Document:

General Release and Separation Agreement

 Exhibit 10.1 
 GENERAL RELEASE AND SEPARATION AGREEMENT 
 This General Release and Separation Agreement
(hereafter “Agreement”) is entered into between Bradford S. Goodwin (the “Executive”), and Novacea, Inc. (the “Company”), effective eight days after the date of the Executive’s signature (the “Effective
Date”), unless he revokes his acceptance as provided in Paragraph 7(c), below. 
 WHEREAS, the Executive is the Chief Executive Officer
of the Company; 
 WHEREAS, the parties entered into an Executive Severance Benefits Agreement dated April 13, 2006, pursuant to which
the Executive is entitled to payment of certain benefits upon a termination of his employment by the Company other than for Cause; 
 WHEREAS, the Company and Executive both wish to terminate the Executive’s employment other than for Cause, effective January 1, 2007; 
 WHEREAS, the Company and the Executive now wish to document the termination of their employment relationship and fully and finally to resolve all matters between them; 
 THEREFORE, in exchange for the good and valuable consideration set forth herein, the adequacy of which is specifically acknowledged, the Executive and
the Company hereby agree as follows: 
 1. Separation of Employment. The Executive resigned all positions that the Executive held as an
officer and member of the Board of Directors of the Company, and of all subsidiaries of the Company, effective December 7, 2006. The Executive’s employment shall terminate effective January 1, 2007 (the “Separation Date”).

 2. Payment of Accrued Wages and Expenses. On the Separation Date, the Executive shall be paid an amount equal to accrued wages,
including any remaining accrued, unused Vacation, through the Separation Date, less applicable taxes and other authorized withholding. The Company shall promptly reimburse the Executive for all reasonable and properly documented business expenses
incurred through the Separation Date that are submitted by him on or before January 1, 2007, in accordance with the Company’s travel and expense policies. As of the Separation Date, the Executive shall no longer have the right to
participate in any Company benefit plans, except as required by law. The Executive shall be permitted to participate in the Company’s 401(k) Plan in calendar year 2007, to the full extent permitted by law. 
 3. Bonus for the Fiscal Years Ending December 31, 2006 and December 31, 2007. 
 (a) The Executive shall be paid a bonus for the fiscal year ending December 31, 2006, in the amount of fifty-six percent
(56%) of the Executive’s FY 2006 bonus target. The bonus shall be paid in a lump sum no later than thirty (30) days following the Separation Date, less applicable taxes and other authorized withholding. In no event shall the Executive
have the ability to affect the timing of the payment of compensation by acceleration, deferral, or otherwise under this Section 3(a). 

 (b) For the fiscal year ending December 31, 2007, the Executive shall be paid a
bonus equal to fifty percent (50%) of the Executive’s FY 2006 bonus target. The bonus shall be paid in a single lump sum on a date which is no earlier than six (6) months and two days following the Separation Date, but no later than
July 31, 2007, less applicable taxes and other authorized withholding. The payment of this bonus is intended to comply with the requirements of Internal Revenue Code Sections 409A(a)(2(A)(i) and 409A(a)(2)(B)(i) and the proposed or final
Treasury regulations promulgated thereunder. In no event shall the Executive have the ability to affect the timing of the payment of compensation by acceleration, deferral, or otherwise under this Section 3(b). 
 4. Stock Options. 
 (a) Executive has been granted the options to purchase shares of the Company’s common stock described in Exhibit A hereto (collectively, the “Options”). As of the Separation Date, the Executive shall be vested in that number
of shares of the Company’s common stock set forth next to each such Option (the “Vested Options”), which includes an amount equal to vesting that would have occurred over the twelve-month period following the Separation Date, had the
Executive remained continuously employed by the Company during such period. Except as otherwise provided in this Agreement, the Executive acknowledges and agrees that the portion of each Option that is unvested as of the Separation Date is forfeited
and shall cease to be exercisable as of the Separation Date. The Executive may exercise the Vested Options in accordance with their original terms of grant as modified by this Paragraph 4. 
 (b) Consistent with the other terms of the Plan(s) under which the options were issued, the Executive shall be permitted, subject to
subparagraph (d) below, to exercise Vested Options on or before December 31, 2007. 
 (c ) In the event that the
Separation Date falls within the Change of Control Benefits Period, as defined in the Executive Severance Benefits Agreement dated April 13, 2006 (the “April 13 Agreement”), the vesting and/or exercisability of each of
Executive’s stock awards shall be immediately accelerated 100%. 
 (d) Notwithstanding anything in the Agreement to the
contrary, within 29 days of the execution of this Agreement, the Executive will inform the Company whether or not the Executive elects to accept any of the benefits of an extended exercisability period with respect to all or any portion of his
Incentive Stock Options. Any failure of the Executive to so notify the Company shall be treated as an acceptance of such extended exercisability period. 
 5. Severance. Beginning on the date which is no earlier than six (6) months and two days following the Separation Date, but no later than July 31, 2007, the Company shall: 

 (a) Pay to the Executive in a single lump sum six (6) months of salary at the Executive’s final
base rate, less applicable taxes and other authorized withholding; and 
 (b) Commencing on July 3, 2007, pay to the Executive in
accordance with the Company’s normal payroll practices, six (6) months of salary at the Executive’s final base rate, less applicable taxes and other authorized withholding. 
 The payments of severance detailed under this Section 5 are intended to comply with the requirements of Internal Revenue Code Sections 409A(a)(2(A)(i) and 409A(a)(2)(B)(i) and the proposed or final Treasury
regulations promulgated thereunder. 
 6. COBRA. Executive’s health care coverage shall continue until January 31, 2007.
Thereafter, the Executive shall be eligible to continue, at his own cost, health care benefits in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). The Executive shall receive detailed
instructions regarding his COBRA rights following the Separation Date. 
 7. General Release of Claims by the Executive. 

(a) The Executive, on behalf of himself and his executors, heirs, administrators, representatives and assigns, hereby releases and
forever discharges the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or
limited partners, employees, attorneys, agents and representatives, and employee benefit plans in which the Executive is or has been a participant by virtue of his employment with the Company (the “Company Releasees”), from any and all
claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind
and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, “Claims”), which the Executive has or may have had against
such entities based on any events or circumstances arising or occurring on or prior to the date hereof or on or prior to the Separation Date, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever
the Executive’s employment by the Company or the separation thereof, and any and all claims arising under federal, state, or local laws relating to employment, including without limitation claims of wrongful discharge, breach of express or
implied contract, fraud, misrepresentation, defamation, or liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, the Older Workers Benefit Protection Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the California Fair Employment and Housing
Act, the California Family Rights Act, the California Labor Code and similar state or local statutes, ordinances, and regulations. Notwithstanding the generality of the foregoing, the Executive does not release the following claims and rights:

 (i) Claims for indemnity pursuant to California Labor Code Section 2802, and the Company’s
by-laws and Indemnity Policy; 
 (ii) The Company’s obligations under this Agreement; 
 (iii) Claims by the Executive for unemployment compensation or state disability insurance benefits pursuant to the terms of applicable state law

 (iv) Claims for pension and 401(k) Plan benefits fully vested as of the Separation Date; 
 (v) The right of the Executive to bring to the attention of the Equal Employment Opportunity Commission claims of discrimination; provided, however, that
the Executive does release his right to secure any damages for alleged discriminatory treatment. 
 (b) THE EXECUTIVE
ACKNOWLEDGES THAT HE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: 
 “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.” 
 BEING AWARE OF SAID CODE SECTION, THE EXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY
HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT, TO THE EXTENT OF THE FOREGOING RELEASE. 
 (c) In accordance with the Older Workers Benefit Protection Act of 1990, the Executive acknowledges that he is aware of the following: 
  

	 	(i)	He has a right to consult with an attorney before signing this Agreement; 

  

	 	(ii)	He has 21 days from the date this offer is received to consider this Agreement; and 

  

	 	(iii)	He has seven days after signing this Agreement to revoke his acceptance of it in writing, addressed and delivered no later than the expiration of the seventh day to the Chairman
of the Company’s Board of Directors, and the Executive’s acceptance will not be effective until that revocation period has expired. 

 (d) The Executive represents and warrants to the Company Releasees that there has been no
assignment or other transfer of any interest in any Claim that the Executive may have against the Company Releasees, or any of them. The Executive agrees to indemnify and hold harmless the Company Releasees from any liability, claims, demands,
damages, costs, expenses and attorneys’ fees incurred as a result of any person asserting such assignment or transfer of any right or claims under any such assignment or transfer from the Executive. 
 (e) The Executive agrees that if he hereafter commences, joins in, or in any manner seeks relief through any suit arising out of, based
upon, or relating to any of the Claims released hereunder or in any manner asserts against the Company Releasees any of the Claims released hereunder, then the Executive will pay to the Company Releasees against whom such claim(s) is asserted, in
addition to any other damages caused thereby, all attorneys’ fees incurred by such Company Releasees in defending or otherwise responding to said suit or Claim. 
 8. Nondisparagement. The Executive agrees that neither he nor anyone acting by, through, under or in concert with him shall disparage or otherwise communicate negative statements or opinions about the Company,
its Board members, officers, employees or business. Likewise, the Officers and Directors of the Company, and each of them, shall not disparage, or otherwise communicate negative statements or opinions about the Executive or his performance while
employed by the Company. 
 9. No Solicitation. For a period of one (1) year following the Separation Date, the Executive shall
not solicit or encourage, or cause others to solicit or encourage, any employees, contractors or vendors of the Company to terminate their employment, service or contractual relationship with the Company. 
 10. Cooperation. The Executive agrees to give reasonable cooperation to the Company, at the Company’s request, in any pending or future
litigation or arbitration brought against the Company and in any investigation the Company or any governmental agency may conduct, which shall include up to two days per month during the 12 months following the Separation Date. The Company agrees to
pay Executive $2,000 per day for any additional assistance. The Company shall reimburse the Executive for all out of pocket expenses reasonably incurred by him in compliance with this Paragraph. Notwithstanding the foregoing, and subject to the
Executive’s right, if any, to indemnification under California law, the Company’s by-laws or the Indemnity Policy, the Company shall have no obligation to pay the Executive for time spent and expenses incurred by the Executive in any
pending or future litigation or arbitration where the Executive is a co-defendant or party to the arbitration or litigation. Other than at the Company’s request, or in response to a request by a governmental agency for informal cooperation by
the Executive, the Executive shall not, in the absence of a valid subpoena, give information, evidence or testimony in any matter in which the Company is a party, or which affects the interests of the Company. The Executive shall promptly inform the
Company of any intention by him to provide information on an informal basis to a governmental agency about the Company, or about the Executive’s actions while in the Company’s employ. The Executive shall further promptly inform the Company
of any subpoena issued to him to testify about the Company or about matters affecting the Company’s interests. 

