture unless it imposes additional
obligations on the Trustee or adversely affects the Trustee's rights and
immunities under this Indenture or otherwise. A copy of all such supplemental
indentures shall be promptly furnished to the Credit Issuer and the Paying
Agent, and the Tender Agent and the Registrar shall be promptly advised of any
modifications of their rights, duties and obligations hereunder.

              The Trustee shall file copies of all such supplemental indentures
with the Company and, if the Bonds are rated by a Rating Agency, shall forward
copies of all such supplemental indentures to such Rating Agency.

              Section 8.2. Amendments to Indenture: Consent of Holders, the
Credit Issuer and the Company. Exclusive of supplemental indentures covered by
Section 8.1 and subject to the terms and provisions contained in this Section
8.2, and not otherwise, the Holders of a majority in aggregate principal amount
of the Bonds then Outstanding and affected by such indenture or indentures
supplemental hereto, with the consent of the Credit Issuer, if any, shall have
the right, from time to time, anything contained in this Indenture to the
contrary notwithstanding, to consent to and direct the execution by the Trustee
of such other indenture or indentures supplemental hereto as shall be consented
to by the Issuer in its sole discretion for the purpose of modifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or
provisions contained in this Indenture or in any supplemental indenture;
provided, however, that nothing contained in this Section shall permit, or be
construed as permitting, without the consent of the Holders of all Outstanding
Bonds, (a) an extension of the maturity of the principal of, or the mandatory
redemption date of, or interest on, any Bond, or (b) a reduction in the
principal amount of, or the premium or the rate of interest on, any Bond, (c) a
preference or priority of any Bond or Bonds over any other Bond or Bonds, (d)
the creation of a lien prior to the lien of this Indenture, (e) a reduction in
the aggregate principal amount of the Bonds required for any consent to any
supplemental indenture, or (f) a modification or change in the duties of the
Trustee hereunder without the consent of the Trustee. The giving of notice to
and consent of the Holders to any such proposed supplemental indenture shall be
obtained pursuant to Section 8.6.

              Anything herein to the contrary notwithstanding, a supplemental
indenture, amendment or other document described under this Article VIII that
affects any rights or obligations of the

                                      -77-
<PAGE>   82

Company shall not become effective unless and until the Company shall have
consented to the execution of such supplemental indenture, amendment or other
document.

              The Trustee shall file copies of all such supplemental indentures
with the Company and, if the Bonds are rated by a Rating Agency, shall furnish
copies of all such supplemental indentures to such Rating Agency.

              Section 8.3. Amendments to to the Agreement Not Requiring Consent
of Holders. The Issuer shall not cause any amendment, modification, supplement,
waiver or consent with respect to the Agreement without the prior written
consent of the Trustee. The Issuer may, with the consent of the Credit Issuer,
if any, but without the consent of or notice to any of the Holders, enter into
or permit (and the Trustee shall consent to) any amendment of the Agreement
acceptable to the Company as may be required (i) for the purpose of curing any
ambiguity or formal defect or omission that shall not adversely affect the
interest of the Holders, (ii) to grant or pledge to the Issuer or Trustee, for
the benefit of the Holders or the Credit Issuer, if any, any additional
security, (iii) to modify, amend or supplement the Agreement for the purpose of
obtaining or retaining a rating on the Bonds from a Rating Agency, (iv) to make
any change therein necessary, in the Opinion of Bond Counsel, to maintain the
exclusion from gross income for federal income tax purposes of interest on any
outstanding Bonds or (v) in connection with any other change therein which, in
the judgment of the Trustee acting in reliance upon an opinion of Counsel, is
not materially prejudicial to the interests of the Trustee and the Holders of
the Bonds.

              The Issuer and the Company shall file copies of any such
amendments to the Agreement with the Trustee and, if the Bonds are rated by a
Rating Agency, the Trustee shall furnish copies of such amendments to such
Rating Agency.

