Document:

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                                                                     Exhibit 4.3

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                               CALPINE CORPORATION

               8.75% SECOND PRIORITY SENIOR SECURED NOTES DUE 2013

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

                                    INDENTURE

                            Dated as of July 16, 2003

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

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

                            WILMINGTON TRUST COMPANY

                                     Trustee

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

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                             CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
Trust Indenture
  Act Section                                                                    Indenture Section
<S>                                                                              <C>
310(a)(1)...................................................................             7.10
   (a)(2)...................................................................             7.10
   (a)(3)...................................................................             N.A.
   (a)(4)...................................................................             N.A.
   (a)(5)...................................................................             7.10
   (b)......................................................................             7.10
   (c)......................................................................             N.A.
311(a)......................................................................             7.11
   (b)......................................................................             7.11
   (c)......................................................................             N.A.
312(a)......................................................................             2.05
313(a)......................................................................             7.06
   (b)(1)...................................................................            10.03
   (b)(2)...................................................................          7.06; 7.07
   (c)......................................................................             7.06
   (d)......................................................................             7.06
314(a)......................................................................             4.03
   (a)(4)...................................................................            12.05
   (b)......................................................................             N.A.
   (c)(3)...................................................................             N.A.
   (e)......................................................................            12.05
   (f)......................................................................             N.A.
315(a)......................................................................             7.01
   (b)......................................................................             7.05
   (c)......................................................................             7.01
   (d)......................................................................             7.01
   (e)......................................................................             6.11
316(a)(last sentence).......................................................             2.09
   (a)(1)(A)................................................................             6.05
   (a)(1)(B)................................................................             6.04
   (a)(2)...................................................................             N.A.
   (b)......................................................................             6.07
   (c)......................................................................             2.12
317(a)(1)...................................................................             6.08
   (a)(2)...................................................................             6.09
   (b)......................................................................             2.04
318(a)......................................................................             N.A.
   (b)......................................................................            12.03
   (c)......................................................................     12.01; 12.02; 12.03
</TABLE>

N.A. means not applicable.
* This Cross Reference Table is not part of this Indenture.

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   Page
<S>                                                                                                                <C>
                                                             ARTICLE 1.
                                                    DEFINITIONS AND INCORPORATION
                                                            BY REFERENCE

Section 1.01      Definitions....................................................................................    1
Section 1.02      Other Definitions..............................................................................   29
Section 1.03      Incorporation by Reference of Trust Indenture Act..............................................   29
Section 1.04      Rules of Construction..........................................................................   30

                                                             ARTICLE 2.
                                                              THE NOTES

Section 2.01      Form and Dating................................................................................   31
Section 2.02      Execution and Authentication...................................................................   31
Section 2.03      Registrar and Paying Agent.....................................................................   32
Section 2.04      Paying Agent to Hold Money in Trust............................................................   32
Section 2.05      Holder Lists...................................................................................   32
Section 2.06      Transfer and Exchange..........................................................................   32
Section 2.07      Replacement Notes..............................................................................   39
Section 2.08      Outstanding Notes..............................................................................   39
Section 2.09      Treasury Notes.................................................................................   39
Section 2.10      Temporary Notes................................................................................   39
Section 2.11      Cancellation...................................................................................   40
Section 2.12      Defaulted Interest.............................................................................   40

                                                             ARTICLE 3.
                                                      REDEMPTION AND PREPAYMENT

Section 3.01      Notices to Trustee.............................................................................   40
Section 3.02      Selection of Notes to Be Redeemed or Purchased.................................................   40
Section 3.03      Notice of Redemption...........................................................................   41
Section 3.04      Effect of Notice of Redemption.................................................................   42
Section 3.05      Deposit of Redemption or Purchase Price........................................................   42
Section 3.06      Notes Redeemed or Purchased in Part............................................................   42
Section 3.07      Optional Redemption............................................................................   42
Section 3.08      Mandatory Redemption...........................................................................   43
Section 3.09      Offer to Purchase by Application of Excess Proceeds............................................   43

                                                             ARTICLE 4.
                                                              COVENANTS

Section 4.01      Payment of Notes...............................................................................   45
Section 4.02      Maintenance of Office or Agency................................................................   45
Section 4.03      Reports........................................................................................   45
Section 4.04      Compliance Certificate.........................................................................   46
Section 4.05      Taxes..........................................................................................   47
Section 4.06      Stay, Extension and Usury Laws.................................................................   47
Section 4.07      Restricted Payments............................................................................   47
Section 4.08      Dividend and Other Payment Restrictions Affecting Subsidiaries.................................   50
Section 4.09      Incurrence of Indebtedness and Issuance of Preferred Stock.....................................   51
Section 4.10      Asset Sales....................................................................................   54
</TABLE>

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<TABLE>
<S>                                                                                                                 <C>
Section 4.11      Transactions with Affiliates...................................................................   56
Section 4.12      Liens..........................................................................................   57
Section 4.13      Limitation on Changes in the Nature of Business................................................   57
Section 4.14      Corporate Existence............................................................................   58
Section 4.15      Offer to Repurchase Upon Change of Control.....................................................   58
Section 4.16      Limitation on Sale and Leaseback Transactions..................................................   59
Section 4.17      Limitation on Issuances of Guarantees of Indebtedness..........................................   59
Section 4.18      Payments for Consent...........................................................................   60
Section 4.19      Designation of Restricted and Unrestricted Subsidiaries........................................   60
Section 4.20      Changes in Covenant When Notes Rated Investment Grade..........................................   60

                                                             ARTICLE 5.
                                                            SUCCESSORS

Section 5.01      Merger, Consolidation, or Sale of Assets.......................................................   61
Section 5.02      Successor Corporation Substituted..............................................................   62

                                                             ARTICLE 6.
                                                        DEFAULTS AND REMEDIES

Section 6.01      Events of Default..............................................................................   62
Section 6.02      Acceleration...................................................................................   64
Section 6.03      Other Remedies.................................................................................   65
Section 6.04      Waiver of Past Defaults........................................................................   65
Section 6.05      Control by Majority............................................................................   65
Section 6.06      Limitation on Suits............................................................................   65
Section 6.07      Rights of Holders of Notes to Receive Payment..................................................   66
Section 6.08      Collection Suit by Trustee.....................................................................   66
Section 6.09      Trustee May File Proofs of Claim...............................................................   66
Section 6.10      Priorities.....................................................................................   67
Section 6.11      Undertaking for Costs..........................................................................   67

                                                             ARTICLE 7.
                                                             TRUSTEE

Section 7.01      Duties of Trustee..............................................................................   67
Section 7.02      Rights of Trustee..............................................................................   68
Section 7.03      Individual Rights of Trustee...................................................................   69
Section 7.04      Trustee's Disclaimer...........................................................................   69
Section 7.05      Notice of Defaults.............................................................................   69
Section 7.06      Reports by Trustee to Holders of the Notes.....................................................   69
Section 7.07      Compensation and Indemnity.....................................................................   70
Section 7.08      Replacement of Trustee.........................................................................   70
Section 7.09      Successor Trustee by Merger, etc...............................................................   71
Section 7.10      Eligibility; Disqualification..................................................................   71
Section 7.11      Preferential Collection of Claims Against Company..............................................   72

                                                             ARTICLE 8.
                                              LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01      Option to Effect Legal Defeasance or Covenant Defeasance.......................................   72
Section 8.02      Legal Defeasance and Discharge.................................................................   72
Section 8.03      Covenant Defeasance............................................................................   72
Section 8.04      Conditions to Legal or Covenant Defeasance.....................................................   73
</TABLE>

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<TABLE>
<S>                                                                                                                 <C>
Section 8.05      Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions..   74
Section 8.06      Repayment to Company...........................................................................   74
Section 8.07      Reinstatement..................................................................................   75

                                                             ARTICLE 9.
                                                  AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01      Without Consent of Holders of Notes............................................................   75
Section 9.02      With Consent of Holders of Notes...............................................................   76
Section 9.03      Compliance with Trust Indenture Act............................................................   77
Section 9.04      Revocation and Effect of Consents..............................................................   77
Section 9.05      Notation on or Exchange of Notes...............................................................   78
Section 9.06      Trustee to Sign Amendments, etc................................................................   78

                                                             ARTICLE 10.
                                                       COLLATERAL AND SECURITY

Section 10.01     Equal and Ratable Sharing of Collateral by Holders of Parity Lien Debt; Sharing Confirmation...   78
Section 10.02     Ranking of Note Liens..........................................................................   79
Section 10.03     Release of Security Interest in Respect of Notes...............................................   79

                                                             ARTICLE 11.
                                                     SATISFACTION AND DISCHARGE

Section 11.01     Satisfaction and Discharge.....................................................................   80
Section 11.02     Application of Trust Money.....................................................................   81

                                                             ARTICLE 12.
                                                            MISCELLANEOUS

Section 12.01     Trust Indenture Act Controls...................................................................   81
Section 12.02     Notices........................................................................................   81
Section 12.03     Communication by Holders of Notes with Other Holders of Notes..................................   82
Section 12.04     Certificate and Opinion as to Conditions Precedent.............................................   82
Section 12.05     Statements Required in Certificate or Opinion..................................................   83
Section 12.06     Rules by Trustee and Agents....................................................................   83
Section 12.07     No Personal Liability of Directors, Officers, Employees and Stockholders.......................   83
Section 12.08     Governing Law..................................................................................   83
Section 12.09     No Adverse Interpretation of Other Agreements..................................................   83
Section 12.10     Successors.....................................................................................   83
Section 12.11     Severability...................................................................................   84
Section 12.12     Counterpart Originals..........................................................................   84
Section 12.13     Table of Contents, Headings, etc...............................................................   84
</TABLE>

                                    EXHIBITS

Exhibit A         FORM OF NOTE

Exhibit B         FORM OF CERTIFICATE OF TRANSFER

Exhibit C         FORM OF CERTIFICATE OF EXCHANGE

Exhibit D         FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
                  INVESTOR

                                       iii

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         INDENTURE dated as of July 16, 2003 between Calpine Corporation, a
Delaware corporation and Wilmington Trust Company (the "Trustee").

         The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders (as defined) of the
8.75% Second Priority Senior Secured Notes due 2013 (the "Notes"):

                                   ARTICLE 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01      Definitions.

         "144A Global Note" means a Global Note substantially in the form of
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that shall be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.

         "Acquired Debt" means, with respect to any specified Person:

              (1) Indebtedness of any other Person existing at the time such
         other Person is merged with or into or became a Restricted Subsidiary
         of such specified Person, whether or not such Indebtedness is incurred
         in connection with, or in contemplation of, such other Person merging
         with or into, or becoming a Restricted Subsidiary of, such specified
         Person; and

              (2) Indebtedness secured by a Lien encumbering any asset acquired
         by such specified Person.

Acquired Debt shall be deemed to be incurred on the date the acquired Person
becomes a Restricted Subsidiary.

         "Additional Notes" means Notes (other than the Initial Notes) issued
under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part
of the same series as the Initial Notes.

         "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 purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings. For purposes of Section 4.11 herein,
"Affiliate" shall also mean any Person of which the Company owns 10% or more of
any class of Capital Stock or rights to acquire 10% or more of any class of
Capital Stock and any Person who would be an Affiliate of any such Person
pursuant to the first sentence hereof.

         "Agent" means any Registrar, co-registrar, Paying Agent or additional
paying agent.

         "Applicable Premium" means, with respect to any note on any redemption
date, the greater of:

              (1) 1.0% of the principal amount of the note; or

              (2) the excess of:

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                  (a) the present value at the redemption date of (i) the
              redemption price of the note at July 15, 2008 (such redemption
              price being set forth in Section 3.07 herein) plus (ii) all
              required interest payments due on the note through July 15, 2013
              (excluding accrued but unpaid interest to the redemption date),
              computed using a discount rate equal to the Treasury Rate as of
              the redemption date plus 100 basis points; over

                  (b) the principal amount of the note.

         "Asset Sale" means:

              (1) the sale, lease, conveyance or other disposition of any assets
         or rights; provided that the sale, conveyance or other disposition of
         all or substantially all of the assets of the Company and its
         Restricted Subsidiaries taken as a whole shall be governed by Section
         4.15 of this Indenture and/or Section 5.01 and not by Section 4.10; and

              (2) the issuance of Equity Interests in any of the Company's
         Restricted Subsidiaries or the sale of Equity Interests in any of its
         Subsidiaries.