 11. Confidential Information; Return of Company Property. 
 (a) The Executive acknowledges that, in the course of his employment by the Company, he was given access to competitive, confidential
information that is proprietary to the Company (the “Confidential Information”). The Executive agrees: 
  

	 	(i)	that all Confidential Information shall remain a trade secret and the sole property of the Company; 

  

	 	(ii)	to keep in strict confidence all Confidential Information and not disclose or allow the disclosure of any Confidential Information to any third party; 

  

	 	(iii)	not to publish, disclose or allow disclosure to others of any Confidential Information, in whole or in part; and 

  

	 	(iv)	that the Company shall have the right to such injunctive or other equitable relief from a court of competent jurisdiction as may be necessary or appropriate to prevent any use or
disclosure of Confidential Information in any manner which has not been authorized by the Company and to such damages as are occasioned by such improper use or disclosure. 

 (b) The Executive represents and warrants that, on or before the Separation Date, he shall deliver to the Company all originals and copies
of correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products, processes or
business of any kind and the originals and copies of all documents containing Confidential Information which are in the possession or control of the Executive or his agents or representatives. 
 (c) The Executive represents and warrants that, on or before the Separation Date, he shall return to the Company all equipment of the
Company in his possession or control. 
 12. Taxes. 
 (a) It is the Executive’s and Company’s intent that any amounts of compensation paid to the Executive pursuant to this
Agreement, which are identified as deferred compensation under a nonqualified deferred compensation plan as defined in Code Section 409A and the proposed or final Treasury regulations promulgated thereunder, be deferred pursuant to an election
properly made pursuant to the requirements of Code Section 409A and the proposed or final Treasury regulations thereunder. Further, since the Executive is a “Specified Employee” as defined in Code Section 409A and the
Treasury regulations 

 
promulgated thereunder, no payments of deferred compensation within the meaning of Section 409A shall be payable to the Executive until a date not
sooner than six months after the Separation Date as specified herein. 
 (b) To the extent any taxes may be payable by the
Executive for the benefits provided to him by this Agreement beyond those withheld by the Company, the Executive agrees to pay them himself and to indemnify and hold the Company and the other entities released herein harmless for any tax claims or
penalties, and associated attorneys’ fees and costs, resulting from any failure by him to make required payments. 
 13. In the Event
of a Claimed Breach. Any dispute, claim or controversy based on, arising out of or relating to Executive’s employment or this Agreement shall be settled by final and binding arbitration in San Mateo County, California, before a single
neutral arbitrator in accordance with the National Rules for the Resolution of Employment Disputes (the “Rules”) of the American Arbitration Association, and judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction. Arbitration may be compelled pursuant to the California Arbitration Act (Code of Civil Procedure §§ 1280 et seq.). If the parties are unable to agree upon an arbitrator, one shall be appointed by the AAA in
accordance with its Rules. Each party shall pay the fees of its own attorneys, the expenses of its witnesses and all other expenses connected with presenting its case. Other costs of the arbitration, including the cost of any record or transcripts
of the arbitration, AAA’s administrative fees, the fee of the arbitrator, and all other fees and costs, shall be borne by the Company. Notwithstanding the foregoing, it is acknowledged that it will be impossible to measure in money the damages
that would be suffered if the parties fail to comply with any of the obligations imposed on them under Paragraphs 11(a) and 11(b) hereof, and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have an
adequate remedy at law. Any such person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action shall be brought in equity to enforce any of the provisions of Paragraphs
11(a) and 11(b) of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. In the event of any legal action and/or arbitration relating to or arising out of this Agreement, the prevailing party
shall be entitled to recover from the losing party its attorneys’ fees and costs incurred in that action to the extent permissible by law. 
 14. Choice of Law. This Agreement shall in all respects be governed and construed in accordance with the laws of the State of California, including all matters of construction, validity and performance, without regard to conflicts of
law principles. 
 15. Notices. All notices, demands or other communications regarding this Agreement shall be in writing and shall be
sufficiently given if either personally delivered or sent by facsimile or overnight courier, addressed as follows: 
  

	 	(a)	If to the Company: 

	 	    	Novacea, Inc. 

	 	    	Attention: Chief Executive Officer 

	 	    	601 Gateway Blvd., Suite 800 

	 	    	South San Francisco, CA 94080 

	 	    	Phone: (650) 228-1800 

	 	    	Fax: (650) 228-1088 

	 	

	 	    	Copy to: 

  

	 	    	Latham & Watkins LLP 

	 	    	Attention: Mark Roeder 

	 	    	140 Scott Drive 

	 	    	Menlo Park, CA 94025 

	 	    	Phone: 650-328-4600 

	 	    	Fax: 650-463-2600 

  

	 	(b)	If to the Executive: 

  

	 	    	Bradford S. Goodwin 

	 	    	Via home address on file with Company 

  

	 	    	Copy to: 

  

	 	    	Fred Caspersen 

	 	    	Holly L. Sutton 

	 	    	Farella, Braun + Martel LLP 

	 	    	235 Montgomery Street, Ste. 30 

	 	    	San Francisco, CA 94104 

 16. Severability. Except
as otherwise specified below, should any portion of this Agreement be found void or unenforceable for any reason by a court of competent jurisdiction, the parties intend that such provision be limited or modified so as to make it enforceable, and if
such provision cannot be modified to be enforceable, the unenforceable portion shall be deemed severed from the remaining portions of this Agreement, which shall otherwise remain in full force and effect. If any portion of this Agreement is so found
to be void or unenforceable for any reason in regard to any one or more persons, entities, or subject matters, such portion shall remain in full force and effect with respect to all other persons, entities, and subject matters. 
 17. Understanding and Authority. The parties understand and agree that all terms of this Agreement are contractual and are not a mere recital, and
represent and warrant that they are competent to covenant and agree as herein provided. 
 18. Integration Clause. This Agreement
contains the entire agreement of the parties with regard to the separation of the Executive’s employment, and supersedes and replaces any prior agreements as to that matter. This Agreement may not be changed or modified, in whole or in part,
except by an instrument in writing signed by the Executive and the Company’s Chief Executive Officer. 
 19. Execution in
Counterparts. This Agreement may be executed in counterparts with the same force and effectiveness as though executed in a single document. 

 The parties have carefully read this Agreement in its entirety; fully understand and agree to its terms
and provisions; and intend and agree that it is final and binding on all parties. 
 IN WITNESS WHEREOF, and intending to be legally bound,
the parties have executed the foregoing on the dates shown below. 
  

							
	BRADFORD S. GOODWIN	 		 	NOVACEA, INC.
			
	 /s/ Bradford S. Goodwin
	 		 	 /s/ John Walker

		 		 	By:	 	John Walker
		 		 	Title:	 	Chairman
			
	Date 12/12/06	 		 	Date 12/13/06Forty-First Supplemental Indenture

 Exhibit 4.1 
  

 AVISTA CORPORATION 
 TO 
 CITIBANK, N.A. 
 As Successor Trustee under 
 Mortgage and Deed of Trust, 
 dated as of June 1, 1939 
  

 Forty-first Supplemental Indenture 
 Providing among other things for a Series of Bonds designated 
 “First Mortgage Bonds, 5.70%
Series due 2037” 
 Due July 1, 2037 
  

 Dated as of December 1, 2006

  

 FORTY-FIRST SUPPLEMENTAL INDENTURE 
 THIS INDENTURE, dated as of the 1st day of December, 2006, between AVISTA CORPORATION (formerly known as The Washington Water Power Company), a
corporation of the State of Washington, whose post office address is 1411 East Mission Avenue, Spokane, Washington 99202 (the “Company”), and CITIBANK, N.A., formerly First National City Bank (successor by merger to First National
City Trust Company, formerly City Bank Farmers Trust Company), a national banking association incorporated and existing under the laws of the United States of America, whose post office address is 388 Greenwich Street – 14th Floor, New York, New York 10013 (the “Trustee”), as Trustee under the Mortgage and Deed of Trust, dated as of
June 1, 1939 (the “Original Mortgage”), executed and delivered by the Company to secure the payment of Bonds issued or to be issued under and in accordance with the provisions thereof, this indenture (the “Forty-first
Supplemental Indenture”) being supplemental to the Original Mortgage, as heretofore supplemented and amended. 
 WHEREAS pursuant to a
written request of the Company made in accordance with Section 103 of the Original Mortgage, Francis M. Pitt (then Individual Trustee under the Mortgage, as supplemented) ceased to be a trustee thereunder on July 23, 1969, and all of
his powers as Individual Trustee have devolved upon the Trustee and its successors alone; and 
 WHEREAS by the Original Mortgage the Company
covenanted that it would execute and deliver such further instruments and do such further acts as might be necessary or proper to carry out more effectually the purposes of the Original Mortgage and to make subject to the lien of the Original
Mortgage any property thereafter acquired intended to be subject to the lien thereof; and 
 WHEREAS the Company has heretofore executed and
delivered, in addition to the Original Mortgage, the indentures supplemental thereto, and has issued the series of Bonds, set forth in Exhibit A hereto (the Mortgage, as supplemented and amended by the First through Fortieth Supplemental
Indentures being herein sometimes called the “Mortgage”); and 
 WHEREAS the Original Mortgage and the First through Thirty-ninth
Supplemental Indentures have been appropriately filed or recorded in various official records in the States of Washington, Idaho, Montana and Oregon, as set forth in the First through Fortieth Supplemental Indentures and the Instrument of Further
Assurance, dated December 15, 2001, hereinafter referred to; and 
 WHEREAS the Fortieth Supplemental Indenture, dated as of
April 1, 2006 has been appropriately filed or recorded in the various official records in the States of Washington, Idaho, Montana and Oregon set forth in Exhibit B hereto; and 
 WHEREAS for the purpose of confirming or perfecting the lien of the Mortgage on certain of its properties, the Company has heretofore executed and
delivered a Short Form Mortgage and Security Agreement, in multiple counterparts dated as of various dates in 1992, and such instrument has been appropriately filed or recorded in the various official records in the States of Montana and Oregon; and

