Document:

MDU RESOURCES GROUP, INC.
            1997 EXECUTIVE LONG-TERM INCENTIVE PLAN

Article 1. Establishment, Purpose and Duration

     1.1  Establishment of the Plan.  MDU Resources Group, Inc.,
a Delaware corporation (hereinafter referred to as the
"Company"), hereby establishes an incentive compensation plan to
be known as the "MDU Resources Group, Inc. 1997 Executive Long-
Term Incentive Plan" (hereinafter referred to as the "Plan"), as
set forth in this document.  The Plan permits the grant of
Nonqualified Stock Options (NQSO), Incentive Stock Options (ISO),
Stock Appreciation Rights (SAR), Restricted Stock, Performance
Units, Performance Shares and other awards.

     The Plan shall become effective when approved by the
stockholders at the annual meeting on April 22, 1997 (the
"Effective Date"), and shall remain in effect as provided in
Section 1.3 herein.

     1.2  Purpose of the Plan.  The purpose of the Plan is to
promote the success and enhance the value of the Company by
linking the personal interests of Participants to those of
Company stockholders and customers.

     The Plan is further intended to provide flexibility to the
Company in its ability to motivate, attract and retain the
services of Participants upon whose judgment, interest and
special effort the successful conduct of its operations is
largely dependent.

     1.3  Duration of the Plan.  The Plan shall commence on the
Effective Date, as described in Section 1.1 herein, and shall
remain in effect, subject to the right of the Board of Directors
to terminate the Plan at any time pursuant to Article 15 herein,
until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions.  However, in no
event may an Award be made under the Plan on or after the day
immediately preceding the tenth anniversary of the Effective
Date.

Article 2. Definitions

     Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when such meaning is intended,
the initial letter of the word is capitalized:

     2.1  "Award" means, individually or collectively, a grant
under the Plan of NQSOs, ISOs, SARs, Restricted Stock,
Performance Units, Performance Shares or any other type of award
permitted under Article 10 of the Plan.

     2.2  "Award Agreement" means an agreement entered into by
each Participant and the Company, setting forth the terms and
provisions applicable to an Award granted to a Participant under
the Plan.

     2.3  "Base Value" of an SAR shall have the meaning set forth
in Section 7.1 herein.

     2.4  "Board" or "Board of Directors" means the Board of
Directors of the Company.

     2.5  "Change in Control" means the earliest of the following
to occur: (a) the public announcement by the Company or by any
person (which shall not include the Company, any subsidiary of
the Company, or any employee benefit plan of the Company or of
any subsidiary of the Company) ("Person") that such Person, who
or which, together with all Affiliates and Associates (within the
meanings ascribed to such terms in the Rule 12b-2 of the General
Rules and Regulations under the Exchange Act) of such Person,
shall be the beneficial owner of twenty percent (20%) or more of
the voting stock of the Company outstanding; (b) the commencement
of, or after the first public announcement of any Person to
commence, a tender or exchange offer the consummation of which
would result in any Person becoming the beneficial owner of
voting stock aggregating thirty percent (30%) or more of the then
outstanding voting stock of the Company; (c) the announcement of
any transaction relating to the Company required to be described
pursuant to the requirements of Item 6(e) of Schedule 14A of
Regulation 14A under the Exchange Act; (d) a proposed change in
constituency of the Board such that, during any period of two (2)
consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election or nomination for
election by the stockholders of the Company of each new Director
was approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who were members of the Board at
the beginning of the period; or (e) any other event which shall
be deemed by a majority of the Compensation Committee to
constitute a "change in control."

     2.6  "Code" means the Internal Revenue Code of 1986, as
amended from time to time.

     2.7  "Committee" means the Committee, as specified in
Article 3, appointed by the Board to administer the Plan with
respect to Awards.

     2.8  "Company" means MDU Resources Group, Inc., a Delaware
corporation, or any successor thereto as provided in Article 17
herein.

     2.9  "Covered Employee" means any Participant who would be
considered a "Covered Employee" for purposes of Section 162(m) of
the Code.

     2.10 "Director" means any individual who is a member of the
Board of Directors of the Company.

     2.11 "Disability" means "permanent and total disability" as
defined under Section 22(e)(3)of the Code.

     2.12 "Dividend Equivalent" means, with respect to Shares
subject to an Award, a right to be paid an amount equal to
dividends declared on an equal number of outstanding Shares.

     2.13 "Eligible Employee" means an Employee who is eligible
to participate in the Plan, as set forth in Section 5.1 herein.

     2.14 "Employee" means any full-time or regularly-scheduled
part-time employee of the Company or of the Company's
Subsidiaries, who is not covered by any collective bargaining
agreement to which the Company or any of its Subsidiaries is a
party.  Directors who are not otherwise employed by the Company
shall not be considered Employees for purposes of the Plan.  For
purposes of the Plan, transfer of employment of a Participant
between the Company and any one of its Subsidiaries (or between
Subsidiaries) shall not be deemed a termination of employment.

     2.15 "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor act thereto.

     2.16 "Exercise Period" means the period during which an SAR
or Option is exercisable, as set forth in the related Award
Agreement.

     2.17 "Fair Market Value" shall mean the average of the high
and low sale prices as reported in the consolidated transaction
reporting system or, if there is no such sale on the relevant
date, then on the last previous day on which a sale was reported.

     2.18 "Freestanding SAR" means an SAR that is granted
independently of any Option.

     2.19 "Incentive Stock Option" or "ISO" means an option to
purchase Shares, granted under Article 6 herein, which is
designated as an Incentive Stock Option and satisfies the
requirements of Section 422 of the Code.

     2.20 "Nonqualified Stock Option" or "NQSO" means an option
to purchase Shares, granted under Article 6 herein, which is not
intended to be an Incentive Stock Option under Section 422 of the
Code.

     2.21 "Option" means an Incentive Stock Option or a
Nonqualified Stock Option.

     2.22 "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as determined
by the Committee and set forth in the Option Award Agreement.

     2.23 "Participant" means an Employee of the Company who has
an outstanding Award granted under the Plan.

     2.24 "Performance Goals" means the performance goals
established by the Committee, which shall be based on one or more
of the following measures:  sales or revenues, earnings per
share, shareholder return and/or value, funds from operations,
operating income, gross income, net income, cash flow, return on
equity, return on capital, earnings before interest, operating
ratios, stock price, customer satisfaction, accomplishment of
mergers, acquisitions, dispositions or similar extraordinary
business transactions, profit returns and margins, financial
return ratios and/or market performance.  Performance goals may
be measured solely on a corporate subsidiary or business unit
basis, or a combination thereof.  Performance goals may reflect
absolute entity performance or a relative comparison of entity
performance to the performance of a peer group of entities or
other external measure.

     2.25 "Performance Unit" means an Award granted to an
Employee, as described in Article 9 herein.

     2.26 "Performance Share" means an Award granted to an
Employee, as described in Article 9 herein.

     2.27 "Period of Restriction" means the period during which
the transfer of Restricted Stock is limited in some way, as
provided in Article 8 herein.

     2.28 "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act, as used in Sections 13(d)
and 14(d) thereof, including usage in the definition of a "group"
in Section 13(d) thereof.

     2.29 "Qualified Restricted Stock" means an Award of
Restricted Stock designated as Qualified Restricted Stock by the
Committee at the time of grant and intended to qualify for the
exemption from the limitation on deductibility imposed by
Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C).

     2.30 "Restricted Stock" means an Award of Shares granted to a
Participant pursuant to Article 8 herein.

     2.31 "Shares" means the shares of common stock of the
Company.

     2.32 "Stock Appreciation Right" or "SAR" means a right,
granted alone or in connection with a related Option, designated
as an SAR, to receive a payment on the day the right is
exercised, pursuant to the terms of Article 7 herein.  Each SAR
shall be denominated in terms of one Share.

     2.33 "Subsidiary" means any corporation that is a
"subsidiary corporation" of the Company as that term is defined
in Section 424(f) of the Code.

     2.34 "Tandem SAR" means an SAR that is granted in connection
with a related Option, the exercise of which shall require
forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the
Tandem SAR shall be similarly canceled).

Article 3. Administration

     3.1  The Committee.  The Plan shall be administered by the
Compensation Committee of the Board, or by any other Committee
appointed by the Board.  The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion
of, the Board of Directors.

     3.2  Authority of the Committee.  The Committee shall have
full power except as limited by law, the Articles of
Incorporation and the Bylaws of the Company, subject to such
other restricting limitations or directions as may be imposed by
the Board and subject to the provisions herein, to determine the
size and types of Awards; to determine the terms and conditions
of such Awards in a manner consistent with the Plan; to construe
and interpret the Plan and any agreement or instrument entered
into under the Plan; to establish, amend or waive rules and
regulations for the Plan's administration; and (subject to the
provisions of Article 15 herein) to amend the terms and
conditions of any outstanding Award.  Further, the Committee
shall make all other determinations which may be necessary or
advisable for the administration of the Plan.  As permitted by
law, the Committee may delegate its authorities as identified
hereunder.

     3.3  Restrictions on Share Transferability.  The Committee
may impose such restrictions on any Shares acquired pursuant to
Awards under the Plan as it may deem advisable, including,
without limitation, restrictions to comply with applicable
Federal securities laws, with the requirements of any stock
exchange or market upon which such Shares are then listed and/or
traded and with any blue sky or state securities laws applicable
to such Shares.

     3.4  Approval.  The Board or the Committee shall approve all
Awards made under the Plan and all elections made by
Participants, prior to their effective date, to the extent
necessary to comply with Rule 16b-3 under the Exchange Act.

     3.5  Decisions Binding.  All determinations and decisions
made by the Committee pursuant to the provisions of the Plan and
all related orders or resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its
stockholders, Employees, Participants and their estates and
beneficiaries.

     3.6  Costs.  The Company shall pay all costs of
administration of the Plan.

Article 4. Shares Subject to the Plan

     4.1  Number of Shares.  Subject to Section 4.2 herein, the
maximum number of Shares available for grant under the Plan shall
be 6,625,581.  Shares underlying lapsed or forfeited Awards, or
Awards that are not paid in Shares, may be reused for other
Awards.  Shares granted pursuant to the Plan may be (i)
authorized but unissued Shares of Common Stock, (ii) treasury
shares, or (iii) shares purchased on the open market.

     4.2  Adjustments in Authorized Shares.  In the event of any
merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock split, stock dividend, split-up,
share combination or other change in the corporate structure of
the Company affecting the Shares, such adjustment shall be made
in the number and class of Shares which may be delivered under
the Plan, and in the number and class of and/or price of Shares
subject to outstanding Awards granted under the Plan, as may be
determined to be appropriate and equitable by the Committee, in
its sole discretion, to prevent dilution or enlargement of
rights; provided, however, that the number of Shares subject to
any Award shall always be a whole number.  Notwithstanding the
foregoing, (i) each such adjustment with respect to an Incentive
Stock Option shall comply with the rules of Section 424(a) of the
Code and (ii) in no event shall any adjustment be made which
would render any Incentive Stock Option granted hereunder to be
other than an incentive stock option for purposes of Section 422
of the Code.

     4.3  Individual Limitations.  Subject to Section 4.2 herein,
(i) the total number of Shares with respect to which Options or
SARs may be granted in any calendar year to any Covered Employee
shall not exceed 1,500,000 Shares; (ii) the total number of
shares of Qualified Restricted Stock that may be granted in any
calendar year to any Covered Employee shall not exceed 1,500,000
Shares; (iii) the total number of Performance Shares or
Performance Units that may be granted in any calendar year to any
Covered Employee shall not exceed 1,500,000 Shares or Units, as
the case may be; (iv) the total number of Shares that are
intended to qualify for deduction under Section 162(m) of the
Code granted pursuant to Article 10 herein in any calendar year
to any Covered Employee shall not exceed 1,500,000 Shares; (v)
the total cash Award that is intended to qualify for deduction
under Section 162(m) of the Code that may be paid pursuant to
Article 10 herein in any calendar year to any Covered Employee
shall not exceed $6,000,000; and (vi) the aggregate number of
Dividend Equivalents that are intended to qualify for deduction
under Section 162(m) of the Code that a Covered Employee may
receive in any calendar year shall not exceed $6,000,000.

Article 5. Eligibility and Participation

     5.1  Eligibility.  Persons eligible to participate in the
Plan include all officers and key employees of the Company and
its Subsidiaries, as determined by the Committee, including
Employees who are members of the Board, but excluding Directors
who are not Employees.

     5.2  Actual Participation.  Subject to the provisions of the
Plan, the Committee may, from time to time, select from all
eligible Employees those to whom Awards shall be granted and
shall determine the nature and amount of each Award.

Article 6. Stock Options

     6.1  Grant of Options.  Subject to the terms and conditions
of the Plan, Options may be granted to an Eligible Employee at
any time and from time to time, as shall be determined by the
Committee.

     The Committee shall have complete discretion in determining
the number of Shares subject to Options granted to each
Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and
conditions pertaining to such Options.  The Committee may grant
ISOs, NQSOs, or a combination thereof.

     6.2  Option Award Agreement.  Each Option grant shall be
evidenced by an Option Award Agreement that shall specify the
Option Price, the term of the Option, the number of Shares to
which the Option pertains, the Exercise Period and such other
provisions as the Committee shall determine, including but not
limited to any rights to Dividend Equivalents.  The Option Award
Agreement shall also specify whether the Option is intended to be
an ISO or an NQSO.

     The Option Price for each Share purchasable under any
Incentive Stock Option granted hereunder shall be not less than
one hundred percent (100%) of the Fair Market Value per Share at
the date the Option is granted; and provided, further, that in
the case of an Incentive Stock Option granted to a person who, at
the time such Incentive Stock Option is granted, owns shares of
stock of the Company or of any Subsidiary which possess more than
ten percent (10%) of the total combined voting power of all
classes of shares of stock of the Company or of any Subsidiary,
the Option Price for each Share shall be not less than one
hundred ten percent (110%) of the Fair Market Value per Share at
the date the Option is granted.  The Option Price will be subject
to adjustment in accordance with the provisions of Section 4.2 of
the Plan.

     No Incentive Stock Option by its terms shall be exercisable
after the expiration of ten (10) years from the date of grant of
the Option; provided, however, in the case of an Incentive Stock
Option granted to a person who, at the time such Option is
granted, owns shares of stock of the Company or of any Subsidiary
possessing more than ten percent (10%) of the total combined
voting power of all classes of shares of stock of the Company or
of any Subsidiary, such Option shall not be exercisable after the
expiration of five (5) years from the date such Option is
granted.

     6.3  Exercise of and Payment for Options.  Options granted
under the Plan shall be exercisable at such times and be subject
to such restrictions and conditions as the Committee shall in
each instance approve.

     A Participant may exercise an Option at any time during the
Exercise Period.  Options shall be exercised by the delivery of a
written notice of exercise to the Company or its designee,
setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by provisions for full
payment for the Shares.

     The Option Price upon exercise of any Option shall be
payable either: (a) in cash or its equivalent, (b) by tendering
previously acquired Shares having an aggregate Fair Market Value
at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the
Participant for at least six (6) months prior to their tender to
satisfy the Option Price), (c) by share withholding, (d) by
cashless exercise or (e) by a combination of (a),(b),(c), and/or
(d).

     As soon as practicable after receipt of a written
notification of exercise of an Option and provisions for full
payment therefor, there shall be delivered to the Participant, in
the Participant's name, Share certificates in an appropriate
amount based upon the number of Shares purchased under the
Option(s).

     6.4  Termination of Employment.  Each Option Award Agreement
shall set forth the extent to which the Participant shall have
the right to exercise the Option following termination of the
Participant's employment with the Company and its Subsidiaries.
Such provisions shall be determined in the sole discretion of the
Committee (subject to applicable law), shall be included in the
Option Award Agreement entered into with Participants, need not
be uniform among all Options granted pursuant to the Plan or
among Participants and may reflect distinctions based on the
reasons for termination of employment.  If the employment of a
Participant by the Company or by any Subsidiary is terminated for
any reason other than death, any Incentive Stock Option granted
to such Participant may not be exercised later than three (3)
months (one (1) year in the case of termination due to
Disability) after the date of such termination of employment.

     6.5  Transferability of Options.  Except as otherwise
determined by the Committee and set forth in the Option Award
Agreement, no Option granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution, and all Incentive Stock Options granted to a
Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant.

Article 7. Stock Appreciation Rights

     7.1  Grant of SARs.  Subject to the terms and conditions of
the Plan, an SAR may be granted to an Eligible Employee at any
time and from time to time as shall be determined by the
Committee.  The Committee may grant Freestanding SARs, Tandem
SARs or any combination of these forms of SAR.

     The Committee shall have complete discretion in determining
the number of SARs granted to each Participant (subject to
Article 4 herein) and, consistent with the provisions of the
Plan, in determining the terms and conditions pertaining to such
SARs.

     The Base Value of a Freestanding SAR shall equal the Fair
Market Value of a Share on the date of grant of the SAR.  The
Base Value of Tandem SARs shall equal the Option Price of the
related Option.

     7.2  SAR Award Agreement.  Each SAR grant shall be evidenced
by an SAR Award Agreement that shall specify the number of SARs
granted, the Base Value, the term of the SAR, the Exercise Period
and such other provisions as the Committee shall determine.

     7.3  Exercise and Payment of SARs.  Tandem SARs may be
exercised for all or part of the Shares subject to the related
Option upon the surrender of the right to exercise the equivalent
portion of the related Option.  A Tandem SAR may be exercised
only with respect to the Shares for which its related Option is
then exercisable.

     Notwithstanding any other provision of the Plan to the
contrary, with respect to a Tandem SAR granted in connection with
an ISO: (i) the Tandem SAR will expire no later than the
expiration of the underlying ISO; (ii) the value of the payout
with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price
of the underlying ISO and the Fair Market Value of the Shares
subject to the underlying ISO at the time the Tandem SAR is
exercised; and (iii) the Tandem SAR may be exercised only when
the Fair Market Value of the Shares subject to the ISO exceeds
the Option Price of the ISO.

     Freestanding SARs may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon
them.

     A Participant may exercise an SAR at any time during the
Exercise Period.  SARs shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the
number of SARs being exercised.  Upon exercise of an SAR, a
Participant shall be entitled to receive payment from the Company
in an amount equal to the product of:

          (a)  the excess of (i) the Fair Market Value of a Share
          on the date of exercise over (ii) the Base Value
          multiplied by

          (b)  the number of Shares with respect to which the SAR
          is exercised.

     At the sole discretion of the Committee, the payment to the
Participant upon SAR exercise may be in cash, in Shares of
equivalent value, or in some combination thereof.

     7.4  Termination of Employment.  Each SAR Award Agreement
shall set forth the extent to which the Participant shall have
the right to exercise the SAR following termination of the
Participant's employment with the Company and its Subsidiaries.
Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the SAR Award Agreement entered
into with Participants, need not be uniform among all SARs
granted pursuant to the Plan or among Participants and may
reflect distinctions based on the reasons for termination of
employment.

     7.5  Transferability of SARs.  Except as otherwise
determined by the Committee and set forth in the SAR Award
Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution, and all SARs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such
Participant or his or her legal representative.

Article 8. Restricted Stock

     8.1  Grant of Restricted Stock.  Subject to the terms and
conditions of the Plan, Restricted Stock may be granted to
Eligible Employees at any time and from time to time, as shall be
determined by the Committee.

     The Committee shall have complete discretion in determining
the number of shares of Restricted Stock granted to each
Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and
conditions pertaining to such Restricted Stock.

     In addition, the Committee may, prior to or at the time of
grant, designate an Award of Restricted Stock as Qualified
Restricted Stock, in which event it will condition the grant or
vesting, as applicable, of such Qualified Restricted Stock upon
the attainment of the Performance Goals selected by the
Committee.

     8.2  Restricted Stock Award Agreement.  Each Restricted
Stock grant shall be evidenced by a Restricted Stock Award
Agreement that shall specify the Period or Periods of
Restriction, the number of Restricted Stock Shares granted and
such other provisions as the Committee shall determine.

     8.3  Transferability.  Restricted Stock granted hereunder
may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period
of Restriction established by the Committee and specified in the
Restricted Stock Award Agreement.  All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be
available during his or her lifetime only to such Participant or
his or her legal representative.

     8.4  Certificate Legend.  Each certificate representing
Restricted Stock granted pursuant to the Plan may bear a legend
substantially as follows:

     "The sale or other transfer of the shares of stock
     represented by this certificate, whether voluntary,
     involuntary or by operation of law, is subject to
     certain restrictions on transfer as set forth in MDU
     Resources Group, Inc. 1997 Executive Long-Term
     Incentive Plan, and in a Restricted Stock Award
     Agreement.  A copy of such Plan and such Agreement may
     be obtained from MDU Resources Group, Inc."

     The Company shall have the right to retain the certificates
representing Restricted Stock in the Company's possession until
such time as all restrictions applicable to such Shares have been
satisfied.

     8.5  Removal of Restrictions.  Restricted Stock shall become
freely transferable by the Participant after the last day of the
Period of Restriction applicable thereto.  Once Restricted Stock
is released from the restrictions, the Participant shall be
entitled to have the legend referred to in Section 8.4 removed
from his or her stock certificate.

     8.6  Voting Rights.  During the Period of Restriction,
Participants holding Restricted Stock may exercise full voting
rights with respect to those Shares.

     8.7  Dividends and Other Distributions.  Subject to the
Committee's right to determine otherwise at the time of grant,
during the Period of Restriction, Participants holding Restricted
Stock shall receive all regular cash dividends paid with respect
to all Shares while they are so held.  All other distributions
paid with respect to such Restricted Stock shall be credited to
Participants subject to the same restrictions on transferability
and forfeitability as the Restricted Stock with respect to which
they were paid and shall be paid to the Participant within forty-
five (45) days following the full vesting of the Restricted Stock
with respect to which such distributions were made.

     8.8  Termination of Employment.  Each Restricted Stock Award
Agreement shall set forth the extent to which the Participant
shall have the right to receive unvested Restricted Stock
following termination of the Participant's employment with the
Company and its Subsidiaries.  Such provisions shall be
determined in the sole discretion of the Committee, shall be
included in the Restricted Stock Award Agreement entered into
with Participants, need not be uniform among all grants of
Restricted Stock or among Participants and may reflect
distinctions based on the reasons for termination of employment.

Article 9. Performance Units and Performance Shares

     9.1  Grant of Performance Units and Performance Shares.
Subject to the terms and conditions of the Plan, Performance
Units and/or Performance Shares may be granted to an Eligible
Employee at any time and from time to time, as shall be
determined by the Committee.

     The Committee shall have complete discretion in determining
the number of Performance Units and/or Performance Shares granted
to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and
conditions pertaining to such Awards.

     9.2  Performance Unit/Performance Share Award Agreement.
Each grant of Performance Units and/or Performance Shares shall
be evidenced by a Performance Unit and/or Performance Share Award
Agreement that shall specify the number of Performance Units
and/or Performance Shares granted, the initial value (if
applicable), the Performance Period, the Performance Goals and
such other provisions as the Committee shall determine, including
but not limited to any rights to Dividend Equivalents.

     9.3  Value of Performance Units/Performance Shares.  Each
Performance Unit shall have an initial value that is established
by the Committee at the time of grant.  The value of a
Performance Share shall be equal to the Fair Market Value of a
Share.  The Committee shall set Performance Goals in its
discretion which, depending on the extent to which they are met,
will determine the number and/or value of Performance
Units/Performance Shares that will be paid out to the
Participants.  The time period during which the Performance Goals
must be met shall be called a "Performance Period."

     9.4  Earning of Performance Units/Performance Shares.  After
the applicable Performance Period has ended, the holder of
Performance Units/Performance Shares shall be entitled to receive
a payout with respect to the Performance Units/Performance Shares
earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding
Performance Goals have been achieved.

     9.5  Form and Timing of Payment of Performance
Units/Performance Shares.  Payment of earned Performance
Units/Performance Shares shall be made following the close of the
applicable Performance Period.  The Committee, in its sole
discretion, may pay earned Performance Units/Performance Shares
in cash or in Shares (or in a combination thereof), which have an
aggregate Fair Market Value equal to the value of the earned
Performance Units/Performance Shares at the close of the
applicable Performance Period.  Such Shares may be granted
subject to any restrictions deemed appropriate by the Committee.

     9.6  Termination of Employment.  Each Performance
Unit/Performance Share Award Agreement shall set forth the extent
to which the Participant shall have the right to receive a
Performance Unit/Performance Share payment following termination
of the Participant's employment with the Company and its
Subsidiaries during a Performance Period.  Such provisions shall
be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with Participants,
need not be uniform among all grants of Performance
Units/Performance Shares or among Participants and may reflect
distinctions based on reasons for termination of employment.

     9.7  Transferability.  Except as otherwise determined by the
Committee and set forth in the Performance Unit/Performance Share
Award Agreement, Performance Units/Performance Shares may not be
sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution, and a Participant's rights with respect to
Performance Units/Performance Shares granted under the Plan shall
be available during the Participant's lifetime only to such
Participant or the Participant's legal representative.

Article 10.  Other Awards

     The Committee shall have the right to grant other Awards
which may include, without limitation, the grant of Shares based
on attainment of Performance Goals established by the Committee,
the payment of Shares in lieu of cash, or cash based on
attainment of Performance Goals established by the Committee, and
the payment of Shares in lieu of cash under other Company
incentive or bonus programs.  Payment under or settlement of any
such Awards shall be made in such manner and at such times as the
Committee may determine.

Article 11.  Beneficiary Designation

     Each Participant under the Plan may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently
or successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all
of such benefit.  Each such designation shall revoke all prior
designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed
by the Participant in writing with the Company during the
Participant's lifetime.  In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be
paid to the Participant's estate.

     The spouse of a married Participant domiciled in a community
property jurisdiction shall join in any designation of
beneficiary or beneficiaries other than the spouse.

Article 12.  Deferrals

     The Committee may permit a Participant to defer the
Participant's receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under the
Plan.  If any such deferral election is permitted, the Committee
shall, in its sole discretion, establish rules and procedures for
such payment deferrals.

Article 13.  Rights of Employees

     13.1 Employment.  Nothing in the Plan shall interfere with
or limit in any way the right of the Company to terminate any
Participant's employment at any time, for any reason or no reason
in the Company's sole discretion, nor confer upon any Participant
any right to continue in the employ of the Company.

     13.2 Participation.  No Employee shall have the right to be
selected to receive an Award under the Plan, or, having been so
selected, to be selected to receive a future Award.

Article 14.  Change in Control

     The terms of this Article 14 shall immediately become
operative, without further action or consent by any person or
entity, upon a Change in Control, and once operative shall
supersede and take control over any other provisions of this
Plan.

     Upon a Change in Control

          (a)  Any and all Options and SARs granted hereunder
          shall become immediately exercisable;

          (b)  Any restriction periods and restrictions imposed
          on Restricted Shares and Qualified Restricted Shares
          shall be deemed to have expired and such Restricted
          Shares and Qualified Restricted Shares shall become
          immediately vested in full; and

          (c)  The target payout opportunity attainable under all
          outstanding Awards of Performance Units, Performance
          Shares and other Awards shall be deemed to have been
          fully earned for the entire Performance Period(s) as of
          the effective date of the Change in Control.  The
          vesting of all Awards denominated in Shares shall be
          accelerated as of the effective date of the Change in
          Control, and shall be paid out in cash to Participants
          immediately following the effective date of the Change
          in Control the full amount of the targeted cash payout
          opportunities associated with outstanding cash-based Awards.

Article 15.  Amendment, Modification and Termination

     15.1 Amendment, Modification and Termination.  The Board
may, at any time and from time to time, alter, amend, suspend or
terminate the Plan in whole or in part, provided that no
amendment shall be made which shall increase the total number of
Shares which may be issued and sold pursuant to Incentive Stock
Options, reduce the minimum exercise price in the case of an
Incentive Stock Option or modify the provisions of the Plan
relating to eligibility with respect to Incentive Stock Options
unless such amendment is made by or with the approval of the
stockholders within 12 months of the effective date of such
amendment, but only if such approval is required by any
applicable provision of law.  The Board of Directors of the
Company is also authorized to amend the Plan and the Options
granted hereunder to maintain qualification as "incentive stock
options" within the meaning of Section 422 of the Code, if
applicable.