              Section 8.4. Amendments to the Agreement Requiring Consent of
Holders and the Credit Issuer. Except as provided in Section 8.3 hereof, the
Issuer shall not enter into, and the Trustee shall not consent to, any other
modification or amendment of the Agreement, nor shall any such modification or
amendment become effective, without the consent of the Credit Issuer, if any,
and the consent of the Holders of a majority in aggregate principal amount of
the Bonds at the time Outstanding, such consent to be obtained in accordance
with Section 8.6. No such amendment may, without the consent of the Holders of
all the Outstanding Bonds, reduce the amounts or delay the times of payment of
Repayments under the Agreement.

              The Issuer and the Company shall file copies of all such
amendments to the Agreement with the Trustee and, if the Bonds are rated by a
Rating Agency, the Trustee shall furnish copies of such amendments to such
Rating Agency.

                                      -78-
<PAGE>   83

              Section 8.5. Amendments, Changes and Modifications to the Credit
Facility. Except as otherwise provided in the Agreement or in this Indenture,
subsequent to the initial issuance of the Bonds and prior to payment of the
Bonds in full (or provision for the payment thereof having been made in
accordance with the provisions of this Indenture), no Credit Facility may be
effectively amended, changed or modified without the prior written consent of
the Trustee and the Paying Agent. The Trustee may, without the consent of the
Holders of the Bonds, consent to any amendment of the Credit Facility as may be
required to extend the term thereof or for purposes of curing any ambiguity,
formal defect or omission or obtaining or retaining a rating on the Bonds from a
Rating Agency that, in the Trustee's and the Paying Agent's judgment, does not
prejudice in any material respect the interests of the Holders. Except for such
amendments, and as otherwise provided herein, the Credit Facility may be amended
only with the consent of the Issuer, the Trustee and the Holders of a majority
in aggregate principal amount of outstanding Bonds, except that no such
amendment may be made that would reduce the amounts required to be paid
thereunder, change the time for payment of such amounts or accelerate the
expiration date of the Credit Facility without the written consent of the
Holders of all Outstanding Bonds. The foregoing shall not limit the Trustee's
obligation to send notice to the Credit Issuer to reduce amounts available to be
drawn under a currently effective Credit Facility under the circumstances set
forth therein.

              The Trustee shall file copies of all such amendments, changes or
modifications with the Rating Agency, if any, rating the Bonds.

              Section 8.6. Notice to And Consent of Holders. If consent of the
Holders is required under the terms of this Indenture for the amendment of this
Indenture, the Agreement or the Credit Facility or for any other similar
purpose, the Trustee shall cause notice of the proposed execution of the
amendment or supplemental indenture to be given by first-class mail, postage
prepaid, to the Holders of the Outstanding Bonds then shown on the Register.
Such notice shall briefly set forth the nature of the proposed amendment,
supplemental indenture or other action and shall state that copies of any such
amendment, supplemental indenture or other document are on file at the principal
office of the Trustee for inspection by all Holders. If, within sixty (60) days
or such longer period as shall be prescribed by the Trustee following the
mailing of such notice, the Holders of a majority or all, as the case may be, of
the principal amount of the Bonds Outstanding by instruments filed with the
Trustee shall have consented to the amendment, supplemental indenture or other
proposed action, then the Trustee may execute such amendment, supplemental
indenture or other document or take such proposed action and the consent of the
Holders shall thereby be conclusively presumed.

                                   ARTICLE IX

                                  MISCELLANEOUS

                                      -79-
<PAGE>   84

              Section 9.1. Right of Trustee to Pay Taxes and Other Charges. In
case any tax, assessment or governmental or other charge upon any part of the
Project is not paid as required, the Trustee may and, upon direction of Holders
owning a majority of the principal amount of the Outstanding Bonds, shall,
subject to any indemnity required pursuant to Section 7.1(h) of this Indenture,
pay such tax, assessment or governmental or other charge, without prejudice,
however, to any rights of the Trustee hereunder arising in consequence of such
failure; and any amount at any time so paid under this Section, with interest
thereon from the date of payment until paid at the greater of the rate of
interest borne by the Bonds or the per annum rate of interest announced from
time to time by the bank serving as Trustee as its "prime rate", shall become so
much additional indebtedness secured by this Indenture, shall be given a
preference in payment over the Bonds, and shall be paid out of the Security
(other than from funds obtained from the Credit Facility).