 WHEREAS for the purpose of confirming or perfecting the lien of the Mortgage on certain of its
properties, the Company has heretofore executed and delivered an Instrument of Further Assurance dated as of December 15, 2001, and such instrument has been appropriately filed or recorded in the various official records in the States of
Washington, Idaho, Montana and Oregon; and 
 WHEREAS in addition to the property described in the Mortgage the Company has acquired certain
other property, rights and interests in property; and 
 WHEREAS Section 8 of the Original Mortgage provides that the form of each
series of Bonds (other than the First Series) issued thereunder and of the coupons to be attached to coupon Bonds of such series shall be established by Resolution of the Board of Directors of the Company; that the form of such series, as
established by said Board of Directors, shall specify the descriptive title of the Bonds and various other terms thereof; and that such series may also contain such provisions not inconsistent with the provisions of the Mortgage as the Board of
Directors may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such Bonds are to be issued and/or secured under the Mortgage; and 
 WHEREAS Section 120 of the Original Mortgage provides, among other things, that any power, privilege or right expressly or impliedly reserved to or
in any way conferred upon the Company by any provision of the Mortgage, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the
time unrestricted or to additional restriction if already restricted, and the Company may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of Bonds issued thereunder, or the Company may cure any
ambiguity contained therein, or in any supplemental indenture, by an instrument in writing executed and acknowledged by the Company in such manner as would be necessary to entitle a conveyance of real estate to record in all of the states in which
any property at the time subject to the lien of the Mortgage shall be situated; and 
 WHEREAS the Company now desires to create a new series
of Bonds; and 
 WHEREAS, as contemplated in Sections 113 and 116 of the Original Mortgage, as amended by the Twenty-ninth Supplemental
Indenture, dated as of December 1, 2001, the Mortgage may be modified or altered with the consent of the owners of sixty per centum (60%) or more in principal amount of bonds outstanding under the Mortgage; and 
  

 2 

 WHEREAS, as set forth in the respective supplemental indentures referred to below, the owners of the
bonds of the respective series referred to below, which series were established in such respective supplemental indentures, are deemed to have consented to the proposed amendment to Section 28 of the Original Mortgage set forth in such
supplemental indentures: 
  

			
	 Supplemental Indenture
	  	 Series (No.)

	 Thirty-second, dated as of September 1, 2003
	  	6.125% Series due 2013 (30)
		
	 Thirty-fourth, dated as of November 1, 2004
	  	5.45% Series due 2019 (32)
		
	 Thirty-fifth, dated as of December 1, 2004
	  	Collateral Series 2004A (33)
		
	 Thirty-eighth, dated as of May 1, 2005
	  	 Collateral Series 2005B (37)
 Collateral Series 2005C
(38)

		
	 Thirty-ninth, dated as of November 1, 2005
	  	6.25% Series due 2035 (39)
		
	 Fortieth, dated as of April 1, 2006
	  	Collateral Series due 2011 (40)

 (the bonds of such series being hereinafter called the “Consenting Bonds”); and 
 WHEREAS, as shown on Exhibit A hereto, the aggregate principal amount of the Consenting Bonds outstanding under the Mortgage is $777,550,000 which
represents seventy-seven and seven tenths per centum (77.7%) of the aggregate principal amount of all bonds outstanding under the Mortgage; and 
 WHEREAS, the Company now desires to make the foregoing amendment to the Original Mortgage, as evidenced by the adoption by the Board of Directors of Resolutions approving such amendment and authorizing the execution
and delivery of this Forty-first Supplemental Indenture in order, among other things, to evidence the same; 
 WHEREAS the execution and
delivery by the Company of this Forty-first Supplemental Indenture and the terms of the Bonds of the Forty-first Series, hereinafter referred to, and the amendment to the Mortgage referred to above, have been duly authorized by the Board of
Directors of the Company by appropriate Resolutions of said Board of Directors; and all things necessary to make this Forty-first Supplemental Indenture a valid, binding and legal instrument have been performed; 
 NOW, THEREFORE, THIS INDENTURE WITNESSETH: That the Company, in consideration of the premises and of other good and valuable consideration, the receipt
and sufficiency whereof are hereby acknowledged, hereby confirms the estate, title and rights of the Trustee (including, without limitation, the lien of the Mortgage on the property of the Company subjected thereto, whether now owned or hereafter
acquired) held as security for the payment of both the principal of and interest and premium, if any, on the Bonds from time to time issued under the Mortgage according to their tenor and effect and the performance of all the provisions 

  

 3 

 
of the Mortgage and of such Bonds, and, without limiting the generality of the foregoing, hereby confirms the grant, bargain, sale, release, conveyance,
assignment, transfer, mortgage, pledge, setting over and confirmation unto the Trustee, contained in the Mortgage, of all the following described properties of the Company, whether now owned or hereafter acquired, namely: 
 All of the property, real, personal and mixed, of every character and wheresoever situated (except any hereinafter or in the Mortgage
expressly excepted) which the Company now owns or, subject to the provisions of Section 87 of the Original Mortgage, may hereafter acquire prior to the satisfaction and discharge of the Mortgage, as fully and completely as if herein or in the
Mortgage specifically described, and including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing or of any general description contained in Mortgage) all lands, real estate, easements,
servitudes, rights of way and leasehold and other interests in real estate; all rights to the use or appropriation of water, flowage rights, water storage rights, flooding rights, and other rights in respect of or relating to water; all plants for
the generation of electricity, power houses, dams, dam sites, reservoirs, flumes, raceways, diversion works, head works, waterways, water works, water systems, gas plants, steam heat plants, hot water plants, ice or refrigeration plants, stations,
substations, offices, buildings and other works and structures and the equipment thereof and all improvements, extensions and additions thereto; all generators, machinery, engines, turbines, boilers, dynamos, transformers, motors, electric machines,
switchboards, regulators, meters, electrical and mechanical appliances, conduits, cables, pipes and mains; all lines and systems for the transmission and distribution of electric current, gas, steam heat or water for any purpose; all towers, mains,
pipes, poles, pole lines, conduits, cables, wires, switch racks, insulators, compressors, pumps, fittings, valves and connections; all motor vehicles and automobiles; all tools, implements, apparatus, furniture, stores, supplies and equipment; all
franchises (except the Company’s franchise to be a corporation), licenses, permits, rights, powers and privileges; and (except as hereinafter or in the Mortgage expressly excepted) all the right, title and interest of the Company in and to all
other property of any kind or nature. 
 The property so conveyed or intended to be so conveyed under the Mortgage shall include, but shall
not be limited to, the property set forth in Exhibit C hereto, the particular description of which is intended only to aid in the identification thereof and shall not be construed as limiting the force, effect and scope of the foregoing. 

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

 4 

 THE COMPANY HEREBY CONFIRMS that, subject to the provisions of Section 87 of the Original Mortgage,
all the property, rights, and franchises acquired by the Company after the date thereof (except any hereinbefore or hereinafter or in the Mortgage expressly excepted) are and shall be as fully embraced within the lien of the Mortgage as if such
property, rights and franchises had been owned by the Company at the date of the Original Mortgage and had been specifically described therein. 
 PROVIDED THAT the following were not and were not intended to be then or now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed under the Mortgage and were, are and
shall be expressly excepted from the lien and operation namely: (l) cash, shares of stock and obligations (including Bonds, notes and other securities) not hereafter specifically pledged, paid, deposited or delivered under the Mortgage or
covenanted so to be; (2) merchandise, equipment, materials or supplies held for the purpose of sale in the usual course of business or for consumption in the operation of any properties of the Company; (3) bills, notes and accounts
receivable, and all contracts, leases and operating agreements not specifically pledged under the Mortgage or covenanted so to be; (4) electric energy and other materials or products generated, manufactured, produced or purchased by the Company
for sale, distribution or use in the ordinary course of its business; and (5) any property heretofore released pursuant to any provisions of the Mortgage and not heretofore disposed of by the Company; provided, however, that the property and
rights expressly excepted from the lien and operation of the Mortgage in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event that the Trustee or a receiver or trustee shall enter
upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XII of the Original Mortgage by reason of the occurrence of a Completed Default as defined in said Article XII. 
 TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged,
pledged, set over or confirmed by the Company in the Mortgage as aforesaid, or intended so to be, unto the Trustee, and its successors, heirs and assigns forever. 
 IN TRUST NEVERTHELESS, for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as set forth in the Mortgage, this Forty-first Supplemental Indenture
being supplemental to the Mortgage. 
 AND IT IS HEREBY FURTHER CONFIRMED by the Company that all the terms, conditions, provisos, covenants
and provisions contained in the Mortgage shall affect and apply to the property in the Mortgage described and conveyed, and to the estates, rights, obligations and duties of the Company and the Trustee and the beneficiaries of the trust with respect
to said property, and to the Trustee and its successors in the trust, in the same manner and with the same effect as if the said property had been owned by the Company at the time of the execution of the Original Mortgage, and had been specifically
and at length described in and conveyed to said Trustee by the Original Mortgage as a part of the property therein stated to be conveyed. 
  