     15.2 Awards Previously Granted.  No termination, amendment
or modification of the Plan shall adversely affect in any
material way any Award previously granted under the Plan, without
the written consent of the Participant holding such Award, unless
such termination, modification or amendment is required by
applicable law and except as otherwise provided herein.

Article 16.  Withholding

     16.1 Tax Withholding.  The Company shall have the power and
the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy Federal,
state and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to an
Award made under the Plan.

     16.2 Share Withholding.  With respect to withholding
required upon the exercise of Options or SARs, upon the lapse of
restrictions on Restricted Stock, or upon any other taxable event
arising out of or as a result of Awards granted hereunder,
Participants may elect to satisfy the withholding requirement, in
whole or in part, by tendering previously-owned Shares or by
having the Company withhold Shares having a Fair Market Value on
the date the tax is to be determined equal to the statutory total
tax which could be imposed on the transaction.  All elections
shall be irrevocable, made in writing and signed by the
Participant.

Article 17. Successors

     All obligations of the Company under the Plan, with respect
to Awards granted hereunder, shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation or
otherwise, of all or substantially all of the business and/or
assets of the Company.

Article 18.  Legal Construction

     18.1 Gender and Number.  Except where otherwise indicated by
the context, any masculine term used herein also shall include
the feminine, the plural shall include the singular and the
singular shall include the plural.

     18.2 Severability.  In the event any provision of the Plan
shall be held illegal or invalid for any reason, the illegality
or invalidity shall not affect the remaining parts of the Plan,
and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.

     18.3 Requirements of Law.  The granting of Awards and the
issuance of Shares under the Plan shall be subject to all
applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may
be required.

     18.4 Governing Law.  To the extent not preempted by Federal
law, the Plan, and all agreements hereunder, shall be construed
in accordance with, and governed by, the laws of the State of
Delaware.AMENDED AND RESTATED INDENTURE OF MORTGAGE (this "Restated
Indenture"), dated as of April 22, 2005 (the "execution
Date)

Exhibit 4.1

________________________________________________________

INDENTURE

Dated as
of April 22, 2005

Supplementing, Amending and Restating

the Indenture of Mortgage, dated as of March 11, 2004, as
supplemented

by a First Supplemental Indenture, dated as of March 23, 2004, and
a Second

Supplemental Indenture, dated as of April 12, 2004

PACIFIC
GAS AND ELECTRIC COMPANY,

Issuer

and

THE BANK
OF NEW YORK TRUST COMPANY, N.A.,

Trustee

_______________________

________________________________________________________

TABLE OF
CONTENTS

	
    

	
    

	
    

	
Page

	
ARTICLE I.

	
     

	
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL

 APPLICATION..................................................................................................

	

 2

	
        

	
Section 1.01

	
          

	
General
Definitions.......................................................................................

	
2

		
Section 1.02

		
Compliance Certificates
and
Opinions...........................................................

	
17

		
Section 1.03

		
Content and Form of
Documents Delivered to
Trustee..................................

	
18

		
Section 1.04

		
Acts of
Holders............................................................................................

	
19

		
Section 1.05

		
Notices, Etc. to Trustee
and
Company.........................................................

	
21

		
Section 1.06

		
Notice to Holders of
Bonds;
Waiver.............................................................

	
22

		
Section 1.07

		
Conflict With Trust
Indenture
Act.................................................................

	
22

		
Section 1.08

		
Effect of Headings and
Table of
Contents.....................................................

	
22

		
Section 1.09

		
Successors and
Assigns................................................................................

	
22

		
Section 1.10

		
Separability
Clause.......................................................................................

	
23

		
Section 1.11.

		
Benefits of
Indenture....................................................................................

	
23

		
Section 1.12

		
Governing
Law............................................................................................

	
23

		
Section 1.13

		
Legal
Holidays.............................................................................................

	
23

		
Section 1.14

		
Investment of Cash Held by
Trustee.............................................................

	
23

	
ARTICLE II.

	
     

	
BOND
FORMS..................................................................................................

	
24

	
     

	
Section 2.01

	
        

	
Forms
Generally..........................................................................................

	
24

		
Section 2.02

		
Form of Trustee’s
Certificate of
Authentication.............................................

	
24

	
 ARTICLE
III.

	
     

	
THE
BONDS......................................................................................................

	
24

	
    

	
Section 3.01

	
        

	
Amount Unlimited; Issuable
in
Series............................................................

	
25

		
Section 3.02

		
Denominations.............................................................................................

	
28

		
Section 3.03

		
Execution, Dating,
Certificate of
Authentication.............................................

	
28

		
Section 3.04

		
Temporary
Bonds........................................................................................

	
29

		
Section 3.05

		
Registration, Registration
of Transfer and
Exchange......................................

	
30

		
Section 3.06

		
Mutilated, Destroyed, Lost
and Stolen
Bonds...............................................

	
32

		
Section 3.07

		
Payment of Interest;
Interest Rights
Preserved..............................................

	
33

		
Section 3.08

		
Persons Deemed
Owners............................................................................

	
34

		
Section 3.09

		
Cancellation by Bond
Registrar....................................................................

	
34

		
Section 3.10

		
Computation of
Interest...............................................................................

	
34

		
Section 3.11.

		
Payment to Be in Proper
Currency...............................................................

	
35

		
Section 3.12.

		
CUSIP
Numbers.........................................................................................

	
35

		
Section 3.13.

		
Global
Bonds..............................................................................................

	
35

	
 ARTICLE
IV

	
     

	
BONDS PREVIOUSLY
ISSUED.......................................................................

	
36

	
    

	
Section 4.01

	
        

	
Continuation of Certain
Series of Bonds Issued Under the Prior Indenture.....

	
36

		
Section 4.02

		
Bonds of the Initial
Series; Terms of Bonds of the Initial
Series......................

	
36

		
Section 4.03

		
Redemption of Bonds of the
Initial
Series.....................................................

	
39

		
Section 4.04

		
Bonds of the Eleventh
Series, Terms of Bonds of the Eleventh
Series............

	
40

	
 ARTICLE V

	
     

	
ISSUANCE OF
BONDS....................................................................................

	
42

	
    

	
Section 5.01

	
        

	
General.......................................................................................................

	
42

	
 ARTICLE
VI

	
     

	
REDEMPTION OF
BONDS..............................................................................

	
43

	
    

	
Section 6.01

	
         

	
Applicability of
Article.................................................................................

	
43

		
Section 6.02

		
Election to Redeem; Notice
to
Trustee.........................................................

	
44

		
Section 6.03

		
Selection of Bonds to Be
Redeemed............................................................

	
44

		
Section 6.04

		
Notice of
Redemption..................................................................................

	
44

		
Section 6.05

		
Bonds Payable on
Redemption
Date............................................................

	
46

		
Section 6.06

		
Bonds Redeemed in
Part.............................................................................

	
46

	
 ARTICLE
VII

	
     

	
COVENANTS....................................................................................................

	
46

	
    

	
Section 7.01

	
        

	
Payment of
Bonds.......................................................................................

	
46

		
Section 7.02

		
Maintenance of Office or
Agency.................................................................

	
46

		
Section 7.03

		
Money for Bond Payments to
Be Held in
Trust.............................................

	
47

		
Section 7.04

		
Corporate
Existence....................................................................................

	
48

		
Section 7.05

		
Waiver of Certain
Covenants.......................................................................

	
48

		
Section 7.06

		
Annual Officer’s
Certificate as to
Compliance...............................................

	
49

		
Section 7.07

		
Limitation on
Liens.......................................................................................

	
49

	
 ARTICLE
VIII..

	
     

	
SATISFACTION AND
DISCHARGE...............................................................

	
51

	
    

	
Section 8.01

	
         

	
Satisfaction and Discharge
of
Bonds.............................................................

	
51

		
Section 8.02

		
Satisfaction and Discharge
of
Indenture........................................................

	
53

		
Section 8.03

		
Application of Trust
Money.........................................................................

	
54

	
 ARTICLE
IX.

	
     

	
EVENTS OF DEFAULT;
REMEDIES................................................................

	
54

	
     

	
Section 9.01

	
        

	
Events of
Default.........................................................................................

	
54

		
Section 9.02

		
Acceleration of Maturity;
Rescission and
Annulment.....................................

	
56

		
Section 9.03

		
Collection of Indebtedness
and Suits for Enforcement by Trustee..................

	
57

		
Section 9.04

		
Application of Money
Collected...................................................................

	
57

		
Section 9.05

		
Trustee May File Proofs of
Claim.................................................................

	
58

		
Section 9.06

		
Trustee May Enforce Claims
Without Possession of Bonds...........................

	
58

		
Section 9.07

		
Limitation on
Suits.......................................................................................

	
59

		
Section 9.08

		
Unconditional Right of
Holders to Receive Principal, Premium and Interest....

	
59

		
Section 9.09

		
Restoration of Rights and
Remedies.............................................................

	
59

		
Section 9.10

		
Rights and Remedies
Cumulative..................................................................

	
60

		
Section 9.11

		
Delay or Omission Not
Waiver....................................................................

	
60

		
Section 9.12

		
Control by Holders of
Bonds.......................................................................

	
60

		
Section 9.13

		
Waiver of Past
Defaults...............................................................................

	
60

		
Section 9.14

		
Undertaking for
Costs..................................................................................

	
61

		
Section 9.15

		
Waiver of Stay and
Extension
Laws.............................................................

	
61

	
 ARTICLE X

	
     

	
THE
TRUSTEE...................................................................................................

	
61

	
     

	
Section 10.01

	
     

	
Certain Duties and
Responsibilities...............................................................

	
61

		
Section 10.02

		
Notice of
Defaults........................................................................................

	
62

		
Section 10.03

		
Certain Rights of
Trustee..............................................................................

	
63

		
Section 10.04

		
Not Responsible for
Recitals or Issuance of Bonds or Application of
Proceeds.....................................................................................................

	

 64

		
Section 10.05

		
May Hold
Bonds.........................................................................................

	
64

		
Section 10.06

		
Money Held in
Trust....................................................................................

	
64

		
Section 10.07

		
Compensation and
Reimbursement...............................................................

	
64

		
Section 10.08

		
Disqualification;
Conflicting
Interests.............................................................

	
65

		
Section 10.09

		
Corporate Trustee
Required;
Eligibility.........................................................

	
65

		
Section 10.10

		
Resignation and Removal;
Appointment of
Successor...................................

	
66

		
Section 10.11

		
Acceptance of Appointment
by
Successor...................................................

	
67

		
Section 10.12

		
Merger, Conversion,
Consolidation or Succession to
Business......................

	
68

		
Section 10.13

		
Preferential Collection of
Claims Against
Company.......................................

	
68

		
Section 10.14

		
Co-Trustees and Separate
Trustees.............................................................

	
68

		
Section 10.15

		
Appointment of
Authenticating
Agent...........................................................

	
69

		
Section 10.16

		
Further
Assurances......................................................................................

	
71

	
ARTICLE XI

	
     

	
LISTS OF HOLDERS; REPORTS
BY TRUSTEE AND COMPANY...............

	
71

	
     

	
Section 11.01

	
       

	
Lists of
Holders...........................................................................................

	
71

		
Section 11.02

		
Reports by Trustee and
Company................................................................

	
72

	
 ARTICLE
XII....

	
     

	
CONSOLIDATION, MERGER,
CONVEYANCE OR OTHER TRANSFER...

	
72

	
     

	
Section 12.01

	
       

	
Company May Consolidate,
etc., Only on Certain Terms.............................

	
72

		
Section 12.02

		
Successor Corporation
Substituted..............................................................

	
73

		
Section 12.03

		
Property of Successor
Corporation..............................................................

	
73

		
Section 12.04

		
Release of Company Upon
Conveyance or Other Transfer...........................

	
74

		
Section 12.05

		
Merger Into
Company.................................................................................

	
74

	
 ARTICLE
XIII.

	
     

	
SUPPLEMENTAL
INDENTURES.....................................................................

	
74

	
    

	
Section 13.01.

	
       

	
Supplemental Indentures
Without Consent of
Holders...................................

	
74

		
Section 13.02

		
Supplemental Indentures
With Consent of
Holders.......................................

	
76

		
Section 13.03

		
Execution of Supplemental
Indentures..........................................................

	
78

		
Section 13.04

		
Effect of Supplemental
Indentures................................................................

	
78

		
Section 13.05

		
Conformity With Trust
Indenture
Act...........................................................

	
78

		
Section 13.06

		
Reference in Bonds to
Supplemental
Indentures............................................

	
78

		
Section 13.07

		
Modification Without
Supplemental
Indenture...............................................

	
78

	
ARTICLE XIV

	
     

	
MEETINGS OF HOLDERS;
ACTION WITHOUT MEETING.........................

	
79

	
    

	
Section 14.01

	
        

	
Purposes for Which
Meetings May Be
Called..............................................

	
79

		
Section 14.02

		
Call, Notice and Place of
Meetings..............................................................

	
79

		
Section 14.03

		
Persons Entitled to Vote
at
Meetings............................................................

	
80

		
Section 14.04

		
Quorum;
Action.................................................................................................

	
80

		
Section 14.05

		
Attendance at Meetings;
Determination of Voting Rights; Conduct and Adjournment of
Meetings...................................................................................

	
81

		
Section 14.06

		
Counting Votes and
Recording Action of
Meetings.......................................

	
82

		
Section 14.07

		
Action Without
Meeting...............................................................................

	
82

	
ARTICLE  XV

	
     

	
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND
DIRECTORS......................................................................................................

	
82

	
    

	
Section 15.01

	
       

	
Liability Solely
Corporate............................................................................

	
82

          INDENTURE
(this “Indenture”), dated as of April 22, 2005 between
PACIFIC GAS AND ELECTRIC COMPANY, a corporation duly
organized and existing under the laws of the State of California
(the “Company”), and THE BANK OF NEW YORK TRUST
COMPANY, N.A., a national banking association organized under
the laws of the United States of America, successor in interest to
BNY Western Trust Company, as Trustee (the
“Trustee”).

RECITALS

          WHEREAS,
the Company and BNY Western Trust Company, predecessor in interest
to the Trustee, executed and delivered an Indenture of Mortgage,
dated as of March 11, 2004 (the “Mortgage”), and
subsequently executed and delivered a First Supplemental Indenture,
dated as of March 23, 2004 (the “First Supplemental
Mortgage”), and a Second Supplemental Indenture, dated as of
April 12, 2004 (the “Second Supplemental Mortgage” and
together with the Mortgage and the First Supplemental Mortgage
collectively, the “Prior Indenture”);

          
WHEREAS, the Prior Indenture provided for the issuance by the
Company from time to time of its bonds in one or more series or
tranches, and provided that the payment of the principal of and
premium, if any, and interest, if any, on bonds issued thereunder
was secured by a lien on and security interest in certain real,
personal and mixed property subject to the lien of the Prior
Indenture to the extent provided therein;

          
WHEREAS, the Prior Indenture provided that upon satisfaction of the
conditions specified in Section 8.12 of the Prior Indenture and
upon an Order of the Company, the lien of the Prior Indenture would
be discharged, canceled, terminated and satisfied and the property
subject thereto would be released and that bonds issued and
outstanding under the Prior Indenture would thereupon constitute
unsecured obligations of the Company;

          
WHEREAS, the Company has satisfied all of the conditions precedent
to the release of the lien of the Prior Indenture specified in
Section 8.12 of the Prior Indenture and has delivered an Order of
the Company to the Trustee for the release of the lien of the Prior
Indenture on the date hereof and requesting that the Trustee
execute this Indenture supplementing, amending and restating the
Prior Indenture;

          
WHEREAS, pursuant to Section 14.01(l) of the Prior Indenture, the
Company and the Trustee may, without the consent of holders of
bonds issued under the Prior Indenture, enter into a supplemental
indenture to amend and restate the Prior Indenture to eliminate any
provisions related to the lien of the Prior Indenture, the
Mortgaged Property (as defined in the Prior Indenture) or Liens (as
defined in the Prior Indenture), other than Section 7.11 of the
Prior Indenture;

          
WHEREAS, pursuant to 14.01(j) of the Prior Indenture, the Company
and the Trustee may, without the consent of holders of bonds issued
under the Prior Indenture, enter into a supplemental indenture to
cure any ambiguity, to correct any provision of the Prior Indenture
which may be defective or inconsistent with any other provision of
the Prior Indenture, or to make any other additions to, deletions
from or other changes to the provisions of the Prior Indenture,
provided that such additions, deletions and/or other changes shall
not materially adversely affect the interests of the holders of
bonds of any series or tranche issued thereunder in any material
respect;

          
WHEREAS, the Company and the Trustee are executing this Indenture
pursuant to Sections 14.01(l) and 14.01(j) of the Prior Indenture
and intend, pursuant to Section 14.04 of the Prior Indenture, that
this Indenture shall amend and restate the Prior Indenture in its
entirety and that this Indenture shall supersede the Prior
Indenture as heretofore in effect for all purposes;

          
WHEREAS, the Company has issued twenty-one (21) series of bonds
under the Prior Indenture, of which six series remain outstanding
on the date hereof as further described in Article IV and shall be
subject to and governed by the provisions of this Indenture from
and after the date hereof, and the Company may issue additional
series of bonds hereunder after the date hereof;

          
WHEREAS, all acts necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been
performed.  For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms used herein shall have the meanings
assigned to them in Article I of this Indenture;

          
NOW, THEREFORE, THIS INDENTURE WITNESSETH that, in consideration of
the premises and of the purchase of Bonds by the Holders thereof,
it is hereby covenanted and agreed by and between the Company and
the Trustee that all the Bonds are to be authenticated and
delivered subject to the further covenants, conditions and trusts
hereinafter set forth, and the Company hereby covenants and agrees
to and with the Trustee, for the equal and ratable benefit of all
Holders of the Bonds or of series or Tranches thereof (except as
otherwise contemplated herein), as follows:

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION

SECTION 1.01.   General
Definitions.

          For
all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

          (a)     the
terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the
singular;

          (b)     reference
to any gender shall include all other genders;

          (c)     all
terms used herein without definition which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;

          (d)     all
terms used herein without definition which are defined in the
California Commercial Code shall have the meanings assigned to them
therein;

          (e)     all
accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles in the United States; and, except as otherwise herein
expressly provided, the term “generally accepted accounting
principles” with respect to any computation required or
permitted hereunder shall mean, at the election of the Company from
time to time, such accounting principles as are generally accepted
in the United States at the date of such computation or at the
Initial Issuance Date; provided, however, that in determining
generally accepted accounting principles applicable to the Company,
effect shall be given, to the extent required, to any order, rule
or regulation of any administrative agency, regulatory authority or
other governmental body having jurisdiction over the
Company;

          (f)     any
reference to an “Article”, a “Section” or
any other subdivision refers to an Article, a Section or other
subdivision, as the case may be, of this Indenture; and

          (g)     the
words “herein”, “hereof” and
“hereunder” and other words of similar import refer to
this Indenture as a whole and not to any particular Article,
Section or other subdivision.

          
“3.60% Senior Notes” has the meaning set forth in
Section 4.02(a).

          
“4.20% Senior Notes” has the meaning set forth in
Section 4.02(b).

          
“4.80% Senior Notes” has the meaning set forth in
Section 4.02(c).

          
“6.05% Senior Notes” has the meaning set forth in
Section 4.02(d).

          
“Accountant” means a Person engaged in the
accounting profession or otherwise qualified to pass on accounting
matters (including, but not limited to, a Person certified or
licensed as a public accountant, whether or not then engaged in the
public accounting profession), which Person, unless required under
the terms hereof to be Independent, may be an employee, an
Affiliate or an employee of an Affiliate of the Company.

          
“Act”, when used with respect to any Holder of a
Bond, has the meaning specified in Section 1.04.

          
“Adjusted Treasury Rate”, with respect to the Fixed
Rate Senior Notes, means, with respect to any Redemption Date on
which any Fixed Rate Senior Notes are being redeemed pursuant to
Section 4.03 hereof:

                    
(a)           
the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently
published statistical release designated “H.15(519) Selected
Interest Rates” or any successor publication that is
published weekly by the Board of Governors of the Federal Reserve
System and that establishes yields on actively traded United States
treasury securities adjusted to constant maturity under the caption
“Treasury Constant Maturities” for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Life, yields for
the two published maturities most closely corresponding to the
Comparable Treasury issue will be determined and the Adjusted
Treasury Rate will be interpolated or extrapolated from such yields
on a straight line basis, rounding to the nearest month);
or

                    
(b)           
if such release (or any successor publication) is not published
during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.

          The
Adjusted Treasury Rate will be calculated on the third Business Day
preceding the Redemption Date.

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

          
“Attributable Debt” in respect of a sale and
leaseback transaction means, at the time of determination, the
present value of the obligation of the lessee for net rental
payments during the remaining term of the lease included in such
sale and leaseback transaction, including any period for which such
lease has been extended or may, at the option of the lessor, be
extended.  Such present value shall be calculated using a
discount rate equal to the rate of interest implicit in such
transaction, determined in accordance with generally accepted
accounting principles.

          
“Authenticating Agent” means any Person or Persons
(other than the Company or an Affiliate of the Company) authorized
by the Trustee to act on behalf of the Trustee to authenticate the
Bonds of one or more series.

          
“Authorized Officer” means the Chairman of the
Board, the President, the Chief Executive Officer, any Vice
President, the Chief Financial Officer, the Treasurer or any other
duly authorized officer, agent or attorney-in-fact of the Company
named in an Officer’s Certificate signed by any of such
officers.

          
“Authorized Publication” means a newspaper or
financial journal of general circulation, printed in the English
language and customarily published on each Business Day, whether or
not published on Saturdays, Sundays or holidays; or, in the
alternative, shall mean such form of communication as may have come
into general use for the dissemination of information of import
similar to that of the information specified to be published by the
provisions hereof.  In the event that successive weekly
publications in an Authorized Publication are required hereunder
they may be made (unless otherwise expressly provided herein) on
the same or different days of the week and in the same or in
different Authorized Publications.  In case, by reason of the
suspension of publication of any Authorized Publication, or by
reason of any other cause, it shall be impractical without
unreasonable expense to make publication of any notice in an
Authorized Publication as required by this Indenture, then such
method of publication or notification as shall be made with the
approval of the Trustee shall be deemed the equivalent of the
required publication of such notice in an Authorized
Publication.

          
“Board of Directors” means the board of directors
of the Company, any committee thereof duly authorized to act in
respect of matters relating to this Indenture or any other body
fulfilling the function of a board of directors of a corporation
authorized to act in respect of matters relating to this
Indenture.

          
“Board Resolution” means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company
that has been duly adopted by the Board of Directors, that is in
full force and effect on the date of such certification and that
has been delivered to the Trustee.

          
“Bond Register” and “Bond
Registrar” have the respective meanings specified in
Section 3.05.

          
“Bonds” means the Fixed Rate Senior Notes, the
Floating Rate Senior Notes, the Bonds of the Eleventh Series and
any securities, including any bonds, notes and other evidences of
indebtedness, authenticated and delivered under this
Indenture.

          
“Bonds of the First Series” means the series of
Bonds established as such under the Prior Indenture and hereafter
governed by and subject to this Indenture as set forth in Section
4.01.

          
“Bonds of the Second Series” means the series of
Bonds established as such under the Prior Indenture and hereafter
governed by and subject to this Indenture as set forth in Section
4.01.

          
“Bonds of the Third Series” means the series of
Bonds established as such under the Prior Indenture and hereafter
governed by and subject to this Indenture as set forth in Section
4.01.

          
“Bonds of the Fourth Series” means the series of
Bonds established as such under the Prior Indenture and hereafter
governed by and subject to this Indenture as set forth in Section
4.01.

          
“Bonds of the Fifth Series” means the series of
Bonds established as such under the Prior Indenture and hereafter
governed by and subject to this Indenture as set forth in Section
4.01.

          
“Bonds of the Eleventh Series” means the series of
Bonds established as such under the Prior Indenture and hereafter
governed by and subject to this Indenture as set forth in Section
4.01.

          
“Bonds of the Initial Series” has the meaning set
forth in Section 4.01.

          
“Business Day” means any day, other than a Saturday
or Sunday, which is not a day on which banking institutions or
trust companies in (i) any Place of Payment or other location
specified in the Bonds or this Indenture or (ii) the location of
the Company’s principal place of business or the Corporate
Trust Office of the Trustee, are generally authorized or required
by law, regulation or executive order to remain closed, except as
may be otherwise specified as contemplated by Section 3.01;
provided, however, that with respect to the Floating Rate Senior
Notes, “Business Day” shall have the meaning set forth
in such Floating Rate Senior Notes.

          
“Calculation Agency Agreement” means the
Calculation Agency Agreement, dated as of March 23, 2004, by and
between the Calculation Agent and the Company, relating to the
Floating Rate Senior Notes, as such agreement may be amended,
modified or supplemented from time to time.

          
“Calculation Agent”, with respect to the Floating
Rate Senior Notes, means The Bank of New York Trust Company, N.A.,
as successor in interest to BNY Western Trust Company, or such
other Person as the Company shall from time to time designate in
accordance with the Calculation Agency Agreement.

          
“California Commercial Code” means the California
Commercial Code as in effect from time to time, unless otherwise
specified in this Indenture.

          
“Capital Lease Obligation” means, at the time any
determination is to be made, the amount of the liability in respect
of a capital lease that would at that time be required to be
capitalized on a balance sheet in accordance with generally
accepted accounting principles.

          
“Commission” means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the Initial Issuance Date,
such Commission is not existing and performing the duties assigned
to it at March 11, 2004 under the Trust Indenture Act, then the
body, if any, performing such duties at such time.

          
“Company” means the Person named as the
“Company” in the first paragraph of this Indenture
until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter
“Company” shall mean such successor Person.

          
“Company Order” or “Company
Request” means, respectively, a written order or request
signed in the name of the Company by an Authorized Officer and
delivered to the Trustee.

          
“Comparable Treasury Issue”, with respect to the
Fixed Rate Senior Notes, means the United States Treasury security
selected by the Independent Investment Banker as having a maturity
comparable to the Remaining Life of the applicable series of Fixed
Rate Senior Notes to be redeemed pursuant to Section 4.03 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 Life of the
applicable series of Fixed Rate Senior Notes to be redeemed
pursuant to Section 4.03.

          
“Comparable Treasury Price”, with respect to the
Fixed Rate Senior Notes, means, with respect to any Redemption Date
on which any series of Fixed Rate Senior Notes is being redeemed
pursuant to Section 4.03 hereof, (a) the average of five (5)
Reference Treasury Dealer Quotations for such Redemption Date,
after excluding the highest and lowest Reference Treasury Dealer
Quotations, or (b) if the Independent Investment Banker obtains
fewer than five (5) such Reference Treasury Dealer Quotations, the
average of all quotations obtained.

          
“Corporate Trust Office” means the office of the
Trustee, at which at any particular time its corporate trust
business shall be principally administered, which office, at the
Initial Issuance Date, was, and on the date hereof is, located at
550 Kearny Street, Suite 600, San Francisco, California, 94108,
Attention: Corporate Trust Administration, fax number (415)
399-1647.

          
“corporation” means a corporation, partnership,
limited liability company, association, company, joint stock
company or business trust, and references to
“corporate” and other derivations of
“corporation” herein shall be deemed to include
appropriate derivations of such entities.

          
“CPI Index” means the United States Department of
Labor, Bureau of Labor Statistics Consumer Price Index for All
Urban Consumers, U.S. City Average, “All Items”
(1982-84 = 100), or any successor index thereof as such successor
index may be appropriately adjusted to establish substantial
equivalence with the Consumer Price Index; provided that if the
Consumer Price Index ceases to be published and there is no
successor thereto, such other index as the Company and the Trustee
shall agree upon in writing shall be substituted for the Consumer
Price Index.

          
“Dealer”, with respect to the Fixed Rate Senior
Notes, means a primary U.S. Government Securities dealer in the
United States.

          
“Debt” means any debt of the Company for money
borrowed and guarantees by the Company of debt for money borrowed
but in each case excluding liabilities in respect of Capital Lease
Obligations or Swap Agreements.