              Section 9.2. Limitation of Rights. With the exception of rights
herein expressly conferred, nothing expressed or mentioned in or to be implied
from this Indenture or the Bonds is intended or shall be construed to give to
any Person other than the parties hereto, the Holders, the Credit Issuer and the
Company any legal or equitable right, remedy or claim under or in respect to
this Indenture or any covenants, conditions and provisions herein contained;
this Indenture and all of the covenants, conditions and provisions herein being
intended to be and being for the sole and exclusive benefit of the parties
hereto, the Holders, the Credit Issuer and the Company as herein provided.

              Section 9.3. Severability. If any provision of this Indenture is
held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.

              The invalidity of any one or more phrases, sentences, clauses or
sections of this Indenture, shall not affect the remaining portions of this
Indenture or any part thereof.

              Section 9.4. Notices. Except as otherwise provided herein, it
shall be sufficient service or giving of any notice, request, complaint, demand
or other paper if the same shall be duly mailed by registered or certified mail,
postage prepaid, addressed as set forth below to the Issuer, the Trustee, the
Company, the Remarketing Agent, the Paying Agent, the Tender Agent, the Credit
Issuer, if any, or to any other Person set forth therein; such notice shall be
deemed given on the date of service by hand delivery or on the postmark date if
mailed to the party receiving notice. The Issuer, the Company, any Credit
Issuer, the Trustee, the Tender Agent, the Remarketing Agent and the Paying
Agent by notice given hereunder, may designate any different addresses to which
subsequent notices, certificates or other communications shall be sent.

                                      -80-
<PAGE>   85

       To the Issuer:          Iowa Finance Authority
                               100 E. Grand, Suite 250
                               Des Moines, Iowa 50309
                               Attention: Chief Financial Officer

       with a copy to:         Dorsey & Whitney P.L.L.P.
                               801 Grand, Suite 3900
                               Des Moines, Iowa 50309
                               Attention: Jeffrey M. Hurlburt

       To the Trustee:         First-Citizens Bank & Trust Company
                               2917 Highwoods Boulevard
                               Raleigh, North Carolina 27604
                               Attention: Corporate Trust Department

       To the Company:         Dixie Bedding Company
                               1931 Freeman Mill Road
                               P.O. Box 5386
                               Greensboro, NC 27435
                               Attention: Treasurer

       With a copy to:         Davis, Hockenberg, Wine, Brown, Koehn &
                               Shors, P.C.
                               The Financial Center, Suite 2500
                               666 Walnut Street
                               Des Moines, Iowa 50309-3993
                               Attention: Nicholas H. Roby

       To the Credit
       Issuer:                 Wachovia Bank of North Carolina, National
                               Association
                               301 North Main Street
                               Winston-Salem, North Carolina 27150
                               Attention: International Department

       With a copy to:         Wachovia Bank of North Carolina, National
                               Association
                               P.O. Box 21048 (27420)
                               230 N. Elm Street (27401)
                               Greensboro, North Carolina
                               Attention: Mr. Howell D. Nelson
                                          Vice President

       To the Remarket-
       ing Agent:              Wachovia Bank of Georgia,
                               National Association
                               Post Office Box 4148 (30302)
                               191 Peachtree Street, N.E. (30303)
                               Atlanta, Georgia
                               Attention: Bond & Money Market Group/
                                          Money Market Desk

       To the Paying Agent:    Wachovia Bank of North Carolina,
                               National Association
                               301 North Main Street

                                      -81-
<PAGE>   86

                               Winston-Salem, North Carolina 27150
                               Attention: Bond and Money Market Group/
                                          Bond Operations

       To the Tender           Wachovia Bank of North Carolina,
       Agent:                  National Association
                               301 North Main Street
                               Winston-Salem, North Carolina 27150
                               Attention: Bond and Money Market Group/
                                          Money Market Desk