 5 

 The Company further covenants and agrees to and with the Trustee and its successor or successors in such
trust under the Mortgage, as follows: 
 ARTICLE I 
 Forty-first Series of Bonds 
 SECTION 1. (I) There shall be a Series of Bonds designated “First
Mortgage Bonds, 5.70% Series due 2037” (herein sometimes referred to as the “Bonds of the Forty-first Series”), each of which shall also bear the descriptive title First Mortgage Bond and the form thereof, which has been established
by Resolution of the Board of Directors of the Company, is set forth on Exhibit D hereto. The Bonds of the Forty-first Series shall be issued as fully registered Bonds in denominations of One Thousand Dollars and, at the option of the Company,
any amount in excess thereof (the exercise of such option to be evidenced by the execution and delivery thereof) and shall be dated as in Section 10 of the Original Mortgage provided. 
 The Bonds of the Forty-first Series shall mature, shall bear interest and shall be payable as set forth below: 
 (a) the principal of Bonds of the Forty-first Series shall (unless theretofore paid) be payable on the Stated Maturity Date (as
hereinafter defined); 
 (b) the Bonds of the Forty-first Series shall bear interest at the rate of five and seventy
one-hundredths percentum (5.70%) per annum; interest on such Bonds shall accrue from and including the date of the initial authentication and delivery thereof, except as otherwise provided in the form of bond attached hereto as Exhibit D;
interest on such Bonds shall be payable on each Interest Payment Date and at Maturity (as each of such terms is hereafter defined); and interest on such Bonds during any period for which payment is made shall be computed on the basis of a 360-day
year consisting of twelve 30-days months; 
 (c) the principal of and premium, if any, and interest on each Bond of the
Forty-first Series payable at Maturity shall be payable upon presentation thereof at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency as at the time of payment is legal tender for public
and private debts. The interest on each Bond of the Forty-first Series (other than interest payable at Maturity) shall be payable by check, in similar coin or currency, mailed to the registered owner thereof as of the close of business on the Record
Date next preceding each Interest Payment Date; provided, however, that if such registered owner shall be a securities depositary, such payment may be made by such other means in lieu of check as shall be agreed upon by the Company, the Trustee and
such registered owner. 
 (d) The Bonds of the Forty-first Series shall be redeemable in whole at any time, or in part from
time to time, at the option of the Company at a redemption price equal to the greater of 
  

 6 

 (i) 100% of the principal amount of the Bonds being redeemed, and 
 (ii) the sum of the present values of the remaining scheduled payments of principal of and interest (not including any portion of any
scheduled payment of interest which accrued prior to the redemption date) on the Bonds being redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to
the Treasury Yield (as hereinafter defined) plus 20 basis points, 
 plus, in the case of either (i) or (ii) above, whichever
is applicable, accrued interest on such Bonds to the date of redemption. 
 (e) (i) “Treasury Yield” means, with
respect to any redemption of Bonds of the Forty-first Series, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price. The Treasury Yield shall be calculated as of the third business day preceding the redemption date or, if the Bonds to be redeemed are to be caused to be deemed to have been paid within
the meaning of Section 106 of the Original Mortgage, as amended, prior to the redemption date, then as of the third business day prior to the earlier of (x) the date notice of such redemption is mailed to bondholders pursuant to
Section 52 of the Original Mortgage, as amended, and (y) the date irrevocable arrangements with the Trustee for the mailing of such notice shall have been made, as the case may be (the “Calculation Date”). 
 (ii) “Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as
having a maturity comparable to the remaining term of the Bonds of the Forty-first Series that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Bonds. 
 (iii) “Comparable Treasury Price” means, (A) the
average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding the Calculation Date, as set forth in the H.15 Daily Update of the Federal
Reserve Bank of New York or (B) if such release (or any successor release) is not published or does not contain such prices on such business day, the Reference Treasury Dealer Quotation for the Calculation Date. 
 (iv) “H.15(519)” means the weekly statistical release entitled “Statistical Release H.15 (519)”, or any successor
publication, published by the Board of Governors of the Federal Reserve System. 
  

 7 

 (v) “H.15 Daily Update” means the daily update of H.15(519) available through
the worldwide website of the Board of Governors of the Federal Reserve System or any successor site or publication. 
 (vi)
“Independent Investment Banker” means Goldman, Sachs & Co. or BNY Capital Markets, Inc. or, if so determined by the Company, any other independent investment banking institution of national standing appointed by the Company and
reasonably acceptable to the Trustee. 
 (vii) “Reference Treasury Dealer Quotation” means, with respect to the
Reference Treasury Dealer, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. on the third business day preceding the Calculation Date). 
 (viii) “Reference
Treasury Dealer” means a primary U.S. Government securities dealer in New York City appointed by the Company and reasonably acceptable to the Trustee. 
 (II) (a) At the option of the registered owner, any Bonds of the Forty-first Series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York,
shall be exchangeable for a like aggregate principal amount of Bonds of the same Series of other authorized denominations. 
 The Bonds of
the Forty-first Series shall be transferable, upon the surrender thereof for cancellation, together with a written instrument of transfer in form approved by the registrar duly executed by the registered owner or by his duly authorized attorney, at
the office or agency of the Company in the Borough of Manhattan, The City of New York. 
 Upon any exchange or transfer of Bonds of the
Forty-first Series, the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 12 of the Original Mortgage, but the Company hereby waives any right to make a
charge in addition thereto or any exchange or transfer of Bonds of the Forty-first Series; provided, however, that the Company shall not be required to make any transfer or exchange of any Bonds of the Forty-first Series for a period of 10 days next
preceding any selection of such Bonds for redemption, nor shall it be required to make transfers or exchange of any Bonds of the Forty-first Series which shall have been selected for redemption in whole or in part. 
 The Bonds of the Forty-first Series are initially to be issued in global form, registered in the name of Cede & Co., as nominee for The
Depository Trust Company (the “Depositary”). Notwithstanding the provisions of subdivision (a) above, such Bonds shall not be transferable, nor shall any purported transfer be registered, except as follows: 
 (i) such Bonds may be transferred in whole, and appropriate registration of transfer effected, to the Depositary, or by the Depositary to
another nominee thereof, or by any nominee of the Depositary to any other nominee thereof, or by the Depositary or any nominee thereof to any successor securities depositary or any nominee thereof; 
  

 8 

 (ii) such Bonds may be transferred in whole, and appropriate registration of transfer
effected, to the beneficial holders thereof, and thereafter shall be transferable, if: 
 (A) The Depositary, or any successor
securities depositary, shall have notified the Company and the Trustee that (I) it is unwilling or unable to continue to act as securities depositary with respect to such Bonds or (II) it is no longer a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and, in either case, the Trustee shall not have been notified by the Company within one hundred twenty (120) days of the identity of a successor securities depositary with respect to such Bonds; or

 (B) the Company shall have delivered to the Trustee a written order to the effect that such Bonds shall be so transferable
on and after a date specified therein. 
 The Bonds of the Forty-first Series, when in global form, shall bear a legend as to such global form
and the foregoing restrictions on transfer substantially as set forth below: 
 This global bond is held by Cede & Co., as nominee
for The Depository Trust Company (the “Depositary”) for the benefit of the beneficial owners hereof. This bond may not be transferred, nor may any purported transfer be registered, except that (i) this bond may be transferred in
whole, and appropriate registration of transfer effected, if such transfer is by Cede & Co., as nominee for the Depositary, to the Depositary, or by the Depositary to another nominee thereof, or by any nominee of the Depositary to any other
nominee thereof, or by the Depositary or any nominee thereof to any successor Bonds depositary or any nominee thereof; and (ii) this bond may be transferred, and appropriate registration of transfer effected, to the beneficial holders hereof,
and thereafter shall be transferable without restrictions (except as provided in the preceding paragraph) if: (A) the Depositary, or any successor securities depositary, shall have notified the Company and the Trustee that (I) it is
unwilling or unable to continue to act as securities depositary with respect to the Bonds or (II) it is no longer a clearing agency registered under the Securities Exchange Act of 1934, as amended, and, in either case, the Trustee shall not have
been notified by the Company within one hundred twenty (120) days of the identity of a successor securities depositary with respect to the Bonds; or (B) the Company shall have delivered to the Trustee a written order to the effect that the
Bonds shall be so transferable on and after a date specified therein. 
 (III) For all purposes of this Forty-first Supplemental Indenture,
except as otherwise expressly provided or unless the context otherwise requires, the terms listed below, when used with respect to the Bonds of the Forty-first Series, shall have the meanings specified below: 
 “Interest Payment Date” means January 1 and July 1 in each year, commencing July 1, 2007. 
  

 9 

 “Maturity” means the date on which the principal of the Bonds of the
Forty-first Series becomes due and payable, whether at the Stated Maturity Date, upon redemption or acceleration, or otherwise. 
 “Record Date”, with respect to any Interest Payment Date, means the December 15 or June 15, as the case may be, next preceding such Interest Payment Date. 
 “Stated Maturity Date” means July 1, 2037. 
 (IV) Notwithstanding the provisions of Section 106 of the Original Mortgage, as amended, the Company shall not cause any Bonds of the Forty-first
Series, or any portion of the principal amount thereof, to be deemed to have been paid as provided in such Section and its obligations in respect thereof to be deemed to be satisfied and discharged prior to the Maturity thereof unless the Company
shall deliver to the Trustee either: 
 (a) an instrument wherein the Company, notwithstanding the effect of Section 106
of the Original Mortgage, as amended, in respect of such Bonds, shall assume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee such additional sums of money, if any, or additional government
obligations (meeting the requirements of Section 106), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or government obligations theretofore so deposited, to pay when due the
principal of and premium, if any, and interest due and to become due on such Bonds or portions thereof, all in accordance with and subject to the provisions of Section 106; provided, however, that such instrument may state that the obligation
of the Company to make additional deposits as aforesaid shall be subject to the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent accountant showing the calculation thereof (which
opinion shall be obtained at the expense of the Company); or 
 (b) an Opinion of Counsel to the effect that the holders of
such Bonds, or portions of the principal amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of the Company’s indebtedness in respect thereof and
will be subject to United States federal income tax on the same amounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected. 
 (V) The Bonds of the Forty-first Series shall have such further terms as are set forth in Exhibit D hereto. If there shall be a conflict between the
terms of the form of bond and the provisions of the Mortgage, the provisions of the Mortgage shall control to the extent permitted by law. 
  