          
“Default” means any event that with the passage of
time or the giving of notice or both would be an Event of
Default.

          
“Defaulted Interest” has the meaning specified in
Section 3.07.

          
“Depositary” means, with respect to the Bonds of
any series, or Tranche thereof, issuable or issued in whole or in
part in the form of one or more Global Bonds, the Person designated
as Depositary by the Company pursuant to Sections 3.01(q) and 3.13
until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and, thereafter,
“Depositary” shall mean or include each Person who is
then a Depositary hereunder, and if at any time there is more than
one such Person, “Depositary” as used with respect to
Bonds of any such series or Tranche shall mean the Depositary with
respect to the Bonds of that series or Tranche.

          
“Diablo Canyon Lease” means that certain lease
dated September 17, 1966, between Eureka Energy Company, as lessor,
and the Company, as lessee, which lease was originally entered into
between Luigi Marre Land and Cattle Company, a California
corporation, as lessor, and San Luis Obispo Bay Properties, Inc., a
California corporation, as lessee, a memorandum of which Lease was
recorded September 21, 1966 in Volume 1410, Page 556, Official
Records, San Luis Obispo County, California, and any supplements,
assignments and modifications thereto.

          
“Discount Bond” means any Bond which provides for
an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 9.02.  “Interest” with respect
to a Discount Bond means interest, if any, borne by such Bond at a
Stated Interest Rate.

          
“Dollar” or “$” means a dollar
or other equivalent unit in such coin or currency of the United
States as at the time shall be legal tender for the payment of
public and private debts.

          
“DTC” means The Depository Trust Company, New York,
New York.

          
“Eligible Obligations” means:

                    
(a)           
with respect to Bonds denominated in Dollars, Government
Obligations; or

                    
(b)           
with respect to Bonds denominated in a currency other than Dollars
or in a composite currency, such other obligations or instruments
as shall be specified with respect to such Bonds as contemplated by
Section 3.01.

          
“Event of Default” has the meaning specified in
Section 9.01.

          
“Excepted Property” means any right, title or
interest of the Company or any Significant Subsidiary in, to or
under any of the following property, whether owned at March 11,
2004 or thereafter acquired:

                    
(a) all money, investment property and deposit accounts (as such
terms are defined in the California Commercial Code as in effect on
March 11, 2004), and all cash on hand or on deposit in banks
or other financial institutions, shares of stock, interests in
general or limited partnerships or limited liability companies,
bonds, notes, other evidences of indebtedness and other securities,
of whatever kind and nature;

                    
(b) all accounts, chattel paper, commercial tort claims, documents,
general intangibles, instruments, letter-of-credit rights and
letters of credit (as such terms are defined in the California
Commercial Code as in effect on March 11, 2004), other than
licenses and permits to use the real property of others, franchises
to use public roads, streets and other public properties, rights of
way and other rights or interests relating to the occupancy or use
of real property; and all contracts, leases (except the Diablo
Canyon Lease), operating agreements and other agreements of
whatever kind and nature; all contract rights, bills and notes
(except to the extent that any of the same constitute investment
property, in which case they are separately covered under clause
(a) above); all revenues, income and earnings, all accounts
receivable, rights to payment and unbilled revenues, all rents,
tolls, issues, products and profits, claims, credits, demands and
judgments, including any rights in or to rates, revenue components,
charges, tariffs or amounts arising therefrom, or in any amounts
that are accrued and recorded in a regulatory account for
collections by the Company or any Significant Subsidiary; all
governmental and other licenses, permits, franchises, consents and
allowances, including all emission allowances (or similar rights)
created under any similar existing or future law relating to
abatement or control of pollution of the atmosphere, water or soil,
other than licenses and permits to use the real property of others,
franchises to use public roads, streets and other public
properties, rights of way and other rights or interests relating to
the occupancy or use of real property; and all patents, patent
licenses and other patent rights, patent applications, trade names,
trademarks, copyrights and other intellectual property, including
computer software and software licenses; and all claims, credits,
choses in action and other intangible property;

                    
(c) all automobiles, buses, trucks, truck cranes, tractors,
trailers, motor vehicles and similar vehicles and movable
equipment; all rolling stock, rail cars and other railroad
equipment; all vessels, boats, barges and other marine equipment;
all airplanes, helicopters, aircraft engines and other flight
equipment; and all parts, accessories and supplies used in
connection with any of the foregoing;

                    
(d) all goods, stock in trade, wares, merchandise and inventory
held for the purpose of sale or lease in the ordinary course of
business; all materials, supplies, inventory and other items of
personal property which are consumable (otherwise than by ordinary
wear and tear) in their use in the operation of the Principal
Property; all fuel, whether or not any such fuel is in a form
consumable in the operation of the Principal Property, including
separate components of any fuel in the forms in which such
components exist at any time before, during or after the period of
the use thereof as fuel; all hand and other portable tools and
equipment; and all furniture and furnishings;

                    
(e) all personal property the perfection of a security interest in
which is not governed by the California Commercial Code;

                    
(f) all oil, gas and other minerals (as such terms are defined in
the California Commercial Code as in effect on March 11,
2004); and all coal, ore, gas, oil and other minerals and all
timber, and all rights and interests in any of the foregoing,
whether or not such minerals or timber shall have been mined or
extracted or otherwise separated from the land; and all electric
energy and capacity, gas (natural or artificial), steam, water and
other products generated, produced, manufactured, purchased or
otherwise acquired by the Company or any Significant
Subsidiary;

                    
(g) all property which is the subject of a lease agreement, other
than a lease agreement that results from a sale and leaseback
transaction, designating the Company or any Significant Subsidiary
as lessee and all right, title and interest of the Company or any
Significant Subsidiary in and to such property and in, to and under
such lease agreement, whether or not such lease agreement is
intended as security; provided, however, that the Company’s
right, title and interest in and to the property which is the
subject of the Diablo Canyon Lease, and in to and under the Diablo
Canyon Lease shall not be Excepted Property;

                    
(h) all property, real, personal and mixed that is stated in
Sections 12.03 and 12.05 to not be Principal Property;

                    
(i) all proceeds (as such term is defined in the California
Commercial Code as in effect on March 11, 2004) of the
foregoing.

          
“Exchange Act” means the Securities Exchange Act of
1934, as amended.

          
“Fair Value”, with respect to property, means the
fair value of such property as may be determined by reference to
(a) the amount which would be likely to be obtained in an
arm’s-length transaction with respect to such property
between an informed and willing buyer and an informed and willing
seller, under no compulsion, respectively, to buy or sell, (b) the
amount of investment with respect to such property which, together
with a reasonable return thereon, would be likely to be recovered
through ordinary business operations or otherwise, (c) cost or
replacement or reproduction cost, in each case less depreciation
with respect to such property and/or (d) any other relevant
factors; provided, however, that the Fair Value of property shall
be determined without deduction for any senior liens on such
property.  Fair Value of any property may be determined,
without physical inspection, by the use of accounting and
engineering records and other data maintained by the Company
(including on the basis of the cost of such property).

          
“First Supplemental Mortgage” has the meaning set
forth in the first recital hereof.

          
“Fixed Rate Senior Notes” means, collectively, the
3.60% Senior Notes, the 4.20% Senior Notes, the 4.80% Senior Notes
and the 6.05% Senior Notes.

          
“Floating Rate Senior Notes” has the meaning set
forth in Section 4.02(e).

          
“Global Bond” means a Bond representing all or part
of a series of Bonds, or Tranche thereof, issued to the Depositary
for such series or Tranche in accordance with Section 3.13, and
bearing the legend prescribed in Section 3.13.

          
“Governmental Authority” means the government of
the United States or of any state or territory thereof or of the
District of Columbia or of any county, municipality or other
political subdivision of any thereof, or any department, agency,
authority or other instrumentality of any of the
foregoing.

          
“Government Obligations” means securities which are
(a) (i) direct obligations of the United States where the payment
or payments thereunder are supported by the full faith and credit
of the United States or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the
United States where the timely payment or payments thereunder are
unconditionally guaranteed as a full faith and credit obligation by
the United States or (b) depository receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act of 1933, as
amended) as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of or
other amount with respect to any such Government Obligation held by
such custodian for the account of the holder of a depository
receipt; provided, that, (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by
the custodian in respect of the Government Obligation or the
specific payment of interest on or principal of or other amount
with respect to the Government Obligation evidenced by such
depository receipt.

          
“Holder” means a Person in whose name a Bond is
registered in the Bond Register.

          
“Indenture” means this instrument as originally
executed and as it may from time to time be supplemented or amended
by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof, including, for all purposes of
this instrument and any such supplemental indenture, the provisions
of the Trust Indenture Act that are deemed to be a part of and
govern this Indenture and any such supplemental indenture,
respectively.  The term “Indenture” shall also
include the provisions or terms of particular series of Bonds
established in any Officer’s Certificate, Board Resolution or
Company Order delivered pursuant to Sections 2.01, 3.01 and
13.07.

          
“Independent”, when applied to any Accountant or
other specified Person, means such a Person who (a) does not have
any direct or indirect material financial interest in the Company
or in any other obligor upon the Bonds or in any Affiliate of the
Company or of such other obligor, (b) is not connected with the
Company, an Affiliate of the Company or such other obligor as an
officer, employee, promoter, underwriter, trustee, partner,
director or any person performing similar functions and (c) is
appointed or selected by the Company and approved by the Trustee in
the exercise of reasonable care.

          
“Independent Investment Banker”, with respect to
the Fixed Rate Senior Notes, means a Dealer appointed by the
Company.

          
“Initial Issuance Date” means March 23, 2004, the
date on which the Bonds of the Initial Series were originally
issued under the Prior Indenture.

          
“Interest Payment Date”, when used with respect to
any Bond, means the Stated Maturity of an installment of interest
on such Bond.

          
“Internal Revenue Code” means the Internal Revenue
Code of 1986, as amended, or any successor federal
statute.

          
“Investment Securities” means any of the following
obligations or investment property on which neither the Company,
any other obligor on the Bonds nor any Affiliate of either is the
obligor: (a) Government Obligations; (b) interest bearing deposit
accounts (which may be represented by certificates of deposit) in
any national or state bank (which may include the Trustee or any
Paying Agent) or savings association which has outstanding
securities rated by a nationally recognized rating organization in
either of the two (2) highest rating categories (without regard to
modifiers) for short-term securities or in any of the three (3)
highest rating categories (without regard to modifiers) for
long-term securities; (c) bankers’ acceptances drawn on and
accepted by any commercial bank (which may include the Trustee or
any Paying Agent) which has outstanding securities rated by a
nationally recognized rating organization in either of the two (2)
highest rating categories (without regard to modifiers) for
short-term securities or in any of the three (3) highest rating
categories (without regard to modifiers) for long-term securities;
(d) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, any state or
territory of the United States or the District of Columbia, or any
political subdivision of any of the foregoing, which are rated by a
nationally recognized rating organization in either of the two (2)
highest rating categories (without regard to modifiers) for
short-term securities or in any of the three (3) highest rating
categories (without regard to modifiers) for long-term securities;
(e) bonds or other obligations of any agency or instrumentality of
the United States; (f) corporate debt securities which are rated by
a nationally recognized rating organization in either of the two
(2) highest rating categories (without regard to modifiers) for
short-term securities or in any of the three (3) highest rating
categories (without regard to modifiers) for long-term securities;
(g) repurchase agreements with respect to any of the foregoing
obligations or securities with any banking or financial institution
(which may include the Trustee or any Paying Agent) which has
outstanding securities rated by a nationally recognized rating
organization in either of the two (2) highest rating categories
(without regard to modifiers) for short-term securities or in any
of the three (3) highest rating categories (without regard to
modifiers) for long-term securities; (h) securities issued by any
regulated investment company (including any investment company for
which the Trustee or any Paying Agent is the advisor), as defined
in Section 851 of the Internal Revenue Code or any such successor
section of the Internal Revenue Code, provided that the portfolio
of such investment company is limited to obligations or securities
of the character and investment quality contemplated in clauses (a)
through (f) above and repurchase agreements which are fully
collateralized by any of such obligations or securities; and (i)
any other obligations or securities which may lawfully be purchased
by the Trustee in its capacity as such.

          
“Lien” means any mortgage, deed of trust, pledge,
security interest, encumbrance, easement, lease, reservation,
restriction, servitude, charge or similar right and any other lien
of any kind, including, without limitation, any conditional sale or
other title retention agreement, any lease in the nature thereof,
and any defect, irregularity, exception or limitation in record
title or, when the context so requires, any lien, claim or interest
arising from any of the foregoing.

          
“Maturity”, when used with respect to any Bond,
means the date on which the principal of such Bond or an
installment of principal or any sinking fund payment becomes due
and payable as provided in such Bond or in this Indenture, whether
at the Stated Maturity, by declaration of acceleration, upon call
for redemption or otherwise.

          
“MBIA” means MBIA Insurance Corporation.

          
“MBIA Reimbursement and Indemnity Agreement” means
the Amended and Restated Reimbursement and Indemnity Agreement,
dated as of March 5, 2004, between the Company and MBIA, as the
same may be amended, supplemented, restated or otherwise modified
from time to time.

          
“Net Tangible Assets” means the total amount of the
Company’s assets determined on a consolidated basis in
accordance with generally accepted accounting principles as of a
date determined pursuant to Section 7.07(b), less (a) the
sum of the Company’s consolidated current liabilities
determined in accordance with generally accepted accounting
principles, and (b) the amount of the Company’s consolidated
assets classified as intangible assets, determined in accordance
with generally accepted accounting principles, including, but not
limited to, such items as goodwill, trademarks, trade names,
patents, and unamortized debt discount and expense and regulatory
assets carried as an asset on the Company’s consolidated
balance sheet.

          
“Notice of Default” has the meaning specified in
Section 9.01(c).

          
“Officer’s Certificate” means a certificate
signed by an Authorized Officer and delivered to the
Trustee.

          
“Opinion of Counsel” means a written opinion of
counsel, who may be counsel for the Company or other counsel
acceptable to the Trustee and who may be an employee, an Affiliate
or an employee of an Affiliate of the Company.

          
“Outstanding”, when used with respect to Bonds,
means, as of the date of determination, all Bonds theretofore
authenticated and delivered under this Indenture,
except:

                    
(a)           
Bonds theretofore canceled or delivered to the Bond Registrar or
the Trustee for cancellation;

                    
(b)           
Bonds deemed to have been paid for all purposes of this Indenture
in accordance with Section 8.01 (whether or not the Company’s
indebtedness in respect thereof shall be satisfied and discharged
for any other purpose); and

                    
(c)           
Bonds, the principal of, premium, if any, and interest, if any, on
which have been fully paid pursuant to the third paragraph of
Section 3.06 or in exchange for or in lieu of which other Bonds
have been authenticated and delivered pursuant to this Indenture,
other than any such Bonds in respect of which there shall have been
presented to the Trustee proof satisfactory to it and the Company
that such Bonds are held by a protected purchaser;

provided, however, that in
determining whether or not the Holders of the requisite principal
amount of the Bonds Outstanding under this Indenture, or the
Outstanding Bonds of any series or Tranche, have given any request,
demand, authorization, direction, notice, consent or waiver
hereunder or whether or not a quorum is present at a meeting of
Holders of Bonds,

                    
(x)           
Bonds owned by the Company or any other obligor upon the Bonds or
any Affiliate of the Company or of such other obligor (unless the
Company, such obligor and/or such Affiliate owns all Bonds
Outstanding under this Indenture, or all Outstanding Bonds of each
such series and each such Tranche, as the case may be, determined
without regard to this clause (x)) shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver or upon
any such determination as to the presence of a quorum, only Bonds
which the Trustee actually knows to be so owned shall be so
disregarded; provided, however, that Bonds so owned which have been
pledged in good faith may be regarded as Outstanding if it is
established to the reasonable satisfaction of the Trustee that the
pledgee, and not the Company, any such other obligor or Affiliate
of either thereof, has the right so to act with respect to such
Bonds and that the pledgee is not the Company or any other obligor
upon the Bonds or any Affiliate of the Company or of such other
obligor; and provided, further, that in no event shall any Bond
which shall have been delivered to evidence, enhance or secure, in
whole or in part, the Company’s obligations in respect of
other indebtedness be deemed to be owned by the Company if the
principal of such Bond is payable, whether at Stated Maturity or
upon mandatory redemption, at the same time as the principal of
such other indebtedness is payable, whether at Stated Maturity or
upon mandatory redemption or acceleration, but only to the extent
of such portion of the principal amount of such Bond as does not
exceed the principal amount of such other indebtedness;
and

                    
(y)           
the principal amount of a Discount Bond that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal
thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the Maturity
thereof pursuant to Section 9.02; and

provided, further, that,
in the case of any Bond the principal of which is payable from time
to time without presentment or surrender, the principal amount of
such Bond that shall be deemed to be Outstanding at any time for
all purposes of this Indenture shall be the original principal
amount thereof less the aggregate amount of principal thereof
theretofore paid, unless otherwise specified pursuant to
Section 3.01.

          
“Paying Agent” means any Person, including the
Company, authorized by the Company to pay the principal of and
premium, if any, or interest, if any, on any Bonds on behalf of the
Company.

          
“Periodic Offering” means an offering of Bonds of a
series from time to time any or all of the specific terms of which
Bonds, including, without limitation, the rate or rates of
interest, if any, thereon, the Stated Maturity or Maturities
thereof and the redemption provisions, if any, with respect
thereto, are to be determined by the Company or its agents from
time to time subsequent to the initial request for the
authentication and delivery of such Bonds by the Trustee, all as
contemplated in Section 3.01 and Section 5.01(b).

          
“Person” means any individual, corporation, limited
liability partnership, joint venture, trust or unincorporated
organization, or any other entity, whether or not a legal entity,
or any Governmental Authority.

          
“Place of Payment”, when used with respect to Bonds
of any series, or any Tranche thereof, means the place or places,
specified as contemplated by Section 3.01, at which the principal
of and premium, if any, and interest, if any, on the Bonds of such
series or Tranche are payable, subject, in either case, to Section
7.02.

          
“Predecessor Bond” of any particular Bond means
every previous Bond evidencing all or a portion of the same debt as
that evidenced by such particular Bond; and, for the purposes of
this definition, any Bond authenticated and delivered under Section
3.06 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Bond shall be deemed (to the extent lawful) to evidence the
same debt as the mutilated, destroyed, lost or stolen
Bond.

          
“Principal Property” means any property of the
Company or any Significant Subsidiary, as applicable, other than
Excepted Property.

          
“Prior Indenture” has the meaning set forth in the
first recital hereof.

          
“Redemption Date”, when used with respect to any
Bond to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.

          
“Redemption Price”, when used with respect to any
Bond to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture which price shall include principal of
and premium, if any, payable on such Bond but shall not include any
accrued interest payable with respect to such Bond.

          
“Reference Treasury Dealer”, with respect to the
Fixed Rate Senior Notes, means Lehman Brothers Inc., UBS Securities
LLC, the Independent Investment Banker and Dealers acceptable to
the Independent Investment Banker and their respective successors;
provided, however, that if any of the foregoing shall cease to be a
Dealer, the Company will select a substitute Dealer.  However,
if the Company does not select a substitute Dealer within a
reasonable period of time, then the substitute Dealer will be
selected by the Trustee after consultation with the
Company.

          
“Reference Treasury Dealer Quotations”, with
respect to the Fixed Rate Senior Notes and with respect to each
Reference Treasury Dealer and any Redemption Date related to Fixed
Rate Senior Notes, means the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Independent
Investment Banker at 5:00 p.m., New York City time, on the third
Business Day preceding such Redemption Date.

          
“Regular Record Date” for the interest payable on
any Interest Payment Date on the Bonds of any series means the date
specified for that purpose as contemplated by Section
3.01.

          
“Release Date” means April 22, 2005, being the date
on which the lien of the Prior Indenture was discharged, cancelled,
terminated and satisfied and the Mortgaged Property (as defined in
the Prior Indenture) was released to the Company free and clear of
any Lien, pursuant to Section 8.12 of the Prior
Indenture.

          
“Remaining Life”, as of any date of calculation,
with respect to the Fixed Rate Senior Notes, means the remaining
term of the applicable series of Fixed Rate Senior
Notes.

          
“Remaining Scheduled Payments” means, with respect
to each Fixed Rate Senior Note that the Company is redeeming
pursuant to Section 4.03, the remaining scheduled payments of
principal and interest that would be due after the applicable
Redemption Date if such Fixed Rate Senior Note were not
redeemed.  However, if the Redemption Date is not a scheduled
Interest Payment Date with respect to that Fixed Rate Senior Note,
the amount of the next succeeding scheduled interest payment on
that Fixed Rate Senior Note will be reduced by the amount of
interest accrued on such Fixed Rate Senior Note to the Redemption
Date.

          
“Required Currency” has the meaning specified in
Section 3.11.

          
“Responsible Officer”, when used with respect to
the Trustee, means any officer of the Trustee with direct
responsibility for the administration of this Indenture and also
means, with respect to a particular corporate trust matter, any
other officer of the Trustee to whom such matter is referred
because of such officer’s knowledge of and familiarity with
the particular subject.

          
“Second Supplemental Mortgage” has the meaning set
forth in the first recital hereof.

          
“Significant Subsidiary” shall have the meaning
specified in Rule 1-02(w) of Regulation S-X under the Securities
Act of 1933, as amended; provided that, Significant Subsidiary
shall not include any Person, substantially all the assets of which
are Excepted Property.

          
“Special Record Date” for the payment of any
Defaulted Interest on the Bonds of any series means a date fixed by
the Trustee pursuant to Section 3.07.

          
“Stated Interest Rate” means a rate (whether fixed
or variable) at which an obligation by its terms is stated to bear
simple interest.  Any calculation or other determination to be
made under this Indenture by reference to the Stated Interest Rate
on an obligation shall be made (a) if the Company’s
obligations in respect of any other indebtedness shall be
evidenced, enhanced or secured in whole or in part by such
obligation, by reference to the lower of the Stated Interest Rate
on such obligation and the Stated Interest Rate on such other
indebtedness and (b) without regard to the effective interest cost
to the Company of such obligation or of any such other
indebtedness.

          
“Stated Maturity”, when used with respect to any
obligation (including any Bond of any series) or any installment of
principal thereof or interest thereon, means the date on which the
principal of such obligation or such installment of principal or
interest is stated to be due and payable (without regard to any
provisions for redemption, prepayment, acceleration, purchase or
extension).

          
“Subsidiary” means (i) any corporation at least a
majority of the outstanding voting stock or interest of which is
owned, directly or indirectly, by the Company or by one or more
Subsidiaries, or by the Company and one or more Subsidiaries or
(ii) any other Person (other than a corporation) of which the
Company and/or one or more Subsidiaries has at least a majority
ownership and power to direct the policies, management and
affairs.  For the purposes of this definition, “voting
stock” means stock having voting power for the election of
directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any
contingency.

          
“Successor Corporation” has the meaning specified
in Section 12.01.

          
“supplemental indenture” or “indenture
supplemental hereto” means an instrument supplementing or
amending this Indenture executed and delivered pursuant to Article
XIII.

          
“Swap Agreement” means any agreement with respect
to any swap, forward, future or derivative transaction or option or
similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions.

          
“Tranche” means a group of Bonds which (a) are of
the same series and (b) have identical terms except as to principal
amount and/or date of issuance.

          
“Trust Indenture Act” means, as of any time, the
Trust Indenture Act of 1939 or any successor statute, as in effect
at such time.

          
“Trustee” means the Person named as the
“Trustee” in the first paragraph of this Indenture
until a successor trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter
“Trustee” shall mean the Person which shall have become
a successor trustee pursuant to the applicable provisions of this
Indenture, and, if at any time there is more than one Person acting
as trustee hereunder, “Trustee” shall mean each such
Person so acting.

          
“United States” means the United States of America,
its territories, its possessions and other areas subject to its
political jurisdiction.

          
“U.S. Government Securities”, for purposes of the
Floating Rate Senior Notes, means securities which are (a) direct
obligations of the United States of America for the payment on
which its full faith and credit is pledged or (b) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit
obligation of the United States of America, and which in the case
of (a) and (b) are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such
U.S. Government Security or a specific payment of interest on or
principal of any such U.S. Government Security held by such
custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Security evidenced by
such depository receipt.

SECTION
1.02     Compliance Certificates and
Opinions.

          Except
as otherwise expressly provided in this Indenture, upon any
application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officer’s Certificate stating that
all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, it
being understood that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating
to such particular application or request, no additional
certificate or opinion need be furnished.

          Every
certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 7.06) shall
include:

          (a)     a
statement that each Person signing such certificate or opinion has
read such covenant or condition and the definitions herein relating
thereto;

          (b)     a
brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based;

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

          (d)     a
statement as to whether, in the opinion of each such Person, such
condition or covenant has been complied with.

SECTION
1.03.     Content and Form of Documents
Delivered to Trustee.

          Any
Officer’s Certificate may be based (without further
examination or investigation), insofar as it relates to or is
dependent upon legal matters, upon an opinion of, or
representations by, counsel, and, insofar as it relates to or is
dependent upon matters which are subject to verification by
Accountants, upon a certificate or opinion of, or representations
by, an Accountant, unless, in any case, such officer has actual
knowledge that the certificate or opinion or representations with
respect to the matters upon which such Officer’s Certificate
may be based as aforesaid are erroneous.

          Any
certificate of an Accountant may be based (without further
examination or investigation), insofar as it relates to or is
dependent upon legal matters, upon an opinion of, or
representations by, counsel, and insofar as it relates to or is
dependent upon factual matters, information with respect to which
is in the possession of the Company and which are not subject to
verification by Accountants, upon a certificate of, or
representations by, an officer or officers of the Company, unless
such Accountant has actual knowledge that the certificate or
opinion or representations with respect to the matters upon which
his certificate or opinion may be based as aforesaid are
erroneous.

          Any
Opinion of Counsel may be based (without further examination or
investigation), insofar as it relates to or is dependent upon
factual matters, information with respect to which is in the
possession of the Company, upon a certificate of, or
representations by, an officer or officers of the Company, and,
insofar as it relates to or is dependent upon matters which are
subject to verification by Accountants upon a certificate or
opinion of, or representations by, an Accountant, unless such
counsel has actual knowledge that the certificate or opinion or
representations with respect to the matters upon which his opinion
may be based as aforesaid are erroneous.  In addition, any
Opinion of Counsel may be based (without further examination or
investigation), insofar as it relates to or is dependent upon
matters covered in an Opinion of Counsel rendered by other counsel,
upon such other Opinion of Counsel, unless such counsel has actual
knowledge that the Opinion of Counsel rendered by such other
counsel with respect to the matters upon which his Opinion of
Counsel may be based as aforesaid are erroneous.  If, in order
to render any Opinion of Counsel provided for herein, the signer
thereof shall deem it necessary that additional facts or matters be
stated in any Officer’s Certificate or certificate of an
Accountant provided for herein, then such certificate may state all
such additional facts or matters as the signer of such Opinion of
Counsel may request.

          In
any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion
of, only one such Person, or that they be so certified or covered
by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several
documents.  Where any Person is required to make, give or
execute two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one
instrument.

          Whenever,
subsequent to the receipt by the Trustee of any Board Resolution,
Officer’s Certificate, Opinion of Counsel or other document
or instrument, a clerical, typographical or other inadvertent or
unintentional error or omission shall be discovered therein, a new
document or instrument may be substituted therefor in corrected
form with the same force and effect as if originally filed in the
corrected form and, irrespective of the date or dates of the actual
execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered
as of the date or dates required with respect to the document or
instrument for which it is substituted.  Anything in this
Indenture to the contrary notwithstanding, if any such corrective
document or instrument indicates that action has been taken by or
at the request of the Company which could not have been taken had
the original document or instrument not contained such error or
omission, the action so taken shall not be invalidated or otherwise
rendered ineffective but shall be and remain in full force and
effect, except to the extent that such action was a result of
willful misconduct or bad faith.  Without limiting the
generality of the foregoing, any Bonds issued under the authority
of such defective document or instrument shall nevertheless be the
valid obligations of the Company entitled to the benefit of this
Indenture equally and ratably with all other Outstanding Bonds,
except as aforesaid.