Notwithstanding the preceding, none of the following items shall be deemed to be
an Asset Sale:

              (1) (A) any single transaction or series of related transactions
         that involves the sale of uninstalled turbines and related equipment,
         and (B) any single transaction or series of related transactions that
         involves other assets having a Fair Market Value of less than $50.0
         million, it being understood that, in connection with any sale, lease,
         conveyance or other disposition of any Designated Assets or rights
         relating thereto in connection with a farm-out transaction, such
         transaction shall be valued as at the time of execution and delivery of
         binding contractual arrangements relating thereto;

              (2) a transfer of assets between or among the Company and its
         Restricted Subsidiaries,

              (3) an issuance of Equity Interests by a Restricted Subsidiary to
         the Company or to a Restricted Subsidiary of the Company;

              (4) the sale or lease of products, services or accounts receivable
         in the ordinary course of business and any sale or other disposition of
         damaged, worn-out or obsolete assets in the ordinary course of
         business;

              (5) the sale or other disposition of cash or Cash Equivalents;

              (6) a Restricted Payment that does not violate Section 4.07 herein
         or a Permitted Investment; and

              (7) the sale or other disposition of all or any part of the
         Company's right to amounts that have or are to become due and payable
         by Pacific Gas & Electric Company under that certain Agreement dated as
         of July 1, 1999, as amended, between Pacific Gas & Electric Company and
         Calpine Gilroy L.P., a California limited partnership (PG&E Log No.
         08C002) For Termination and Buy-Out of Standard Offer 4 Power Purchase
         Agreement, as such rights were purchased from Calpine Gilroy Cogen L.P.
         by the Company pursuant to the Purchase Agreement dated as of March 8,
         2002, as amended, between Calpine Gilroy Cogen L.P. and the Company.

                                        2

<PAGE>

         "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 GAAP; provided, that
if such sale and leaseback transaction results in a Capital Lease Obligation,
the amount of Indebtedness represented thereby shall be determined in accordance
with the definition of "Capital Lease Obligation."

         "Bankruptcy Case" means any case under Title 11 of the United States
Code or any successor bankruptcy law commenced voluntarily or involuntarily
against the Company or any other Obligor.

         "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.

         "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.

         "Board of Directors" means:

              (1) with respect to a corporation, the Board of Directors of the
         corporation or any committee thereof duly authorized to act on behalf
         of such board;

              (2) with respect to a partnership, the Board of Directors of the
         general partner of the partnership;

              (3) with respect to a limited liability company, the managing
         member or members or any controlling committee of managing members
         thereof; and

              (4) with respect to any other Person, the board or committee of
         such Person serving a similar function.

         "Business Day" means any day other than a Legal Holiday.

         "Canadian Gas Assets" means Designated Assets owned by a direct or
indirect Restricted Subsidiary of one or more Canadian Guarantors.

         "Canadian Guarantors" means Quintana Minerals (USA) Inc., a Delaware
corporation, JOQ Canada, Inc., a Delaware limited liability company and Quintana
Canada Holdings LLC, a Delaware limited liability company, and any successor to
any of the foregoing.

         "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
GAAP, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.

                                        3

<PAGE>

         "Capital Stock" means:

              (1) in the case of a corporation, corporate stock;

              (2) in the case of an association or business entity, any and all
         shares, interests, participations, rights or other equivalents (however
         designated) of corporate stock;

              (3) in the case of a partnership or limited liability company,
         partnership interests (whether general or limited) or membership
         interests; and

              (4) any other interest or participation that confers on a Person
         the right to receive a share of the profits and losses of, or
         distributions of assets of, the issuing Person, but excluding from all
         of the foregoing any debt securities convertible into Capital Stock,
         whether or not such debt securities include any right of participation
         with Capital Stock.

         "Cash Equivalents" means:

              (1) the lawful currency of any country where the Company owns or
         operates a Facility;

              (2) securities issued or directly and fully guaranteed or insured
         by the United States government or any state thereof (or any agency or
         instrumentality thereof), by the Canadian government (or any agency or
         instrumentality thereof), or by the government of a member state of the
         European Union (or any agency or instrumentality thereof), in each case
         the payment of which is backed by the full faith and credit of the
         United States, Canada or the relevant member state of the European
         Union, as the case may be, and having maturities of not more than six
         months from the date of acquisition;

              (3) certificates of deposit and eurodollar time deposits with
         maturities of six months or less from the date of acquisition, bankers'
         acceptances with maturities not exceeding six months and overnight bank
         deposits, in each case, with any lender party to the Credit Agreement
         or with any domestic commercial bank having capital and surplus in
         excess of $500.0 million and a Thomson Bank Watch or successor rating
         agency rating of "B" or better;

              (4) repurchase obligations with a term of not more than seven days
         for underlying securities of the types described in clauses (2) and (3)
         above entered into with any financial institution meeting the
         qualifications specified in clause (3) above;

              (5) commercial paper having one of the two highest ratings
         obtainable from Moody's or S&P and maturing within six months after the
         date of acquisition; and

              (6) money market funds at least 95% of the assets of which
         constitute Cash Equivalents of the kinds described in clauses (1)
         through (5) of this definition.

         "CCEC" means Calpine Canada Energy Ltd., a Nova Scotia limited
liability company that is wholly-owned by the Canadian Guarantors.

         "Change of Control" means the occurrence of any of the following:

              (1) the direct or indirect sale, transfer, conveyance or other
         disposition (other than by way of merger or consolidation), in one or a
         series of related transactions, of all or substantially all of the

                                        4

<PAGE>

         properties or assets of the Company and its Restricted Subsidiaries
         taken as a whole to any "person" (as that term is used in Section 13(d)
         of the Exchange Act);

              (2) the adoption of a plan relating to the liquidation or
         dissolution of the Company;

              (3) the consummation of any transaction (including any merger or
         consolidation) the result of which is that any "person" (as defined
         above) becomes the Beneficial Owner, directly or indirectly, of more
         than 50% of the Voting Stock of the Company, measured by voting power
         rather than number of shares;

              (4) the Company consolidates with, or merges with or into, any
         Person, or any Person consolidates with, or merges with or into, the
         Company, in any such event pursuant to a transaction in which any of
         the outstanding Voting Stock of the Company or such other Person is
         converted into or exchanged for cash, securities or other property,
         other than any such transaction where the Voting Stock of the Company
         outstanding immediately prior to such transaction is converted into or
         exchanged for Voting Stock (other than Disqualified Stock) of the
         surviving or transferee Person constituting a majority of the
         outstanding shares of such Voting Stock of such surviving or transferee
         Person (immediately after giving effect to such issuance); or

              (5) the first day on which a majority of the members of the Board
         of Directors of the Company are not Continuing Directors.

         "Clearstream" means Clearstream Banking, S.A.

         "Collateral" means all properties and assets at any time owned or
acquired by the Company, except the Excluded Assets, and the Canadian
Guarantors' ownership interest in 65% of the aggregate outstanding voting stock
of CCEC.

         "Collateral Trust Agreement" means that certain Collateral Trust
Agreement dated as of July 16, 2003, among the Company, the Canadian Guarantors,
the Credit Agreement Agent, the Trustee and the Bank of New York.

         "Collateral Trustee" means The Bank of New York in its capacity as
collateral trustee under the Collateral Trust Agreement, together with its
successors and assigns in such capacity.

         "Company" means Calpine Corporation, a Delaware Corporation and any and
all successors thereto.

         "Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus,
without duplication:

              (1) an amount equal to any extraordinary loss plus any net loss
         realized by such Person or any of its Restricted Subsidiaries in
         connection with an Asset Sale, to the extent such losses were deducted
         in computing such Consolidated Net Income; plus

              (2) provision for taxes based on income or profits of such Person
         and its Restricted Subsidiaries for such period, to the extent that
         such provision for taxes was deducted in computing such Consolidated
         Net Income; plus

              (3) the Fixed Charges of such Person and its Restricted
         Subsidiaries for such period, to the extent that such Fixed Charges
         were deducted in computing such Consolidated Net Income; plus

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<PAGE>

              (4) depreciation, amortization (including amortization of
         intangibles but excluding amortization of prepaid cash expenses that
         were paid in a prior period) and other non-cash expenses (excluding any
         such non-cash expense to the extent that it represents an accrual of or
         reserve for cash expenses in any future period or amortization of a
         prepaid cash expense that was paid in a prior period) of such Person
         and its Restricted Subsidiaries for such period to the extent that such
         depreciation, amortization and other non-cash expenses were deducted in
         computing such Consolidated Net Income;

minus non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business;

in each case, on a consolidated basis and determined in accordance with GAAP.

         "Consolidated Current Liabilities," as of the date of determination,
means the aggregate amount of liabilities of the Company and its Restricted
Subsidiaries which may properly be classified as current liabilities (including
taxes accrued as estimated), after eliminating (i) all inter-company items
between the Company and any consolidated Subsidiary and (ii) all current
maturities of long-term Indebtedness, all as determined on a consolidated basis
in accordance with GAAP.

         "Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP; provided that:

              (1) the Net Income (but not loss) of any Person that is not a
         Restricted Subsidiary or that is accounted for by the equity method of
         accounting shall be included only to the extent of the amount of
         dividends or similar distributions paid in cash to the specified Person
         or a Restricted Subsidiary of the Person;

              (2) the Net Income of any Restricted Subsidiary shall be excluded
         to the extent that the declaration or payment of dividends or similar
         distributions by that Restricted Subsidiary of that Net Income is not
         at the date of determination permitted without any prior governmental
         approval (that has not been obtained) or, directly or indirectly, by
         operation of the terms of its charter or any agreement, instrument,
         judgment, decree, order, statute, rule or governmental regulation
         applicable to that Restricted Subsidiary or its stockholders; and

              (3) the cumulative effect of a change in accounting principles
         shall be excluded.

         "Consolidated Net Worth" means, with respect to any specified Person as
of any date, the sum of:

              (1) the consolidated equity of the common stockholders of such
         Person and its consolidated Subsidiaries as of such date; plus

              (2) the respective amounts reported on such Person's balance sheet
         as of such date with respect to any series of preferred stock (other
         than Disqualified Stock) that by its terms is not entitled to the
         payment of dividends unless such dividends may be declared and paid
         only out of net earnings in respect of the year of such declaration and
         payment, but only to the extent of any cash received by such Person
         upon issuance of such preferred stock.

         "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:

                                        6

<PAGE>

              (1) was a member of such Board of Directors on the date of this
         Indenture; or

              (2) was nominated for election or elected to such Board of
         Directors with the approval of a majority of the Continuing Directors
         then still in office or with the approval of a majority of Directors
         whose election was previously so approved from time to time.

         "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.

         "Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of July 16, 2003, by and among the Company and The Bank of
Nova Scotia and Bayerische Landesbank, as lead arrangers and bookrunners,
providing for up to $500.0 million of revolving credit and term loan borrowings,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
restated, modified, renewed, refunded, replaced or refinanced (including by
means of sales of debt securities to institutional investors) in whole or in
part from time to time.

         "Credit Agreement Agent" means, at any time, the Person serving at such
time as the "Agent" or "Administrative Agent" under the Credit Agreement or any
other representative of the Lenders then most recently designated by a majority
of the Lenders, in a written notice delivered to each Parity Debt Representative
and the Collateral Trustee, as the Credit Agreement Agent for the purposes of
the Parity Lien Debt Documents.

         "Credit Facilities" means one or more debt facilities (including the
Credit Agreement) with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
(including by means of sales of debt securities to institutional investors) in
whole or in part from time to time.

         "Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.

         "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

         "Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.

         "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

         "Designated Assets" means all geothermal energy assets (including any
related extraction, processing or similar equipment and geothermal power plants)
and all natural gas assets (including any related extraction, processing or
similar equipment, other than natural gas power plants) owned by the Company or
any of its Restricted Subsidiaries from time to time, including the equity
interests of any

                                        7

<PAGE>

Restricted Subsidiary owning any Designated Assets, but excluding (i) any
geothermal energy assets that are both unproven and undeveloped and (ii)
contracts for the purchase or sale of natural gas and natural gas supplied under
such contracts.

         "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the Notes issued pursuant to this Indenture
mature. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders of the Capital Stock
have the right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock. The amount of Disqualified Stock deemed to be outstanding at
any time for purposes of this Indenture shall be the maximum amount that the
Company and its Restricted Subsidiaries may become obligated to pay upon the
maturity of, or pursuant to any mandatory redemption provisions of, such
Disqualified Stock, exclusive of accrued dividends.