 10 

 (VI) Upon the delivery of this Forty-first Supplemental Indenture, Bonds of the Forty-first Series in an
aggregate principal amount of $150,000,000 are to be authenticated and delivered, upon the basis of retired bonds, and will be Outstanding, in addition to $1,000,550,000 aggregate principal amount of Bonds of prior Series Outstanding at the date of
delivery of this Forty-first Supplemental Indenture; it being understood that, subject to the provisions of the Mortgage, there shall be no limit under the Mortgage upon the aggregate principal amount of Bonds of the Forty-first Series which may be
authenticated and delivered hereunder. 
 ARTICLE II 
 Amendment of Original Mortgage 
 SECTION 1. Section 28 of the Original Mortgage is hereby
amended to add at the end thereof a new paragraph reading as follows: 
 Notwithstanding the foregoing, any Opinion of Counsel
delivered pursuant to subdivision (7) of this Section 28, or pursuant to any other provision of this Indenture by reference to this Section 28, may, at the election of the Company, omit any or all of the statements contained in clause
(a) of subdivision (7) if there shall have been delivered to the Trustee a policy of title insurance (or endorsement thereto) issued by a nationally recognized title insurance company, in an amount not less than twenty-eight percent
(28%) of the cost or fair value to the Company (whichever is less) of the Property Additions made the basis of such application, insuring, in customary terms, against risk of loss sustained or incurred by the Trustee by reason of any
circumstances or conditions by virtue of which the statements omitted from clause (a) of such Opinion of Counsel would not have been accurate if made. 
 SECTION 2. The Trustee hereby assents to the foregoing amendment to the Original Mortgage (to the extent, if any, that such assent is necessary under the provisions of Section 114 of the Original Mortgage).

 ARTICLE III 
 Bond
Insurance 
 SECTION 1. The Company shall deliver to the Trustee, concurrently with its application for the authentication and delivery
of the Bonds of the Forty-first Series, a financial guaranty insurance policy (the “Policy”) with respect to such bonds issued by XL Capital Assurance, Inc. (“XLCA”). 
 SECTION 2. To the extent permitted by law and so long as XLCA is not in default under the Policy and is not subject to any bankruptcy, insolvency or
similar proceedings: 
 (a) notwithstanding any other provision of the Indenture, the holders of the Bonds of the Forty-first
Series shall be deemed to have agreed, by their purchase 

  

 11 

 
and acceptance thereof, that XLCA shall be entitled to exercise all rights and remedies of the holders of the Bonds which arise upon the occurrence and
continuance of a Completed Default (as defined in Section 65 of the Original Mortgage) (including but not limited to the right to vote to direct the Trustee to accelerate the maturity of all bonds then outstanding under the Mortgage and the
right to vote for the approval or disapproval of any plan or reorganization or liquidation) to the same extent as if XLCA were the holder of all the Bonds of the Forty-first Series; 
 (b) the Company shall not enter into any amendment or modification of the Mortgage that would require the consent of holders of Bonds of
the Forty-first Series without the prior written consent of XLCA.; 
 (c) Anything herein to the contrary notwithstanding, in
the event that XLCA shall make a payment in respect of an amount of principal or interest due on such Bonds of the Forty-first Series, pursuant to the Policy, the Bonds and each such amount due on the Bonds shall remain outstanding for all purposes,
shall not be defeased or otherwise satisfied and shall not be considered paid by the Company, and the lien of the Mortgage and all covenants, agreements and other obligations of the Company to the holders of such Bonds, shall continue to exist and,
to the extent of such payment by XLCA, shall run to the benefit of XLCA, and XLCA shall be subrogated to the rights of such holders in respect of such payment; and 
 (d) Anything herein to the contrary notwithstanding, in determining whether the rights of the holders of the Bonds of the Forty-first
Series will be adversely affected by any action taken pursuant to the terms and provisions hereof, the effect on such holders shall be considered as if there were no Policy. 
 SECTION 3. (a) At least two (2) business days prior to any Interest Payment Date or the Stated Maturity Date (any such date being hereinafter called
a “Payment Date”), the Company shall advise the Trustee as to whether or not there will be sufficient funds in the funds on account with the Trustee to pay the principal of or interest on the Bonds of the Forty-first Series on such Payment
Date. If the Company has advised the Trustee that there will be insufficient funds to make such payment, the Trustee shall so notify XLCA by 10 a.m. New York City time on the business day before the Payment Date. Such notice shall specify the amount
of the anticipated deficiency and whether such Bonds will be deficient as to principal or interest, or both. The Policy will require XLCA to make payments of principal or interest due on the Bonds on the later of (a) one (1) Business Day
following receipt by XLCA of a notice of nonpayment from the Trustee or (b) the Business Day on which such scheduled payment is due. 
 For the purposes of the preceding paragraph, “Notice” means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from the Trustee to XLCA, which notice
shall specify (a) the name of the Trustee, (b) the number of the Policy, (c) the claimed amount and (d) the Payment Date on which the claimed amount will become due. 
  

 12 

 (b) in the event that the Trustee has actual notice that any payment of principal of or interest on a
Bond of the Forty-first Series which has become due and which is made to a holder by or on behalf of the Company has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy
Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee shall notify XLCA of such court order and shall notify all holders of the Bonds that in the event that any
holder’s payment is so recovered, such holder will be entitled to payment from XLCA to the extent of such recovery if sufficient funds are not otherwise available; and the Trustee shall furnish to XLCA its records evidencing the payments of
principal of and interest on the Bonds which have been made by the Trustee and subsequently recovered from holders and the dates on which such payments were made; and 
 (c) XLCA shall, to the extent it makes any payment in respect of principal of or interest on the Bonds, become subrogated to the rights of the recipients of such payment in accordance with the terms of the Policy, and
to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee shall note XLCA’s rights as subrogee on the registration books of the Company maintained by the Trustee with respect to the related
Bonds upon receipt from XLCA of proof, reasonably satisfactory to the Trustee, of the payment of amounts in respect of such interest to the holders of such Bonds and (ii) in the case of subrogation as to claims for past due principal, the
Trustee shall note XLCA’s rights as subrogee on the registration books of the Company maintained by the Trustee with respect to the related Bonds upon surrender of such Bonds by the holders thereof together with proof reasonably satisfactory to
the Trustee, of the payment by XCLA of amounts in respect of the principal thereof. 
 (d) Upon payment of a claim under the Policy, the
Trustee shall establish a separate special purpose trust account for the benefit of holders of Bonds of the Forty-first Series (the “Policy Payments Account”) over which the Trustee shall have exclusive control and sole right of
withdrawal. The Trustee shall receive any amount paid under the Policy in trust on behalf of holders of the Bonds of the Forty-first Series and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes
of making the payments for which a claim was made. Such amounts shall be disbursed by the Trustee to holders of Bonds of the Forty-first Series in the same manner as principal and interest payments are to be made with respect to such Bonds under the
Mortgage. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. 
 The Trustee shall keep a complete and accurate record of all funds deposited by XLCA into the Policy Payments Account and the allocation of such funds to
payment of principal of and interest on any Bond of the Forty-first Series. XLCA shall have the right to inspect such records at reasonable times upon reasonable notice to the Trustee. 
 Funds held in the Policy Payments Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of
the Trustee. The funds held in the Policy Payments Account shall not be part of the Mortgaged and Pledged Property (as defined in the Original Mortgage). 
  

 13 

 Any funds remaining in the Policy Payments Account following a Payment Date shall promptly be remitted to
XLCA. 
 ARTICLE IV 
 Miscellaneous Provisions 
 SECTION 1. The terms defined in the Original Mortgage shall, for all purposes of this Forty-first
Supplemental Indenture, have the meanings specified in the Original Mortgage. 
 SECTION 2. The Trustee hereby confirms its acceptance of the
trusts in the Original Mortgage declared, provided, created or supplemented and agrees to perform the same upon the terms and conditions in the Original Mortgage set forth, including the following: 
 The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Forty-first Supplemental Indenture
or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. Each and every term and condition contained in Article XVI of the Original Mortgage, shall apply to and form part of this Forty-first
Supplemental Indenture with the same force and effect as if the same were herein set forth in full, with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Forty-first
Supplemental Indenture. 
 SECTION 3. Whenever in this Forty-first Supplemental Indenture either of the parties hereto is named or referred
to, this shall, subject to the provisions of Articles XV and XVI of the Original Mortgage be deemed to include the successors and assigns of such party, and all the covenants and agreements in this Forty-first Supplemental Indenture contained
by or on behalf of the Company, or by or on behalf of the Trustee, or either of them, shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not.

 SECTION 4. Nothing in this Forty-first Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon,
or to give to, any person, firm or corporation, other than the parties hereto, the holders of the Bonds and coupons Outstanding under the Mortgage and XLCA, any right, remedy or claim under or by reason of this Forty-first Supplemental Indenture or
any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this Forty-first Supplemental Indenture contained by or on behalf of the Company shall be for the sole and
exclusive benefit of the parties hereto, and of the holders of the Bonds and of the coupons Outstanding under the Mortgage and XLCA. XLCA shall be deemed to be a third-party beneficiary of all rights and remedies granted to it in this Forty-first
Supplemental Indenture. 
 SECTION 5. This Forty-first Supplemental Indenture shall be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same instrument. 
  

 14 

 SECTION 6. The titles of the several Articles of this Forty-first Supplemental Indenture shall not be
deemed to be any part thereof. 
  

  

 15 

 IN WITNESS WHEREOF, on the 12th day of December, 2006, AVISTA CORPORATION has caused its corporate name
to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents, and its corporate seal to be attested by its Corporate Secretary or one of its Assistant Corporate Secretaries for and in its behalf,
all in The City of Spokane, Washington, as of the day and year first above written; and on the 12th day of December, 2006, CITIBANK, N.A., has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its
President or one of its Vice Presidents or one of its Senior Trust Officers or one of its Trust Officers and its corporate seal to be attested by one of its Vice Presidents or one of its Trust Officers, all in The City of New York, New York, as of
the day and year first above written. 
  