SECTION
1.04.     Acts of
Holders.

          (a)     Any
request, demand, authorization, direction, notice, consent,
election, waiver or other action provided by this Indenture to be
made, given or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by
such Holders in person or by an agent duly appointed in writing or,
alternatively, may be embodied in and evidenced by the record of
Holders voting in favor thereof, either in person or by proxies
duly appointed in writing, at any meeting of Holders duly called
and held in accordance with the provisions of Article XIV, or a
combination of such instruments and any such record.  Except
as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both are
delivered to the Trustee and, where it is hereby expressly
required, to the Company.  Such instrument or instruments and
any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the “Act”
of the Holders signing such instrument or instruments and so voting
at any such meeting.  Proof of execution of any such
instrument or of a writing appointing any such agent, or of the
holding by any Person of a Bond, shall be sufficient for any
purpose of this Indenture and (subject to Section 10.01) conclusive
in favor of the Trustee and the Company, if made in the manner
provided in this Section.  The record of any meeting of
Holders shall be proved in the manner provided in Section
14.06.

          (b)     The
fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that
the individual signing such instrument or writing acknowledged to
him the execution thereof or may be proved in any other manner
which the Trustee and the Company deem sufficient.  Where such
execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority.

          (c)     The
ownership, principal amount (except as otherwise contemplated in
clause (y) of the first proviso to the definition of Outstanding)
and serial numbers of Bonds held by any Person, and the date of
holding the same, shall be proved by the Bond Register.

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

          (e)     Until
such time as written instruments shall have been delivered to the
Trustee with respect to the requisite percentage of principal
amount of Bonds for the action contemplated by such instruments,
any such instrument executed and delivered by or on behalf of a
Holder may be revoked with respect to any or all of such Bonds by
written notice by such Holder or any subsequent Holder, proven in
the manner in which such instrument was proven.

          (f)     Bonds
of any series, or any Tranche thereof, authenticated and delivered
after any Act of Holders may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any action
taken by such Act of Holders.  If the Company shall so
determine, new Bonds of any series, or any Tranche thereof, so
modified as to conform, in the opinion of the Trustee and the
Company, to such action may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for
Outstanding Bonds of such series or Tranche.

          (g)     The
Company may, at its option, by Company Order, fix in advance a
record date for the determination of Holders entitled to give any
request, demand, authorization, direction, notice, consent, waiver
or other Act solicited by the Company, but the Company shall have
no obligation to do so.  In addition, the Trustee may, at its
option, fix in advance a record date for the determination of
Holders entitled to join in the giving or making of any Notice of
Default, any declaration of acceleration referred to in Section
9.02, any request to institute proceedings referred to in Section
9.07 or any direction referred to in Section 9.12.  If any
such record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act, or such notice,
declaration, request or direction, may be given before or after
such record date, but only the Holders of record at the close of
business on the record date shall be deemed to be Holders for the
purposes of determining (i) whether Holders of the requisite
proportion of the Outstanding Bonds have authorized or agreed or
consented to such Act (and for that purpose the Outstanding Bonds
shall be computed as of the record date) and/or (ii) which Holders
may revoke any such Act (notwithstanding subsection (e) of this
Section); and any such Act, given as aforesaid, shall be effective
whether or not the Holders which authorized or agreed or consented
to such Act remain Holders after such record date and whether or
not the Bonds held by such Holders remain Outstanding after such
record date.

SECTION
1.05.     Notices, Etc. to Trustee and
Company.

Except as otherwise
provided herein, any request, demand, authorization, direction,
notice, consent, election, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made or
served upon, given or furnished to, or filed with, the Trustee by
any Holder or by the Company, or the Company by the Trustee or by
any Holder, shall be sufficient for every purpose hereunder (unless
otherwise expressly provided herein) if the same shall be in
writing and delivered personally to the addressee (which delivery,
with respect to the Trustee, shall be made to its Corporate Trust
Office and addressed to the attention of the Corporate Trust
Administration), or transmitted by facsimile transmission or other
direct written electronic means to such telephone number or other
electronic communications address as the parties hereto shall from
time to time designate, or transmitted by registered or certified
mail, return receipt requested, or overnight courier guaranteeing
next day delivery, charges prepaid, to the applicable address set
forth opposite such party’s name below or to such other
address as either party hereto may from time to time
designate:

                    If
to the Trustee, to:

                              The
Bank of New York Trust Company, N.A.

                              550
Kearny Street, Suite 600

                              San
Francisco, California  94108

                              Attention:
Corporate Trust Administration

                              Fax: 
(415) 399-1647

                    If
to the Company, to:

                              Pacific
Gas and Electric Company

                              77
Beale Street (street address)

                              P.O.
Box 770000

                              San
Francisco, California 94177

                              Attention:
Treasurer and Assistant Treasurer

                              Fax: 
(415) 973-4343/267-7265

          Any
communication contemplated herein shall be deemed to have been
made, given, furnished and filed if personally delivered, on the
date of delivery, if transmitted by facsimile transmission or other
direct written electronic means, on the date of transmission, and
if transmitted by registered or certified mail or reputable
overnight courier, on the date of receipt.

SECTION
1.06.     Notice to Holders of Bonds;
Waiver.

          Except
as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of any event, such notice shall be
sufficiently given, and shall be deemed given, to Holders if in
writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at the address of such Holder as it appears
in the Bond Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such
notice.

          In
case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such
notice to Holders by mail, then such notification as shall be made
with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.  In any case where
notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with
respect to other Holders.

          Any
notice required by this Indenture may be waived in writing by the
Person entitled to receive such notice, either before or after the
event otherwise to be specified therein, and such waiver shall be
the equivalent of such notice.  Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance
upon such waiver.

SECTION
1.07.     Conflict With Trust Indenture
Act.

          If
any provision of this Indenture limits, qualifies or conflicts with
another provision hereof which is required or deemed to be included
in this Indenture by any provision of the Trust Indenture Act, the
provision required or deemed to be included by the Trust Indenture
Act shall control; and if any provision hereof otherwise conflicts
with the Trust Indenture Act, or limits, qualifies or conflicts
with the duties imposed by Section 318(c) of the Trust Indenture
Act, the Trust Indenture Act, including the duties imposed by
Section 318(c) of the Trust Indenture Act, shall
control.

SECTION
1.08.     Effect of Headings and Table
of Contents.

          The
Article and Section headings in this Indenture and the Table of
Contents are for convenience only and shall not affect the
construction hereof.

SECTION
1.09.     Successors and
Assigns.

          All
covenants and agreements in this Indenture by the Company and the
Trustee shall bind their respective successors and assigns, whether
so expressed or not.

SECTION
1.10.     Separability
Clause.

          In
case any provision in this Indenture or the Bonds shall be held to
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

SECTION
1.11.     Benefits of
Indenture.

          Nothing
in this Indenture or the Bonds, express or implied, shall give to
any Person, other than the parties hereto, their successors
hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.

SECTION1.12.     Governing
Law.

          This
Indenture and the Bonds shall be governed by, and construed and
enforced in accordance with, the laws of the State of California
without regard to the principles of conflicts of laws thereunder,
except to the extent that the Trust Indenture Act shall be
applicable.

SECTION
1.13.     Legal
Holidays.

          
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Bond shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Bonds other than a provision in Bonds of any
series, or any Tranche thereof, or in the indenture supplemental
hereto, Board Resolution or Officer’s Certificate which
establishes the terms of the Bonds of such series or Tranche, which
specifically states that such provision shall apply in lieu of this
Section) payment of interest or principal and premium, if any, need
not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with
the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity, and, if such payment
is made or duly provided for on such Business Day, no interest
shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as
the case may be, to such Business Day.

SECTION
1.14.     Investment of Cash Held by
Trustee.

          Any
cash held by the Trustee or any Paying Agent under any provision of
this Indenture shall, except as otherwise provided in Article VIII,
at the request of the Company evidenced by Company Order, be
invested or reinvested in Investment Securities designated by the
Company (such Company Order to contain a representation to the
effect that the securities designated therein constitute Investment
Securities), and any interest on such Investment Securities shall
be promptly paid over to the Company as received.  Such
Investment Securities shall be held subject to the same provisions
hereof as the cash used to purchase the same, but upon a like
request of the Company shall be sold, in whole or in designated
part, and the proceeds of such sale shall be held subject to the
same provisions hereof as the cash used to purchase the Investment
Securities so sold.  If such sale shall produce a net sum less
than the cost of the Investment Securities so sold, the Company
shall pay to the Trustee or any such Paying Agent, as the case may
be, such amount in cash as, together with the net proceeds from
such sale, shall equal the cost of the Investment Securities so
sold, and if such sale shall produce a net sum greater than the
cost of the Investment Securities so sold, the Trustee or any such
Paying Agent, as the case may be, shall promptly pay over to the
Company an amount in cash equal to such excess.  In no event
shall the Trustee be liable for any loss incurred in connection
with the sale of any Investment Security pursuant to this
Section.  In the absence of a Company Order directing the
Trustee to invest cash held by the Trustee hereunder, the Company
hereby directs the Trustee to invest such cash in Government
Obligations having maturities of less than one year until the
Trustee shall have received a Company Order directing the Trustee
to invest such cash in another Investment Security.  The
Trustee shall not be accountable or liable for any losses resulting
from the sale or depreciation in the market value of investments
made pursuant to this Indenture and Company Orders.

ARTICLE II

BOND FORMS

SECTION
2.01.     Forms
Generally.

          The
definitive Bonds of each series shall be in substantially the form
or forms established in the indenture supplemental hereto
establishing such series, or in a Board Resolution establishing
such series, or in an Officer’s Certificate pursuant to such
a supplemental indenture or Board Resolution, in any case with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such
Bonds, as evidenced by their execution of the Bonds.  If the
form or forms of Bonds of any series are established in a Board
Resolution or in an Officer’s Certificate pursuant to a
supplemental indenture or a Board Resolution, such Board Resolution
and Officer’s Certificate, if any, shall be delivered to the
Trustee at or prior to the delivery of the Company Order
contemplated by Section 5.01 for the authentication and delivery of
such Bonds.

          The
Bonds of each series shall be issuable in registered form without
coupons.  The definitive Bonds shall be produced in such
manner as shall be determined by the officers executing such Bonds,
as evidenced by their execution thereof.

SECTION 2.02     Form
of Trustee’s Certificate of
Authentication.

          The
Trustee’s certificate of authentication shall be in
substantially the form set forth below:

          This
is one of the Bonds of the series designated therein referred to in
the within-mentioned Indenture.

                                                            
[NAME OF TRUSTEE], as Trustee

                                                            By:
           
           
           
           
           

                                                                      Authorized
Signatory

ARTICLE III

THE BONDS

SECTION
3.01     Amount Unlimited; Issuable in
Series.

          The
aggregate principal amount of Bonds which may be authenticated and
delivered under this Indenture is unlimited.

          The
Bonds may be issued in one or more series.  Subject to the
penultimate paragraph of this Section, prior to the authentication
and delivery of Bonds of any series there shall be established by
specification in a supplemental indenture or in a Board Resolution,
or in an Officer’s Certificate pursuant to a supplemental
indenture or a Board Resolution:

          (a)     the
title of the Bonds of such series (which shall distinguish the
Bonds of such series from Bonds of all other series);

          (b)     any
limit upon the aggregate principal amount of the Bonds of such
series which may be authenticated and delivered under this
Indenture (except for Bonds authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Bonds of such series pursuant to Section 3.04, 3.05, 3.06,
6.06 or 13.06 and except for any Bonds which, pursuant to Section
3.03, are deemed never to have been authenticated and delivered
hereunder);

          (c)     the
Persons (without specific identification) to whom interest on Bonds
of such series, or any Tranche thereof, shall be payable on any
Interest Payment Date, if other than the Persons in whose names
such Bonds (or one or more Predecessor Bonds) are registered at the
close of business on the Regular Record Date for such
interest;

          (d)     the
date or dates on which the principal of the Bonds of such series,
or any Tranche thereof, is payable or any formula or other method
or other means by which such date or dates shall be determined, by
reference to an index or other fact or event ascertainable outside
of this Indenture or otherwise (without regard to any provisions
for redemption, prepayment, acceleration, purchase or extension)
and the right, if any, to extend the Maturity of the Bonds of such
series, or any Tranche thereof, and the duration of any such
extension;

          (e)     the
rate or rates (or method of determination thereof) at which any
Bonds of such series, or any Tranche thereof, shall bear interest,
if any (including the rate or rates at which overdue principal
shall bear interest, if different from the rate or rates at which
such Bonds shall bear interest prior to Maturity, and, if
applicable, the rate or rates at which overdue premium or interest
shall bear interest, if any), or any formula or other method or
other means by which such rate or rates shall be determined, by
reference to an index or other fact or event ascertainable outside
of this Indenture or otherwise; the date or dates from which any
such interest shall accrue (or method of determination thereof);
the Interest Payment Dates on which any such interest shall be
payable (or method of determination thereof) and the Regular Record
Date, if any (which, in either case or both, if so provided in or
pursuant to such Board Resolution or supplemental indenture, may be
determined by the Company from time to time and set forth in the
Bonds of such series, or any Tranche thereof, issued from time to
time) for any such interest payable on any Interest Payment Date;
the basis of computation of interest if other than as provided in
Section 3.10; and the right, if any, to extend the interest payment
periods and the duration of any such extension;

          (f)     the
place or places at which and/or the methods (if other than as
provided elsewhere in this Indenture) by which (i) the principal of
and premium, if any, and interest, if any, on Bonds of such series,
or any Tranche thereof, shall be payable, (ii) registration of
transfer of Bonds of such series, or any Tranche thereof, may be
effected, (iii) exchanges of Bonds of such series, or any Tranche
thereof, may be effected and (iv) notices and demands to or upon
the Company in respect of the Bonds of such series, or any Tranche
thereof, and this Indenture may be made, given, furnished, filed or
served, if other than as provided in Section 1.05; the Bond
Registrar and any Paying Agent or Agents for such series or
Tranche; and, if such is the case, that the principal of such Bonds
shall be payable without the presentment or surrender
thereof;

          (g)     if
the time for the giving of redemption notices for such series of
Bonds, or any Tranche thereof, shall be other than as provided in
Section 6.04, such different time, and the period or periods within
which or the date or dates on which, the price or prices at which
and the terms and conditions upon which the Bonds of such series,
or any Tranche thereof, may be redeemed, in whole or in part, at
the option of the Company (including, without limitation, any
provision for the payment of a “make-whole”,
yield-maintenance or similar premium in connection with the
redemption of Bonds of such series during a “no-call”
or other period during which such Bonds are generally not subject
to optional redemption by the Company) and any restrictions on such
redemptions;

          (h)     the
obligation or obligations, if any, of the Company to redeem,
purchase or repay the Bonds of such series, or any Tranche thereof,
pursuant to any sinking fund or other mandatory redemption
provisions or at the option of a Holder thereof and the period or
periods within which or the date or dates on which, the price or
prices at which and the terms and conditions upon which such Bonds
shall be redeemed, purchased or repaid, in whole or in part,
pursuant to such obligation, and applicable exceptions to the
requirements of Section 6.04 in the case of mandatory redemption or
redemption or repayment at the option of the Holder;

          (i)     the
denominations in which Bonds of such series, or any Tranche
thereof, shall be issuable if other than denominations of One
Thousand Dollars ($1,000) and any integral multiple
thereof;

          (j)     the
currency or currencies, including composite currencies, in which
payment of the principal of and premium, if any, and interest, if
any, on the Bonds of such series, or any Tranche thereof, shall be
payable (if other than in Dollars); it being understood that, for
purposes of calculations under this Indenture, any amounts
denominated in a currency other than Dollars or in a composite
currency shall be converted to Dollar equivalents by calculating
the amount of Dollars which could have been purchased by the amount
of such other currency based on such quotations or methods of
determination as shall be specified pursuant to this clause
(j);

          (k)     if
the principal of or premium, if any, or interest, if any, on the
Bonds of such series, or any Tranche thereof, are to be payable, at
the election of the Company or a Holder thereof, in a coin or
currency other than that in which the Bonds are stated to be
payable, the coin or currency in which payment of any amount as to
which such election is made will be payable, the period or periods
within which, and the terms and conditions upon which, such
election may be made; it being understood that, for purposes of
calculations under this Indenture, any such election shall be
required to be taken into account, in the manner contemplated in
clause (j) of this paragraph, only after such election shall have
been made;

          (l)     if
the principal of or premium, if any, or interest, if any, on the
Bonds of such series, or any Tranche thereof, are to be payable, or
are to be payable at the election of the Company or a Holder
thereof, in securities or other property, the type and amount of
such securities or other property, or the formula or other method
or other means by which such amount shall be determined, and the
period or periods within which, and the terms and conditions upon
which, any such election may be made; it being understood that all
calculations under this Indenture shall be made on the basis of the
fair market value of such securities or the Fair Value of such
other property, in either case determined as of the most recent
practicable date, except that, in the case of any amount of
principal or interest that may be so payable at the election of the
Company or a Holder, if such election shall not yet have been made,
such calculations shall be made on the basis of the amount of
principal or interest, as the case may be, that would be payable if
no such election were made;

          (m)     if
the amount payable in respect of principal of or premium, if any,
or interest, if any, on the Bonds of such series, or any Tranche
thereof, may be determined with reference to an index, formula or
other fact or event ascertainable outside of this Indenture, the
manner in which such amounts shall be determined (to the extent not
established pursuant to clause (e) of this paragraph); it being
understood that all calculations under this Indenture shall be made
on the basis of the amount that would be payable as principal if
such principal were due, or on the basis of the interest rates in
effect, as the case may be, on the date next preceding the date of
such calculation;

          (n)     if
other than the entire principal amount thereof, the portion of the
principal amount of Bonds of such series, or any Tranche thereof,
which shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 9.02;

          (o)     the
terms, if any, pursuant to which the Bonds of such series, or any
Tranche thereof, may be converted into or exchanged for shares of
capital stock or other securities of the Company or any other
Person;

          (p)     the
obligations or instruments, if any, which shall be considered to be
Eligible Obligations in respect of the Bonds of such series, or any
Tranche thereof, denominated in a currency other than Dollars or in
a composite currency, and any additional or alternative provisions
for the reinstatement of the Company’s indebtedness in
respect of such Bonds after the satisfaction and discharge thereof
as provided in Section 8.01;

          
(q)     (i) whether the Bonds of such
series, or any Tranche thereof, are to be issued as Global Bonds
and if such Bonds are to be issued as Global Bonds, the Depositary
for such Global Bonds, (ii) any limitations on the rights of the
Holder or Holders of such Bonds to transfer or exchange the same or
to obtain the registration of transfer thereof, if other than as
provided in Section 3.05, (iii) any limitations on the rights of
the Holder or Holders thereof to obtain certificates therefor in
definitive form in lieu of temporary form, and (iv) any and all
other matters incidental to such Bonds;

          (r)     to
the extent not established pursuant to clause (q) of this
paragraph, any limitations on the rights of the Holders of the
Bonds of such series, or any Tranche thereof, to transfer or
exchange such Bonds or to obtain the registration of transfer
thereof; and if a service charge will be made for the registration
of transfer or exchange of Bonds of such series, or any Tranche
thereof, the amount or terms thereof;

          (s)     any
exceptions to Section 1.13, or variation in the definition of
Business Day, with respect to the Bonds of such series, or any
Tranche thereof;

          (t)     if
the principal of Bonds of such series is payable from time to time
without presentation or surrender, any method or manner of
calculating the principal amount of Bonds of such series that is
Outstanding at any time for purposes of this Indenture, if other
than as specified in the last proviso of the definition of
“Outstanding”; and

          (u)     any
other terms of the Bonds of such series, or any Tranche
thereof.

          With
respect to Bonds of a series subject to a Periodic Offering, the
indenture supplemental hereto or the Board Resolution which
establishes such series, or the Officer’s Certificate
pursuant to such supplemental indenture or Board Resolution, as the
case may be, may provide general terms or parameters for Bonds of
such series and provide either that the specific terms of Bonds of
such series, or any Tranche thereof, shall be specified in a
Company Order or that such terms shall be determined by the Company
or its agents in accordance with procedures specified in a Company
Order as contemplated by Section 5.01(b).

          Anything
herein to the contrary notwithstanding, the Trustee shall be under
no obligation to authenticate and deliver Bonds of any series the
terms of which, established as contemplated by this Section, would
adversely affect the rights, duties, obligations, liabilities or
immunities of the Trustee under this Indenture or
otherwise.

SECTION
3.02.     Denominations
.

          Unless
otherwise provided as contemplated by Section 3.01 with respect to
any series of Bonds, or any Tranche thereof, the Bonds of each
series shall be issuable in denominations of One Thousand Dollars
($1,000) and any integral multiple thereof.

SECTION
3.03.     Execution, Dating,
Certificate of Authentication.

          Unless
otherwise provided as contemplated by Section 3.01 with respect to
any series of Bonds, or any Tranche thereof, the Bonds shall be
executed on behalf of the Company by any two of the following: the
President, the Chief Executive Officer, any Vice President, the
Chief Financial Officer, the Treasurer or any Assistant
Treasurer.  The corporate seal of the Company may be affixed
thereto or reproduced thereon and attested by any Authorized
Officer.  The signature of any or all of these officers on the
Bonds may be manual or facsimile.

          Bonds
bearing the manual or facsimile signatures of individuals who were
at the time of execution the President, the Chief Executive
Officer, a Vice President, the Chief Financial Officer, the
Treasurer or an Assistant Treasurer of the Company shall bind the
Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and
delivery of such Bonds or did not hold such offices at the date of
such Bonds.

          Unless
otherwise specified as contemplated by Section 3.01 with respect to
any series of Bonds, or any Tranche thereof, each Bond shall be
dated the date of its authentication.

          Unless
otherwise specified as contemplated by Section 3.01 with respect to
any series of Bonds, or any Tranche thereof, no Bond shall be
entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Bond a
certificate of authentication substantially in the form provided
for herein executed by the Trustee or an Authenticating Agent by
manual signature of an authorized officer thereof, and such
certificate upon any Bond shall be conclusive evidence, and the
only evidence, that such Bond has been duly authenticated and
delivered hereunder and is entitled to the benefits of this
Indenture.  Notwithstanding the foregoing, if any Bond shall
have been authenticated and delivered hereunder to the Company, or
any Person acting on its behalf, but shall never have been issued
and sold (or pledged) by the Company, and (a) the Company shall
deliver such Bond to the Bond Registrar for cancellation or shall
cancel such Bond and deliver evidence of such cancellation to the
Trustee, in each case as provided in Section 3.09, and (b) the
Company, at its election, shall deliver to the Trustee a written
statement (which need not comply with Section 1.02 and need not be
accompanied by an Officer’s Certificate or an Opinion of
Counsel) stating that such Bond has never been issued and sold (or
pledged) by the Company, then, for all purposes of this Indenture,
such Bond shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits
hereof.

SECTION
3.04.     Temporary
Bonds.

          Pending
the preparation of definitive Bonds of any series, or any Tranche
thereof, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Bonds which are
printed, lithographed, typewritten, mimeographed, photocopied or
otherwise produced, in any authorized denomination, substantially
of the tenor of the definitive Bonds in lieu of which they are
issued, with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Bonds may
determine, as evidenced by their execution of such
Bonds.

          Except
as otherwise specified as contemplated by Section 3.01 with respect
to the Bonds of any series, or any Tranche thereof, after the
preparation of definitive Bonds of such series or Tranche, the
temporary Bonds of such series or Tranche shall be exchangeable,
without charge to the Holder thereof, for definitive Bonds of such
series or Tranche upon surrender of such temporary Bonds at the
office or agency of the Company maintained pursuant to Section 7.02
in a Place of Payment for such Bonds.  Upon such surrender of
temporary Bonds, the Company shall, except as otherwise specified
as contemplated by Section 3.01, execute and the Trustee shall
authenticate and deliver in exchange therefor definitive Bonds of
the same series and Tranche, of authorized denominations and of
like tenor and aggregate principal amount.

          Until
exchanged in full as hereinabove provided, temporary Bonds shall in
all respects be entitled to the same benefits under this Indenture
as definitive Bonds of the same series and Tranche and of like
tenor authenticated and delivered hereunder.

SECTION
3.05.     Registration, Registration of
Transfer and Exchange.

          The
Company shall cause to be kept in one of the offices designated
pursuant to Section 7.02, with respect to the Bonds of each
series, or any Tranche thereof, a register (the “Bond
Register”) in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration
of Bonds of such series or Tranche and the registration of transfer
thereof.  Pursuant to Section 3.01(f), the Company shall
designate one Person to maintain the Bond Register for the Bonds of
each series, and such Person is referred to herein, with respect to
such series, as the “Bond Registrar”.  Anything
herein to the contrary notwithstanding, the Company may designate
one or more of its offices as an office in which a Bond Register
with respect to the Bonds of one or more series, or any Tranche or
Tranches thereof, shall be maintained, and the Company may
designate itself the Bond Registrar with respect to one or more of
such series.  The Bond Register(s) shall be open for
inspection by the Trustee and the Company at all reasonable
times.

          Except
as otherwise specified as contemplated by Section 3.01 with respect
to the Bonds of any series, or any Tranche thereof, and except as
provided below with respect to Global Bonds, upon surrender for
registration of transfer of any Bond of such series or Tranche at
the office or agency of the Company maintained pursuant to Section
7.02 in a Place of Payment for such series or Tranche, the Company
shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more
new Bonds of the same series and Tranche, of authorized
denominations and of like tenor and aggregate principal
amount.

          Except
as otherwise specified as contemplated by Section 3.01 with respect
to the Bonds of any series, or any Tranche thereof, any Bond of
such series or Tranche may be exchanged at the option of the
Holder, for one or more new Bonds of the same series and Tranche,
of authorized denominations and of like tenor and aggregate
principal amount, upon surrender of the Bonds to be exchanged at
any such office or agency.  Whenever any Bonds are so
surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Bonds which the Holder
making the exchange is entitled to receive.

          All
Bonds delivered upon any registration of transfer or exchange of
Bonds shall be valid obligations of the Company, evidencing the
same obligation, and entitled to the same benefits under this
Indenture, as the Bonds surrendered upon such registration of
transfer or exchange.  Every Bond presented or surrendered for
registration of transfer shall be duly endorsed or shall be
accompanied by a written instrument of transfer in form
satisfactory to the Company, the Trustee or the Bond Registrar, as
the case may be, duly executed by the Holder thereof or his
attorney duly authorized in writing.  Every Bond presented or
surrendered for exchange shall (if so required by the Company, the
Trustee or the Bond Registrar) be duly endorsed or shall be
accompanied by a written instrument of transfer in form
satisfactory to the Company, the Trustee or the Bond Registrar, as
the case may be, duly executed by the Holder thereof or such
Holder’s attorney duly authorized in writing.

          Unless
otherwise specified as contemplated by Section 3.01 with respect to
Bonds of any series, or any Tranche thereof, no service charge
shall be made for any registration of transfer or exchange of
Bonds, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Bonds,
other than exchanges pursuant to Section 3.04, 6.06 or 13.06 not
involving any transfer.

          The
Company shall not be required to execute or to provide for the
registration of transfer of or the exchange of (a) Bonds of any
series, or any Tranche thereof, during a period of fifteen (15)
days immediately preceding the date notice is to be given
identifying the serial numbers of the Bonds of such series or
Tranche called for redemption or (b) any Bond so selected for
redemption in whole or in part, except the unredeemed portion of
any Bond being redeemed in part.

          Notwithstanding
any other provision of this Section, unless and until it is
exchanged in whole or in part for Bonds in definitive form, a
Global Bond representing all or a portion of the Bonds of a series,
or Tranche thereof,  may not be transferred except as a whole
by the Depositary for such series or Tranche to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by such Depositary or any
such nominee to a successor Depositary for such series, or Tranche
thereof, or a nominee of such successor Depositary.