         "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

         "Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear system.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Excluded Assets" means:

              (1) any lease of property other than (i) a lease of a geothermal
         energy or natural gas interest or property, (ii) a lease of real estate
         underlying a power generation property or (iii) a capital lease;

              (2) all deposit accounts (as defined in Article 9 of the Uniform
         Commercial Code of any relevant jurisdiction) and deposits therein to
         the extent not exceeding $50.0 million in the aggregate, except for the
         Designated Assets Sale Proceeds Account and any deposit account and
         deposits therein holding amounts referred to in clause (7) of this
         definition;

              (3) the fixtures and equipment relating to any pipeline if, to the
         extent that and for so long as (i) the ownership or operation of such
         pipeline is regulated by any federal or state regulatory authority and
         (ii) under the law applicable to such regulatory authority the grant of
         a security interest in such fixtures and equipment is prohibited or a
         security interest in such fixtures and equipment may be granted only
         after completion of a filing with, or receipt of consent from, such
         regulatory authority which has not been effectively completed or
         received; provided, that (a) such fixtures and equipment shall be an
         Excluded Asset only to the extent and for so long as the conditions set
         forth in clauses (i) and (ii) in this clause (3) are and remain
         satisfied and to the extent such assets otherwise constitute
         Collateral, shall cease to be an Excluded Asset, and shall become
         subject to the security interests granted to the Collateral Trustee
         under the Security Documents, immediately and automatically at such
         time as such conditions cease to exist, including by reason of the
         effective completion of any required filing or effective receipt of any
         required regulatory approval, and (b) unless prohibited by law, the
         proceeds of any sale, lease or other disposition of any such fixtures
         or equipment that are Excluded Assets shall not be an Excluded Asset
         and shall at all times be and remain subject to the security interests
         granted to the Collateral Trustee under the Security Documents except
         as such proceeds are applied and used by

                                        8

<PAGE>

         the Company in the ordinary course of business and applied in
         accordance with Section 4.10 herein;

              (4) all easements, rights-of-way, licenses and other real property
         interests for or pertaining to the construction, operation, use or
         maintenance of any pipeline over, upon or under land owned by another
         Person;

              (5) with respect to personal property, any lease, license, permit,
         franchise, power, authority or right if, to the extent that and for so
         long as (i) the grant of a security interest therein constitutes or
         would result in the abandonment, invalidation or unenforceability of
         such lease, license, permit, franchise, power, authority or right or
         the termination of or a default under the instrument or agreement by
         which such lease, license, permit, franchise, power, authority or right
         is governed and (ii) such abandonment, invalidation, unenforceability,
         termination or default is not rendered ineffective pursuant to Sections
         9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
         successor provisions) of any relevant jurisdiction or any other
         applicable law (including the United States bankruptcy code); provided,
         that (a) such lease, license, permit, franchise, power, authority or
         right shall be an Excluded Asset only to the extent and for so long as
         the conditions set forth in clauses (i) and (ii) of this clause (5) are
         and remain satisfied and to the extent that such assets otherwise
         constitute Collateral, shall cease to be an Excluded Asset, and shall
         become subject to the security interests granted to the Collateral
         Trustee under the Security Documents, immediately and automatically at
         such time as such conditions cease to exist, including by reason of any
         waiver or consent under the applicable instrument or agreement, and (b)
         the proceeds of any sale, lease or other disposition of any such lease,
         license, permit, franchise, power, authority or right that is or
         becomes an Excluded Asset shall not be an Excluded Asset and shall at
         all times be and remain subject to the security interests granted to
         the Collateral Trustee under the Security Documents except as such
         proceeds are applied and used by the Company in the ordinary course of
         business and applied in accordance with Section 4.10 herein;

              (6) with respect to any real property, any lease, license, permit,
         franchise, power, authority or right if, to the extent that and for so
         long as the grant of a security interest therein (i) requires a third
         party consent which has not been obtained or (ii) constitutes or would
         result in the abandonment, invalidation or unenforceability of such
         lease, license, permit, franchise, power, authority or right or the
         termination of or a default under the instrument or agreement by which
         such lease, license, permit, franchise, power, authority or right is
         governed; provided, that such lease, license, permit, franchise, power,
         authority or right shall be an Excluded Asset only to the extent and
         for as long as the conditions set forth in clause (i) or (ii) of this
         clause (6) are and remain satisfied and to the extent such assets
         otherwise constitute Collateral, shall cease to be an Excluded Asset,
         and shall become subject to the security interests granted to the
         Collateral Trustee under the Security Documents immediately and
         automatically at such time as such conditions cease to exist except as
         such proceeds are applied and used by the Company in the ordinary
         course of business and applied in accordance with Section 4.10 herein;

              (7) any cash proceeds (including any earnings thereon) of Priority
         Lien Debt that are pledged to cash collateralize letters of credit;

              (8) any turbines which serve as collateral pursuant to that
         certain General Agreement dated as of January 31, 2002 among the
         Company, various Subsidiaries of the Company and Siemens Westinghouse
         Power Corporation relating to various purchase contracts and letters of
         intent for gas turbine generators, steam turbine generators and related
         accessories;

                                        9

<PAGE>

              (9) proved oil and gas reserves located in Oklahoma and
         undeveloped reserves and unproven acreage located in California, Texas,
         Wyoming, Montana, Colorado, New Mexico and offshore Louisiana; provided
         that such reserves and acreage has a Fair Market Value not exceeding
         $20.0 million in the aggregate;

              (10) Capital Stock of Subsidiaries designated by the Company, but
         only for so long as (i) the Capital Stock of such Subsidiaries is not
         pledged to any Person (other than the Collateral Trustee on behalf of
         all holders of all Secured Debt) and (ii) such Subsidiaries
         collectively own less than 5.0% of the Company's total consolidated
         assets and collectively account for less than 5.0% of the Company's
         Consolidated Cash Flow; and

              (11) any other property in which a security interest cannot be
         perfected by the filing of a financing statement under the Uniform
         Commercial Code of the relevant jurisdiction; provided that such
         property has a Fair Market Value not exceeding $25.0 million in the
         aggregate.

         "Existing Guarantees" means the Guarantees of the Term Loans, the Notes
and certain obligations under the Credit Agreement that exist on the date of
this Indenture.

         "Existing Indebtedness" means the Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of this Indenture, until such amounts are repaid.

         "Facility" means a power generation facility or energy producing
facility, including any related fuel reserves.

         "Fair Market Value" means the value that would be paid by a willing
buyer to a willing seller in a transaction not involving distress or necessity
of either party, determined in good faith by the Board of Directors of the
Company (unless otherwise provided in this Indenture).

         "Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that the specified Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise
discharges any Indebtedness (other than ordinary working capital borrowings) or
issues, repurchases or redeems preferred stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated and on
or prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase, redemption, defeasance or other
discharge of Indebtedness, or such issuance, repurchase or redemption of
preferred stock, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the applicable four-quarter reference period.

         In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:

              (1) acquisitions that have been made by the specified Person or
         any of its Restricted Subsidiaries, including through mergers or
         consolidations or acquisitions of assets, or any Person or any of its
         Restricted Subsidiaries acquired by merger, consolidation, or the
         acquisition of all or substantially all of its assets by the specified
         Person or any of its Restricted Subsidiaries, and including any related
         financing transactions and including increases in ownership of
         Restricted Subsidiaries, during the four-quarter reference period or
         subsequent to such reference period and on or prior to the Calculation
         Date shall be given pro forma effect (in accordance with Regulation

                                       10

<PAGE>

         S-X under the Securities Act) as if they had occurred on the first day
         of the four-quarter reference period;

              (2) the Consolidated Cash Flow attributable to discontinued
         operations, as determined in accordance with GAAP, and operations or
         businesses (and ownership interests therein) disposed of prior to the
         Calculation Date, shall be excluded;

              (3) the Fixed Charges attributable to discontinued operations, as
         determined in accordance with GAAP, and operations or businesses (and
         ownership interests therein) disposed of prior to the Calculation Date,
         shall be excluded, but only to the extent that the obligations giving
         rise to such Fixed Charges shall not be obligations of the specified
         Person or any of its Restricted Subsidiaries following the Calculation
         Date;

              (4) any Person that is a Restricted Subsidiary on the Calculation
         Date shall be deemed to have been a Restricted Subsidiary at all times
         during such four-quarter period;

              (5) any Person that is not a Restricted Subsidiary on such
         Calculation Date shall be deemed not to have been a Restricted
         Subsidiary at any time during such four-quarter period; and

              (6) if any Indebtedness bears a floating rate of interest, the
         interest expense on such Indebtedness shall be calculated as if the
         rate in effect on the Calculation Date had been the applicable rate for
         the entire period (taking into account any Hedging Obligation
         applicable to such Indebtedness if such Hedging Obligation has a
         remaining term as at the Calculation Date in excess of 12 months).

         "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:

              (1) the consolidated interest expense of such Person and its
         Restricted Subsidiaries for such period, whether paid or accrued,
         including amortization of debt issuance costs and original issue
         discount, non-cash interest payments, the interest component of any
         deferred payment obligations, the interest component of all payments
         associated with Capital Lease Obligations, commissions, discounts and
         other fees and charges incurred in respect of letter of credit or
         bankers' acceptance financings, and net of the effect of all payments
         made or received pursuant to Hedging Obligations in respect of interest
         rates, plus one-third of all payments with respect to operating leases;
         plus

              (2) the consolidated interest of such Person and its Restricted
         Subsidiaries that was capitalized during such period, except interest
         on Indebtedness incurred to finance the development or construction of
         a Facility; plus

              (3) any interest accruing on Indebtedness of another Person that
         is Guaranteed by such Person or one of its Restricted Subsidiaries or
         secured by a Lien on assets of such Person or one of its Restricted
         Subsidiaries, whether or not such Guarantee or Lien is called upon, but
         excluding any such Guarantee or Lien in effect on the date of this
         Indenture unless the same is called upon; plus

              (4) the product of (a) all dividends, whether paid or accrued and
         whether or not in cash, on any series of preferred stock of such Person
         or any of its Restricted Subsidiaries, other than dividends on Equity
         Interests payable solely in Equity Interests of the Company (other than
         Disqualified Stock) or to the Company or a Restricted Subsidiary of the
         Company, times (b) a fraction, the numerator of which is one and the
         denominator of which is one minus the effective

                                       11

<PAGE>

         combined federal, state and local statutory tax rate of such Person for
         the immediately preceding fiscal year, expressed as a decimal, in each
         case, on a consolidated basis and in accordance with GAAP.

         "Foreign Asset Sale" means an Asset Sale in respect of the Capital
Stock or assets of a Foreign Subsidiary or a Restricted Subsidiary of the type
described in Section 936 of the Internal Revenue Code of 1986, as amended, to
the extent that the proceeds of such Asset Sale are received by a Person subject
in respect of such proceeds to the tax laws of a jurisdiction other than the
United States of America or any State thereof or the District of Columbia.

         "Foreign Subsidiary" means a Subsidiary that is incorporated in a
jurisdiction other than the United States of America or a State thereof or the
District of Columbia.

         "GAAP" means generally accepted accounting principles set forth in the
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect and, to
the extent optional, adopted by the Company, on the applicable date of
determination.

         "Global Notes" means, individually and collectively, each of the
Restricted Global Notes, substantially in the form of Exhibit A hereto issued in
accordance with Section 2.01 or 2.06(b)(3) hereof.

         "Global Note Legend" means the legend set forth in Section 2.06(e)(2),
which is required to be placed on all Global Notes issued under this Indenture.

         "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.

         "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof, of all or any
part of any Indebtedness (whether arising by virtue of partnership arrangements,
or by agreements to keep-well, to purchase assets, goods, securities or
services, to take or pay or to maintain financial statement conditions or
otherwise).

         "Guarantor" means each Subsidiary of Calpine that Guarantees the Notes.

         "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:

              (1) interest rate swap agreements (whether from fixed to floating
         or from floating to fixed), interest rate cap agreements and interest
         rate collar agreements;

              (2) other agreements or arrangements designed to manage interest
         rate risk; and

              (3) other agreements or arrangements designed to protect such
         Person against fluctuations in currency exchange rates or commodity
         prices.

         "Holder" means a Person in whose name a Note is registered.

         "IAI Global Note" means a Global Note substantially in the form of
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and

                                       12

<PAGE>

registered in the name of the Depositary or its nominee that shall be issued in
a denomination equal to the outstanding principal amount of the Notes sold to
Institutional Accredited Investors.