			
	AVISTA CORPORATION
		
	By	 	/s/ Christy M. Burmeister-Smith
		 	Name: Christy M. Burmeister-Smith
		 	Title: Vice President and Treasurer

  

	
	Attest:
	
	/s/ Susan Y. Miner
	Name: Susan Y. Miner
	Title: Assistant Corporate Secretary
	
	 Executed, sealed and delivered by AVISTA CORPORATION in the presence of:

	
	/s/ Diane C. Thoren
	Name: Diane C. Thoren
	
	/s/ Ryan L. Krasselt
	Name: Ryan L. Krasselt

  

 16 

			
	CITIBANK, N.A., AS TRUSTEE
		
	By	 	/s/ Wafaa Orfy
		 	Name: Wafaa Orfy
		 	Title: Vice President

  

	
	Attest:
	
	/s/ JOHN J BYRNES
	Name: JOHN J BYRNES
	Title: Vice President
	
	 Executed, sealed and delivered by CITIBANK, N.A., in the presence of:

	
	/s/ R.T. Kirchner
	Name: R.T. Kirchner
	
	/s/ Louis Piscitelli
	Name: Louis Piscitelli

  

 17 

			
	STATE OF WASHINGTON	  	)
		  	) ss.:
	COUNTY OF SPOKANE	  	)

 On the 12th day of December, 2006, before me personally appeared Christy M. Burmeister-Smith, to
me known to be a Vice President and the Treasurer of AVISTA CORPORATION, one of the corporations that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said Corporation for
the uses and purposes therein mentioned and on oath stated that she was authorized to execute said instrument and that the seal affixed is the corporate seal of said Corporation. 
 On the 12th day of December, 2006, before me, a Notary Public in and for the State and County aforesaid, personally appeared Christy M. Burmeister-Smith,
known to me to be a Vice President and the Treasurer of AVISTA CORPORATION, one of the corporations that executed the within and foregoing instrument and acknowledged to me that such Corporation executed the same. 
 IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written. 
  

					
			
	Notary Seal	 		 	/s/ Diane L. Kaufman
		 		 	 Notary Public
 State of Washington
 Commission Expires 07-03-08

  

 18 

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

 On the 12th day of December, 2006 before me personally appeared Wafaa Ofry, to me known to be a
Vice President of CITIBANK, N.A., one of the corporations that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said Corporation for the uses and purposes therein mentioned
and on oath stated that she was authorized to execute said instrument and that the seal affixed is the corporate seal of said Corporation. 
 On the 12th day of December, 2006, before me, a Notary Public in and for the State and County aforesaid, personally appeared Wafaa Ofry, known to me to be a Vice President of CITIBANK, N.A., one of the corporations that executed the within
and foregoing instrument and acknowledged to me that such Corporation executed the same. 
 IN WITNESS WHEREOF, I have hereunto set my hand
and affixed my official seal the day and year first above written. 
  

	
	
	/s/ Zenaida Santiago
	 Notary Public
 State of New York
 Commission Expires September 18, 2010

  

 19 

 EXHIBIT A 
 MORTGAGE, SUPPLEMENTAL INDENTURES 
 AND SERIES OF BONDS 
  

												
	 MORTGAGE OR
 SUPPLEMENTAL
 INDENTURE
	  	 DATED AS OF
	  	SERIES	  	 PRINCIPAL
 AMOUNT
 ISSUED
	  	 PRINCIPAL
 AMOUNT
 OUTSTANDING

	  	  	NO.	  	 DESIGNATION
	  	  
	 Original
	  	June 1, 1939	  	1	  	3-1/2% Series due 1964	  	$	22,000,000	  	None
	 First
	  	October 1, 1952	  	2	  	3-3/4% Series due 1982	  	 	30,000,000	  	None
	 Second
	  	May 1, 1953	  	3	  	3-7/8% Series due 1983	  	 	10,000,000	  	None
	 Third
	  	December 1, 1955	  		  	None	  			  	
	 Fourth
	  	March 15, 1957	  		  	None	  			  	
	 Fifth
	  	July 1, 1957	  	4	  	4-7/8% Series due 1987	  	 	30,000,000	  	None
	 Sixth
	  	January 1, 1958	  	5	  	4-1/8% Series due 1988	  	 	20,000,000	  	None
	 Seventh
	  	August 1, 1958	  	6	  	4-3/8% Series due 1988	  	 	15,000,000	  	None
	 Eighth
	  	January 1, 1959	  	7	  	4-3/4% Series due 1989	  	 	15,000,000	  	None
	 Ninth
	  	January 1, 1960	  	8	  	5-3/8% Series due 1990	  	 	10,000,000	  	None
	 Tenth
	  	April 1, 1964	  	9	  	4-5/8% Series due 1994	  	 	30,000,000	  	None
	 Eleventh
	  	March 1,1965	  	10	  	4-5/8% Series due 1995	  	 	10,000,000	  	None
	 Twelfth
	  	May 1, 1966	  		  	None	  			  	
	 Thirteenth
	  	August 1, 1966	  	11	  	6 % Series due 1996	  	 	20,000,000	  	None
	 Fourteenth
	  	April 1, 1970	  	12	  	9-1/4% Series due 2000	  	 	20,000,000	  	None
	 Fifteenth
	  	May 1, 1973	  	13	  	7-7/8% Series due 2003	  	 	20,000,000	  	None
	 Sixteenth
	  	February 1, 1975	  	14	  	9-3/8% Series due 2005	  	 	25,000,000	  	None
	 Seventeenth
	  	November 1, 1976	  	15	  	8-3/4% Series due 2006	  	 	30,000,000	  	None
	 Eighteenth
	  	June 1, 1980	  		  	None	  			  	
	 Nineteenth
	  	January 1, 1981	  	16	  	14-1/8% Series due 1991	  	 	40,000,000	  	None
	 Twentieth
	  	August 1, 1982	  	17	  	15-3/4% Series due 1990-1992	  	 	60,000,000	  	None

											
	 Twenty-First
	  	September 1, 1983	  	18	  	13-1/2% Series due 2013	  	60,000,000	  	None
	 Twenty-Second
	  	March 1, 1984	  	19	  	13-1/4% Series due 1994	  	60,000,000	  	None
	 Twenty-Third
	  	December 1, 1986	  	20	  	9-1/4% Series due 2016	  	80,000,000	  	None
	 Twenty-Fourth
	  	January 1, 1988	  	21	  	10-3/8% Series due 2018	  	50,000,000	  	None
	 Twenty-Fifth
	  	October 1, 1989	  	22
23	  	 7-1/8% Series due 2013
 7-2/5% Series due 2016
	  	66,700,000
17,000,000	  	 None
 None

	 Twenty-Sixth
	  	April 1, 1993	  	24	  	Secured Medium-Term Notes, Series A ($250,000,000 authorized)	  	250,000,000	  	68,000,000
	 Twenty-Seventh
	  	January 1, 1994	  	25	  	Secured Medium-Term Notes, Series B ($250,000,000 authorized)	  	161,000,000	  	5,000,000
	 Twenty-Eighth
	  	September 1, 2001	  	26	  	Collateral Series due 2002	  	220,000,000	  	None
	 Twenty-Ninth
	  	December 1, 2001	  	27	  	7.75% Series due 2007	  	150,000,000	  	150,000,000
	 Thirtieth
	  	May 1, 2002	  	28	  	Collateral Series due 2003	  	225,000,000	  	None
	 Thirty-first
	  	May 1, 2003	  	29	  	Collateral Series due 2004	  	245,000,000	  	None
	 Thirty-second
	  	September 1, 2003	  	30	  	6.125% Series due 2013	  	45,000,000	  	45,000,000
	 Thirty-third
	  	May 1, 2004	  	31	  	Collateral Series due 2005	  	350,000,000	  	None
	 Thirty-fourth
	  	November 1, 2004	  	32	  	5.45% Series due 2019	  	90,000,000	  	90,000,000
	 Thirty-fifth
	  	December 1, 2004	  	33	  	Collateral Series 2004A	  	88,850,000	  	88,850,000
	 Thirty-sixth
	  	December 1, 2004	  	34
35	  	 Collateral Series 2004B
 Collateral Series 2004C
	  	66,700,000
17,000,000	  	 None
 None

	 Thirty-seventh
	  	December 1, 2004	  	36	  	Collateral Series 2004D	  	350,000,000	  	None
	 Thirty-eighth
	  	May 1, 2005	  	37
38	  	 Collateral Series 2005B
 Collateral Series 2005C
	  	66,700,000
17,000,000	  	 66,700,000
 17,000,000

	 Thirty-ninth
	  	November 1, 2005	  	39	  	6.25% Series due 2035	  	100,000,000
50,000,000	  	 100,000,000
 50,000,000

	 Fortieth
	  	April 1, 2006	  	40	  	Collateral Series due 2011	  	320,000,000	  	320,000,000

  

 A-2 

 EXHIBIT B 
 FILING AND RECORDING OF 
 FORTIETH SUPPLEMENTAL INDENTURE 
 FILING IN STATE OFFICES 

							
	  
	 State
	  	 Office of
	  	Date	  	 Financing Statement
Document Number

	 Washington
	  	Secretary of State	  	8/21/06	  	2006-235-2968-5
	 Idaho
	  	Secretary of State	  	8/21/06	  	B2006-1011221-5
	 Montana
	  	Secretary of State	  	8/22/06	  	88795421
	 Oregon
	  	Secretary of State	  	8/21/06	  	7367732