          If
at any time (i) the Depositary for the Bonds of a series, or a
Tranche thereof, notifies the Company that it is unwilling or
unable to continue as Depositary for the Bonds of such series or
Tranche or that it is no longer eligible under Section 3.13, and in
any such case the Company has not appointed a successor Depositary
within ninety (90) days after delivery of such notice, (ii) there
has occurred and is continuing an Event of Default, or (iii) the
Company in its sole discretion determines that the Bonds of any
series, or any Tranche thereof, issued in the form of one or more
Global Bonds shall no longer be represented by such Global Bond or
Bonds, then in each such event the Company will execute, and the
Trustee, upon receipt of a Company Order for the authentication and
delivery of definitive Bonds of such series or Tranche, will
authenticate and deliver, Bonds of such series in definitive form
and in an aggregate principal amount equal to the principal amount
of the Global Bond or Bonds representing such series or Tranche in
exchange for such Global Bond or Bonds.

          In
addition, if specified by the Company pursuant to Section 3.01 with
respect to a series of Bonds, or Tranche thereof, the Depositary
for such series of Bonds may surrender a Global Bond for such
series or Tranche of Bonds in exchange in whole or in part for
Bonds of such series or Tranche in definitive form on such terms as
are acceptable to the Company and such Depositary.  Thereupon,
the Company shall authenticate and deliver, without
charge:

                    
(i)           
to each Person specified by such Depositary a new Bond or Bonds of
the same series or Tranche, of any authorized denomination as
requested by such Person in aggregate principal amount equal to and
in exchange for such Person’s beneficial interest in the
Global Bonds; and

                    
(ii)           
to such Depositary a new Global Bond in a denomination equal to the
difference, if any, between the principal amount of the surrendered
Global Bond and the aggregate principal amount of Bonds delivered
to Holders thereof.

          Bonds
issued in exchange for a Global Bond pursuant to this Section shall
be registered in such names and in such authorized denominations as
the Depositary for such Global Bond, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct
the Trustee.  The Trustee shall deliver such Bonds to the
Persons in whose names such Bonds are so registered.

SECTION
3.06.     Mutilated, Destroyed, Lost
and Stolen Bonds.

          If
any mutilated Bond is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange
therefor a new Bond of the same series and Tranche, and of like
tenor and principal amount and bearing a number not
contemporaneously outstanding.

          If
there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the ownership of and the
destruction, loss or theft of any Bond and (b) such security or
indemnity as may be reasonably required by them to save each of
them and any agent of either of them harmless, then, in the absence
of notice to the Company or the Trustee that such Bond is held by a
protected purchaser, the Company shall execute and the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost
or stolen Bond, a new Bond of the same series and Tranche, and of
like tenor and principal amount and bearing a number not
contemporaneously outstanding.

          Notwithstanding
the foregoing, in case any such mutilated, destroyed, lost or
stolen Bond has become or is about to become due and payable, the
Company in its discretion may, but subject to compliance with the
foregoing conditions, instead of issuing a new Bond, pay such
Bond.

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

          Every
new Bond of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Bond shall constitute an additional
contractual obligation of the Company, whether or not the
destroyed, lost or stolen Bond shall be at any time enforceable by
anyone other than the Holder of such new Bond, and any such new
Bond shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Bonds of such
series duly issued hereunder.

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

SECTION
3.07.     Payment of Interest; Interest
Rights Preserved.

          Unless
otherwise specified as contemplated by Section 3.01 with respect to
the Bonds of any series, or any Tranche thereof, interest on any
Bond which is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose
name that Bond (or one or more Predecessor Bonds) is registered at
the close of business on the Regular Record Date for such interest,
except that, unless otherwise provided in the Bonds of such series,
interest payable on the Stated Maturity of the principal of a Bond
shall be paid to the Person to whom principal is paid.  The
initial payment of interest on any Bond of any series which is
issued between a Regular Record Date and the related Interest
Payment Date shall be payable as provided in such Bond or in a
Board Resolution, Officer’s Certificate or supplemental
indenture pursuant to Section 3.01 with respect to the related
series of Bonds.  Except in the case of a Global Bond at the
option of the Company, interest on any series of Bonds may be paid
by (i) check mailed to the address of the Person entitled thereto
as it shall appear on the Bond Register of such series or (ii) wire
transfer in immediately available funds at such place and to such
account as designated in writing by the Person entitled thereto as
specified in the Bond Register of such series.

          Any
interest on any Bond of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date
(herein called “Defaulted Interest”) shall forthwith
cease to be payable to the Holder on the related Regular Record
Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case,
as provided in clause (a) or (b) below:

          (a)     The
Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Bonds of such series (or their
respective Predecessor Bonds) are registered at the close of
business on a date (herein called a “Special Record
Date”) for the payment of such Defaulted Interest, which
shall be fixed in the following manner.  The Company shall
notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Bond of such series and the date of the
proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit on
or prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause
provided.  Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not
more than thirty (30) days and not less than ten (10) days prior to
the date of the proposed payment and not less than twenty-five (25)
days after the receipt by the Trustee of the notice of the proposed
payment.  The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall, not less than fifteen (15) days prior to such
Special Record Date, cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given
to each Holder of Bonds of such series.  Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Bonds of such series (or
their respective Predecessor Bonds) are registered at the close of
business on such Special Record Date.

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

          Subject
to the foregoing provisions of this Section and Section 3.05, each
Bond delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Bond shall carry the
rights to interest accrued and unpaid, and to accrue, which were
carried by such other Bond.

SECTION
3.08.     Persons Deemed
Owners.

          The
Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Bond is registered as the
absolute owner of such Bond for the purpose of receiving payment of
principal of and premium, if any, and (subject to Section 3.07)
interest, if any, on such Bond and for all other purposes
whatsoever, whether or not such Bond be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.

SECTION
3.09.     Cancellation by Bond
Registrar.

          All
Bonds surrendered for payment, redemption, registration of transfer
or exchange shall, if surrendered to any Person other than the Bond
Registrar, be delivered to the Bond Registrar and, if not
theretofore canceled, shall be promptly canceled by the Bond
Registrar.  The Company may at any time deliver to the Bond
Registrar for cancellation any Bonds previously authenticated and
delivered hereunder which the Company may have acquired in any
manner whatsoever or which the Company shall not have issued and
sold (or pledged), and all Bonds so delivered shall be promptly
canceled by the Bond Registrar.  No Bonds shall be
authenticated in lieu of or in exchange for any Bonds canceled as
provided in this Section, except as expressly permitted by this
Indenture.  All canceled Bonds held by the Bond Registrar
shall be disposed of in accordance with the Bond Registrar’s
then customary practice for disposing of securities, unless
otherwise directed by a Company Order.

SECTION
3.10.     Computation of
Interest.

          Except
as otherwise specified as contemplated by Section 3.01 for Bonds of
any series, or any Tranche thereof, interest on the Bonds of each
series shall be computed on the basis of a three hundred sixty
(360) day year consisting of twelve (12) thirty (30) day months
and, with respect to any period less than a full calendar month, on
the basis of the actual number of days elapsed during such
period.

SECTION
3.11.     Payment to Be in Proper
Currency.

          In
the case of the Bonds of any series, or any Tranche thereof,
denominated in any currency other than Dollars or in a composite
currency (the “Required Currency”), except as otherwise
specified with respect to such Bonds as contemplated by Section
3.01, the obligation of the Company to make any payment of the
principal thereof, or the premium, if any, or interest, if any,
thereon, shall not be discharged or satisfied by any tender by the
Company, or recovery by the Trustee, in any currency other than the
Required Currency, except to the extent that such tender or
recovery shall result in the Trustee timely holding the full amount
of the Required Currency then due and payable.  If any such
tender or recovery is in a currency other than the Required
Currency, the Trustee may take such actions as it considers
appropriate to exchange such currency for the Required
Currency.  The costs and risks of any such exchange, including
without limitation the risks of delay and exchange rate
fluctuation, shall be borne by the Company, the Company shall
remain fully liable for any shortfall or delinquency in the full
amount of Required Currency then due and payable, and in no
circumstances shall the Trustee be liable therefor except in the
case of its negligence or willful misconduct.

SECTION
3.12.     CUSIP
Numbers.

          The
Company, in issuing the Bonds, may use “CUSIP” or other
similar numbers (if then generally in use), and, if so, the Trustee
or Bond Registrar may use CUSIP or such other numbers in notices of
redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the
correctness of such numbers either as printed on the Bonds or as
contained in any notice of a redemption and that reliance may be
placed only on the other identification numbers printed on the
Bonds, in which case none of the Company or, as the case may be,
the Trustee or the Bond Registrar, or any agent of any of them,
shall have any liability in respect of any CUSIP number used on any
such notice, and any such redemption shall not be affected by any
defect in or omission of such numbers.  The Company will
promptly notify the Trustee of any change in the CUSIP
numbers.

SECTION
3.13     Global
Bonds.

          If
the Company shall establish pursuant to Section 3.01(q) that the
Bonds of a series, or a Tranche thereof, are to be issued in whole
or in part in the form of one or more Global Bonds, then the
Company shall execute and the Trustee shall, in accordance with
this Section and the Company Order with respect to such series or
Tranche, authenticate and deliver one or more Global Bonds in
temporary or permanent form that (i) shall represent and shall be
denominated in an aggregate amount equal to the aggregate principal
amount of the Outstanding Bonds of such series or Tranche, to be
represented by one or more Global Bonds, (ii) shall be registered
in the name of the Depositary for such Global Bond or Bonds or the
nominee of such Depositary, (iii) shall be delivered by the Trustee
to such Depositary or pursuant to such Depositary’s
instruction or held by the Trustee as custodian for the Depositary,
and (iv) shall bear a legend substantially to the following
effect:  “Unless and until it is exchanged in whole or
in part for Bonds in definitive form, this Bond may not be
transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor
Depositary.”

          The
Company may at any time designate another Person to act as
Depositary in place of the Person designated pursuant to Section
3.01(q).  Each Depositary designated pursuant to Section
3.01(q) or otherwise for a Global Bond must, at the time of its
designation and at all times while it serves as Depositary, be a
clearing agency registered under the Exchange Act and any other
applicable statute or regulation.

ARTICLE IV

BONDS PREVIOUSLY ISSUED

SECTION
4.01.     Continuation of Certain
Series of Bonds Issued Under the Prior
Indenture.

          (a)     Under
the Prior Indenture, the Company established Bonds of the First
Series, Bonds of the Second Series, Bonds of the Third Series,
Bonds of the Fourth Series and Bonds of the Fifth Series
(collectively, “Bonds of the Initial Series”) and Bonds
of the Eleventh Series, and such bonds issued under the Prior
Indenture are hereby continued under this Indenture, constitute
“Bonds” under this Indenture and are hereafter governed
by and subject to the provisions hereof.  All other bonds
issued under the Prior Indenture prior to the date hereof are no
longer Outstanding (as defined under the Prior
Indenture).

          (b)     Bonds
of the First Series were originally issued in an aggregate
principal amount of $600,000,000, of which $600,000,000 principal
amount is Outstanding as of the date hereof.

          (c)     Bonds
of the Second Series were originally issued in an aggregate
principal amount of $500,000,000, of which $500,000,000 principal
amount is Outstanding as of the date hereof.

          (d)     Bonds
of the Third Series were originally issued in an aggregate
principal amount of $1,000,000,000, of which $1,000,000,000
principal amount is Outstanding as of the date hereof.

          (e)     Bonds
of the Fourth Series were originally issued in an aggregate
principal amount of $3,000,000,000, of which $3,000,000,000
principal amount is Outstanding as of the date hereof.

          (f)     Bonds
of the Fifth Series were originally issued in an aggregate
principal amount of $1,600,000,000, of which $200,000,000 principal
amount is Outstanding as of the date hereof.

SECTION
4.02.     Bonds of the Initial Series;
Terms of Bonds of the Initial
Series.

          (a)     Under
Section 201 of the First Supplemental Mortgage, the Company
designated the Bonds of the First Series as the “3.60% First
Mortgage Bonds due 2009” (the “3.60% First Mortgage
Bonds”).  The Release Date having occurred on the date
hereof and pursuant to Section 202 of the First Supplemental
Mortgage, the 3.60% First Mortgage Bonds are hereby redesignated as
the “3.60% Senior Notes due 2009” (the “3.60%
Senior Notes”).

          (b)     Under
Section 201 of the First Supplemental Mortgage, the Company
designated the Bonds of the Second Series as the “4.20% First
Mortgage Bonds due 2011” (the “4.20% First Mortgage
Bonds”).  The Release Date having occurred on the date
hereof and pursuant to Section 202 of the First Supplemental
Mortgage, the 4.20% First Mortgage Bonds are hereby redesignated as
the “4.20% Senior Notes due 2011” (the “4.20%
Senior Notes”).

          (c)     Under
Section 201 of the First Supplemental Mortgage, the Company
designated the Bonds of the Third Series as the “4.80% First
Mortgage Bonds due 2014” (the “4.80% First Mortgage
Bonds”).  The Release Date having occurred on the date
hereof and pursuant to Section 202 of the First Supplemental
Mortgage, the 4.80% First Mortgage Bonds are hereby redesignated as
the “4.80% Senior Notes due 2014” (the “4.80%
Senior Notes”).

          (d)     Under
Section 201 of the First Supplemental Mortgage, the Company
designated the Bonds of the Fourth Series as the “6.05% First
Mortgage Bonds due 2034” (the “6.05% First Mortgage
Bonds”).  The Release Date having occurred on the date
hereof and pursuant to Section 202 of the First Supplemental
Mortgage, the 6.05% First Mortgage Bonds are hereby redesignated as
the “6.05% Senior Notes due 2034” (the “6.05%
Senior Notes”).

          (e)     Under
Section 201 of the First Supplemental Mortgage, the Company
designated the Bonds of the Fifth Series as the “Floating
Rate First Mortgage Bonds due 2006” (the “Floating Rate
First Mortgage Bonds”).  The Release Date having
occurred on the date hereof and pursuant to Section 202 of the
First Supplemental Mortgage, the Floating Rate First Mortgage Bonds
are hereby redesignated as the “Floating Rate Senior Notes
due 2006” (the “Floating Rate Senior
Notes”).

          (f)     In
accordance with Section 202 of the First Supplemental Mortgage,
each holder of a 3.60% First Mortgage Bond, 4.20% First Mortgage
Bond, a 4.80% Mortgage Bond, 6.05% Mortgage Bond and Floating Rate
First Mortgage Bond that is a Global Bond is to surrender such Bond
to the Trustee as soon as reasonably practicable after the Release
Date and the Trustee shall simultaneously exchange the surrendered
Bond for a 3.60% Senior Note, a 4.20% Senior Note, a 4.80% Senior
Note, a 6.05% Senior Note and a Floating Rate Senior Note,
respectively.  The form of the Fixed Rate Senior Notes being
exchanged pursuant hereto is attached hereto as Exhibit A
and the form of the Floating Rate Senior Notes being exchanged
pursuant hereto is attached hereto as Exhibit B.

          (g)     As
established in Section 201 of the First Supplemental Mortgage and
as continued hereunder, any series of the Bonds of the Initial
Series may be reopened, from time to time, for issuances of
additional Bonds of such series, and any additional Bonds issued
and comprising Bonds of any series of the Bonds of the Initial
Series shall have identical terms as such series of Bonds of the
Initial Series, except that the issue price, issue date and, in
some cases, the first Interest Payment Date may differ.

          (h)     As
established in Section 204 of the First Supplemental Mortgage and
as continued hereunder, (i) the 3.60% Senior Notes bear interest at
the rate of 3.60% per annum and have a Stated Maturity of March 1,
2009; (ii) the 4.20% Senior Notes bear interest at the rate of
4.20% per annum and have a Stated Maturity of March 1, 2011, (iii)
the 4.80% Senior Notes bear interest at the rate of 4.80% per annum
and have a Stated Maturity of March 1, 2014; (iv) the 6.05% Senior
Notes bear interest at the rate of 6.05% per annum and have a
Stated Maturity of March 1, 2034; and (v) the rate of interest on
the Floating Rate Senior Notes is calculated as set forth in the
form of such Bond attached hereto as Exhibit B and the
Stated Maturity of the Floating Rate Senior Notes is April 3,
2006.

          (i)     As
established in Section 205 of the First Supplemental Mortgage and
as continued hereunder, the Bonds of the Initial Series were issued
in the form of one or more permanent Global Securities as provided
in Section 3.13 of the Prior Indenture and deposited with the
Trustee, as custodian for the Depositary, duly executed by the
Company and authenticated by the Trustee.

          (j)     As
established in Section 205 of the First Supplemental Mortgage and
as continued hereunder, the Company appointed DTC to act as the
Depositary with respect to all Bonds of the Initial Series, and the
Bonds of the Initial Series were initially registered in the name
of Cede & Co., as the nominee of DTC.

          (k)     In
accordance with Section 205 of the First Supplemental Mortgage, the
Trustee executed and delivered a Letter of Representations to DTC
and, in connection with any successor nominee for DTC or any
successor Depositary, the Trustee will enter into comparable
arrangements, and shall have the same rights with respect to its
actions thereunder as it has with respect to its actions under the
Indenture.

          (l)     As
established in Section 205 of the First Supplemental Mortgage and
as continued hereunder, none of the Company, the Trustee, any
Paying Agent or any Bond Registrar will have any responsibility or
liability for any aspect of Depositary records relating to, or
payments made on account of, beneficial ownership interests in a
Global Bond or for maintaining, supervising or reviewing any
Depositary records relating to such beneficial ownership interests,
or for transfers of beneficial interests in the Bonds or any
transactions between the Depositary and beneficial
owners.

          (m)     As
established in Section 206 of the First Supplemental Mortgage and
as continued hereunder, no sinking fund is provided for any of the
Bonds of the Initial Series.

          (n)     As
established in Section 208 of the First Supplemental Mortgage and
as continued hereunder, the Trustee is appointed as initial Paying
Agent and initial Bond Registrar for the Bonds of the Initial
Series.

          (o)     As
established in Section 209 of the First Supplemental Mortgage, BNY
Western Trust Company was appointed as the initial Calculation
Agent for the Floating Rate Senior Notes and The Bank of New York
Trust Company, N.A., as successor in interest to BNY Western Trust
Company is continued as the initial Calculation Agent for the
Floating Rate Senior Notes.

          (p)     Other
terms of the Bonds of the Initial Series are as expressly set forth
Section 4.03 below, Exhibit A (with respect to the Fixed
Rate Senior Notes) and Exhibit B (with respect to the
Floating Rate Senior Notes).

SECTION
4.03.     Redemption of Bonds of the
Initial Series.

          (a)     
Optional Redemption of 3.60% Senior Notes.  As established
in Section 302(a) of the First Supplemental Mortgage and as
continued hereunder, subject to the terms and conditions of this
Indenture, the 3.60% Senior Notes are redeemable at the option of
the Company, in whole or in part at any time after the Initial
Issuance Date and prior to Maturity, at a Redemption Price equal to
the greater of:

                    
(i)     100% of the principal amount of
the 3.60% Senior Notes to be redeemed; or

            
(ii)     as determined by the Independent
Investment Banker, the sum of the present values of the Remaining
Scheduled Payments on the 3.60% Senior Notes to be so redeemed (not
including any portion of such payments of interest accrued to the
Redemption Date) discounted to the Redemption Date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus 0.15%,

plus, in either of the
above cases, accrued and unpaid interest on the principal amount of
the 3.60% Senior Notes being redeemed to but not including the
Redemption Date.

          (b)     
Optional Redemption of 4.20% Senior Notes.  As established
in Section 302(b) of the First Supplemental Mortgage and as
continued hereunder, subject to the terms and conditions of this
Indenture, the 4.20% Senior Notes are redeemable at the option of
the Company, in whole or in part at any time after the Initial
Issuance Date and prior to Maturity, at a Redemption Price equal to
the greater of:

                    (i)     100%
of the principal amount of the 4.20% Senior Notes to be redeemed;
or

            (ii)     as
determined by the Independent Investment Banker, the sum of the
present values of the Remaining Scheduled Payments on the 4.20%
Senior Notes to be so redeemed (not including any portion of such
payments of interest accrued to the Redemption Date) discounted to
the Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus 0.15%,

plus, in either of the
above cases, accrued and unpaid interest on the principal amount of
the 4.20% Senior Notes being redeemed to but not including the
Redemption Date.

          (c)     
Optional Redemption of 4.80% Senior Notes.  As established
in Section 302(c) of the First Supplemental Mortgage and as
continued hereunder, subject to the terms and conditions of the
Indenture, the 4.80% Senior Notes are redeemable at the option of
the Company, in whole or in part at any time after the Initial
Issuance Date and prior to Maturity, at a Redemption Price equal to
the greater of:

                    (i)     100%
of the principal amount of the 4.80% Senior Notes to be redeemed;
or

            (ii)     as
determined by the Independent Investment Banker, the sum of the
present values of the Remaining Scheduled Payments on the 4.80%
Senior Notes to be so redeemed (not including any portion of such
payments of interest accrued to the Redemption Date) discounted to
the Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus 0.20%,

plus, in either of the
above cases, accrued and unpaid interest on the principal amount of
the 4.80% Senior Notes being redeemed to but not including the
Redemption Date.

          (d)     
Optional Redemption of 6.05% Senior Notes.  As established
in Section 302(d) of the First Supplemental Mortgage and as
continued hereunder, subject to the terms and conditions of the
Indenture, the 6.05% Senior Notes are redeemable at the option of
the Company, in whole or in part at any time after the Initial
Issuance Date and prior to Maturity, at a Redemption Price equal to
the greater of:

                    (i)     100%
of the principal amount of the 6.05% Senior Notes to be redeemed;
or

            (ii)     as
determined by the Independent Investment Banker, the sum of the
present values of the Remaining Scheduled Payments on the 6.05%
Senior Notes to be so redeemed (not including any portion of such
payments of interest accrued to the Redemption Date) discounted to
the Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus 0.25%,

plus, in either of the
above cases, accrued and unpaid interest on the principal amount of
the 6.05% Senior Notes being redeemed to but not including the
Redemption Date.

          (e)     
Optional Redemption of Floating Rate Senior Notes.  As
established in Section 302(e) of the First Supplemental Mortgage
and as continued hereunder, subject to the terms and conditions of
the Indenture, the Floating Rate Senior Notes were redeemable at
the option of the Company, in whole or in part, on October 3, 2004
and are redeemable on any Interest Payment Date thereafter and
prior to Maturity, at a Redemption Price equal to 100% of the
principal amount of the Floating Rate Senior Notes being redeemed,
plus accrued and unpaid interest thereon to but not including the
Redemption Date.

          (f)     As
established in Section 302(f) of the First Supplemental Mortgage
and as continued hereunder, redemption of each series of Bonds of
the Initial Series pursuant to this Section 4.03 shall be made in
accordance with Article VI of this Indenture.

SECTION
4.04.     Bonds of the Eleventh Series,
Terms of Bonds of the Eleventh
Series.

          (a)     Under
Section 701 of the Second Supplemental Mortgage, the Company
established an eleventh series of Bonds designated as the
“Bond of the Eleventh Series” and such Bond was
originally issued in certificated form.  The Release Date
having occurred on the date hereof and pursuant to Section 702 of
the Second Supplemental Mortgage, the Bonds of the Eleventh Series
are hereby redesignated as the “Senior Note due December 1,
2016” (the “Senior Note due 2016”).

          (b)     In
accordance with Section 702 of the Second Supplemental Mortgage,
the Holder of the Bond of the Eleventh Series shall surrender such
Bond to the Trustee and the Trustee shall simultaneously exchange
the surrendered Bond for a Senior Note due 2016.  The form of
the Senior Note due 2016 being exchanged pursuant hereto is
attached hereto as Exhibit C.

          (c)     As
established in Section 703 of the Second Supplemental Mortgage and
as continued hereunder, (i) the initial face amount of the Senior
Note due 2016 is $200,000,000, which face amount represents the
maximum principal amount of the Senior Note due 2016, (ii) the
amount of principal payable on the Senior Note due 2016, and the
date or dates on which such principal is payable, are as set forth
in said Senior Note due 2016, (iii) for all purposes of this
Indenture, the principal amount of the Senior Note due 2016
Outstanding as of any date of calculation shall be equal to the
Obligations (as defined in the Senior Note due 2016) outstanding
under the MBIA Reimbursement and Indemnity Agreement as of such
date, but in no event shall the principal amount of such Senior
Note due 2016 as of any date of calculation be greater than the
then current face amount of such Senior Note due 2016, and (iv) for
all purposes of this Indenture, principal of the Senior Note due
2016 shall be payable without the presentment or surrender
thereof.

          (d)     As
established in Section 704 of the Second Supplemental Mortgage and
as continued hereunder, (i) the Senior Note due 2016 bears interest
at the rate or rates, and interest with respect thereto is payable
on the Interest Payment Dates set forth in said Senior Note due
2016; (ii) the Senior Note due 2016 has a Stated Maturity of
December 1, 2016; and (iii) interest on the Senior Note due 2016
shall accrue from the same dates that interest, if any, accrues on
outstanding Obligations pursuant to the MBIA Reimbursement and
Indemnity Agreement until such interest is paid.

          (e)     As
established in Section 705 of the Second Supplemental Mortgage and
as continued hereunder, the Senior Note due 2016 is not subject to
redemption prior to its Stated Maturity, and no sinking fund is
provided for the Senior Note due 2016.

          (f)     As
established in Section 706 of the Second Supplemental Mortgage and
as continued hereunder, the Trustee is appointed as initial Paying
Agent and initial Bond Registrar for the Senior Note due
2016.  The Place of Payment of the Senior Note due 2016 shall
be the Corporate Trust Office of the Trustee; provided, however,
that the Company reserves the right to change, by one or more
Officer’s Certificates any such place or the Bond Registrar;
provided, further, that the Company reserves the right to
designate, by one or more Officer’s Certificates, one or more
of its offices as any such place or itself as the Bond
Registrar.

          (g)     As
established in Section 707 of the Second Supplemental Mortgage and
as continued hereunder, (i) the Senior Note due 2016 may not be
exchanged for any other Bond, except as provided in Section 3.06 of
this Indenture, and may not be transferred except to effect an
assignment thereof to a successor or an assign of MBIA; and (ii)
the Company may take such actions as it shall deem necessary,
desirable or appropriate to effect compliance with such
restrictions on transfer, including the issuance of stop-transfer
instructions to the Trustee or any other transfer agent.

          (h)     Other
terms of the Senior Note due 2016 are as expressly set forth in
Exhibit C hereto.

ARTICLE V

ISSUANCE OF BONDS

SECTION
5.01.     General
..

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

          (a)     the
instrument or instruments establishing the form or forms and terms
of such series, as provided in Sections 2.01 and 3.01;

          (b)     a
Company Order requesting the authentication and delivery of such
Bonds and, to the extent that the terms of such Bonds shall not
have been established in an indenture supplemental hereto or in a
Board Resolution, or in an Officer’s Certificate pursuant to
a supplemental indenture or Board Resolution, all as contemplated
by Section 3.01, either (i) establishing such terms or (ii) in the
case of Bonds of a series subject to a Periodic Offering,
specifying procedures by which such terms are to be established
(which procedures may provide for authentication and delivery
pursuant to oral or electronic instructions from the Company or any
agent or agents thereof, which oral instructions are to be promptly
confirmed electronically or in writing), in either case in
accordance with the instrument or instruments delivered pursuant to
clause (a) above;

          (c)     the
Bonds of such series, executed on behalf of the Company by an
officer specified in Section 3.03;

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

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

                    (ii)     the
terms of such Bonds have been duly authorized by the Company and
have been established in conformity with the provisions of this
Indenture; and

                    (iii)     when
such Bonds shall have been authenticated and delivered by the
Trustee and issued and delivered by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel,
such Bonds will constitute valid obligations of the Company,
entitled to the benefits of this Indenture, equally and ratably
with all other Outstanding Bonds without any priority of any one
Bond over any other Bond;

provided, however, that,
with respect to Bonds of a series subject to a Periodic Offering,
the Trustee shall be entitled to receive such Opinion of Counsel
only once at or prior to the time of the first authentication and
delivery of such Bonds (provided that such Opinion of Counsel
addresses the authentication and delivery of all such Bonds) and
that, in lieu of the opinions described in clauses (ii) and (iii)
above, counsel may opine that:

                    
(x)     when the terms of such Bonds shall
have been established pursuant to a Company Order or Orders or
pursuant to such procedures as may be specified from time to time
by a Company Order or Orders, all as contemplated by and in
accordance with the instrument or instruments delivered pursuant to
clause (a) above, such terms will have been duly authorized by the
Company and will have been established in conformity with the
provisions of this Indenture; and

                    
(y)     when such Bonds shall have been
authenticated and delivered by the Trustee in accordance with this
Indenture and the Company Order or Orders or the specified
procedures referred to in paragraph (x) above and issued and
delivered by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, such Bonds will
constitute valid obligations of the Company, entitled to the
benefits of this Indenture, equally and ratably with all other
Outstanding Bonds without any priority of any one Bond over any
other Bond;

          (e)     an
Officer’s Certificate to the effect that, to the knowledge of
the signer, no Event of Default has occurred and is continuing;
provided, however, that with respect to Bonds of a series subject
to a Periodic Offering, either (i) such an Officer’s
Certificate shall be delivered at the time of the authentication
and delivery of each Bond of such series or (ii) the
Officer’s Certificate delivered at or prior to the time of
the first authentication and delivery of the Bonds of such series
shall state that the statements therein shall be deemed to be made
at the time of each, or each subsequent, authentication and
delivery of Bonds of such series.