         "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses and trade payables),
whether or not contingent:

              (1) in respect of borrowed money;

              (2) evidenced by bonds, notes, debentures or similar instruments
         or letters of credit (or reimbursement agreements in respect thereof);

              (3) in respect of banker's acceptances;

              (4) representing Capital Lease Obligations or Attributable Debt in
         respect of sale and leaseback transactions;

              (5) representing the balance deferred and unpaid of the purchase
         price of any property or services due more than six months after such
         property is acquired or such services are completed; or

              (6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit,
Attributable Debt and Hedging Obligations) would appear as a liability upon a
balance sheet of the specified Person prepared in accordance with GAAP. In
addition, the term "Indebtedness" includes all Indebtedness of others secured by
a Lien on any asset of the specified Person (whether or not such Indebtedness is
assumed by the specified Person) and, to the extent not otherwise included, the
Guarantee by the specified Person of any Indebtedness of any other Person.

         The amount of any Indebtedness outstanding as of any date shall be:

              (1) the accreted value of the Indebtedness, in the case of any
         Indebtedness issued with original issue discount;

              (2) the principal amount of the Indebtedness, in the case of any
         other Indebtedness; and

              (3) in respect of Indebtedness of another Person secured by a Lien
         on the assets of the specified Person, the lesser of:

                  (A) the Fair Market Value of such asset at such date of
              determination, and

                  (B) the amount of the Indebtedness of such other Person.

         Notwithstanding anything to the contrary in this definition of
Indebtedness, with respect to any contingent obligations (other than with
respect to contractual obligations to repurchase goods sold or distributed,
which shall be included to the extent reflected on the balance sheet of such
Person in accordance with GAAP) of a Person, the maximum liability of such
Indebtedness shall be as determined by such Person's Board of Directors, in good
faith, as, in light of the facts and circumstances existing at the time,
reasonably likely to be incurred upon the occurrence of the contingency giving
rise to such obligation.

                                       13

<PAGE>

         "Indenture" means this indenture, as amended or supplemented from time
to time.

         "Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.

         "Initial Notes" means the first $900,000,000 aggregate principal amount
of Notes issued under this Indenture on the date hereof.

         "Initial Purchasers" means Credit Lyonnais (USA) Inc., Goldman, Sachs &
Co., ING Financial Markets LLC, Scotia Capital (USA) Inc. and TD Securities
(USA) Inc.

         "Insolvency Proceeding" means:

              (1) any proceeding for the reorganization, recapitalization or
         adjustment or marshalling of the assets or liabilities of the Company
         or any other Obligor, any receivership or assignment for the benefit of
         creditors relating to the Company or any other Obligor or any similar
         case or proceeding relative to the Company or any other Obligor or its
         creditors, as such, in each case whether or not voluntary;

              (2) any liquidation, dissolution, marshalling of assets or
         liabilities or other winding up of or relating to the Company or any
         other Obligor, in each case whether or not voluntary and whether or not
         involving bankruptcy or insolvency; or

              (3) any other proceeding of any type or nature in which
         substantially all claims of creditors of the Company or any other
         Obligor are determined and any payment or distribution is or may be
         made on account of such claims.

         "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.

         "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the Fair Market
Value of the Company's Investments in such Subsidiary that were not sold or
disposed of in an amount determined as provided in Section 4.07(b). Except as
otherwise provided in this Indenture, the amount of an Investment shall be
determined at the time the Investment is made and without giving effect to
subsequent changes in value.

         "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.

                                       14

<PAGE>

         "Lenders" means, at any time, the parties to the Credit Agreement then
holding (or committed to provide) loans, letters of credit or other extensions
of credit that constitute (or when provided shall constitute) Priority Lien Debt
outstanding under the Credit Agreement.

         "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

         "Magic Valley Generating Assets" means the Magic Valley Generating
Station, a natural gas fired power plant in commercial operation in Edinburg,
Texas.

         "Material Designated Assets" means Designated Assets having a Fair
Market Value in the aggregate in excess of $50.0 million.

         "Moody's" means Moody's Investors Service, Inc. (or, if such entity
ceases to rate the applicable notes for reasons outside of the control of the
Company, the equivalent investment grade credit rating from any other
"nationally recognized statistical rating organization" (or successor concept)
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act (or
successor provision) selected by the Company as a replacement agency).

         "Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, without
duplication:

              (1) any gain (but not loss), together with any related provision
         for taxes on such gain (but not loss), realized in connection with: (a)
         any Asset Sale; or (b) the disposition of any securities by such Person
         or any of its Restricted Subsidiaries or the extinguishment of any
         Indebtedness of such Person or any of its Restricted Subsidiaries; and

              (2) any extraordinary gain (but not loss), together with any
         related provision for taxes on such extraordinary gain (but not loss).

         "Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including legal, accounting and investment banking fees, and
sales commissions, and any relocation expenses incurred as a result of the Asset
Sale, taxes paid or payable as a result of the Asset Sale, in each case, after
taking into account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Priority Debt, secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.

         "Non-Recourse Debt" means Indebtedness of any Restricted Subsidiary
that is incurred to finance the exploration, drilling, development, construction
or purchase of or by, or repairs, improvements or additions to, property or
assets of the Company or any Restricted Subsidiary; provided that such
Indebtedness is without recourse to the Company (except as permitted by clause
(8) of the definition of Permitted Debt) or any Restricted Subsidiary or to any
property or assets of the Company or any

                                       15

<PAGE>

Restricted Subsidiary other than property or assets (including Capital Stock) of
a Restricted Subsidiary subject to a Lien permitted pursuant to clause (8) of
the definition of Permitted Liens or property or assets (including Capital
Stock) of a Restricted Subsidiary subject to a Lien permitted pursuant to clause
(19) of the definition of Permitted Liens.

         "Note Documents" means this Indenture, the Notes, the 2007 Notes and
the indenture governing such notes, the 2010 Notes and the indenture governing
such notes, each Sharing Confirmation and the Security Documents.

         "Note Obligations" means the Notes (including any Additional Notes
issued under the this Indenture) and all other Obligations of any Obligor under
this Indenture, the Notes (including any Additional Notes issued under this
Indenture) and the Security Documents.

         "Notes" has the meaning assigned to it in the preamble to this
Indenture. The Initial Notes and the Additional Notes shall be treated as a
single class for all purposes under this Indenture, and unless the context
otherwise requires, all references to the Notes shall include the Initial Notes
and any Additional Notes.

         "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness (including the Notes and this
Indenture).

         "Obligor" means the Company and each Restricted Subsidiary of the
Company (if any) that at any time guarantees or provides collateral security or
credit support for any Secured Obligations.

         "Offering Circular" means that certain offering circular dated as of
July 10, 2003, with respect to the $2.55 billion in aggregate principal amount
offering of the Notes, the 2007 Notes and the 2010 Notes, collectively.

         "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.

         "Officers' Certificate" means a certificate signed on behalf of the
Company by one Officer of the Company that meets the requirements of Section
12.05 hereof.

         "Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.

         "Parity Debt Representative" means:

              (1) in the case of the Notes, the 2007 Notes or the 2010 Notes,
         the applicable trustee thereof;

              (2) in the case of the Term Loans, the Term Loan Administrative
         Agent; or

              (3) in the case of any other Series of Parity Debt, the trustee,
         agent or representative of the holders of such Series of Parity Lien
         Debt who maintains the transfer register for such Series of Parity Lien
         Debt and is appointed as a Parity Debt Representative (for purposes
         related to the administration of the Security Documents) pursuant to
         this Indenture or other agreement governing such Series of Parity Lien
         Debt.

                                       16

<PAGE>

         "Parity Lien" means a Lien granted by a Security Document to the
Collateral Trustee upon any property of the Company or any other Obligor to
secure Parity Lien Obligations.

         "Parity Lien Debt" means:

              (1) the Notes;

              (2) the Term Loans; and

              (3) any other Indebtedness (including additional notes and Term
         Loans) that:

                  (A) is permitted to be incurred under Section 4.09 herein; and

                  (B) is permitted to be secured by Parity Liens by clause (2)
              of the definition of Permitted Liens;

provided, in the case of each issue or series of Indebtedness referred to in
this clause (3), that:

              (i) on or before the date on which such Indebtedness was incurred
         by the Company such Indebtedness is designated by the Company, in an
         officers' certificate delivered to each Parity Debt Representative and
         the Collateral Trustee on or before such date, as Parity Lien Debt for
         the purposes of this Indenture and the Collateral Trust Agreement,

              (ii) such Indebtedness is governed by an indenture or other
         agreement that includes a Sharing Confirmation and

              (iii) all requirements set forth in the Collateral Trust Agreement
         as to the confirmation, grant or perfection of the Collateral Trustee's
         Liens to secure such Indebtedness or Obligations in respect thereof are
         satisfied

(and the satisfaction of such requirements and the other provisions of this
clause (3) shall be conclusively established, for purposes of entitling the
holders of such Indebtedness to share equally and ratably with the other holders
of Parity Lien Debt in the benefits and proceeds of the Collateral Trustee's
Liens on the Collateral, if the Company delivers to the Collateral Trustee an
officers' certificate in the form required pursuant to the Collateral Trust
Agreement stating that such requirements and other provisions have been
satisfied and that such Indebtedness is Parity Lien Debt, together with an
opinion of counsel stating that such officers' certificate has been duly
authorized by the Board of Directors of the Company and has been duly executed
and delivered, and the holders of such Indebtedness and Obligations in respect
thereof shall be entitled to rely conclusively thereon).

         "Parity Lien Debt Documents" means, collectively, the Term Loan
Documents, the Note Documents, and the indenture or agreement governing each
other Series of Parity Lien Debt and all agreements binding on any Obligor
related thereto.

         "Parity Lien Obligations" means Parity Lien Debt and all other
Obligations in respect thereof.

         "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

                                       17

<PAGE>

         "Permitted Business" means the business of acquiring, constructing,
managing, developing, improving, owning and operating Facilities, as well as any
other activities reasonably related to the foregoing activities (including
acquiring and holding reserves), including investing in Facilities.

         "Permitted Investments" means:

              (1) any Investment in the Company or in a Restricted Subsidiary
          of the Company;

              (2) any Investment in Cash Equivalents;

              (3) any Investment by the Company or any Restricted Subsidiary of
         the Company in a Person, if as a result of such Investment:

                  (a) such Person becomes a Restricted Subsidiary of the
              Company; or

                  (b) such Person is merged, consolidated or amalgamated with or
              into, or transfers or conveys substantially all of its assets to,
              or is liquidated into, the Company or a Restricted Subsidiary of
              the Company;

              (4) any Investment made as a result of the receipt of non-cash
         consideration from an Asset Sale that was made pursuant to and in
         compliance with Section 4.10 herein;

              (5) any acquisition of assets or Capital Stock solely in exchange
         for the issuance of Equity Interests (other than Disqualified Stock) of
         the Company;

              (6) any Investments received in compromise or resolution of (A)
         obligations of trade creditors or customers that were incurred in the
         ordinary course of business of the Company or any of its Restricted
         Subsidiaries, including pursuant to any plan of reorganization or
         similar arrangement upon the bankruptcy or insolvency of any trade
         creditor or customer; or (B) litigation, arbitration or other disputes
         with Persons who are not Affiliates;

              (7) Investments represented by Hedging Obligations;

              (8) loans or advances to employees made in the ordinary course of
         business consistent with past practices of the Company or such
         Restricted Subsidiary in an aggregate principal amount not to exceed
         $5.0 million at any one time outstanding;

              (9) repurchases of the Notes; and

              (10) other Investments in any Person having an aggregate Fair
         Market Value (measured on the date each such Investment was made and
         without giving effect to subsequent changes in value), when taken
         together with all other Investments made pursuant to this clause (10)
         that are at the time outstanding not to exceed $100.0 million;

         provided that Designated Assets held by the Company may not be invested
         in, leased to or otherwise transferred to any Restricted Subsidiary;
         provided, however, that the Company may transfer proven undeveloped gas
         reserves to its Restricted Subsidiaries in the ordinary course of
         business for consumption in the power generating business of such
         Restricted Subsidiaries during the 12-month period following transfer.