       To the Rating           Moody's Investors Service
       Agency (if the          Corporate Department, Structured
       Bonds are rated           Finance Group
       by Moody's)             99 Church Street
                               New York, New York 10007

              Section 9.5. Payments Due on Non-Business Days. In any case where
the date of maturity of interest on or premium, if any, or principal of the
Bonds or the date fixed for redemption of any Bonds shall not be a Business Day,
then payment of such interest, premium or principal need not be made on such
date but shall be made on the next succeeding Business Day, with the same force
and effect as if made on the date of maturity or the date fixed for redemption,
and, in the case of such payment, no interest shall accrue for the period from
and after such date.

              Section 9.6. Binding Effect. This instrument shall inure to the
benefit of and shall be binding upon the Issuer and the Trustee and their
respective successors and assigns, subject, however, to the limitations
contained in this Indenture.

              Section 9.7. Captions. The captions or headings in this Indenture
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Indenture.

              Section 9.8. Governing Law. This Indenture shall be governed by
and interpreted in accordance with the laws of the State.

              Section 9.9. Limited Liability of Issuer. Notwithstanding anything
to the contrary, any liability for payment of money and any other liability or
obligation which the Issuer may incur under the Bonds, this Indenture, the
Agreement or the Placement Agreement shall not constitute a general obligation
of the Issuer but shall constitute limited obligations of the Issuer payable
solely from and enforced only against the Security.

              Section 9.10. Notices to Rating Agency. If the Bonds are rated by
a Rating Agency, the Trustee shall provide written notice to such Rating Agency
with respect to (i) the appointment of any successor Trustee, Remarketing Agent,
Paying Agent or Tender Agent, (ii) the appointment of any agent by the Trustee
to perform any

                                      -82-
<PAGE>   87

material duties of the Trustee under this Indenture, (iii) the expiration,
termination or extension (other than an automatic extension) of any Credit
Facility, (iv) any Fixed Rate Conversion Date or any conversion to a Semiannual
Rate or a Long Term Rate, (v) any material amendment or supplement to this
Indenture, the Credit Facility, the Credit Agreement, the Remarketing Agreement
or the Tender Agent Agreement, and (vi) the payment in full of all of the Bonds.
Failure of the Trustee to provide any such notice shall not have any effect on
the occurrence of such event.

              Section 9.11. Execution in Counterparts. This Indenture may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.

                                      -83-
<PAGE>   88

              IN WITNESS WHEREOF, the Issuer has caused this Indenture to be
executed in its name and on its behalf by its Chairman or Vice Chairman and its
seal affixed and attested by its Secretary and the Trustee has caused this
Indenture to be executed, sealed and attested in its name by its duly authorized
officers, all as of the day and year first above written.

                                           IOWA FINANCE AUTHORITY

(SEAL)                                     By: /S/ James W. Balmer
                                               -------------------
                                           Title: Chairman

ATTEST:

/S/
-----------------------------
Ted R. Chapler, Secretary

                                           FIRST-CITIZENS BANK TRUST COMPANY,
                                           AS TRUSTEE

(SEAL)                                     By: /S/
                                              ------------------------------
                                           Its: Assistant Vice President

ATTEST:

 /S/
------------------------------
Title: Assistant Secretary

                                      -84-
<PAGE>   89

                            ACKNOWLEDGMENT OF ISSUER

STATE OF IOWA

COUNTY OF POLK

              Personally appeared before me, the undersigned authority in and
for the jurisdiction aforesaid, the within named James W. Balmer and Ted R.
Chapler, who acknowledged to me that they are Chairman and Secretary,
respectively, of the Iowa Finance Authority (the "Issuer"), and that for and on
behalf of the Issuer and as its act and deed, they signed, sealed and delivered
the above and foregoing instrument on the day and in the year therein mentioned,
they being first duly authorized so to do by the Issuer.

              GIVEN under my hand and official seal this, the 8th day of March,
1995.

                                                /S/
                                             -----------------------------------
                                             NOTARY PUBLIC

                                             My Commission Expires:

                                             January 15, 1998

                                      -85-

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