          With
respect to Bonds of a series subject to a Periodic Offering, the
Trustee may conclusively rely, as to the authorization by the
Company of any of such Bonds, the forms and terms thereof, the
validity thereof and the compliance of the authentication and
delivery thereof with the terms and conditions of this Indenture,
upon the Opinion or Opinions of Counsel and the certificates and
other documents delivered pursuant to this Article V at or prior to
the time of the first authentication and delivery of Bonds of such
series until (i) such time as the Trustee has received written
notice that any of such opinions, certificates or other documents
have been superseded or revoked or (ii) such opinions, certificates
or other documents expire by their terms.  In connection with
the authentication and delivery of Bonds of a series subject to a
Periodic Offering, the Trustee shall be entitled to assume that the
Company’s instructions to authenticate and deliver such Bonds
do not violate any applicable law or any applicable rule,
regulation or order of any Governmental Authority having
jurisdiction over the Company.

ARTICLE VI

REDEMPTION OF BONDS

SECTION
6.01.     Applicability of
Article.

          Bonds
of any series, or any Tranche thereof, which are redeemable before
their Stated Maturity shall be redeemable in accordance with their
terms and (except as otherwise specified as contemplated by Section
3.01 for Bonds of such series or Tranche) in accordance with this
Article.

SECTION
6.02.     Election to Redeem; Notice to
Trustee.

          The
election of the Company to redeem any Bonds shall be evidenced by a
Board Resolution or an Officer’s Certificate.  The
Company shall, at least forty-five (45) days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee in writing of
such Redemption Date and of the principal amount of such Bonds to
be redeemed.  In the case of any redemption of Bonds (a) prior
to the expiration of any restriction on such redemption provided in
the terms of such Bonds or elsewhere in this Indenture or (b)
pursuant to an election of the Company which is subject to a
condition specified in the terms of such Bonds, the Company shall
furnish the Trustee with an Officer’s Certificate evidencing
compliance with such restriction or condition.

SECTION
6.03.     Selection of Bonds to Be
Redeemed.

          If
less than all the Bonds of any series, or any Tranche thereof, are
to be redeemed, the particular Bonds to be redeemed shall be
selected by the Bond Registrar from the Outstanding Bonds of such
series or Tranche not previously called for redemption, by such
method as shall be provided for any particular series or Tranche,
or, in the absence of any such provision, by such method of random
selection as the Bond Registrar shall deem fair and appropriate and
which may, in any case, provide for the selection for redemption of
portions (equal to the minimum authorized denomination for Bonds of
such series or Tranche or any integral multiple thereof) of the
principal amount of Bonds of such series or Tranche having a
denomination larger than the minimum authorized denomination for
Bonds of such series or Tranche; provided, however, that if, as
indicated in an Officer’s Certificate, the Company shall have
offered to purchase all or any principal amount of the Bonds then
Outstanding of any series, or any Tranche thereof, and less than
all of such Bonds as to which such offer was made shall have been
tendered to the Company for such purchase, the Bond Registrar, if
so directed by Company Order, shall select for redemption all or
any principal amount of such Bonds which have not been so
tendered.

          The
Bond Registrar shall promptly notify the Company and the Trustee in
writing of the Bonds selected for redemption and, in the case of
any Bonds selected to be redeemed in part, the principal amount
thereof to be redeemed.

          For
all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Bonds shall
relate, in the case of any Bonds redeemed or to be redeemed only in
part, to the portion of the principal amount of such Bonds which
has been or is to be redeemed.

SECTION
6.04.     Notice of
Redemption.

          Unless
otherwise specified with respect to any series of Bonds, or any
Tranche thereof, in accordance with Section 3.01, notice of
redemption shall be given in the manner provided in Section 1.06 to
the Holders of the Bonds to be redeemed not less than thirty (30)
nor more than sixty (60) days prior to the Redemption
Date.

          All
notices of redemption shall state:

          (a)     the
Redemption Date,

          (b)     the
Redemption Price,

          (c)     if
less than all the Bonds of any series or Tranche are to be
redeemed, the identification of the particular Bonds to be redeemed
and the portion of the principal amount of any Bond to be redeemed
in part,

          (d)     that
on the Redemption Date, the Redemption Price, together with accrued
interest, if any, to the Redemption Date, will become due and
payable upon each such Bond to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date;
provided, that if a conditional notice shall be given, other
appropriate language shall be inserted indicating the conditional
nature of the redemption,

          (e)     the
place or places where such Bonds are to be surrendered for payment
of the Redemption Price and accrued interest, if any, unless it
shall have been specified as contemplated by Section 3.01 with
respect to such Bonds that such surrender shall not be
required,

          (f)     that
the redemption is for a sinking or other fund, if such is the case,
and

          (g)     such
other matters as the Company shall deem desirable or
appropriate.

          Unless
otherwise specified with respect to any series of Bonds, or any
Tranche thereof, in accordance with Section 3.01, with respect to
any redemption of Bonds at the election of the Company or any
redemption which is contingent on the occurrence or nonoccurrence
of an event or condition which cannot be ascertained prior to the
time a redemption notice is required to be given hereunder, such
notice may state that such redemption shall be conditional upon
receipt by the Trustee or the Paying Agent or Agents for such
Bonds, on or prior to the date fixed for such redemption, of money
sufficient to pay the Redemption Price of such Bonds and accrued
interest, if any, thereon to the Redemption Date (or direction from
the Company to apply such money for the payment of such Bonds, if
such money shall have been deposited with the Trustee or Paying
Agent or Agents upon the condition that the Trustee or Paying Agent
or Agents will apply such money only at the direction of the
Company) and that if such money shall not have been so received (or
if such money shall have been received but the Trustee or the
Paying Agent or Agents have been directed by the Company not to
apply such money to redeem such Bonds) such notice shall be of no
force or effect and the Company shall not be required to redeem
such Bonds; provided, however, that conditional notice shall not be
given if upon the giving of notice, such Bonds shall be deemed to
have been paid in accordance with Section 8.01.  In the event
that such notice of redemption contains such a condition and such
money is not so received, or the Trustee or Paying Agent or Agents
have been directed by the Company not to apply such money to the
redemption of such Bonds, the redemption shall not be made, and
within a reasonable time thereafter notice shall be given, in the
manner in which the notice of redemption was given, that such money
was not so received or that the Trustee or Paying Agent or Agents
have been directed by the Company not to redeem such Bonds and such
redemption was not required to be made, and the Trustee or Paying
Agent or Agents for the Bonds otherwise to have been redeemed shall
promptly return to the Holders thereof any of such Bonds which had
been surrendered for payment upon such redemption.

          Notice
of redemption of Bonds to be redeemed at the election of the
Company, and any notice of non-satisfaction of a condition for
redemption as aforesaid, shall be given by the Company or, at the
Company’s request, by the Bond Registrar in the name and at
the expense of the Company.  Notice of mandatory redemption of
Bonds shall be given by the Bond Registrar in the name and at the
expense of the Company.

SECTION
6.05.     Bonds Payable on
Redemption Date.

          Notice
of redemption having been given as aforesaid, and the conditions,
if any, set forth in such notice having been satisfied, the Bonds
or portions thereof so to be redeemed shall, on the Redemption
Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless, in the case of an
unconditional notice of redemption, the Company shall default in
the payment of the Redemption Price and accrued interest, if any)
such Bonds or portions thereof, if interest-bearing, shall cease to
bear interest.  Upon surrender of any such Bond for redemption
in accordance with such notice, such Bond or portion thereof shall
be paid by the Company at the Redemption Price, together with
accrued interest, if any, to the Redemption Date; provided,
however, that no such surrender shall be a condition to such
payment if so specified as contemplated by Section 3.01 with
respect to such Bond; and provided, further, that, except as
otherwise specified as contemplated by Section 3.01 with respect to
such Bond, any installment of interest on any Bond the Stated
Maturity of which installment is on or prior to the Redemption Date
shall be payable to the Holder of such Bond, or one or more
Predecessor Bonds, registered as such at the close of business on
the related Regular Record Date according to the terms of such Bond
and subject to the provisions of Section 3.07.

SECTION
6.06.     Bonds Redeemed in
Part.

Upon the surrender of any
Bond which is to be redeemed only in part at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), the
Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Bond, without service charge, a new
Bond or Bonds of the same series and Tranche, of any authorized
denomination requested by such Holder and of like tenor and in
aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Bond so
surrendered.

ARTICLE VII

COVENANTS

SECTION
7.01.     Payment of
Bonds.

          The
Company shall pay the principal of and premium, if any, and
interest, if any, on the Bonds of each series in accordance with
the terms of such Bonds and this Indenture.

SECTION
7.02.     Maintenance of Office or
Agency.

          The
Company shall maintain in each Place of Payment for the Bonds of
each series, or any Tranche thereof, an office or agency where
payment of such Bonds shall be made, and where the registration of
transfer or exchange of such Bonds may be effected and where
notices and demands to or upon the Company in respect of such Bonds
and this Indenture may be served.  The Company shall give
prompt written notice to the Trustee of the location, and any
change in the location, of each such office or agency.  If at
any time the Company shall fail to maintain any such required
office or agency in respect of Bonds of any series, or any Tranche
thereof, or shall fail to furnish the Trustee with the address
thereof, payment of such Bonds shall be made, registration of
transfer or exchange thereof may be effected and notices and
demands in respect thereof may be served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee
as its agent for all such purposes in any such event.

          The
Company may also from time to time designate one or more other
offices or agencies with respect to the Bonds of one or more
series, or any Tranche thereof, for any or all of the foregoing
purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an
office or agency for such purposes.  The Company shall give
prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other
office or agency.

          Anything
herein to the contrary notwithstanding, any office or agency
required by this Section may be maintained at an office of the
Company, in which event the Company shall perform all functions to
be performed at such office or agency.

SECTION
7.03     Money for Bond Payments to Be
Held in Trust.

          If
the Company shall at any time act as its own Paying Agent with
respect to the Bonds of any series, or any Tranche thereof, it
shall, on or before each due date of the principal of and premium,
if any, and interest, if any, on any of such Bonds, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal and premium or interest so becoming
due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided.  The Company shall promptly
notify the Trustee of any failure by the Company (or any other
obligor on such Bonds) to make any payment of principal of or
premium, if any, or interest, if any, on such Bonds.

          Whenever
the Company shall have one or more Paying Agents for the Bonds of
any series, or any Tranche thereof, it shall, on or before each due
date of the principal of and premium, if any, and interest, if any,
on such Bonds, deposit with such Paying Agents sums sufficient
(without duplication) to pay the principal and premium or interest
so becoming due, such sums to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company shall
promptly notify the Trustee of any failure by it so to
act.

          Upon
their appointment as Paying Agent, the Company shall cause each
Paying Agent for the Bonds of any series, or any Tranche thereof,
other than the Company or the Trustee, to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that
such Paying Agent shall:

          (a)     hold
all sums held by it for the payment of the principal of and
premium, if any, or interest, if any, on such Bonds in trust for
the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein
provided;

          (b)     give
the Trustee notice of any failure by the Company (or any other
obligor upon such Bonds) to make any payment of principal of or
premium, if any, or interest, if any, on such Bonds; and

          (c)     at
any time during the continuance of any such failure, upon the
written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent and furnish to the
Trustee such information as it possesses regarding the names and
addresses of the Persons entitled to such sums.

          The
Company may at any time pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the Company
or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company
or such Paying Agent and, if so stated in a Company Order delivered
to the Trustee, in accordance with the provisions of Article VIII;
and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with
respect to such money.

          Unless
otherwise prescribed by applicable law, any money deposited with
the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of and premium, if any, or
interest, if any, on any Bond and remaining unclaimed for two years
after such principal and premium, if any, or interest, if any, has
become due and payable shall be paid to the Company on Company
Request, or, if then held by the Company, shall be discharged from
such trust without further action by the Company, Trustee or any
Paying Agent; and, upon such payment or discharge, the Holder of
such Bond shall, as an unsecured general creditor and not as the
Holder of an Outstanding Bond, look only to the Company for payment
of the amount so due and payable and remaining unpaid, and all
liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof,
shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such payment to the
Company, shall, upon receipt of a Company Request and at the
expense of the Company, cause to be mailed, on one occasion only,
notice to such Holder that such money remains unclaimed and that,
after a date specified therein, which shall not be less than thirty
(30) days from the date of such mailing, any unclaimed balance of
such money then remaining will be paid to the Company.

SECTION
7.04.     Corporate
Existence.

          Subject
to the rights of the Company under Article XII, the Company shall
do or cause to be done all things necessary to preserve and keep
its corporate existence in full force and effect.

SECTION
7.05.     Waiver of Certain
Covenants.

          The
Company may omit in any particular instance to comply with any
term, provision or condition set forth in

          (a)     any
covenant or restriction specified with respect to the Bonds of any
one or more series, or any one or more Tranches thereof, as
contemplated by Section 3.01 if before the time for such compliance
the Holders of not less than a majority in aggregate principal
amount of the Outstanding Bonds of all series and Tranches with
respect to which compliance with such covenant or restriction is to
be omitted, considered as one class, shall, by Act of such Holders,
either waive such compliance in such instance or generally waive
compliance with such term, provision or condition; provided,
however, that no such waiver shall be effective as to any of the
matters contemplated in clause (a), (b) or (c) in Section 13.02
without the consent of the Holders specified in such Section;
and

          (b)     Section
7.04 or 7.07 or Article XII if, before the time for such
compliance, the Holders of not less than a majority in principal
amount of Bonds Outstanding under this Indenture shall, by Act of
such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or
condition;

but, in either case, no
such waiver shall extend to or affect such term, provision or
condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.

SECTION
7.06.     Annual Officer’s
Certificate as to Compliance.

          Not
later than June 1 in each year, commencing June 1, 2005,
the Company shall deliver to the Trustee a certificate (which need
not comply with Section 1.02) executed by the principal executive
officer, the principal financial officer or the principal
accounting officer of the Company, as to such officer’s
knowledge of the Company’s compliance with all conditions and
covenants under this Indenture, such compliance to be determined
without regard to any period of grace or requirement of notice
under this Indenture.

SECTION
7.07.     Limitation on
Liens.

          (a)     The
Company will not, nor will it permit any Significant Subsidiary to,
(1) issue, incur, assume or permit to exist any Debt, if such Debt
is secured by a Lien on any Principal Property (whether such
Principal Property was owned at March 11, 2004 or thereafter
acquired), unless the Company provides that Outstanding Bonds will
be equally and ratably secured with such secured Debt or (2) incur
or permit to exist any Attributable Debt in respect of Principal
Property; provided, however, that the foregoing restriction shall
not apply to:

               (i)     to
the extent the Company or any Significant Subsidiary consolidates
with, or merges with or into, another entity, Liens on the property
of such entity securing Debt in existence on the date of such
consolidation or merger, provided that such Debt and Liens were not
created or incurred in anticipation of such consolidation or merger
and that such Liens do not extend to or cover any Principal
Property;

               (ii)     Liens
on property acquired after March 11, 2004 and existing at the time
of such acquisition, as long as the Lien was not created or
incurred in anticipation thereof and does not extend to or cover
any other Principal Property;

               (iii)     Liens
of any kind, including purchase money Liens, conditional sales
agreements or title retention agreements and similar agreements,
upon any property acquired, constructed, developed or improved by
the Company or any Significant Subsidiary (whether alone or in
association with others) which do not exceed the cost or value of
the property acquired, constructed, developed or improved and which
are created prior to, at the time of, or within twelve (12) months
after such acquisition (or in the case of property constructed,
developed or improved, within twelve (12) months after the
completion of such construction, development or improvement and
commencement of full commercial operation of such property,
whichever is later) to secure or provide for the payment of any
part of the purchase price or cost thereof; provided that the Liens
shall not extend to any Principal Property other than the property
so acquired, constructed, developed or improved;

               (iv)     Liens
in favor of the United States, any state or any foreign country or
any department, agency or instrumentality or political subdivision
of any such jurisdiction to secure payments pursuant to any
contract or statute or to secure any indebtedness incurred for the
purpose of financing all or any part of the purchase price or cost
of constructing or improving the property subject to such Lien,
including Liens related to governmental obligations the interest on
which is tax-exempt under Section 103 of the Internal Revenue Code
or any successor section of the Internal Revenue Code;

               (v)     Liens
in favor of the Company, one or more Significant Subsidiaries of
the Company, one or more wholly-owned Subsidiaries of the Company
or any of the foregoing combination; and

               (vi)     replacements,
extensions or renewals (or successive replacements, extensions or
renewals), in whole or in part, of any Lien, or of any agreement,
referred to above in clauses (i) through (v) inclusive, or
replacements, extensions or renewals of the Debt secured thereby
(to the extent that the amount of Debt secured by any such Lien is
not increased from the amount originally so secured, plus any
premium, interest, fee or expenses payable in connection with any
replacements, refundings, refinancings, remarketings, extensions or
renewals); provided that such replacement, extension or renewal is
limited to all or a part of the same property (plus improvements
thereon or additions or accessions thereto) that secured the Lien
replaced, extended or renewed.

          (b)     Notwithstanding
the restriction in subsection (a) of this Section 7.07, the Company
or any Significant Subsidiary may (1) issue, incur or assume Debt
secured by a Lien not described in clauses (i) through (vi) of
subsection (a) above on any Principal Property owned at March 11,
2004 or thereafter acquired without providing that the Outstanding
Bonds be equally and ratably secured with such Debt and (2) issue
or permit to exist Attributable Debt in respect of Principal
Property, in either case so long as the aggregate amount of such
secured Debt and Attributable Debt, together with the aggregate
amount of all other Debt secured by Liens on Principal Property not
described in clauses (i) through (vi) of subsection (a) above then
outstanding and all other Attributable Debt, does not exceed 10% of
the Net Tangible Assets of the Company, as determined by the
Company as of a month end not more than 90 days prior to the
closing or consummation of the proposed transaction.

          (c)     For
purposes of determining compliance with this Section 7.07, in the
event that any Lien at any time meets the criteria of more than one
of the categories described in clauses (i) through (vi) above of
Section 7.07(a), or is entitled to be created pursuant to Section
7.07(b), the Company will be permitted to classify (and later
reclassify) in whole or in part in its sole discretion such Lien in
any manner that complies with this Section 7.07.

          (d)     For
purposes of determining compliance with any Dollar-denominated
restriction on the incurrence of Debt secured by Liens on Principal
Property, the Dollar-equivalent principal amount of Debt
denominated in a foreign currency will be calculated based on the
relevant currency exchange rate in effect on the date such Debt was
incurred, in the case of term Debt, or first committed, in the case
of revolving credit Debt; provided that if such Debt is incurred to
refinance other Debt denominated in the same foreign currency, and
such refinancing would cause the applicable Dollar-denominated
restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, the
Dollar-denominated restriction will be deemed not to have been
exceeded so long as the principal amount of the refinancing Debt
does not exceed the principal amount of the Debt being
refinanced.  Notwithstanding any other provision of this
Section 7.07, the maximum amount of Debt secured by Liens on
Principal Property that the Company or any Significant Subsidiary
may incur pursuant to this covenant will not be deemed to be
exceeded solely as a result of fluctuations in the exchange rate of
currencies.

          (e)     For
purposes of this Section 7.07, “Debt” of a Significant
Subsidiary shall mean any debt of such Significant Subsidiary for
money borrowed and guarantees by such Significant Subsidiary of
debt for money borrowed, but in each case excluding liabilities in
respect of Capital Lease Obligations or Swap Agreements.

ARTICLE VIII

SATISFACTION AND DISCHARGE

SECTION
8.01.     Satisfaction and Discharge of
Bonds.

Any Bond or Bonds, or any
portion of the principal amount thereof, shall be deemed to have
been paid and no longer Outstanding for all purposes of this
Indenture, and the entire indebtedness of the Company in respect
thereof shall be satisfied and discharged, if there shall have been
irrevocably deposited with the Trustee or any Paying Agent (other
than the Company), in trust:

          (a)     money
in an amount which shall be sufficient, or

          (b)     in
the case of a deposit made prior to the Maturity of such Bonds or
portions thereof, Eligible Obligations, which shall not contain
provisions permitting the redemption or other prepayment thereof at
the option of the issuer thereof, the principal of and the interest
on which when due, without any regard to reinvestment thereof, will
provide moneys which, together with the money, if any, deposited
with or held by the Trustee or such Paying Agent, shall be
sufficient, or

          (c)     a
combination of (a) or (b) which shall be sufficient to pay when due
the principal of and premium, if any, and interest, if any, due and
to become due on such Bonds or portions thereof; provided, however,
that in the case of the provision for payment or redemption of less
than all the Bonds of any series or Tranche, such Bonds or portions
thereof shall have been selected by the Bond Registrar as provided
herein and, in the case of a redemption, the notice requisite to
the validity of such redemption shall have been given or
irrevocable authority shall have been given by the Company to the
Trustee to give such notice, under arrangements satisfactory to the
Trustee; and provided, further, that the Company shall have
delivered to the Trustee and such Paying Agent:

           (x)      
if such deposit shall have been made prior to the Maturity of such
Bonds, a Company Order stating that the money and Eligible
Obligations deposited in accordance with this Section shall be held
in trust, as provided in Section 8.03;

           (y)      
if Eligible Obligations shall have been deposited, an Opinion of
Counsel to the effect that such obligations constitute Eligible
Obligations and do not contain provisions permitting the redemption
or other prepayment thereof at the option of the issuer thereof,
and an opinion of an Independent public Accountant of nationally
recognized standing, selected by the Company, to the effect that
the other requirements set forth in clause (b) above have been
satisfied; and

           (z)      
if such deposit shall have been made prior to the Maturity of such
Bonds, an Officer’s Certificate stating the Company’s
intention that, upon delivery of such Officer’s Certificate,
its indebtedness in respect of such Bonds or portions thereof will
have been satisfied and discharged as contemplated in this
Section.

          Upon
the deposit of money or Eligible Obligations, or both, in
accordance with this Section, together with the documents required
by clauses (x), (y) and (z) above, the Trustee shall, upon Company
Request, acknowledge in writing that such Bonds or portions thereof
are deemed to have been paid for all purposes of this Indenture and
that the entire indebtedness of the Company in respect thereof has
been satisfied and discharged as contemplated in this
Section.  In the event that all of the conditions set forth in
the preceding paragraph shall have been satisfied in respect of any
Bonds or portions thereof except that, for any reason, the
Officer’s Certificate specified in clause (z) (if otherwise
required) shall not have been delivered, such Bonds or portions
thereof shall nevertheless be deemed to have been paid for all
purposes of this Indenture, and the Holders of such Bonds or
portions thereof shall nevertheless be no longer entitled to the
benefits of this Indenture (other than with respect to such
deposit) or of any of the covenants of the Company under Article
VII (except the covenants contained in Sections 7.02 and 7.03) or
any other covenants made in respect of such Bonds or portions
thereof as contemplated by Section 3.01, but the indebtedness of
the Company in respect of such Bonds or portions thereof shall not
be deemed to have been satisfied and discharged prior to Maturity
for any other purpose; and, upon Company Request, the Trustee shall
acknowledge in writing that such Bonds or portions thereof are
deemed to have been paid for all purposes of this
Indenture.

          If
payment at Stated Maturity of less than all of the Bonds of any
series, or any Tranche thereof, is to be provided for in the manner
and with the effect provided in this Section, the Bond Registrar
shall select such Bonds, or portions of principal amount thereof,
in the manner specified by Section 6.03 for selection for
redemption of less than all the Bonds of a series or
Tranche.

          In
the event that Bonds which shall be deemed to have been paid for
purposes of this Indenture, and, if such is the case, in respect of
which the Company’s indebtedness shall have been satisfied
and discharged, all as provided in this Section, do not mature and
are not to be redeemed within the sixty (60) day period commencing
with the date of the deposit of moneys or Eligible Obligations, as
aforesaid, the Company shall, as promptly as practicable, give a
notice, in the same manner as a notice of redemption with respect
to such Bonds, to the Holders of such Bonds to the effect that such
deposit has been made and the effect thereof.

          Notwithstanding
that any Bonds shall be deemed to have been paid for purposes of
this Indenture, as aforesaid, the obligations of the Company and
the Trustee in respect of such Bonds under Sections 3.04, 3.05,
3.06, 6.04, 7.02, 7.03, 10.07 and 10.15 and this Article shall
survive.

          The
Company shall pay, and shall indemnify the Trustee or any Paying
Agent with which Eligible Obligations shall have been deposited as
provided in this Section against, any tax, fee or other charge
imposed on or assessed against such Eligible Obligations or the
principal or interest received in respect of such Eligible
Obligations, including, but not limited to, any such tax payable by
any entity deemed, for tax purposes, to have been created as a
result of such deposit.

          Anything
herein to the contrary notwithstanding, (a) if, at any time after a
Bond would be deemed to have been paid for purposes of this
Indenture, and, if such is the case, the Company’s
indebtedness in respect thereof would be deemed to have been
satisfied and discharged, pursuant to this Section (without regard
to the provisions of this paragraph), the Trustee or any Paying
Agent, as the case may be, shall be required to return the money or
Eligible Obligations, or combination thereof, deposited with it as
aforesaid to the Company or its representative under any applicable
federal or state bankruptcy, insolvency or other similar law, such
Bond shall thereupon be deemed retroactively not to have been paid
and any satisfaction and discharge of the Company’s
indebtedness in respect thereof shall retroactively be deemed not
to have been effected, and such Bond shall be deemed to remain
Outstanding and (b) any satisfaction and discharge of the
Company’s indebtedness in respect of any Bond shall be
subject to the provisions of the last paragraph of Section
7.03.

SECTION
8.02.     Satisfaction and Discharge of
Indenture.

          This
Indenture shall upon Company Request cease to be of further effect
(except as hereinafter expressly provided), and the Trustee, at the
expense of the Company, shall execute such instruments as the
Company shall reasonably request to evidence and acknowledge the
satisfaction and discharge of this Indenture, when:

          (a)     no
Bonds remain Outstanding hereunder;

          (b)     the
Company has paid or caused to be paid all other sums payable
hereunder by the Company; and

          (c)     the
Company has delivered to the Trustee an Officer’s Certificate
and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with;

provided, however, that
if, in accordance with the last paragraph of Section 8.01, any
Bond, previously deemed to have been paid for purposes of this
Indenture, shall be deemed retroactively not to have been so paid,
this Indenture shall thereupon be deemed retroactively not to have
been satisfied and discharged, as aforesaid, and to remain in full
force and effect, and the Company shall execute and deliver such
instruments as the Trustee shall reasonably request to evidence and
acknowledge the same.

          Notwithstanding
the satisfaction and discharge of this Indenture as aforesaid, the
obligations of the Company and the Trustee under Sections 3.04,
3.05, 3.06, 6.04, 7.02, 7.03, 10.07 and 10.15 and this Article
shall survive.