         "Permitted Liens" means:

                                       18

<PAGE>

              (1) Liens on assets of the Company or any Canadian Guarantor
         securing Obligations of the Company or such Canadian Guarantor under
         one or more Credit Facilities in an aggregate amount not exceeding the
         Priority Lien Cap;

              (2) Liens held by the Collateral Trustee equally and ratably
         securing the Notes and the Term Loans to be issued on the date of this
         Indenture and all future Parity Lien Debt and other Parity Lien
         Obligations; provided that the Collateral Trustee's Liens may secure
         Parity Lien Debt incurred after the date of this Indenture or
         Obligations in respect thereof only if, on the date of the incurrence
         of such Parity Lien Debt, after giving pro forma effect to the
         incurrence thereof and the application of the proceeds therefrom, the
         Secured Leverage Ratio is not greater than 2.75:1.0;

              (3) Liens in favor of the Company;

              (4) Pledges or deposits made under workers' compensation,
         unemployment insurance laws or similar legislation, or good faith
         deposits in connection with bids, tenders, contracts (other than for
         payment of Indebtedness) or leases to which such Person is a party, and
         Liens or deposits to secure the performance of statutory obligations,
         surety or appeal bonds, performance bonds or other obligations of a
         like nature incurred in the ordinary course of business;

              (5) Liens to secure Indebtedness (including Capital Lease
         Obligations) permitted by clause (4) of the definition of Permitted
         Debt covering only the assets acquired, designed, constructed,
         installed or improved with or financed by such Indebtedness;

              (6) Liens existing on the date of this Indenture;

              (7) Liens securing Indebtedness or other obligations of a
         Restricted Subsidiary owing to the Company or a Restricted Subsidiary;

              (8) (A) Liens on assets or property of a Restricted Subsidiary
         (other than Material Designated Assets) incurred by any Restricted
         Subsidiary to secure Indebtedness of such Restricted Subsidiary
         incurred to finance the exploration, drilling, development,
         construction or purchase of or by, or repairs, improvements or
         additions to, property or assets of the Company or such Restricted
         Subsidiary, which Liens may include Liens on the Capital Stock of such
         Restricted Subsidiary (other than a Restricted Subsidiary that (i) is a
         direct Subsidiary of the Company or (ii) owns, directly or indirectly,
         Material Designated Assets), (B) Liens (other than Liens on Material
         Designated Assets) incurred by any Restricted Subsidiary that does not
         own, directly or indirectly, at the time of original incurrence of such
         a Lien under this clause (B) any Material Designated Assets or any
         operating properties or assets, securing Indebtedness incurred to
         finance the exploration, drilling, development, construction or
         purchase of or by, or repairs, improvements or additions to, property
         or assets of any Restricted Subsidiary that does not, directly or
         indirectly, own any operating properties or assets at the time of the
         original incurrence of such Lien, which Liens contemplated by this
         clause (8) may include Liens on the Capital Stock of one or more
         Restricted Subsidiaries that (i) are not direct Subsidiaries of the
         Company and (ii) do not, directly or indirectly, own any Material
         Designated Assets or operating properties or assets at the time of
         original incurrence of such Lien; or (C) without duplication, Liens
         (other than Liens on Material Designated Assets) incurred by any
         Restricted Subsidiary (which Liens may include Liens on Capital Stock
         of such Restricted Subsidiary so long as the Capital Stock of such
         Restricted Subsidiary is not pledged as Collateral) that owns as of the
         date of this Indenture all or part of one or more of the peaking power
         plants (and no other significant unrelated assets)

                                       19

<PAGE>

         constructed for the purpose of providing peaking capacity and energy to
         the California Department of Water Resources; provided, that the
         Indebtedness secured by any such Lien contemplated by this clause (8)
         may not be issued more than 365 days (or, in the case of clause (C)
         above, two years) after the later of the exploration, drilling,
         development, completion of construction, purchase, repair, improvement,
         addition or commencement of full commercial operation of the property
         or asset being so financed;

              (9) Liens on property or shares of Capital Stock of a Subsidiary
         at the time such Person becomes a Subsidiary; provided that any such
         Lien may not extend to any other property owned by the Company;

              (10) Liens on property at the time a Subsidiary acquires the
         property, including any acquisition by means of a merger or
         consolidation with or into the Subsidiary; provided that such Liens are
         not incurred in connection with, or in contemplation of, such merger or
         consolidation; and provided, further, that the Lien may not extend to
         any other property owned by the Company or any Restricted Subsidiary;

              (11) Liens incurred by a Person other than the Company or any
         Subsidiary on assets that are the subject of a Capitalized Lease
         Obligation to which the Company or a Subsidiary is a party; provided
         that any such Lien may not secure Indebtedness of the Company or any
         Subsidiary (except Indebtedness secured by a Lien on any property or
         assets of the Company or such Subsidiary incurred in connection with
         Indebtedness of another Person), with the amount of such obligation
         being deemed to be the lesser of the value of such property or assets
         or the amount of the obligation so secured) and may not extend to any
         other property owned by the Company or any Restricted Subsidiary;

              (12) Liens on assets of the Company Construction Finance Company,
         L.P. (and/or any other Restricted Subsidiary that subsequently owns any
         such assets) relating to the Magic Valley Generating Station;

              (13) Liens not in respect of Indebtedness arising from Uniform
         Commercial Code financing statements for informational purposes with
         respect to leases incurred in the ordinary course of business and not
         otherwise prohibited by this Indenture;

              (14) Liens not in respect of Indebtedness consisting of the
         interest of the lessor under any lease entered into in the ordinary
         course of business and not otherwise prohibited by this Indenture; and
         Liens on shares of Capital Stock of a subsidiary that does not own any
         significant assets other than a lessee's interest in a Facility or on
         the Capital Stock of a subsidiary whose only significant asset is its
         direct or indirect interest in such lessee subsidiary; provided that in
         no event shall this clause (14) allow a lien on any Capital Stock
         constituting Collateral;

              (15) Liens which constitute banker's liens, rights of set-off or
         similar rights and remedies as to deposit accounts or other funds
         maintained with any bank or other financial institution, whether
         arising by operation of law or pursuant to contract;

              (16) Liens for taxes, assessments or governmental charges or
         claims that are not yet delinquent or that are being contested in good
         faith by appropriate proceedings promptly instituted and diligently
         concluded; provided that any reserve or other appropriate provision as
         is required in conformity with GAAP has been made therefor;

                                       20

<PAGE>

              (17) Liens imposed by law such as carriers', warehousemen's and
         mechanics' Liens, in each case, arising in the ordinary course of
         business and with respect to amounts not yet due or being contested in
         good faith by appropriate legal proceedings promptly instituted and
         diligently conducted and for which a reserve or other appropriate
         provision, if any, as shall be required in conformity with GAAP shall
         have been made; or other Liens arising out of judgments or awards
         against such Person with respect to which such Person shall then be
         diligently prosecuting appeal or other proceedings for review;

              (18) survey exceptions, easements or reservations of, or rights of
         others for, licenses, rights-of-way, sewers, electric lines, telegraph
         and telephone lines and other similar purposes, or zoning or other
         restrictions as to the use of real property or Liens incidental to the
         conduct of the business of the Company or any Restricted Subsidiary or
         to the ownership of its properties that were not incurred in connection
         with Indebtedness and that do not in the aggregate materially adversely
         affect the value of said properties or materially impair their use in
         the operation of the business of the Company or any Restricted
         Subsidiary;

              (19) Liens to secure any refinancing, refunding, extension,
         renewal or replacement (or successive refinancings, refundings,
         extensions, renewals or replacements) as a whole, or in part, of any
         Indebtedness secured by any Lien referred to in the foregoing clauses
         (6), (8), (9) and (10); provided that (A) such new Lien shall be
         limited to all or part of the same property or assets that secured the
         original Lien (plus repairs, improvements and additions to such
         property or assets and Liens on the stock or other ownership interest
         in one or more Restricted Subsidiaries beneficially owning such
         property or assets) and (B) the amount of the Indebtedness secured by
         such Lien at such time (or, if the amount that may be realized in
         respect of such Lien is limited, by contract or otherwise, such limited
         lesser amount) is not increased (other than by an amount necessary to
         pay fees and expenses, including premiums, related to the refinancing,
         refunding, extension, renewal or replacement of such Indebtedness);

              (20) Liens on assets of Restricted Subsidiaries to secure letters
         of credit issued pursuant to clause (14) of the definition of Permitted
         Debt; provided if and to the extent such letters of credit are drawn
         upon, such drawing is reimbursed no later than the tenth Business Day
         following a demand for reimbursement following payment on the letter of
         credit and Liens to secure letters of credit incurred pursuant to
         clause (15) of the definition of Permitted Debt on cash collateral
         constituting the proceeds of Priority Lien Debt;

              (21) Liens (A) on cash and short-term investments of Restricted
         Subsidiaries to secure obligations with respect to (i) contracts for
         commercial and trading activities in the ordinary course of business
         and contracts (including physical delivery, option (whether cash or
         financial), exchange, swap and futures contracts) for the purchase,
         transmission, distribution, sale, lease or hedge of any energy-related
         commodity or service or (ii) interest rate, commodity price, or
         currency rate management contracts or derivatives and (B) encumbering
         assets of a Restricted Subsidiary, other than (i) Material Designated
         Assets or (ii) accounts or receivables, which Liens arise out of
         contracts or agreements relating to the generation, distribution or
         transmission or sale of energy and/or fuel; provided that all such
         agreements or contracts are entered into in the ordinary course of
         business; and

              (22) other Liens to secure Indebtedness in an aggregate amount not
         to exceed $50.0 million at any time outstanding.

        "Permitted Prior Liens" means (a) Liens securing Priority Lien
Obligations not exceeding the Priority Lien Cap, (b) Liens described in clauses
(5), (6), (10) or (11) of the definition of "Permitted

                                       21

<PAGE>

Liens" and (c) Liens that arise by operation of law and are not voluntarily
granted, to the extent entitled by law to priority over the security interests
created by the Security Documents.

         "Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:

              (1) the principal amount (or accreted value, if applicable) of
         such Permitted Refinancing Indebtedness does not exceed the principal
         amount (or accreted value, if applicable) of the Indebtedness extended,
         refinanced, renewed, replaced, defeased or refunded (plus all accrued
         or accumulated interest on the Indebtedness and the amount of all fees,
         costs, expenses and premiums, including swap breakage and defeasance
         costs, incurred in connection therewith);

              (2) such Permitted Refinancing Indebtedness has a final maturity
         date equal to or later than the final maturity date of, and has a
         Weighted Average Life to Maturity equal to or greater than the Weighted
         Average Life to Maturity of, the Indebtedness being extended,
         refinanced, renewed, replaced, defeased or refunded; provided that such
         Permitted Refinancing Indebtedness may have such shorter final maturity
         date and Weighted Average Life to Maturity as is equal to or greater
         than the latest maturity date of any Notes issued under this Indenture;
         and

              (3) if the Indebtedness being extended, refinanced, renewed,
         replaced, defeased or refunded is subordinated in right of payment to
         the Notes, such Permitted Refinancing Indebtedness has a final maturity
         date equal to or later than the final maturity date of, and is
         subordinated in right of payment to, the Notes on terms at least as
         favorable to the holders of Notes as those contained in the
         documentation governing the Indebtedness being extended, refinanced,
         renewed, replaced, defeased or refunded;

provided that Permitted Refinancing Indebtedness shall not include (A)
Indebtedness of the Company incurred to refinance Non-Recourse Debt of a
Restricted Subsidiary, (B) Indebtedness of a Restricted Subsidiary of the
Company that refinances Indebtedness of the Company or (C) Indebtedness of the
Company or a Restricted Subsidiary that refinances Indebtedness of an
Unrestricted Subsidiary.

         "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

         "Pledged Power Project" means the power generation property and related
equipment at each of the following locations:

              (1) the Goldendale Energy Center in Goldendale, Washington;

              (2) the Otay Mesa Energy Center near San Diego, California;

              (3) the Metcalf Energy Center near San Jose, California;

              (4) the Santa Rosa Energy Center in Santa Rosa County, Florida;

              (5) the Washington Parish Energy Center near Bogalusa, Louisiana;

              (6) the Deer Park Energy Center in Deer Park, Texas; and

                                       22

<PAGE>

              (7) the Augusta Energy Center in Augusta, Georgia.

         "Priority Foreclosure Event" means the failure to pay at maturity or
upon acceleration of maturity all outstanding Priority Lien Debt at any time
when no Bankruptcy Case or Insolvency Proceeding is pending.