 RECORDING IN COUNTY OFFICES 
  

													
	 	  	 	  	Real Estate Mortgage Records	  	 
	 County
	  	 Office of
	  	Date	  	Document
Number	  	Book	  	page	  	Financing
Statement
Document
Number
	Washington	  		  		  		  		  		  	
	 Adams
	  	Auditor	  	8/21/06	  	282531	  	N/A	  	N/A	  	N/A
	 Asotin
	  	Auditor	  	8/21/06	  	293433	  	N/A	  	N/A	  	N/A
	 Benton
	  	Auditor	  	8/21/06	  	2006-027482	  	N/A	  	N/A	  	N/A
	 Douglas
	  	Auditor	  	8/21/06	  	3101332	  	N/A	  	N/A	  	N/A
	 Ferry
	  	Auditor	  	8/21/06	  	266301	  	N/A	  	N/A	  	N/A
	 Franklin
	  	Auditor	  	8/21/06	  	1688257	  	N/A	  	N/A	  	N/A
	 Garfield
	  	Auditor	  	8/22/06	  	20060522	  	N/A	  	N/A	  	N/A
	 Grant
	  	Auditor	  	8/21/06	  	1198076	  	N/A	  	N/A	  	N/A
	 Klickitat
	  	Auditor	  	8/21/06	  	1064711	  	N/A	  	N/A	  	N/A
	 Lewis
	  	Auditor	  	8/21/06	  	3259833	  	N/A	  	N/A	  	N/A
	 Lincoln
	  	Auditor	  	8/21/06	  	20060441846	  	91	  	2417	  	N/A
	 Pend Oreille
	  	Auditor	  	8/22/06	  	20060288518	  	N/A	  	N/A	  	N/A
	 Skamania
	  	Auditor	  	8/21/06	  	2006162711	  	N/A	  	N/A	  	N/A
	 Spokane
	  	Auditor	  	8/21/06	  	5423768	  	N/A	  	N/A	  	N/A
	 Stevens
	  	Auditor	  	8/21/06	  	2006-0010041	  	351	  	883	  	N/A
	 Thurston
	  	Auditor	  	8/23/06	  	3859580	  	N/A	  	N/A	  	N/A
	 Whitman
	  	Auditor	  	8/21/06	  	673654	  	N/A	  	N/A	  	N/A
							
	Idaho	  		  		  		  		  		  	
	 Benewah
	  	Recorder	  	8/21/06	  	243737	  	N/A	  	N/A	  	N/A
	 Bonner
	  	Recorder	  	8/29/06	  	711884	  	N/A	  	N/A	  	N/A
	 Boundary
	  	Recorder	  	8/21/06	  	228005	  	N/A	  	N/A	  	N/A
	 Clearwater
	  	Recorder	  	8/21/06	  	203489	  	N/A	  	N/A	  	N/A
	 Idaho
	  	Recorder	  	8/21/06	  	450398	  	N/A	  	N/A	  	N/A
	 Kootenai
	  	Recorder	  	8/21/06	  	2050857000	  	N/A	  	N/A	  	N/A
	 Latah
	  	Recorder	  	8/21/06	  	507773	  	N/A	  	N/A	  	N/A
	 Lewis
	  	Recorder	  	9/1/06	  	133900	  	N/A	  	N/A	  	N/A

 RECORDING IN COUNTY OFFICES 
  

													
	 	  	 	  	Real Estate Mortgage Records	  	 
	 County
	  	 Office of
	  	Date	  	Document
Number	  	Book	  	page	  	Financing
Statement
Document
Number
	 Nez Perce
	  	Recorder	  	8/21/06	  	734576	  	N/A	  	N/A	  	N/A
	 Shoshone
	  	Recorder	  	8/21/06	  	432588	  	N/A	  	N/A	  	N/A
							
	Montana	  		  		  		  		  		  	
	 Big Horn
	  	Clerk & Recorder	  	8/28/06	  	335528	  	88	  	812	  	N/A
	 Broadwater
	  	Clerk & Recorder	  	8/21/06	  	154023	  	97	  	61	  	N/A
	 Golden Valley
	  	Clerk & Recorder	  	8/21/06	  	78850	  	M	  	12673	  	N/A
	 Meagher
	  	Clerk & Recorder	  	8/21/06	  	134087	  	F65	  	511	  	N/A
	 Mineral
	  	Clerk & Recorder	  	8/21/06	  	100080	  	N/A	  	N/A	  	N/A
	 Rosebud
	  	Clerk & Recorder	  	8/22/06	  	99967	  	115	  	639	  	N/A
	 Sanders
	  	Clerk & Recorder	  	8/21/06	  	55342	  	N/A	  	N/A	  	N/A
	 Stillwater
	  	Clerk & Recorder	  	8/21/06	  	327925	  	N/A	  	N/A	  	N/A
	 Treasure
	  	Clerk & Recorder	  	8/21/06	  	79696	  	17	  	814	  	N/A
	 Wheatland
	  	Clerk & Recorder	  	8/21/06	  	103927	  	M	  	17624	  	N/A
	 Yellowstone
	  	Clerk & Recorder	  	8/21/06	  	3391785	  	N/A	  	N/A	  	N/A
							
	Oregon	  		  		  		  		  		  	
	 Douglas
	  	Recorder	  	8/21/06	  	2006-020415	  	N/A	  	N/A	  	N/A
	 Jackson
	  	Recorder	  	8/29/06	  	2006-043895	  	N/A	  	N/A	  	N/A
	 Josephine
	  	Recorder	  	8/21/06	  	2006-016743	  	N/A	  	N/A	  	N/A
	 Klamath
	  	Recorder	  	8/22/06	  	2006-016894	  	N/A	  	N/A	  	N/A
	 Morrow
	  	Recorder	  	8/21/06	  	2006-17470	  	N/A	  	N/A	  	N/A
	 Union
	  	Recorder	  	8/21/06	  	20064311	  	N/A	  	N/A	  	N/A
	 Wallowa
	  	Recorder	  	8/21/06	  	06-56175	  	N/A	  	N/A	  	N/A

  

 B-2 

 EXHIBIT C 
 PROPERTY ADDITIONS 
 THE ADDITIONAL ELECTRIC SUBSTATIONS AND SUBSTATION SITES OF THE COMPANY, in the
States of Washington and Idaho, including all buildings, structures, towers, poles, equipment, appliances and devices for transforming, converting and distributing electric energy, and the lands of the company on which the same are situated and all
of the company’s real estate and interests therein, machinery, equipment, appliances, devices, appurtenances and supplies, franchises, permits and other rights and other property forming a part of said substations or any of them, or used or
enjoyed or capable of being used or enjoyed in connection with any thereof, including, but not limited to, the following situated in the States of Washington and Idaho, to wit: 
 1) Spokane County, Washington: “Downtown East 115kV Substation”; Property No. WA-32-035; Grantor: S&C Enterprises, LLC; Ptn of Block 1,
Block 2 and Lots 2-7, Block 3, 1st Addition to 3rd Addition to Railroad Addition, with vacated streets, situate in SW/4 of Section 17, Township 25 North, Range 43 East, W.M. 
 2) Spokane County, Washington: “Indian Trail 115kV Substation”: Property No. WA-32-033; Grantor: W & M, LLC; Ptn of SE/4 in Sec. 9 and Ptn
of SW/4 in Sec. 10, all in Township 26 North, Range 42 East, W.M. 
 3) Spokane County, Washington: “Northeast 115kV Substation”;
Property No. WA-32-072; Grantor: Spokane County; Ptn of NW/4 SW/4 of Section 22, Township 26 North, Range 43 East, W.M. 
 4) Nez Perce
County, Idaho: “Sweetwater 115kV Substation”; Property No. ID-N-035; Grantor: Heitstuman Ranch Co.; Ptn. Craig Donation Land Claim in NW/4 of Section 20, Township 35 North, Range 3 West, B.M. 
 5) Bonner County, Idaho: “Pine Street 115kV Substation”; Property No. ID-7B-035; Grantor: City of Sandpoint; South Half of 16’ wide
alleyway (vacated by Ordinance #509635) adjacent to Block 1, Lots 1 and 2 of Law’s Third Addition to Sandpoint, Idaho, located in the NE/4 of Sec 22, Township 57 North, Range 2 West, B.M. 

 EXHIBIT D 
 (Form of Bond) 
 This bond is subject to restrictions on transfer, 
 as hereinafter set forth 
 CUSIP 05379B
AM 9 
 AVISTA CORPORATION 
 First Mortgage Bond, 
 5.70% Series due 2037 
  

				
	 REGISTERED
	  	 	REGISTERED
		
	 NO. _________________
	  	$	____________

 AVISTA CORPORATION, a corporation of the State of Washington (hereinafter called the
Company), for value received, hereby promises to pay to 
 , or registered assigns, on July 1, 2037, 
 DOLLARS 
 and to pay the registered owner hereof interest
thereon semi-annually in arrears on January 1 and July 1 in each year (each such date being hereinafter called an “Interest Payment Date”), commencing July 1, 2007 and at Maturity (as hereinafter defined), at the rate of
five and seventy one-hundredths percentum (5.70%) per annum computed on the basis of a 360-day year consisting of twelve 30-day months, until the Company’s obligation with respect to the payment of such principal shall have been
discharged. This bond shall bear interest from December 15, 2006 or, if the date of this bond shall be July 1, 2007 or thereafter, from the most recent Interest Payment Date on or prior to the date of this bond to which interest has been
paid; provided, however, that if the date of the bond shall be after a Record Date (as hereinafter defined) and prior to the corresponding Interest Payment Date, this bond shall bear interest from such Interest Payment Date. The principal of and
premium, if any, and interest on this bond payable at Maturity shall be payable upon presentation hereof at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of
America as at the time of payment is legal tender for public and private debts. The interest on this bond (other than interest payable at Maturity) shall be paid by check, in the similar coin or currency, mailed to the registered owner hereof as of
the close of business on the December 15 or June 15, as the case may be, next preceding each Interest Payment Date (each such date being herein called a “Record Date”); provided, however, that if such registered owner shall be a
securities depositary, such payment shall be made by such other means in lieu of check as shall 