          Upon
satisfaction and discharge of this Indenture as provided in this
Section, the Trustee shall execute and deliver to the Company such
instruments as, in the judgment of the Company, shall be necessary,
desirable or appropriate to effect or evidence the satisfaction and
discharge of this Indenture.

SECTION
8.03.     Application of Trust
Money.

          Neither
the Eligible Obligations nor the money deposited pursuant to
Section 8.01, nor the principal or interest payments on any such
Eligible Obligations, shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the
principal of and premium, if any, and interest, if any, on the
Bonds or portions of principal amount thereof in respect of which
such deposit was made, all subject, however, to the provisions of
Section 7.03; provided, however, that any cash received from such
principal or interest payments on such Eligible Obligations, if not
then needed for such purpose, shall, to the extent practicable and
upon Company Request and delivery to the Trustee of the documents
referred to in subclause (y) of clause (c) in Section 8.01, be
invested pursuant to a Company Order in Eligible Obligations of the
type described in clause (b) in Section 8.01 maturing at such times
and in such amounts as shall be sufficient, together with any other
moneys and the proceeds of any other Eligible Obligations then held
by the Trustee, to pay when due the principal of and premium, if
any, and interest, if any, due and to become due on such Bonds or
portions thereof on and prior to the Maturity thereof, and interest
earned from such reinvestment shall be paid over to the Company as
received; and provided, further, that any moneys held in accordance
with this Section on the Maturity of all such Bonds in excess of
the amount required to pay the principal of and premium, if any,
and interest, if any, then due on such Bonds shall be paid over to
the Company.

ARTICLE IX

EVENTS OF DEFAULT; REMEDIES

SECTION
9.01.     Events of
Default.

          
“Event of Default”, wherever used herein with respect
to the Bonds, means any of the following events which shall have
occurred and be continuing:

          (a)     the
failure to pay interest, if any, on any Bond within thirty (30)
days after the same becomes due and payable; or

          (b)     the
failure to pay the principal of or sinking fund installment, if
any, or premium, if any, on any Bond after the same becomes due and
payable; or

          (c)     the
failure to perform or breach of any covenant or warranty of the
Company in this Indenture (other than a covenant or warranty a
default in the performance of which or breach of which is elsewhere
in this Section specifically dealt with) for a period of ninety
(90) days after there has been given, by registered or certified
mail, return receipt requested, to the Company by the Trustee, or
to the Company and the Trustee by the Holders of at least
thirty-three percent (33%) in principal amount of the Bonds then
Outstanding, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a
“Notice of Default” hereunder, unless the Trustee, or
the Trustee and the Holders of a principal amount of Bonds not less
than the principal amount of Bonds the Holders of which gave such
notice, as the case may be, shall agree in writing to an extension
of such period prior to its expiration; or

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

          (e)     the
commencement by the Company of a voluntary case or proceeding under
any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company, or the filing by
the Company of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state
bankruptcy, insolvency or other similar law, or the consent by the
Company to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or of any
substantial part of its property, or the making by the Company of a
general assignment for the benefit of creditors, or an admission in
writing by the Company of its inability to pay its debts generally
as they become due; or

          (f)     the
occurrence of any event of default as defined in any mortgage,
indenture or instrument under which there may be issued, or by
which there may be secured or evidenced, any Debt of the Company,
whether such Debt existed on the Initial Issuance Date or shall
thereafter be created, if such event of default:

          
(i) is caused by a failure to pay principal after final maturity of
such Debt after the expiration of the grace period provided in such
Debt (a “Payment Default”), or

          
(ii) results in the acceleration of such Debt prior to its express
maturity,

and in each case, the
principal amount of any such Debt, together with the principal
amount of any other such Debt under which there has been a Payment
Default or the maturity of which has been so accelerated,
aggregates $100,000,000 or more.

For purposes of Section
9.01(f), the amount of $100,000,000 shall be increased in any
calendar year subsequent to 2004 by the same percentage increase in
the CPI Index for the period commencing January 1, 2004 and ending
on January 1 of the applicable calendar year.

SECTION
9.02.     Acceleration of Maturity;
Rescission and Annulment.

          If
an Event of Default shall have occurred and be continuing, then in
every such case the Trustee or the Holders of not less than
thirty-three percent (33%) in aggregate principal amount of Bonds
then Outstanding, considered as one class, may declare the
principal amount (or, if any of the Bonds are Discount Bonds, such
portion of the principal amount of such Bonds as may be specified
in the terms thereof as contemplated by Section 3.01) of all Bonds
then Outstanding to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders),
and upon such declaration such principal amount (or specified
amount), together with premium, if any, and accrued interest, if
any, thereon, shall become immediately due and payable; provided,
however, that with respect to an Event of Default described in
Section 9.01(d) or (e), the principal amount (or, if any of the
Bonds are Discount Bonds, such portion of the principal amount of
such Bonds as may be specified in the terms thereof as contemplated
by Section 3.01) of all Bonds then Outstanding shall be due and
payable immediately without further action by the Trustee or
Holders.

          At
any time after such a declaration of acceleration of the Maturity
of the Bonds then Outstanding shall have been made, but before a
judgment or decree for payment of the money due shall have been
obtained by the Trustee as provided in this Article, the Event or
Events of Default giving rise to such declaration of acceleration
shall, without further act and notwithstanding anything to the
contrary in Section 316(a) of the Trust Indenture Act, be deemed to
have been waived, and such declaration and its consequences shall,
without further act, be deemed to have been rescinded and annulled,
if

          (a)     the
Company shall have paid or deposited with the Trustee a sum
sufficient to pay

               (i)     all
overdue interest, if any, on all Bonds then Outstanding;

               (ii)     the
principal of and premium, if any, on any Bonds then Outstanding
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed
therefor in such Bonds; and

               (iii)     all
amounts due to the Trustee under Section 10.07; and

          (b)     any
other Event or Events of Default, other than the non-payment of the
principal of Bonds which shall have become due solely by such
declaration of acceleration, shall have been cured or waived as
provided in Section 9.13.

          No
such rescission shall affect any subsequent Event of Default or
impair any right consequent thereon.

SECTION
9.03.     Collection of Indebtedness
and Suits for Enforcement by
Trustee.

          If
an Event of Default described in clause (a) or (b) of Section 9.01
shall have occurred and be continuing, the Company shall, upon
demand of the Trustee, pay to it, for the benefit of the Holders of
the Bonds with respect to which such Event of Default shall have
occurred, the whole amount then due and payable on such Bonds for
principal and premium, if any, and interest, if any, and, in
addition thereto, such further amount as shall be sufficient to
cover any amounts due to the Trustee under Section
10.07.

          If
the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of
the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree and may enforce the same against the
Company or any other obligor upon such Bonds and collect the moneys
adjudged or decreed to be payable in the manner provided by law out
of the property of the Company or any other obligor upon such
Bonds, wherever situated.  No recovery of any such judgment by
the Trustee shall affect or impair any rights, powers or remedies
of the Trustee hereunder, or any rights, powers or remedies of the
Holders of the Bonds.

SECTION
9.04.     Application of Money
Collected.

          Any
money collected by the Trustee pursuant to this Article, including
amounts collected pursuant to Section 9.03 (after the deductions
therein provided) shall be applied in the following order, to the
extent permitted by law, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of
principal or premium, if any, or interest, if any, upon
presentation of the Bonds and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully
paid:

          First:
       To the payment of all amounts
due the Trustee under Section 10.07;

          Second:   
To the payment of the whole amount then due and unpaid upon the
Outstanding Bonds for principal and premium, if any, and interest,
if any, in respect of which or for the benefit of which such money
has been collected; and in case such proceeds shall be insufficient
to pay in full the whole amount so due and unpaid upon such Bonds,
then to the payment of such principal and interest, if any, thereon
without any preference or priority, ratably according to the
aggregate amount so due and unpaid, with any balance then remaining
to the payment of premium, if any, and, if so specified as
contemplated by Section 3.01 with respect to the Bonds of any
series, or any Tranche thereof, interest, if any, on overdue
premium, if any, and overdue interest, if any, ratably as
aforesaid, all to the extent permitted by applicable law; provided,
however, that any money collected by the Trustee pursuant to
Section 9.03 shall first be applied to the payment of interest
accrued on the principal of Outstanding Bonds; and

          Third:     
To the payment of the remainder, if any, to the Company or to
whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.

SECTION
9.05.     Trustee May File Proofs of
Claim.

          In
case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other
obligor upon the Bonds or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of
whether the principal of the Bonds shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or
otherwise,

          (a)     to
file and prove a claim for the whole amount of principal, premium,
if any, and interest, if any, owing and unpaid in respect of the
Bonds and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for amounts due to the Trustee under Section
10.07) and of the Holders allowed in such judicial proceeding,
and

          (b)     to
collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the
same;

          and
any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to
pay to the Trustee any amounts due it under Section
10.07.

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

SECTION
9.06.     Trustee May Enforce Claims
Without Possession of Bonds.

          All
rights of action and claims under this Indenture or on the Bonds
may be prosecuted and enforced by the Trustee without the
possession of any of the Bonds or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by
the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Holders in respect of which such
judgment has been recovered.

SECTION
9.07.     Limitation on
Suits.

          No
Holder shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy
hereunder, unless:

          (a)     such
Holder shall have previously given written notice to the Trustee of
a continuing Event of Default;

          (b)     the
Holders of at least thirty-three percent (33%) in aggregate
principal amount of the Bonds then Outstanding shall have made
written request to the Trustee to institute proceedings in respect
of such Event of Default in its own name as Trustee
hereunder;

          (c)     such
Holder or Holders shall have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;

          (d)     the
Trustee for sixty (60) days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any
such proceeding; and

          (e)     no
direction inconsistent with such written request shall have been
given to the Trustee during such sixty (60) day period by the
Holders of at least a majority in aggregate principal amount of the
Bonds then Outstanding;

it being understood and
intended that no one or more of such Holders shall have any right
in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the
rights of any other of such Holders or to obtain or to seek to
obtain priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all of such
Holders.

SECTION
9.08.     Unconditional Right of
Holders to Receive Principal, Premium and
Interest.

          Notwithstanding
any other provision in this Indenture, the Holder of any Bond shall
have the right, which is absolute and unconditional, to receive
payment of the principal of and premium, if any, and (subject to
Section 3.07) interest, if any, on such Bond on the Stated Maturity
or Maturities expressed in such Bond (or, in the case of
redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder.

SECTION
9.09.     Restoration of Rights and
Remedies.

          If
the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding shall
have been discontinued or abandoned for any reason, or shall have
been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and such Holder shall be
restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and
such Holder shall continue as though no such proceeding had been
instituted.

SECTION
9.10.     Rights and Remedies
Cumulative.

          Except
as otherwise provided in the last paragraph of Section 3.06, no
right or remedy herein conferred upon or reserved to the Trustee or
to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.  The assertion or employment of any right
or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or
remedy.

SECTION
9.11.     Delay or Omission Not
Waiver.

          No
delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein.  Every right and remedy
given by this Article or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may
be.

SECTION
9.12     Control by Holders of
Bonds.

          If
an Event of Default shall have occurred and be continuing, the
Holders of not less than a majority in principal amount of the
Bonds then Outstanding shall have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred on the Trustee hereunder; provided, however,
that

          (a)     such
direction shall not be in conflict with any rule of law or with
this Indenture, and could not involve the Trustee in personal
liability in circumstances where indemnity would not, in the
Trustee’s sole discretion, be adequate, and

          (b)     the
Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.

SECTION
9.13.     Waiver of Past
Defaults.

          Before
a judgment or decree for payment of the money due shall have been
obtained by the Trustee as in this Article provided, the Holders of
not less than a majority in principal amount of the Bonds then
Outstanding may on behalf of the Holders of all the Bonds then
Outstanding waive any past default hereunder and its consequences,
except a default

          (a)     in
the payment of the principal of or premium, if any, or interest, if
any, on any Bond Outstanding, or

          (b)     in
respect of a covenant or provision hereof which under Section 13.02
cannot be modified or amended without the consent of the Holder of
each Outstanding Bond of any series or Tranche affected.

          Upon
any such waiver, such default shall cease to exist, and any and all
Events of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other default or impair any right
consequent thereon.

SECTION
9.14.     Undertaking for
Costs.

          The
Company and the Trustee agree, and each Holder of Bonds by its
acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable
attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Company, to
any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than ten
percent (10%) in aggregate principal amount of the Bonds then
Outstanding, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of or premium, if any,
or interest, if any, on any Bond on or after the Stated Maturity or
Maturities expressed in such Bond (or, in the case of redemption,
on or after the Redemption Date).

SECTION
9.15.     Waiver of Stay and Extension
Laws.

          The
Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or
extension law, now or hereafter in effect, in order to prevent or
hinder the enforcement of this Indenture; and the Company, for
itself and all who may claim under it, so far as it or they now or
hereafter may lawfully do so, hereby waives the benefit of all such
laws.

ARTICLE X

THE TRUSTEE

SECTION
10.01.     Certain Duties and
Responsibilities.

          (a)     Except
during the continuance of an Event of Default,

               (i)     the
Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against
the Trustee; and

               (ii)     in
the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions
which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture.

          (b)     In
case an Event of Default shall have occurred and be continuing, the
Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own
affairs.

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

               (i)     this
subsection shall not be construed to limit the effect of subsection
(a) of this Section;

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

               (iii)     the
Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Bonds, as provided herein, relating to the time, method
and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and

               (iv)     no
provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to
it.

          (d)     Whether
or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the
provisions of this Section.

SECTION
10.02.     Notice of
Defaults.

          Within
ninety (90) days after the occurrence of any default hereunder, the
Trustee shall transmit by mail to all Holders notice of such
default hereunder known to the Trustee, unless such default shall
have been cured or waived; provided, however, that, except in the
case of a default in the payment of the principal of (or premium,
if any) or interest, if any, on any Bond, or in the payment of any
sinking fund installment with respect to a Bond, the Trustee shall
be protected in withholding such notice if and so long as the board
of directors, executive committee or a trust committee of directors
or a Responsible Officer of the Trustee in good faith determine
that the withholding of such notice is in the interest of the
Holders; provided, further, that, in the case of any default of the
character specified in Section 9.01(c), no such notice to Holders
shall be given until at least sixty (60) days after the occurrence
thereof.  For the purpose of this Section, the term
“default” means any event which is, or after notice or
lapse of time or both would become, an Event of Default.

          The
Trustee shall not be deemed to have knowledge of any default
specified in Section 9.01(c), 9.01(d) or 9.01(e) hereunder unless
and until a Responsible Officer shall have actual knowledge
thereof, or shall have received written notice thereof at its
Corporate Trust Office.  In the absence of such actual
knowledge or notice, the Trustee may conclusively assume that no
such default has occurred and is continuing under this
Indenture.  Except as otherwise expressly provided herein, the
Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions,
covenants or agreements herein or of any of the documents executed
in connection with Bonds issued hereunder, or as to the existence
of a default or Event of Default hereunder.

SECTION
10.03.     Certain Rights of
Trustee.

          Subject
to the provisions of Section 10.01 and to the applicable provisions
of the Trust Indenture Act:

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

          (b)     any
request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, or as
otherwise expressly provided herein, and any resolution of the
Board of Directors may be sufficiently evidenced by a Board
Resolution;

          (c)     whenever
in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless
other evidence is specifically prescribed herein) may, in the
absence of bad faith on its part, conclusively rely upon an
Officer’s Certificate;

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

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

          (f)     the
Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall (subject to
applicable legal requirements) be entitled to examine, during
normal business hours, the books, records and premises of the
Company, personally or by agent or attorney;

          (g)     the
Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.

SECTION
10.04.     Not Responsible for Recitals
or Issuance of Bonds or Application of
Proceeds.

          The
recitals contained herein and in the Bonds (except the
Trustee’s certificate of authentication on the Bonds) shall
be taken as the statements of the Company, and neither the Trustee
nor any Authenticating Agent assumes any responsibility for their
correctness.  The Trustee makes no representations as to the
validity or genuineness of any securities at any time deposited
with the Trustee hereunder, or as to the validity or sufficiency of
this Indenture or of the Bonds.  The Trustee shall not be
accountable for the use or application by the Company of the Bonds
or the proceeds thereof or of any money paid to the Company or upon
Company Order under any provision hereof.  Neither the Trustee
nor any Authenticating Agent shall be accountable for the use or
application by the Company of Bonds or the proceeds
thereof.

SECTION
10.05.     May Hold
Bonds.

          Each
of the Trustee, any Authenticating Agent, any Paying Agent, any
Bond Registrar or any other agent of the Company or the Trustee, in
its individual or any other capacity, may become the owner or
pledgee of Bonds and, subject to Sections 10.08 and 10.13, may
otherwise deal with the Company with the same rights it would have
if it were not such Trustee, Authenticating Agent, Paying Agent,
Bond Registrar or other agent.

SECTION
10.06.     Money Held in
Trust.

          Money
held by the Trustee in trust hereunder need not be segregated from
other funds, except to the extent required by law or as otherwise
provided in this Indenture.  The Trustee shall be under no
liability for interest on or investment of any money received by it
hereunder (provided that the Trustee has invested such money in
accordance with a Company Order) except as expressly provided
herein or otherwise agreed with, and for the sole benefit of, the
Company.

SECTION
10.07.     Compensation and
Reimbursement.

          The
Company agrees

          (a)     to
pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of
a trustee of an express trust);

          (b)     except
as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel),
except to the extent that any such expense, disbursement or advance
may be attributable to its negligence, willful misconduct or bad
faith; and

          (c)     to
indemnify the Trustee (which for purposes of this Section shall
include its officers, directors, employees and agents) and hold it
harmless from and against any loss, liability or expense reasonably
incurred without negligence, willful misconduct or bad faith on its
part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder or the exercise or
performance of its duties hereunder, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.  “Trustee” for purposes of this
Section shall include any predecessor Trustee; provided, however,
that the negligence, willful misconduct or bad faith of any Trustee
hereunder shall not affect the rights of any other Trustee
hereunder.

          In
addition and without prejudice to the rights provided to the
Trustee under any of the provisions of this Indenture, when the
Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 9.01(d) or Section 9.01(e),
the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to
constitute expenses of administration under any applicable federal
or state bankruptcy, insolvency or other similar law.

          The
provisions of this Section shall survive the termination of this
Indenture and the resignation or removal of the Trustee.

SECTION
10.08.     Disqualification;
Conflicting Interests.

          If
the Trustee shall have or acquire any conflicting interest within
the meaning of the Trust Indenture Act, it shall either eliminate
such conflicting interest or resign to the extent, in the manner
and with the effect, and subject to the conditions, provided in the
Trust Indenture Act and this Indenture.  For purposes of
Section 310(b)(1) of the Trust Indenture Act and to the extent
permitted thereby, the Trustee, in its capacity as trustee in
respect of the Bonds of any series, shall not be deemed to have a
conflicting interest arising from its capacity as trustee in
respect of the Bonds of any other series.

SECTION
10.09.     Corporate Trustee Required;
Eligibility.

          There
shall at all times be a Trustee hereunder which shall be

               (i)     a
corporation organized and doing business under the laws of the
United States, any state or territory thereof or the District of
Columbia, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least Fifty
Million Dollars ($50,000,000) and subject to supervision or
examination by federal or state authority, or

               (ii)     if
and to the extent permitted by the Commission by rule, regulation
or order upon application, a corporation or other Person organized
and doing business under the laws of a foreign government,
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least Fifty Million
Dollars ($50,000,000) or the Dollar equivalent of the applicable
foreign currency and subject to supervision or examination by
authority of such foreign government or a political subdivision
thereof substantially equivalent to supervision or examination
applicable to United States institutional trustees,

and, in either case,
qualified and eligible under this Article and the Trust Indenture
Act.  If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of such
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published.  If at any
time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the
manner and with the effect hereinafter specified in this
Article.

SECTION
10.10.     Resignation and Removal;
Appointment of Successor.

          (a)     No
resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section
10.11.

          (b)     The
Trustee may resign at any time by giving written notice thereof to
the Company.  If the instrument of acceptance by a successor
Trustee required by Section 10.11 shall not have been delivered to
the Trustee within thirty (30) days after the giving of such notice
of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor
Trustee.

          (c)     The
Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Bonds then Outstanding
delivered to the Trustee and to the Company.

          (d)     If
at any time:

              (i)     the
Trustee shall fail to comply with Section 10.08 after written
request therefor by the Company or by any Holder who has been a
bona fide Holder for at least six (6) months, or

              (ii)     the
Trustee shall cease to be eligible under Section 10.09 or Section
310(a) of the Trust Indenture Act and shall fail to resign after
written request therefor by the Company or by any such Holder,
or

              (iii)     the
Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,

then, in any such case,
(x) the Company by a Board Resolution may remove the Trustee or (y)
subject to Section 9.14, any Holder who has been a bona fide Holder
for at least six (6) months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee or Trustees.

          (e)     If
the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause
(other than as contemplated in clause (y) in subsection (d) of this
Section), the Company, by a Board Resolution, shall take prompt
steps to appoint a successor Trustee or Trustees and shall comply
with the applicable requirements of Section 10.11.  If, within
one (1) year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount
of the Bonds then Outstanding delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 10.11, become the
successor Trustee and to that extent supersede the successor
Trustee appointed by the Company.  If no successor Trustee
shall have been so appointed by the Company or the Holders and
accepted appointment in the manner required by Section 10.11, the
Holders of at least ten percent (10%) in aggregate principal amount
of the then Outstanding Bonds may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

          (f)     So
long as no event which is, or after notice or lapse of time, or
both, would become, an Event of Default shall have occurred and be
continuing, if the Company shall have delivered to the Trustee (i)
a Board Resolution appointing a successor Trustee, effective as of
a date specified therein, and (ii) an instrument of acceptance of
such appointment, effective as of such date, by such successor
Trustee in accordance with Section 10.11, the Trustee shall be
deemed to have resigned as contemplated in subsection (b) of this
Section, the successor Trustee shall be deemed to have been
appointed pursuant to subsection (e) of this Section and such
appointment shall be deemed to have been accepted as contemplated
in Section 10.11, all as of such date, and all other provisions of
this Section and Section 10.11 shall be applicable to such
resignation, appointment and acceptance except to the extent
inconsistent with this subsection  (f).

          (g)     The
Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid,
to all Holders as their names and addresses appear in the Bond
Register.  Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.

SECTION
10.11.     Acceptance of Appointment by
Successor.

          (a)     In
case of the appointment hereunder of a successor Trustee, every
such successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee.  Such retiring Trustee shall execute
and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee
hereunder.

          (b)     Upon
request of any such successor Trustee, the Company shall execute
any instruments which fully vest in and confirm to such successor
Trustee all rights, powers and trusts referred to in subsection (a)
of this Section.

          (c)     No
successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and
eligible under this Article.

SECTION
10.12.     Merger, Conversion,
Consolidation or Succession to
Business.

          Any
corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.  In case
any Bonds shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
authentication and deliver the Bonds so authenticated with the same
effect as if such successor Trustee had itself authenticated such
Bonds.

SECTION
10.13.     Preferential Collection of
Claims Against Company.

          If
the Trustee shall be or become a creditor of the Company or any
other obligor upon the Bonds (other than by reason of a
relationship described in Section 311(b) of the Trust Indenture
Act), the Trustee shall be subject to any and all applicable
provisions of the Trust Indenture Act regarding the collection of
claims against the Company or such other obligor. 

SECTION
10.14.     Co-Trustees and Separate
Trustees.

          At
any time or times, for the purpose of meeting the legal
requirements of any jurisdiction, the Company and the Trustee shall
have power to appoint, and, upon the written request of the Trustee
or of the Holders of at least thirty-three percent (33%) in
principal amount of the Bonds then Outstanding, the Company shall
for such purpose join with the Trustee in the execution and
delivery of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Trustee and, if no
Event of Default shall have occurred and be continuing, by the
Company either to act as co-trustee under this Indenture, jointly
with the Trustee, or to act as separate trustee under this
Indenture, in either case with such powers as may be provided in
the instrument of appointment, and to vest in such Person or
Persons, in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other
provisions of this Section.  If the Company does not join in
such appointment within fifteen (15) days after the receipt by it
of a request so to do, or if an Event of Default shall have
occurred and be continuing, the Trustee alone shall have power to
make such appointment.

          Should
any written instrument or instruments from the Company be required
by any co-trustee or separate trustee so appointed to more fully
confirm to such co-trustee or separate trustee such property,
title, right or power, any and all such instruments shall, on
request, be executed, acknowledged and delivered by the
Company.

          Every
co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following
conditions:

              (i)     the
Bonds shall be authenticated and delivered, and all rights, powers,
duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by the Trustee
hereunder shall be exercised solely by the Trustee;

               (ii)     the
rights, powers, duties and obligations hereby conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised
or performed either by the Trustee or by the Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except
to the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent
or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee;

               (iii)     the
Trustee at any time, by an instrument in writing executed by it,
with the concurrence of the Company, may accept the resignation of
or remove any co-trustee or separate trustee appointed under this
Section, and, if an Event of Default shall have occurred and be
continuing, the Trustee shall have power to accept the resignation
of, or remove, any such co-trustee or separate trustee without the
concurrence of the Company.  Upon the written request of the
Trustee, the Company shall join with the Trustee in the execution
and delivery of all instruments and agreements necessary or proper
to effectuate such resignation or removal.  A successor to any
co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section;

               (iv)     neither
the Trustee nor any co-trustee or separate trustee hereunder shall
be personally liable by reason of any act or omission of any other
trustee hereunder; and

               (v)     any
Act of Holders delivered to the Trustee shall be deemed to have
been delivered to each such co-trustee and separate
trustee.

SECTION
10.15.     Appointment of
Authenticating Agent.

          The
Trustee may appoint an Authenticating Agent or Agents with respect
to the Bonds of one or more series, or any Tranche thereof, which
shall be authorized to act on behalf of the Trustee to authenticate
Bonds of such series or Tranche issued upon original issuance,
exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.06, and Bonds so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee
hereunder.  Wherever reference is made in this Indenture to
the authentication and delivery of Bonds by the Trustee or the
Trustee’s certificate of authentication, such reference shall
be deemed to include authentication and delivery on behalf of the
Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an
Authenticating Agent.  Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation
organized and doing business under the laws of the United States,
any state or territory thereof or the District of Columbia or the
Commonwealth of Puerto Rico, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not
less than Fifty Million Dollars ($50,000,000) and subject to
supervision or examination by federal or state authority.  If
such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.  If
at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect
specified in this Section.

          Any
corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which
such Authenticating Agent shall be a party, or any corporation
succeeding to all or substantially all of the corporate agency or
corporate trust business of an Authenticating Agent, shall continue
to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.

          An
Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company.  The Trustee
may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to
the Company.  Upon receiving such a notice of resignation or
upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions
of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company.  Any successor
Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as
an Authenticating Agent.  No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this
Section.

          The
Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this
Section.

          The
provisions of Sections 3.03, 10.04 and 10.05 shall be applicable to
each Authenticating Agent.

          If
an appointment with respect to the Bonds of one or more series, or
any Tranche thereof, shall be made pursuant to this Section, the
Bonds of such series or Tranche may have endorsed thereon, in
addition to the Trustee’s certificate of authentication, an
alternate certificate of authentication substantially in the
following form:

               This
is one of the Bonds of the series designated therein referred to in
the within-mentioned Indenture.

                                                       ___________________________,
as Trustee

                                                       By
         
           
           
           

                                                              As Authenticating Agent

                                                       By
         
           
           
           

                                                              Authorized Officer

          If
all of the Bonds of a series may not be originally issued at one
time, and if the Trustee does not have an office capable of
authenticating Bonds upon original issuance located in a Place of
Payment where the Company wishes to have Bonds of such series
authenticated upon original issuance, the Trustee, if so requested
by the Company in writing (which writing need not comply with
Section 1.02 and need not be accompanied by an Opinion of Counsel),
shall appoint, in accordance with this Section and in accordance
with such procedures as shall be acceptable to the Trustee, an
Authenticating Agent having an office in a Place of Payment
designated by the Company with respect to such series of
Bonds.

SECTION
10.16.     Further
Assurances.