         "Priority Lien" means a Lien granted by a Security Document to the
Collateral Trustee upon any property of the Company or any other Obligor to
secure Priority Lien Obligations not exceeding the Priority Lien Cap.

         "Priority Lien Agent" means the Credit Agreement Agent or any other
agent for holders of Priority Lien Debt.

         "Priority Lien Cap" means an amount equal to (a) the Indebtedness
outstanding under the Credit Agreement or any other Credit Facility in an
aggregate principal amount not exceeding the greater of (1) $500.0 million, less
the amount of any Net Proceeds of a Sale of Designated Assets applied to repay
Priority Lien Debt and/or cash collateralize letters of credit that constitute
Priority Lien Debt and (2) the dollar amount that, on the date of incurrence of
such Indebtedness, is equal to 50% of the Company's Consolidated Cash Flow for
the then most recent four-quarter period for which financial information is
available, plus (b) any interest (including any interest accruing at the then
applicable rate provided in any applicable Priority Lien Document after the
maturity of the loans and reimbursement obligations therein and interest
accruing at the then applicable rate provided in any applicable Priority Lien
Document after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Company,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), penalties, premiums, fees, costs, expenses or other
Obligations in respect of such Indebtedness. For purposes of this definition of
Priority Lien Cap, all letters of credit shall be valued at face amount, whether
or not drawn, and all letters of credit denominated in a currency other than
U.S. dollars shall be valued at all times at the Equivalent Amount (as defined
in the Credit Agreement) thereof on the date of issue thereof.

         "Priority Lien Debt" means Indebtedness under (a) the Credit Agreement
or (b) any other Credit Facility that is secured by a Priority Lien that was
permitted to be incurred under clause (1) of the definition of "Permitted Liens"
but only if on or before the day on which such Indebtedness under a Credit
Facility described in clause (b) above is incurred by the Company such
Indebtedness is designated by the Company, in an officers' certificate delivered
to each Parity Debt Representative and the Collateral Trustee on or before such
date, as Priority Lien Debt for the purposes of each of the Parity Lien Debt
Documents and the Collateral Trust Agreement.

         "Priority Lien Documents" means the Credit Agreement or any other
Credit Facility pursuant to which any Priority Lien Debt is incurred and all
other agreements governing, securing or relating to any Priority Lien
Obligations.

         "Priority Lien Obligations" means the Priority Lien Debt and all other
Obligations in respect of Priority Lien Debt.

         "Private Placement Legend" means the legend set forth in Section
2.06(e)(1) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.

         "Public Equity Offering" means an underwritten primary public offering
of the Company's equity securities pursuant to an effective registration
statement under the Securities Act.

                                       23

<PAGE>

         "PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.

         "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

         "Regulation S" means Regulation S promulgated under the Securities Act.

         "Regulation S Global Note" means a Global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.

         "Required Parity Debtholders" means, at any time in respect of any
action or matter, holders of a majority in aggregate outstanding principal
amount of all Parity Lien Debt then outstanding, voting together as a single
class. For this purpose, Parity Lien Debt registered in the name of, or
beneficially owned by, the Company or any Affiliate of the Company shall be
deemed not to be outstanding.

         "Required Priority Debtholders" means, at any time in respect of any
action or matter, (1) holders of the outstanding principal amount of, or
commitments with respect to, the applicable Priority Lien Debt then outstanding
required pursuant to the terms of the applicable Credit Facility, voting as a
single class, to approve such action or matter or (2) the Priority Lien Agent
acting upon the authorization or consent of the holders referred to in the
immediately preceding clause (1). For this purpose, Priority Lien Debt
registered in the name of, or beneficially owned by, the Company or any
Affiliate of the Company shall be deemed not to be outstanding.

         "Responsible Officer," means, with respect to the Collateral Trustee,
any officer within the corporate trust department of the Collateral Trustee
including any vice president, assistant vice president, assistant treasurer,
trust officer or any other officer of the Collateral Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such Person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of the Collateral Trust Agreement.

         "Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.

         "Restricted Global Note" means a Global Note bearing the Private
Placement Legend.

         "Restricted Investment" means an Investment other than a Permitted
Investment.

         "Restricted Period" means the 40-day distribution compliance period as
defined in Regulation S.(9030(B)(3))

         "Restricted Subsidiary" means any Subsidiary of the Company that is not
an Unrestricted Subsidiary.

         "Rule 144" means Rule 144 promulgated under the Securities Act.

         "Rule 144A" means Rule 144A promulgated under the Securities Act.

         "Rule 903" means Rule 903 promulgated under the Securities Act.

         "Rule 904" means Rule 904 promulgated the Securities Act.

                                       24

<PAGE>

          "S&P" means Standard & Poor's Ratings Group (or, if such entity ceases
to rate the Notes for reasons outside of the control of the Company, the
equivalent investment grade credit rating from any other "nationally recognized
statistical rating organization" (or successor concept) within the meaning of
Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act (or successor provision)
selected by the Company as a replacement agency).

         "Sale of Designated Assets" means any Asset Sale involving a sale or
other disposition of Designated Assets.

         "SEC" means the Securities and Exchange Commission.

         "Secured Debt" means Parity Lien Debt and Priority Lien Debt.

         "Secured Debt Documents" means the Parity Lien Debt Documents and the
Priority Lien Documents.

         "Secured Debt Representative" means each Parity Debt Representative and
the Priority Lien Agent.

         "Secured Leverage Ratio" means, on any date, the ratio of:

              (1) the aggregate principal amount of Secured Debt outstanding on
         such date (and, for this purpose, letters of credit shall be deemed to
         have a principal amount equal to the maximum potential liability of the
         Company thereunder) to

              (2) the aggregate amount of the Company's Consolidated Cash Flow
         for the most recent four-quarter period for which financial information
         is available.

         In addition, for purposes of calculating the Secured Leverage Ratio:

              (1) acquisitions that have been made by the specified Person or
         any of its Restricted Subsidiaries, including through mergers or
         consolidations or acquisitions of assets, or any Person or any of its
         Restricted Subsidiaries acquired by merger, consolidation or the
         acquisition of all or substantially all of its assets by the specified
         Person or any of its Restricted Subsidiaries, and including any related
         financing transactions and including increases in ownership of
         Restricted Subsidiaries, during the four-quarter reference period or
         subsequent to such reference period and on or prior to the date on
         which the event for which the calculation of the Secured Leverage Ratio
         is made (the "Leverage Calculation Date") shall be given pro forma
         effect in accordance with Regulation S-X under the Securities Act) as
         if they had occurred on the first day of the four-quarter reference
         period;

              (2) the Consolidated Cash Flow attributable to discontinued
         operations, as determined in accordance with GAAP, and operations or
         businesses (and ownership interests therein) disposed of prior to the
         Leverage Calculation Date, shall be excluded;

              (3) any Person that is a Restricted Subsidiary on the Leverage
         Calculation Date shall be deemed to have been a Restricted Subsidiary
         at all times during such four-quarter period;

              (5) any Person that is not a Restricted Subsidiary on the Leverage
         Calculation Date shall be deemed not to have been a Restricted
         Subsidiary at any time during such four-quarter period; and

                                       25

<PAGE>

              (6) if any Indebtedness bears a floating rate of interest, the
         interest expense on such Indebtedness shall be calculated as if the
         rate in effect on the Leverage Calculation Date had been the applicable
         rate for the entire period (taking into account any Hedging Obligation
         applicable to such Indebtedness if such Hedging Obligation has a
         remaining term as at the Calculation Date in excess of 12 months).

         "Secured Obligations" means the Parity Lien Obligations and the
Priority Lien Obligations.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Security Documents" means the Collateral Trust Agreement and one or
more security agreements, pledge agreements, collateral assignments, mortgages,
collateral agency agreements, deeds of trust or other grants or transfers for
security executed and delivered by the Company or any other Obligor creating (or
purporting to create) a Lien upon Collateral in favor of the Collateral Trustee,
in each case, as amended, modified, renewed, restated or replaced, in whole or
in part, from time to time, in accordance with its terms.

         "Series of Parity Lien Debt" means, severally, each series of the
Notes, the 2007 Notes, the 2010 Notes, the Term Loans and each other issue or
series of Parity Lien Debt for which a single transfer register is maintained.

         "Series of Secured Debt" means, severally, each series of the Notes,
the 2007 Notes, the 2010 Notes, the Term Loans, each other issue or series of
Parity Lien Debt for which a single transfer register is maintained and each
issue or series of Priority Lien Debt for which a single register is maintained.

         "Sharing Confirmation" means, as to any Series of Parity Lien Debt, the
written agreement of the holders of such Series of Parity Lien Debt, as set
forth in the indenture or agreement governing such Series of Parity Lien Debt,
for the enforceable benefit of all holders of each other existing and future
Series of Parity Lien Debt and each existing and future Parity Debt
Representative, that all Parity Lien Obligations shall be and are secured
equally and ratably by all Liens at any time granted by the Company or any other
Obligor to secure any Obligations in respect of such Series of Parity Lien Debt,
whether or not upon property otherwise constituting Collateral, that all such
Liens shall be enforceable by the Collateral Trustee for the benefit of all
holders of Parity Lien Obligations equally and ratably, and that the holders of
Obligations in respect of such Series of Parity Lien Debt are bound by the
provisions in the Collateral Trust Agreement relating to the order of
application of proceeds from enforcement of the Collateral Trustee's Liens upon
the Collateral, and consent to and direct the Collateral Trustee to perform its
obligations under the Collateral Trust Agreement.

         "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.

         "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness as of the date of this Indenture, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.

         "Subsidiary" means, as applied to any Person, any corporation, limited
or general partnership, trust, association or other business entity of which an
aggregate of at least 50% of the outstanding Voting

                                       26

<PAGE>

Shares, or an equivalent controlling interest therein, of such Person is, at the
time, directly or indirectly, owned by such Person and/or one or more
Subsidiaries of such Person.

         "Term Loan Administrative Agent" means Goldman Sachs Credit Partners
L.P., as administrative agent under the Term Loan Agreement, together with its
successors in such capacity.

         "Term Loan Agreement" means that certain Term Loan Agreement dated the
date of this Indenture between the Company and the Term Loan Administrative
Agent, relating to $750.0 million in aggregate principal amount of Term Loans,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, as amended, modified, increased,
renewed, restated or replaced, in whole or in part, from time to time.

         "Term Loan Documents" means the Term Loan Agreement, each Sharing
Confirmation and the Security Documents.

         "Term Loan Obligations" means the Term Loans (including additional Term
Loans) and all other Obligations under the Term Loan Agreement and the Security
Documents.

         "Term Loans" means the principal of and interest and premium (if any)
on Indebtedness of the Company incurred under the Term Loan Agreement.

         "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 of this Indenture.

         "Treasury Rate" means, as of any redemption date, the yield to maturity
as of such redemption date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to July 15, 2013; provided,
however, that if the period from the redemption date to July 15, 2013 is less
than one year, the average of weekly yields on actively traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

         "Trustee" means the party named as such in the preamble to this
Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.

         "2007 Notes" means the $500.0 million in aggregate principal amount of
the Company's floating rate notes due 2007.

         "2010 Notes" means the $1.15 billion in aggregate principal amount of
the Company's 8 1/2% notes due 2010.

         "Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary (and any
subsidiary of an Unrestricted Subsidiary) pursuant to a Board Resolution passed
after the date of this Indenture, but only to the extent that such Subsidiary:

              (1) has no Indebtedness other than Indebtedness that is non-
         recourse to the Company and its Restricted Subsidiaries;

                                       27

<PAGE>

              (2) is not party to any agreement, contract, arrangement or
         understanding with the Company or any Restricted Subsidiary of the
         Company unless the terms of any such agreement, contract, arrangement
         or understanding are no less favorable to the Company or such
         Restricted Subsidiary than those that might be obtained at the time
         from Persons who are not Affiliates of the Company;

              (3) is a Person with respect to which neither the Company nor any
         of its Restricted Subsidiaries has any direct or indirect obligation
         (a) to subscribe for additional Equity Interests or (b) to maintain or
         preserve such Person's financial condition or to cause such Person to
         achieve any specified levels of operating results; and

              (4) has not guaranteed or otherwise directly or indirectly
         provided credit support for any Indebtedness of the Company or any of
         its Restricted Subsidiaries;

provided, however, that a corporation with no significant assets created for the
sole purpose of serving as a co-obligor to facilitate a financing by a
partnership of a limited liability company may be designated as an Unrestricted
Subsidiary.

         Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 herein, regarding
Restricted Payments. If, at any time, any Unrestricted Subsidiary would fail to
meet the preceding requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date and, if such Indebtedness
is not permitted to be incurred as of such date under Section 4.09 herein, the
Company shall be in default of such Section 4.09. The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (1) such Indebtedness is permitted under Section 4.09 herein,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation.

         "U.S. Person" means a U.S. Person as defined in Rule 902(o) under the
Securities Act.

         "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

         "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years or portion thereof obtained by
dividing:

              (1) the sum of the products obtained by multiplying (a) the amount
         of each then remaining installment, sinking fund, serial maturity or
         other required payments of principal, including payment at final
         maturity, in respect of the Indebtedness, by (b) the number of years
         (calculated to the nearest one-twelfth) that shall elapse between such
         date and the making of such payment; by

              (2) the then outstanding principal amount of such Indebtedness.

                                       28

<PAGE>

         "Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.

Section 1.02      Other Definitions.

<TABLE>
<CAPTION>
                                                                                        Defined in
Term                                                                                      Section
----                                                                                      -------
<S>                                                                                     <C>
"Affiliate Transaction".............................................................       4.11
"Asset Sale Offer"..................................................................       3.09
"Authentication Order"..............................................................       2.02
"Change of Control Offer"...........................................................       4.15
"Change of Control Payment".........................................................       4.15
"Change of Control Payment Date"....................................................       4.15
"Covenant Defeasance"...............................................................       8.03
"DTC"...............................................................................       2.03
"Event of Default"..................................................................       6.01
"Excess Proceeds"...................................................................       4.10
"incur".............................................................................       4.09
"Legal Defeasance"..................................................................       8.02
"Offer Amount"......................................................................       3.09
"Offer Period"......................................................................       3.09
"Paying Agent"......................................................................       2.03
"Permitted Debt"....................................................................       4.09
"Purchase Date".....................................................................       3.09
"Registrar".........................................................................       2.03
"Restricted Payments"...............................................................       4.07
</TABLE>

Section 1.03      Incorporation by Reference of Trust Indenture Act.

         Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.

         The following TIA terms used in this Indenture have the following
meanings:

         "indenture securities" means the Notes;

         "indenture security holder" means a Holder of a Note;

         "indenture to be qualified" means this Indenture;

         "indenture trustee" or "institutional trustee" means the Trustee; and

         "obligor" on the Notes and the Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the
Guarantees, respectively.

         All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.

                                       29

<PAGE>

Section 1.04      Rules of Construction.

         Unless the context otherwise requires:

                  (1)      a term has the meaning assigned to it;

                  (2)      an accounting term not otherwise defined has the
         meaning assigned to it in accordance with GAAP;

                  (3)      "or" is not exclusive;

                  (4)      words in the singular include the plural, and in the
         plural include the singular;

                  (5)      "shall" shall be interpreted to express a command;

                  (6)      provisions apply to successive events and
         transactions; and

                  (7)      references to sections of or rules under the
         Securities Act shall be deemed to include substitute, replacement of
         successor sections or rules adopted by the SEC from time to time.

                                       30

<PAGE>

                                   ARTICLE 2.
                                    THE NOTES

Section 2.01      Form and Dating.

         (a)      General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.

         The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

         (b)      Global Notes. Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including the Global
Note Legend thereon and the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Notes issued in definitive form shall be substantially
in the form of Exhibit A attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it represents
the aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

         (c)      Euroclear and Clearstream Procedures Applicable. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Clearstream Banking" and "Customer Handbook" of Clearstream shall be applicable
to transfers of beneficial interests in the Global Notes that are held by
Participants through Euroclear or Clearsteam.

Section 2.02      Execution and Authentication.

         One Officer must sign the Notes for the Company by manual or facsimile
signature.

         If the Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.

         A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.

         The Trustee will, upon receipt of a written order of the Company signed
by one Officer (an "Authentication Order"), authenticate (i) Initial Notes in an
aggregate principal amount up to $1.15 billion on the date of this Indenture and
(ii) Additional Notes from time to time as permitted under this Indenture.

                                       31

<PAGE>

         The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

Section 2.03      Registrar and Paying Agent.

         The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.

         The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.

         The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.04      Paying Agent to Hold Money in Trust.

         The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and shall notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.

Section 2.05      Holder Lists.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).

Section 2.06      Transfer and Exchange.

         (a)      Transfer and Exchange of Global Notes. A Global Note may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the

                                       32

<PAGE>

Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Notes shall be exchanged by the Company for Definitive
Notes if:

                  (1)      the Company delivers to the Trustee notice from the
         Depositary that it is unwilling or unable to continue to act as
         Depositary or that it is no longer a clearing agency registered under
         the Exchange Act and, in either case, a successor Depositary is not
         appointed by the Company within 120 days after the date of such notice
         from the Depositary; or

                  (2)      the Company in its sole discretion determines that
         the Global Notes (in whole but not in part) should be exchanged for
         Definitive Notes and delivers a written notice to such effect to the
         Trustee.

         Upon the occurrence of either of the preceding events in (1) or (2)
above, Definitive Notes shall be issued in such names as the Depositary shall
instruct the Trustee. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated by the Trustee pursuant to an Authentication Order and
delivered in the form of, and shall be, a Global Note. A Global Note may not be
exchanged for another Note other than as provided in this Section 2.06(a),
however, beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.06(b), (c) or (f) hereof.

         (b)      Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (1) or (2) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:

                  (1)      Transfer of Beneficial Interests in the Same Global
         Note. Beneficial interests in any Restricted Global Note may be
         transferred to Persons who take delivery thereof in the form of a
         beneficial interest in the same Restricted Global Note in accordance
         with the transfer restrictions set forth in the Private Placement
         Legend; provided, however, that prior to the expiration of the
         Restricted Period, transfers of beneficial interests in the Regulation
         S Global Note may not be made to a U.S. Person or for the account or
         benefit of a U.S. Person (other than an Initial Purchaser). No written
         orders or instructions shall be required to be delivered to the
         Registrar to effect the transfers described in this Section 2.06(b)(1).

                  (2)      All Other Transfers and Exchanges of Beneficial
         Interests in Global Notes. In connection with all transfers and
         exchanges of beneficial interests that are not subject to Section
         2.06(b)(1) above, the transferor of such beneficial interest must
         deliver to the Registrar both:

                           (A)      a written order from a Participant or an
                  Indirect Participant given to the Depositary in accordance
                  with the Applicable Procedures directing the Depositary to
                  credit or cause to be credited a beneficial interest in
                  another Global Note in an amount equal to the beneficial
                  interest to be transferred or exchanged; and

                           (B)      instructions given in accordance with the
                  Applicable Procedures containing information regarding the
                  Participant account to be credited with such increase.

                                       33

<PAGE>

                  (3)      Transfer of Beneficial Interests to Another
         Restricted Global Note. A beneficial interest in any Restricted Global
         Note may be transferred to a Person who takes delivery thereof in the
         form of a beneficial interest in another Restricted Global Note if the
         transfer complies with the requirements of Section 2.06(b)(2) above and
         the Registrar receives the following:

                           (A)      if the transferee shall take delivery in the
                  form of a beneficial interest in the 144A Global Note, then
                  the transferor must deliver a certificate in the form of
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                           (B)      if the transferee shall take delivery in the
                  form of a beneficial interest in the Regulation S Global Note,
                  then the transferor must deliver a certificate in the form of
                  Exhibit B hereto, including the certifications in item (2)
                  thereof; and

                           (C)      if the transferee shall take delivery in the
                  form of a beneficial interest in the IAI Global Note, then the
                  transferor must deliver a certificate in the form of Exhibit B
                  hereto, including the certifications, certificates and Opinion
                  of Counsel required by item (3)(d) thereof, if applicable.

                  (4)      Transfer and Exchange of Beneficial Interests in
         Restricted Global Notes to Restricted Definitive Notes. If any holder
         of a beneficial interest in a Restricted Global Note proposes to
         exchange such beneficial interest for a Restricted Definitive Note or
         to transfer such beneficial interest to a Person who takes delivery
         thereof in the form of a Restricted Definitive Note, then, upon receipt
         by the Registrar of the following documentation:

                           (A)      if the holder of such beneficial interest in
                  a Restricted Global Note proposes to exchange such beneficial
                  interest for a Restricted Definitive Note, a certificate from
                  such holder in the form of Exhibit C hereto, including the
                  certifications in item (a) thereof;

                           (B)      if such beneficial interest is being
                  transferred to a QIB in accordance with Rule 144A, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (1) thereof;

                           (C)      if such beneficial interest is being
                  transferred to a Non-U.S. Person in an offshore transaction in
                  accordance with Rule 903 or Rule 904, a certificate to the
                  effect set forth in Exhibit B hereto, including the
                  certifications in item (2) thereof;

                           (D)      if such beneficial interest is being
                  transferred pursuant to an exemption from the registration
                  requirements of the Securities Act in accordance with Rule
                  144, a certificate to the effect set forth in Exhibit B
                  hereto, including the certifications in item (a) thereof;

                           (E)      if such beneficial interest is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (B) through (D) above, a certificate to the effect set forth
                  in Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable;

                           (F)      if such beneficial interest is being
                  transferred to the Company or any of its Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof; or

                                       34

<PAGE>

                           (G)      if such beneficial interest is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(f) hereof, and the
Company shall execute and the Trustee shall authenticate, upon receipt of an
Authentication Order, and deliver to the Person designated in such
Authentication Order a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(b) shall be registered in such name or
names and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial interest in
a Restricted Global Note pursuant to this Section 2.06(b) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer contained
therein.

         (c)      Transfer and Exchange of Definitive Notes for Beneficial
Interests.

                  (1)      Restricted Definitive Notes to Beneficial Interests
         in Restricted Global Notes. If any Holder of a Restricted Definitive
         Note proposes to exchange such Note for a beneficial interest in a
         Restricted Global Note or to transfer such Restricted Definitive Notes
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Restricted Global Note, then, upon receipt by the
         Registrar of the following documentation:

                           (A)      if the Holder of such Restricted Definitive
                  Note proposes to exchange such Note for a beneficial interest
                  in a Restricted Global Note, a certificate from such Holder in
                  the form of Exhibit C hereto, including the certifications in
                  item (b) thereof; (B) if such Restricted Definitive Note is
                  being transferred to a QIB in accordance with Rule 144A, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (1) thereof;

                           (C)      if such Restricted Definitive Note is being
                  transferred to a Non-U.S. Person in an offshore transaction in
                  accordance with Rule 903 or Rule 904, a certificate to the
                  effect set forth in Exhibit B hereto, including the
                  certifications in item (2) thereof;

                           (D)      if such Restricted Definitive Note is being
                  transferred pursuant to an exemption from the registration
                  requirements of the Securities Act in accordance with Rule
                  144, a certificate to the effect set forth in Exhibit B
                  hereto, including the certifications in item (3)(a) thereof;

                           (E)      if such Restricted Definitive Note is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (B) through (D) above, a certificate to the effect set forth
                  in Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)(d)
                  thereof, if applicable;

                           (F)      if such Restricted Definitive Note is being
                  transferred to the Company or any of its Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof; or

                                       35

<PAGE>

                           (G)      if such Restricted Definitive Note is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof,

                  the Trustee shall cancel the Restricted Definitive Note,
                  increase or cause to be increased the aggregate principal
                  amount of, in the case of clause (A) above, the appropriate
                  Restricted Global Note, in the case of clause (B) above, the
                  144A Global Note, in the case of clause (C) above, the
                  Regulation S Global Note, and in all other cases, the IAI
                  Global Note.

         (d)      Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.06(d), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder must present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
must provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(d).

                  (1)      Restricted Definitive Notes to Restricted Definitive
         Notes. Any Restricted Definitive Note may be transferred to and
         registered in the name of Persons who take delivery thereof in the form
         of a Restricted Definitive Note if the Registrar receives the
         following:

                           (A)      if the transfer shall be made pursuant to
                  Rule 144A under the Securities Act, then the transferor must
                  deliver a certificate in the form of Exhibit B hereto,
                  including the certifications in item (1) thereof;

                           (B)      if the transfer shall be made pursuant to
                  Rule 903 or Rule 904, then the transferor must deliver a
                  certificate in the form of Exhibit B hereto, including the
                  certifications in item (2) thereof; and

                           (C)      if the transfer shall be made pursuant to
                  any other exemption from the registration requirements of the
                  Securities Act, then the transferor must deliver a certificate
                  in the form of Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable.