 
be agreed upon by the Company, the Trustee and such registered owner. Interest payable at Maturity shall be paid to the person to whom principal shall be
paid. As used herein, the term “Maturity” shall mean the date on which the principal of this bond becomes due and payable, whether at stated maturity, upon redemption or acceleration, or otherwise. 
 This bond is one of an issue of bonds of the Company issuable in series and is one of a series known as its First Mortgage Bonds, 5.70% Series due 2037,
all bonds of all such series being issued and issuable under and equally secured (except insofar as any sinking or other fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for
the bonds of any particular series) by a Mortgage and Deed of Trust, dated as of June 1, 1939 (the “Original Mortgage”), executed by the Company (formerly known as The Washington Water Power Company) to City Bank Farmers Trust Company
and Ralph E. Morton, as Trustees (Citibank, N.A., successor Trustee to both said Trustees). The Original Mortgage has been amended and supplemented by various supplemental indentures, including the Forty-first Supplemental Indenture, dated as of
December 1, 2006, and, as so amended and supplemented, is herein called the “Mortgage”. Reference is made to the Mortgage for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of
the holders of the bonds and of the Trustee in respect thereof, the duties and immunities of the Trustee and the terms and conditions upon which the bonds are and are to be secured and the circumstances under which additional bonds may be issued. If
there shall be a conflict between the terms of this bond and the provisions of the Mortgage, the provisions of the Mortgage shall control to the extent permitted by law. The holder of this bond, by its acceptance hereof, shall be deemed to have
consented and agreed to all of the terms and provisions of the Mortgage and, further, in the event that such holder shall not be the sole beneficial owner of this bond, shall be deemed to have agreed to use all commercially reasonable efforts to
cause all direct and indirect beneficial owners of this bond to have knowledge of the terms and provisions of the Mortgage and of this bond and to comply therewith, including particularly, but without limitation, any provisions or restrictions in
the Mortgage regarding the transfer or exchange of such beneficial interests and any legend set forth on this bond. 
 The Mortgage may be
modified or altered by affirmative vote of the holders of at least 60% in principal amount of the bonds outstanding under the Mortgage, considered as one class, or, if the rights of one or more, but less than all, series of bonds then outstanding
are to be affected, then such modification or alteration may be effected with the affirmative vote only of 60% in principal amount of the bonds outstanding of the series so to be affected, considered as one class, and, furthermore, for limited
purposes, the Mortgage may be modified or altered without any consent or other action of holders of any series of bonds. No modification or alteration shall, however, permit an extension of the Maturity of the principal of, or interest on, this bond
or a reduction in such principal or the rate of interest hereon or any other modification in the terms of payment of such principal or interest or the creation of any lien equal or prior to the lien of the Mortgage or deprive the holder of a lien on
the mortgaged and pledged property without the consent of the holder hereof. 
 The principal hereof may be declared or may become due prior
to the stated maturity date on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a completed default as in the Mortgage provided. 
  

 D-2 

 As provided in the Mortgage and subject to certain limitations therein set forth, this bond or any
portion of the principal amount hereof will be deemed to have been paid if there has been irrevocably deposited with the Trustee moneys or direct obligations of or obligations guaranteed by the United States of America, the principal of and interest
on which when due, and without regard to any reinvestment thereof, will provide moneys which, together with moneys so deposited, will be sufficient to pay when due the principal of and premium, if any, and interest on this bond when due. 

The Mortgage contains terms, provisions and conditions relating to the consolidation or merger of the Company with or into, and the conveyance or
other transfer, or lease, of assets to, another Corporation and to the assumption by such other Corporation, in certain circumstances, of all of the obligations of the Company under the Mortgage and on the Bonds secured thereby. 
 In the manner prescribed in the Mortgage, this bond is transferable by the registered owner hereof in person, or by his duly authorized attorney, at the
office or agency of the Company in the Borough of Manhattan, The City of New York, upon surrender and cancellation of this bond, together with a written instrument of transfer whenever required by the Company duly executed by the registered owner or
by its duly authorized attorney, and, thereupon, a new fully registered bond of the same Series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage. The Company and the Trustee may deem and
treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes. 
 In the manner prescribed in the Mortgage, any bonds of this series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, are exchangeable
for a like aggregate principal amount of bonds of the same series of other authorized denominations. 
 The bonds of this series shall be
redeemable in whole at any time or in part from time to time, at the option of the Company, upon notice mailed as provided in Section 52 of the Mortgage, at the option of the Company at a redemption price equal to the greater of 
 (a) 100% of the principal amount of the bonds being redeemed, and 
 (b) the sum of the present values of the remaining scheduled payments of principal of and interest (not including any portion of any
scheduled payment of interest which accrued prior to the redemption date) on the bonds being redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to
the Treasury Yield (as hereinafter defined) plus 20 basis points, 
 plus, in the case of either (i) or (ii) above, whichever is applicable,
accrued interest on such Bonds to the date of redemption. 
 “Treasury Yield” means, with respect to any redemption of the bonds of
this series, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable 

  

 D-3 

 
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury
Price. The Treasury Yield shall be calculated as of the third business day preceding the redemption date or, if the bonds to be redeemed are to be caused to be deemed to have been paid within the meaning of Section 106 of the Original Mortgage,
as amended, prior to the redemption date, then as of the third business day prior to the earlier of (x) the date notice of such redemption is mailed to bondholders pursuant to Section 52 of the Original Mortgage, as amended, and
(y) the date irrevocable arrangements with the Trustee for the mailing of such notice shall have been made, as the case may be (the “Calculation Date”). 
 “Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Bonds of the Forty-first Series
that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the bonds. 
 “Comparable Treasury Price” means, (A) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case
as a percentage of its principal amount) on the third business day preceding the Calculation Date, as set forth in the H.15 Daily Update of the Federal Reserve Bank of New York or (B) if such release (or any successor release) is not published
or does not contain such prices on such business day, the Reference Treasury Dealer Quotation for the Calculation Date. 
 “H.15(519)” means the weekly statistical release entitled “Statistical Release H.15 (519)”, or any successor publication, published by the Board of Governors of the Federal Reserve System. 
 “H.15 Daily Update” means the daily update of H.15(519) available through the worldwide website of the Board of Governors of the Federal
Reserve System or any successor site or publication. 
 “Independent Investment Banker” means Goldman, Sachs & Co. or BNY
Capital Markets, Inc. or, if so determined by the Company, any other independent investment banking institution of national standing appointed by the Company and reasonably acceptable to the Trustee. 
 “Reference Treasury Dealer Quotation” means, with respect to the Reference Treasury Dealer, the average, as determined by the Trustee, of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding the
Calculation Date). 
 “Reference Treasury Dealer” means a primary U.S. Government securities dealer in New York City appointed by
the Company and reasonably acceptable to the Trustee. 
 No recourse shall be had for the payment of the principal of or premium, if any, or
interest on this bond against any incorporator or any past, present or future subscriber to the 

  

 D-4 

 
capital stock, stockholder, officer or director of the Company or of any predecessor or successor corporation, as such, either directly or through the
Company or any predecessor or successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, stockholders, officers and directors being
released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. 
 This bond shall not become obligatory until Citibank, N.A., the Trustee under the Mortgage, or its successor thereunder, shall have signed the form of certificate endorsed hereon. 
 IN WITNESS WHEREOF, AVISTA CORPORATION has caused this bond to be signed in its corporate name by its President or one of its Vice Presidents by
his signature or a facsimile thereof, and its corporate seal to be impressed or imprinted hereon and attested by its Corporate Secretary or one of its Assistant Corporate Secretaries by his signature or a facsimile thereof. 
  

									
	Dated:	 		 	AVISTA CORPORATION
				
		 		 	By:	 	  
					
	ATTEST:	 	  	 		 		 	

  

 D-5 

 TRUSTEE’S CERTIFICATE 
 This bond is one of the bonds of the Series herein designated, described or provided for in the within-mentioned Mortgage. 
  

			
	 CITIBANK, N.A.
         Trustee

		
	By	 	  
		 	Authorized Officer

  

 D-6 

 DEPOSITARY LEGEND 
 This global bond is held by Cede & Co., as nominee for The Depository Trust Company (The “Depositary”) for the benefit of the beneficial owners hereof. This bond may not be transferred, nor may
any purported transfer be registered, except that (i) this bond may be transferred in whole, and appropriate registration of transfer effected, if such transfer is by Cede & Co., as nominee for the Depositary, to the Depositary, or by
the Depositary to another nominee thereof, or by any nominee of the Depositary to any other nominee thereof, or by the Depositary or any nominee thereof to any successor Bonds depositary or any nominee thereof; and (ii) this bond may be
transferred, and appropriate registration of transfer effected, to the beneficial holders hereof, and thereafter shall be transferable without restrictions (except as provided in the preceding paragraph) if: (A) the Depositary, or any successor
securities depositary, shall have notified the Company and the Trustee that (I) it is unwilling or unable to continue to act as securities depositary with respect to the Bonds or (II) it is no longer a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and, in either case, the Trustee shall not have been notified by the Company within one hundred twenty (120) days of the identity of a successor securities depositary with respect to the Bonds; or
(B) the Company shall have delivered to the Trustee a written order to the effect that the Bonds shall be so transferable on and after a date specified therein. 
  

 D-7 

 STATEMENT OF INSURANCE 
 XL Capital Assurance, Inc. (“XLCA”), New York, New York has delivered its financial guaranty insurance policy (the “Policy”) with respect to the scheduled payments of principal of and
interest on this bond, as and to the extent set forth in the Policy, to Citibank, N.A., as trustee (the “Trustee”) under the Mortgage and Deed of Trust, dated as of June 1, 1939, of Avista Corporation, as amended and supplemented.
The Policy is on file and available for inspection at the principal office of the Trustee and a copy thereof may be obtained from XLCA or the Trustee. 
  

 D-8 

 ASSIGNMENT CERTIFICATE 
 FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto 
 _________________________________________________________________ 
 [please insert social security or other
identifying number of assignee] 
 _________________________________________________________________ 
 [please print or typewrite name and address of assignee] 
 the within bond of AVISTA CORPORATION and
does hereby irrevocably constitute and appoint                     , Attorney, to transfer said bond on the books of the
within-mentioned Company, will full power of substitution in the premises. 
  

									
	Dated:                     	 		 	
					
		 	     __________________________	 		 		 	
		 		 		 		 	Notice: The signature to this assignment must correspond with the name as written upon the face of the bond in every particular without alteration or enlargement or any change
whatsoever.

  

 D-9

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