          On
the Release Date, the lien of the Prior Indenture was discharged,
cancelled, terminated and satisfied, and as a result, all Bonds are
unsecured obligations of the Company. To the extent necessary to
evidence or make effective such discharge, cancellation,
termination and satisfaction, the Trustee shall, promptly upon
request of the Company, (i) authorize, execute and deliver to the
order of the Company such documents or instruments as, in the
judgment of the Company, may be necessary, desirable or appropriate
to discharge, cancel, terminate and satisfy the lien of the Prior
Indenture,  and (ii) execute and deliver to the Company such
deeds, termination statements and other documents and instruments
as, in the judgment of the Company, may be necessary, desirable or
appropriate to release, quitclaim or otherwise turn over to the
Company all Mortgaged Property (as defined in the Prior
Indenture).

ARTICLE XI

LISTS OF HOLDERS; REPORTS BY TRUSTEE AND
COMPANY

SECTION
11.01.     Lists of
Holders.

          Semiannually,
not less than forty‐five (45) days nor more than sixty (60)
days after June 1 and December 1 in each year, commencing 2004, and
at such other times as the Trustee may request in writing, the
Company shall furnish or cause to be furnished to the Trustee,
information as to the names and addresses of the Holders as of a
date no more than fifteen (15) days prior to the date such
information is so furnished, and the Trustee shall preserve such
information and similar information received by it in any other
capacity and afford to the Holders access to information so
preserved by it, all to such extent, if any, and in such manner as
shall be required by the Trust Indenture Act; provided, however,
that no such list need be furnished so long as the Trustee shall be
the Bond Registrar.

SECTION
11.02.     Reports by Trustee and
Company.

          Not
later than July 15 in each year, commencing July 15, 2005, the
Trustee shall transmit to the Holders, the Commission and each
securities exchange upon which any Bonds are listed a report, dated
as of the next preceding May 15, with respect to any events and
other matters described in Section 313(a) of the Trust Indenture
Act, in such manner and to the extent required by the Trust
Indenture Act.  The Trustee shall transmit to the Holders, the
Commission and each securities exchange upon which any Bonds are
listed, and the Company shall file with the Trustee (within thirty
(30) days after filing with the Commission in the case of reports
which pursuant to the Trust Indenture Act must be filed with the
Commission and furnished to the Trustee) and cause to be
transmitted to the Holders, such other information, reports and
other documents, if any, at such times and in such manner, as shall
be required by the Trust Indenture Act.  Delivery of such
reports, information and documents to the Trustee is for
informational purposes only and the Trustee’s receipt of such
shall not constitute constructive notice of any information
contained therein or determinable from information contained
therein, including the Company’s compliance with any of its
covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers’ Certificates).  The Company
shall notify the Trustee of the listing of any Bonds on any
securities exchange.

ARTICLE XII

CONSOLIDATION, MERGER, CONVEYANCE OR OTHER
TRANSFER

SECTION
12.01.     Company May Consolidate,
etc., Only on Certain Terms.

          The
Company shall not consolidate with or merge with or into any other
Person, or convey, or otherwise transfer, or lease, all or
substantially all of the Principal Property to any Person,
unless:

          (a)     the
Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or other
transfer, or which leases, all or substantially all of the
Principal Property shall be a corporation, shall be organized and
existing under the laws of the United States, any state thereof or
the District of Columbia (such corporation being hereinafter
sometimes called the “Successor Corporation”) and shall
execute and deliver to the Trustee an indenture supplemental
hereto, in form reasonably satisfactory to the Trustee, which in
the case of a consolidation, merger, conveyance or other transfer,
or in the case of a lease if the term thereof extends beyond the
last Stated Maturity of the Bonds then Outstanding, contains an
assumption by the Successor Corporation of the due and punctual
payment of the principal of and premium, if any, and interest, if
any, on all the Bonds then Outstanding and the performance and
observance of every covenant and condition of this Indenture to be
performed or observed by the Company, and

          (b)     in
the case of a lease, such lease shall be made expressly subject to
termination by the Company or by the Trustee at any time during the
continuance of an Event of Default, and

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

          (d)     the
Company has delivered to the Trustee an Officer’s Certificate
and an Opinion of Counsel, each stating that the merger,
consolidation, conveyance, lease or transfer, as the case may be,
fully complies with all provisions of this Indenture; provided,
however, that the delivery of such an Officer’s Certificate
and Opinion of Counsel shall not be required with respect to any
merger, consolidation, conveyance, transfer or lease between the
Company and any of its wholly-owned Subsidiaries.

          Notwithstanding
the foregoing, the Company may merge or consolidate with or
transfer all or substantially all of its assets to an Affiliate
that has no significant assets or liabilities and was formed solely
for the purpose of changing the jurisdiction of organization of the
Company or the form of organization of the Company or for the
purpose of forming a holding company; provided that the amount of
indebtedness of the Company is not increased thereby; and provided,
further that the successor assumes all obligations of the Company
under this Indenture.

SECTION
12.02.     Successor Corporation
Substituted.

          Upon
any consolidation or merger or any conveyance or other transfer of
all or substantially all of the Principal Property in accordance
with Section 12.01, the Successor Corporation shall succeed to, and
be substituted for, and may exercise every power and right of, the
Company under this Indenture with the same effect as if such
Successor Corporation had been named as the “Company”
herein.  Without limiting the generality of the foregoing, the
Successor Corporation may execute and deliver to the Trustee, and
thereupon the Trustee shall, subject to the provisions of Article
V, authenticate and deliver, Bonds in accordance with the
provisions hereof.

          All
Bonds so executed by the Successor Corporation, and authenticated
and delivered by the Trustee, shall in all respects be entitled to
the benefits of this Indenture equally and ratably with all Bonds
executed, authenticated and delivered prior to the time such
consolidation, merger, conveyance or other transfer became
effective.

          In
case of any such consolidation, merger, sale, conveyance or lease,
changes in phraseology and form may be made in the Bonds thereafter
to be issued and the documentation thereafter to be delivered
hereunder as may be appropriate to reflect such
occurrence.

SECTION
12.03.     Property of Successor
Corporation.

          Unless,
in the case of a consolidation, merger, conveyance or other
transfer contemplated by Section 12.01, the indenture
supplemental hereto contemplated in clause (a) in
Section 12.01, or any other indenture, so provides, none of
the properties:

          (a)     owned
by the Successor Corporation or any other party to such transaction
(other than the Company) immediately prior to the time of
effectiveness of such transaction or

          (b)     acquired
by the Successor Corporation at or after the time of effectiveness
of such transaction,

shall be or become
Principal Property, except, in either case, Principal Property
acquired from the Company in or as a result of such transaction and
to the extent not constituting Excepted Property, improvements,
extensions and additions to such Principal Property and renewals,
replacements and substitutions of or for any part or parts of such
Principal Property.

SECTION
12.04.     Release of Company Upon
Conveyance or Other Transfer.

          In
the case of a conveyance or other transfer to any Person or Persons
as contemplated in Section 12.01, upon the satisfaction of all the
conditions specified in Section 12.01, the Company (such term being
used in this Section without giving effect to such transaction)
shall be released and discharged from all obligations and covenants
under this Indenture and on and under all Bonds then Outstanding
(unless the Company shall have delivered to the Trustee an
instrument in which it shall waive such release and discharge) and
the Trustee shall acknowledge in writing that the Company has been
so released and discharged.

SECTION
12.05.     Merger Into
Company.

          (a)     Nothing
in this Indenture shall be deemed to prevent or restrict any
consolidation or merger after the consummation of which the Company
would be the surviving or resulting company or any conveyance or
other transfer, or lease, of any part of the Principal Property
which does not constitute the entirety, or substantially the
entirety, thereof.

          (b)     Unless,
in the case of a consolidation or merger described in
subsection (a) of this Section, an indenture supplemental
hereto shall otherwise provide, none of the properties acquired by
the Company in or as a result of such transaction or any
improvements, extensions or additions to such properties or any
renewals, replacements or substitutions of or for any part or parts
thereof shall be or become Principal Property.

ARTICLE XIII

SUPPLEMENTAL INDENTURES

SECTION
13.01.     Supplemental Indentures
Without Consent of Holders.

          Without
the consent of any Holders, the Company and the Trustee, at any
time and from time to time, may enter into one or more indentures
supplemental hereto, in form reasonably satisfactory to the
Trustee, for any of the following purposes:

          (a)     to
evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company
herein and in the Bonds, all as provided in Article XII;
or

          (b)     to
add one or more covenants of the Company or other provisions for
the benefit of all Holders or for the benefit of the Holders of, or
to remain in effect only so long as there shall be Outstanding,
Bonds of one or more specified series, or one or more specified
Tranches thereof; or to surrender any right or power herein
conferred upon the Company; or

          (c)     to
change or eliminate any provision of this Indenture or to add any
new provision to this Indenture; provided, however, that if such
change, elimination or addition shall adversely affect the
interests of the Holders of Bonds of any series or Tranche in any
material respect, such change, elimination or addition shall become
effective with respect to such series or Tranche only when no Bond
of such series or Tranche remains Outstanding; or

          (d)     to
establish the form or terms of Bonds of any series or Tranche as
contemplated by Sections 2.01 and 3.01; or

          (e)     to
evidence and provide for the acceptance of appointment hereunder by
a separate or successor Trustee with respect to the Bonds of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 10.11(b); or

          (f)     to
provide for the procedures required to permit the Company to issue,
at its option, all or any series or Tranche of, the Bonds as
uncertificated securities; or

          (g)     to
change any place or places where (1) the principal of and premium,
if any, and interest, if any, on all or any series of Bonds, or any
Tranche thereof, shall be payable, (2) all or any series of Bonds,
or any Tranche thereof, may be surrendered for registration of
transfer, (3) all or any series of Bonds, or any Tranche thereof,
may be surrendered for exchange and (4) notices and demands to or
upon the Company in respect of all or any series of Bonds, or any
Tranche thereof, and this Indenture may be served; or

          (h)     to
cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision
herein; or to make any other additions to, deletions from or other
changes to the provisions under this Indenture, provided that such
additions, deletions and/or other changes shall not materially
adversely affect the interests of the Holders of Bonds of any
series or Tranche in any material respect; or

          (i)     to
modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to continue the qualification of
this Indenture under the Trust Indenture Act, or under any similar
federal statute enacted after March 11, 2004, and to add to
this Indenture such other provisions as may be expressly permitted
by the Trust Indenture Act, excluding, however the provisions
referred to in Section 316(a)(2) of the Trust Indenture Act as in
effect on March 11, 2004 or any corresponding provision in any
similar federal statute enacted after March 11, 2004;
or

          (j)     to
supplement any of the provisions of this Indenture to such extent
as shall be necessary to permit or facilitate the discharge of any
series of Bonds pursuant to Section 8.02; provided that any such
action shall not adversely affect the interests of the Holders of
Bonds of such series or any other series of Bonds in any material
respect; or

          (k)     to
comply with the rules or regulations of any securities exchange or
automated quotation system on which any of the Bonds may be listed
or traded.

          Without
limiting the generality of the foregoing, if the Trust Indenture
Act as in effect on the Initial Issuance Date, or at any time
thereafter shall be amended and

                (x)      
if any such amendment shall require one or more changes to any
provisions hereof or the inclusion herein of any additional
provisions, or shall by operation of law be deemed to effect such
changes or incorporate such provisions by reference or otherwise,
this Indenture shall be deemed to have been amended so as to
conform to such amendment to the Trust Indenture Act, and the
Company and the Trustee may, without the consent of any Holders,
enter into an indenture supplemental hereto to evidence such
amendment hereof; or

                (y)      
if any such amendment shall permit one or more changes to, or the
elimination of, any provisions hereof which, as of March 11,
2004 or at any time thereafter, are required by the Trust Indenture
Act to be contained herein or are contained herein to reflect any
provisions of the Trust Indenture Act as in effect at such date,
this Indenture shall be deemed to have been amended to effect such
changes or elimination, and the Company and the Trustee may,
without the consent of any Holders, enter into an indenture
supplemental hereto to amend this Indenture to effect such changes
or elimination.

SECTION
13.02.     Supplemental Indentures With
Consent of Holders.

          Subject
to the provisions of Section 13.01, with the consent of the Holders
of not less than a majority in aggregate principal amount of the
Bonds of all series then Outstanding under this Indenture,
considered as one class, by Act of said Holders delivered to the
Company and the Trustee, the Company and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture; provided, however, that
if there shall be Bonds of more than one series Outstanding
hereunder and if a proposed supplemental indenture shall directly
affect the rights of the Holders of Bonds of one or more, but less
than all, of such series, then the consent only of the Holders of
not less than a majority in aggregate principal amount of the
Outstanding Bonds of all series so directly affected, considered as
one class, shall be required; and provided, further, that if the
Bonds of any series shall have been issued in more than one Tranche
and if a proposed supplemental indenture shall directly affect the
rights of the Holders of Bonds of one or more, but less than all,
of such Tranches, then the consent only of the Holders of a
majority in aggregate principal amount of the Outstanding Bonds of
all Tranches so directly affected, considered as one class, shall
be required; and provided, further, that no such supplemental
indenture shall, without the consent of the Holder of each
Outstanding Bond of each series or Tranche so directly
affected:

          (a)     except
as otherwise specified in the form or terms of the Bonds of any
series as permitted by Sections 2.01 and 3.01 with respect to
extending the Stated Maturity of any Bond of such series, change
the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Bond, or reduce the principal
amount thereof or the rate of interest thereon (or the amount of
any installment of interest thereon) or change the method of
calculating such rate or reduce any premium payable thereon, or
reduce the amount of the principal of any Discount Bond that would
be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 9.02, or change the coin or
currency (or other property), in which any Bond or premium, if any,
or interest, if any, thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after
the Maturity of any Bond, without, in any such case, the consent of
the Holder of such Bond; or

          (b)     reduce
the percentage in principal amount of the Outstanding Bonds of any
series, or any Tranche thereof, the consent of the Holders of which
is required for any such supplemental indenture, or the consent of
the Holders of which is required for any waiver of compliance with
any provision of this Indenture or of any default hereunder and its
consequences, or reduce the requirements of Section 14.04 for
quorum or voting; or

          (c)     modify
any of the provisions of this Section, Section 7.05 or Section 9.13
with respect to the Bonds of any series or any Tranche thereof
(except to increase the percentages in principal amount referred to
in this Section or such other Sections or to provide that other
provisions of this Indenture cannot be modified or waived without
the consent of the Holders of all Bonds of such series or Tranche)
without, in any such case, the consent of the Holder of each
Outstanding Bond of such series or Tranche; provided, however, that
this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to “the
Trustee” and concomitant changes in this Section, or the
deletion of this proviso, in accordance with the requirements of
Section 13.01(e).

          A
supplemental indenture which (x) changes or eliminates any covenant
or other provision of this Indenture which has expressly been
included solely for the benefit of the Holders of, or which is to
remain in effect only so long as there shall be Outstanding, Bonds
of one or more specified series, or one or more Tranches thereof,
or (y) modifies the rights of the Holders of Bonds of such series
or Tranches with respect to such covenant or other provision, shall
be deemed not to affect the rights under this Indenture of the
Holders of Bonds of any other series or Tranche.

          It
shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance
thereof.

          Anything
in this Indenture to the contrary notwithstanding, if the
Officer’s Certificate, supplemental indenture or Board
Resolution, as the case may be, establishing the Bonds of any
series or Tranche shall provide that the Company may make certain
specified additions, changes or eliminations to or from this
Indenture which shall be specified in such Officer’s
Certificate, supplemental indenture or Board Resolution
establishing such series or Tranche, (a) the Holders of Bonds of
such series or Tranche shall be deemed to have consented to a
supplemental indenture containing such additions, changes or
eliminations to or from this Indenture which shall be specified in
such Officer’s Certificate, supplemental indenture or Board
Resolution establishing such series or Tranche, (b) no Act of such
Holders shall be required to evidence such consent and (c) such
consent may be counted in the determination of whether or not the
Holders of the requisite principal amount of Bonds shall have
consented to such supplemental indenture.

SECTION
13.03.     Execution of Supplemental
Indentures.

          In
executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Section
10.01) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture.  The Trustee
may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee’s own
rights, duties, immunities or liabilities under this Indenture or
otherwise.

SECTION
13.04.     Effect of Supplemental
Indentures.

          Upon
the execution and delivery of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith,
and such supplemental indenture shall form a part of this Indenture
for all purposes; and every Holder of Bonds theretofore or
thereafter authenticated and delivered hereunder shall be bound
thereby.  Any supplemental indenture permitted by this Article
may restate this Indenture in its entirety, and, upon the execution
and delivery thereof, any such restatement shall supersede this
Indenture as theretofore in effect for all purposes.

SECTION
13.05.     Conformity With Trust
Indenture Act.

          Every
supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.

SECTION
13.06.     Reference in Bonds to
Supplemental Indentures.

          Bonds
of any series, or any Tranche thereof, authenticated and delivered
after the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation
in form approved by the Trustee as to any matter provided for in
such supplemental indenture.  If the Company shall so
determine, new Bonds of any series, or any Tranche thereof, so
modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Bonds of such series or
Tranche.

SECTION
13.07.     Modification Without
Supplemental Indenture.

          To
the extent, if any, that the terms of any particular series of
Bonds shall have been established in or pursuant to a Board
Resolution or an Officer’s Certificate pursuant to a
supplemental indenture or a Board Resolution as contemplated by
Section 3.01, and not in a supplemental indenture, additions to,
changes in or the elimination of any of such terms may be effected
by means of a supplemental Board Resolution or a supplemental
Officer’s Certificate, as the case may be, delivered to, and
accepted by, the Trustee; provided, however, that such supplemental
Board Resolution or supplemental Officer’s Certificate shall
not be accepted by the Trustee or otherwise be effective unless all
conditions set forth in this Indenture which would be required to
be satisfied if such additions, changes or elimination were
contained in a supplemental indenture shall have been appropriately
satisfied.  Upon the acceptance thereof by the Trustee, any
such supplemental Board Resolution or supplemental Officer’s
Certificate shall be deemed to be a “supplemental
indenture” for purposes of Section 13.04 and
13.06.

ARTICLE XIV

MEETINGS OF HOLDERS; ACTION WITHOUT MEETING

SECTION
14.01.     Purposes for Which Meetings
May Be Called.

          A
meeting of Holders of Bonds of one or more, or all, series, or any
Tranche or Tranches thereof, may be called at any time and from
time to time pursuant to this Article to make, give or take any
request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be made, given or
taken by Holders of Bonds of such series or Tranches.

SECTION
14.02.     Call, Notice and Place of
Meetings.

          (a)     The
Trustee may at any time call a meeting of Holders of Bonds of one
or more, or all, series, or any Tranche or Tranches thereof, for
any purpose specified in Section 14.01, to be held at such time and
(except as provided in subsection (b) of this Section) at such
place as the Trustee shall determine with the approval of the
Company.  Notice of every such meeting, setting forth the time
and the place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be given, in the manner
provided in Section 1.06, not less than twenty-one (21) nor more
than one hundred eighty (180) days prior to the date fixed for the
meeting.

          (b)     The
Trustee may be asked to call a meeting of the Holders of Bonds of
one or more, or all, series, or any Tranche or Tranches thereof, by
the Company or by the Holders of at least twenty-five percent (25%)
in aggregate principal amount of all of such series and Tranches,
considered as one class, for any purpose specified in Section
14.01, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting.  If the Trustee
shall have been asked by the Company to call such a meeting, the
Company shall determine the time and place for such meeting and may
call such meeting by giving notice thereof in the manner provided
in subsection (a) of this Section, or shall direct the Trustee, in
the name and at the expense of the Company, to give such
notice.  If the Trustee shall have been asked to call such a
meeting by Holders in accordance with this subsection (b), and the
Trustee shall not have given the notice of such meeting within
twenty-one (21) days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided
herein, then the Holders of Bonds of such series and Tranches, in
the principal amount above specified, may determine the time and
the place for such meeting, such place to be approved by the
Company, and may call such meeting for such purposes by giving
notice thereof as provided in subsection (a) of this
Section.

          (c)     Any
meeting of Holders of Bonds of one or more, or all, series, or any
Tranche or Tranches thereof, shall be valid without notice if the
Holders of all Outstanding Bonds of such series or Tranches are
present in person or by proxy and if representatives of the Company
and the Trustee are present, or if notice is waived in writing
before or after the meeting by the Holders of all Outstanding Bonds
of such series, or any Tranche or Tranches thereof, or by such of
them as are not present at the meeting in person or by proxy, and
by the Company and the Trustee.

SECTION
14.03.     Persons Entitled to Vote at
Meetings.

          To
be entitled to vote at any meeting of Holders of Bonds of one or
more, or all, series, or any Tranche or Tranches thereof, a Person
shall be (a) a Holder of one or more Outstanding Bonds of such
series or Tranches or (b) a Person appointed by an instrument in
writing as proxy for a Holder or Holders of one or more Outstanding
Bonds of such series or Tranches by such Holder or Holders. 
The only Persons who shall be entitled to attend any meeting of
Holders of Bonds of any series or Tranche shall be the Persons
entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

SECTION
14.04.     Quorum;
Action.

          The
Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Bonds of the series and Tranches with respect to
which a meeting shall have been called as hereinbefore provided,
considered as one class, shall constitute a quorum for a meeting of
Holders of Bonds of such series and Tranches; provided, however,
that if any action is to be taken at such meeting which this
Indenture expressly provides may be taken by the Holders of a
specified percentage, which is less than a majority, in principal
amount of the Outstanding Bonds of such series and Tranches,
considered as one class, the Persons entitled to vote such
specified percentage in principal amount of the Outstanding Bonds
of such series and Tranches, considered as one class, shall
constitute a quorum.  In the absence of a quorum within one
hour of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Bonds of such series and
Tranches, be dissolved.  In any other case the meeting may be
adjourned for such period as may be determined by the chairman of
the meeting prior to the adjournment of such meeting.  In the
absence of a quorum at any such adjourned meeting, such adjourned
meeting may be further adjourned for such period as may be
determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting.  Except as provided by Section
14.05(e), notice of the reconvening of any meeting adjourned for
more than thirty (30) days shall be given as provided in Section
1.06 not less than ten (10) days prior to the date on which the
meeting is scheduled to be reconvened.  Notice of the
reconvening of an adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the
Outstanding Bonds of such series and Tranches which shall
constitute a quorum.

          Except
as limited by Section 13.02, any resolution presented to a meeting
or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the
Holders of not less than a majority in aggregate principal amount
of the Outstanding Bonds of the series and Tranches with respect to
which such meeting shall have been called, considered as one class;
provided, however, that, except as so limited, any resolution with
respect to any action which this Indenture expressly provides may
be taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Bonds of
such series and Tranches, considered as one class, may be adopted
at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the
Holders of such specified percentage in principal amount of the
Outstanding Bonds of such series and Tranches, considered as one
class.

          Any
resolution passed or decision taken at any meeting of Holders of
Bonds duly held in accordance with this Section shall be binding on
all the Holders of Bonds of the series and Tranches with respect to
which such meeting shall have been held, whether or not present or
represented at the meeting.

SECTION
14.05.     Attendance at Meetings;
Determination of Voting Rights; Conduct and Adjournment of
Meetings.

          (a)     Attendance
at meetings of Holders of Bonds may be in person or by proxy; and,
to the extent permitted by law, any such proxy shall remain in
effect and be binding upon any future Holder of the Bonds with
respect to which it was given unless and until specifically revoked
by the Holder or future Holder (except as provided in Section
1.04(g)) of such Bonds before being voted.

          (b)     Notwithstanding
any other provisions of this Indenture, the Trustee may make such
reasonable regulations as it may deem advisable for any meeting of
Holders of Bonds in regard to proof of the holding of such Bonds
and of the appointment of proxies and in regard to the appointment
and duties of inspectors of votes, the submission and examination
of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it
shall deem appropriate.  Except as otherwise permitted or
required by any such regulations and approved by the Company, the
holding of Bonds shall be proved in the manner specified in Section
1.04 and the appointment of any proxy shall be proved in the manner
specified in Section 1.04.  Such regulations may provide that
written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in
Section 1.04 or other proof.

          (c)     The
Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called
by the Company or by Holders as provided in Section 14.02(b), in
which case the Company or the Holders of Bonds of the series and
Tranches calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman.  A permanent chairman and
a permanent secretary of the meeting shall be elected by vote of
the Persons entitled to vote a majority in aggregate principal
amount of the Outstanding Bonds of all series and Tranches
represented at the meeting, considered as one class.

          (d)     At
any meeting each Holder or proxy shall be entitled to one vote for
each One Thousand Dollars ($1,000) principal amount of Outstanding
Bonds held or represented by such Holder; provided, however, that
no vote shall be cast or counted at any meeting in respect of any
Bond challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding.  The chairman of the meeting
shall have no right to vote, except as a Holder of a Bond or
proxy.

          (e)     Any
meeting duly called pursuant to Section 14.02 at which a quorum is
present may be adjourned from time to time by Persons entitled to
vote a majority in aggregate principal amount of the Outstanding
Bonds of all series and Tranches represented at the meeting,
considered as one class; and the meeting may be held as so
adjourned without further notice.

SECTION
14.06.     Counting Votes and Recording
Action of Meetings.

          The
vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures
of the Holders or of their representatives by proxy and the
principal amounts and serial numbers of the Outstanding Bonds, of
the series and Tranches with respect to which the meeting shall
have been called, held or represented by them.  The permanent
chairman of the meeting shall appoint two (2) inspectors of votes
who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the
meeting their verified written reports of all votes cast at the
meeting.  A record in duplicate of the proceedings of each
meeting of Holders shall be prepared by the secretary of the
meeting and there shall be attached to such record the original
reports of the inspectors of votes on any vote by ballot taken
thereat and affidavits by one or more persons having knowledge of
the facts setting forth a copy of the notice of the meeting and
showing that such notice was given as provided in Section 14.02
and, if applicable, Section 14.04.  Each copy shall be signed
and verified by the affidavits of the permanent chairman and
secretary of the meeting and one such copy shall be delivered to
the Company, and another to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at
the meeting.  Any record so signed and verified shall be
conclusive evidence of the matters therein stated.

SECTION
14.07.     Action Without
Meeting.

          In
lieu of a vote of Holders at a meeting as hereinbefore contemplated
in this Article, any request, demand, authorization, direction,
notice, consent, waiver or other action may be made, given or taken
by Holders by one or more written instruments as provided in
Section 1.04.

ARTICLE XV

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,

OFFICERS AND DIRECTORS

SECTION
15.01.     Liability Solely
Corporate.

          No
recourse shall be had for the payment of the principal of or
premium, if any, or interest, if any, on any Bonds, or any part
thereof, or for any claim based thereon or otherwise in respect
thereof, or of the indebtedness represented thereby, or upon any
obligation, covenant or agreement under this Indenture, against any
incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any predecessor or
successor corporation (either directly or through the Company or a
predecessor or successor corporation), whether by virtue of any
constitutional provision, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise; it being
expressly agreed and understood that this Indenture and all the
Bonds are solely corporate obligations and that no personal
liability whatsoever shall attach to, or be incurred by, any
incorporator, stockholder, member, officer or director, past,
present or future, of the Company or of any predecessor or
successor corporation, either directly or indirectly through the
Company or any predecessor or successor corporation, because of the
indebtedness hereby authorized or under or by reason of any of the
obligations, covenants or agreements contained in this Indenture or
in any of the Bonds or to be implied herefrom or therefrom; and
such personal liability, if any, is hereby expressly waived and
released as a condition of, and as part of the consideration for,
the execution and delivery of this Indenture and the issuance of
the Bonds.

_________________________

          This
instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
instrument.

[Signature
Page Follows]

          IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above
written.

	
                                                            

	
PACIFIC GAS AND
ELECTRIC COMPANY,

		
as Issuer

		
     

		
By:
         KENT M.
HARVEY                    

		
Name:      Kent M.
Harvey

		
Title:        Senior
Vice President -

		
               Chief
Financial Officer and Treasurer

		
      

		
       

		
THE BANK OF NEW YORK
TRUST COMPANY, N.A.,

		
as Trustee

		
     

		
By:
       JOSPEHINE
LIBUNAO      
           

		
Name:   Josephine Libunao

            
Vice President

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