         (e)      Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

                  (1)      Private Placement Legend.

                           (A)      Each Global Note and each Definitive Note
                  (and all Notes issued in exchange therefor or substitution
                  thereof) shall bear the legend in substantially the following
                  form:

"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN AND SHALL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE

                                       36

<PAGE>

144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS."

                  (2)      Global Note Legend. Each Global Note shall bear a
         legend in substantially the following form:

"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE 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. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."

         (f)      Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who shall take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to

                                       37

<PAGE>

a Person who shall take delivery thereof in the form of a beneficial interest in
another Global Note, such other Global Note shall be increased accordingly and
an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

         (g)      General Provisions Relating to Transfers and Exchanges.

                  (1)      To permit registrations of transfers and exchanges,
         the Company shall execute and the Trustee shall authenticate Global
         Notes and Definitive Notes upon receipt of an Authentication Order in
         accordance with Section 2.02 or at the Registrar's request.

                  (2)      No service charge shall be made to a Holder of a
         Global Note or to a Holder of a Definitive Note for any registration of
         transfer or exchange, but the Company may require payment of a sum
         sufficient to cover any transfer tax or similar governmental charge
         payable in connection therewith (other than any such transfer taxes or
         similar governmental charge payable upon exchange or transfer pursuant
         to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).

                  (3)      The Registrar shall not be required to register the
         transfer of or exchange any Note selected for redemption in whole or in
         part, except the unredeemed portion of any Note being redeemed in part.

                  (4)      All Global Notes and Definitive Notes issued upon any
         registration of transfer or exchange of Global Notes or Definitive
         Notes shall be the valid obligations of the Company, evidencing the
         same debt, and entitled to the same benefits under this Indenture, as
         the Global Notes or Definitive Notes surrendered upon such registration
         of transfer or exchange.

                  (5)      The Company shall not be required:

                           (A)      to issue, to register the transfer of or to
                  exchange any Notes during a period beginning at the opening of
                  business 15 days before the day of any selection of Notes for
                  redemption under Section 3.02 hereof and ending at the close
                  of business on the day of selection;

                           (B)      to register the transfer of or to exchange
                  any Note selected for redemption in whole or in part, except
                  the unredeemed portion of any Note being redeemed in part; or

                           (C)      to register the transfer of or to exchange a
                  Note between a record date and the next succeeding interest
                  payment date.

                  (6)      Prior to due presentment for the registration of a
         transfer of any Note, the Trustee, any Agent and the Company may deem
         and treat the Person in whose name any Note is registered as the
         absolute owner of such Note for the purpose of receiving payment of
         principal of and interest on such Notes and for all other purposes, and
         none of the Trustee, any Agent or the Company shall be affected by
         notice to the contrary.

                  (7)      The Trustee shall authenticate Global Notes and
         Definitive Notes in accordance with the provisions of Section 2.02
         hereof.

                  (8)      All certifications, certificates and Opinions of
         Counsel required to be submitted to the Registrar pursuant to this
         Section 2.06 to effect a registration of transfer or exchange may be
         submitted by facsimile.

                                       38

<PAGE>

Section 2.07      Replacement Notes.

         If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements hereunder are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and the Company to protect the Company, the Trustee, any Agent
and any authenticating agent from any loss that any of them may suffer if a Note
is replaced. The Company may charge the applicable Holder for its expenses in
replacing a Note.

         Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

Section 2.08      Outstanding Notes.

         The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.

         If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.

         If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

         If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.

Section 2.09      Treasury Notes.

         In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.

Section 2.10      Temporary Notes.

         Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as may be reasonably acceptable to
the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall, upon receipt of an Authentication Order, authenticate definitive
Notes in exchange for temporary Notes.

         Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.

                                       39

<PAGE>

Section 2.11      Cancellation.

         The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes in accordance with its customary practices (subject to the record
retention requirement of the Exchange Act). Certification of the destruction of
all canceled Notes shall be delivered to the Company. The Company may not issue
new Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.

Section 2.12      Defaulted Interest.

         If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
may be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

Section 3.01      Notices to Trustee.

         If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at
least 30 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth:

                  (1)      the clause of this Indenture pursuant to which the
         redemption shall occur;

                  (2)      the redemption date;

                  (3)      the principal amount of Notes to be redeemed; and

                  (4)      the redemption price.

Section 3.02      Selection of Notes to Be Redeemed or Purchased.

         If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select Notes for redemption or
purchase as follows:

                  (1)      if the Notes are listed on any national securities
         exchange, in compliance with the requirements of the principal national
         securities exchange on which the Notes are listed; or

                  (2)      if the Notes are not listed on any national
         securities exchange, on a pro rata basis, by lot or by such method as
         the Trustee shall deem fair and appropriate.

                                       40

<PAGE>

         In the event of partial redemption or purchase by lot, the particular
Notes to be redeemed or purchased shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption or
purchase date by the Trustee from the outstanding Notes not previously called
for redemption or purchase.

         The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption or purchase and, in the case of any Note selected for
partial redemption or purchase, the principal amount thereof to be redeemed or
purchased. Notes and portions of Notes selected shall be in amounts of $1,000 or
whole multiples of $1,000; except that if all of the Notes of a Holder are to be
redeemed or purchased, the entire outstanding amount of Notes held by such
Holder, even if not a multiple of $1,000, shall be redeemed or purchased. Except
as provided in the preceding sentence, provisions of this Indenture that apply
to Notes called for redemption or purchase also apply to portions of Notes
called for redemption or purchase.

Section 3.03      Notice of Redemption.

         Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address, except that redemption
notices may be mailed more than 60 days prior to a redemption date if the notice
is issued in connection with a defeasance of the Notes or a satisfaction and
discharge of this Indenture pursuant to Articles 8 or 11, respectively, of this
Indenture.

         The notice shall identify the Notes to be redeemed and shall state:

                  (1)      the redemption date;

                  (2)      the redemption price;

                  (3)      if any Note is being redeemed in part, the portion of
         the principal amount of such Note to be redeemed and that, after the
         redemption date upon surrender of such Note, a new Note or Notes in
         principal amount equal to the unredeemed portion shall be issued upon
         cancellation of the original Note;

                  (4)      the name and address of the Paying Agent;

                  (5)      that Notes called for redemption must be surrendered
         to the Paying Agent to collect the redemption price;

                  (6)      that, unless the Company defaults in making such
         redemption payment, interest on Notes called for redemption ceases to
         accrue on and after the redemption date;

                  (7)      the paragraph of the Notes and/or Section of this
         Indenture pursuant to which the Notes called for redemption are being
         redeemed; and

                  (8)      that no representation is made as to the correctness
         or accuracy of the CUSIP number, if any, listed in such notice or
         printed on the Notes.

         At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company has delivered to the Trustee, at least 45

                                       41

<PAGE>

days prior to the redemption date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.

Section 3.04      Effect of Notice of Redemption.

         Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.

Section 3.05      Deposit of Redemption or Purchase Price.

         Not less than one Business Day prior to the redemption or purchase
price date, the Company shall deposit with the Trustee or with the Paying Agent
money sufficient to pay the redemption or purchase price of and accrued interest
on all Notes to be redeemed or purchased on that date. The Trustee or the Paying
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption or purchase price of, and accrued interest on, all Notes to be
redeemed or purchased.

         If the Company complies with the provisions of the preceding paragraph,
on and after the redemption or purchase date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption or purchase. If a Note
is redeemed or purchased on or after an interest record date but on or prior to
the related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption or purchase is
not so paid upon surrender for redemption or purchase because of the failure of
the Company to comply with the preceding paragraph, interest shall be paid on
the unpaid principal, from the redemption or purchase date until such principal
is paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.

Section 3.06      Notes Redeemed or Purchased in Part.

         Upon surrender of a Note that is redeemed or purchased in part, the
Company shall issue and, upon receipt of an Authentication Order, the Trustee
shall authenticate for the Holder at the expense of the Company a new Note equal
in principal amount to the unredeemed or unpurchased portion of the Note
surrendered.

Section 3.07      Optional Redemption.

         (a)      At any time prior to July 15, 2006, the Company may on one or
more occasions upon not less than 30 nor more than 60 days prior notice mailed
by first-class mail to each holder's registered address, redeem up to 35% of the
aggregate principal amount of Notes issued under this Indenture at a redemption
price of 108.750% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date, with the net cash proceeds of one or
more Public Equity Offerings; provided that:

                  (1)      at least 65% of the aggregate principal amount of
         Notes originally issued under this Indenture remains outstanding
         immediately after the occurrence of such redemption (excluding Notes
         held by the Company and its Subsidiaries); and

                  (2)      the redemption must occur within 45 days of the date
         of the closing of such Public Equity Offering.

                                       42

<PAGE>

         (b)      At any time prior to July 15, 2008 the Company may also redeem
all or a part of the 2013 Notes, upon not less than 30 nor more than 60 days
prior notice mailed by first-class mail to each holder's registered address, at
a redemption price equal to 100% of the principal amount of the Notes redeemed
plus the Applicable Premium as of, and accrued and unpaid interest, if any, to
the redemption date, subject to the rights of noteholders on the relevant record
date to receive interest due on the relevant interest payment date.

         (c)      After July 15, 2008 the Company may redeem all or a part of
the Notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest, if any, on the notes redeemed, to the applicable
redemption date, if redeemed during the twelve-month period beginning on July 15
of the years indicated below, subject to the rights of noteholders on the
relevant record date to receive interest on the relevant interest payment date:

<TABLE>
<CAPTION>
Year                                                             Percentage
----                                                             ----------
<S>                                                              <C>
2008........................................................      104.375%
2009........................................................      102.917%
2010........................................................      101.458%
2011 and thereafter.........................................      100.000%
</TABLE>

         (d)      Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.

Section 3.08      Mandatory Redemption.

         The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.

Section 3.09      Offer to Purchase by Application of Excess Proceeds.

         In the event that, pursuant to Section 4.10 hereof, the Company is
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.

         The Asset Sale Offer shall be made to all Holders and all holders of
other Indebtedness that is pari passu with the Notes containing provisions
similar to those set forth in this Indenture with respect to offers to purchase
or redeem with the proceeds of sales and assets. The Asset Sale Offer shall
remain open for a period of at least 20 Business Days following its commencement
and not more than 30 Business Days, except to the extent that a longer period is
required by applicable law (the "Offer Period"). No later than three Business
Days after the termination of the Offer Period (the "Purchase Date"), the
Company shall apply all Excess Proceeds (the "Offer Amount") to the purchase of
Notes and such other pari passu Indebtedness (on a pro rata basis, if
applicable) or, if less than the Offer Amount has been tendered, all Notes and
other Indebtedness tendered in response to the Asset Sale Offer. Payment for any
Notes so purchased shall be made in the same manner as interest payments are
made.

         If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.

         Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The written notice shall contain

                                       43

<PAGE>

all instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Asset Sale Offer. The written notice, which shall govern the
terms of the Asset Sale Offer, shall state:

                  (1)      that the Asset Sale Offer is being made pursuant to
         this Section 3.09 and Section 4.10 hereof and the length of time the
         Asset Sale Offer shall remain open;

                  (2)      the Offer Amount, the purchase price and the Purchase
         Date;

                  (3)      that any Note not tendered or accepted for payment
         shall continue to accrue interest;

                  (4)      that, unless the Company defaults in making such
         payment, any Note accepted for payment pursuant to the Asset Sale Offer
         shall cease to accrue interest after the Purchase Date;

                  (5)      that Holders electing to have a Note purchased
         pursuant to an Asset Sale Offer may elect to have Notes purchased in
         integral multiples of $1,000 only;

                  (6)      that Holders electing to have a Note purchased
         pursuant to any Asset Sale Offer shall be required to surrender the
         Note, with the form entitled "Option of Holder to Elect Purchase" on
         the reverse of the Note completed, or transfer by book-entry transfer,
         to the Company, a Depositary, if appointed by the Company, or a Paying
         Agent at the address specified in the notice at least three days before
         the Purchase Date;

                  (7)      that Holders shall be entitled to withdraw their
         election if the Company, the Depositary or the Paying Agent, as the
         case may be, receives, not later than the expiration of the Offer
         Period, a telegram, telex, facsimile transmission or letter setting
         forth the name of the Holder, the principal amount of the Note the
         Holder delivered for purchase and a statement that such Holder is
         withdrawing his election to have such Note purchased;

                  (8)      that, if the aggregate principal amount of Notes and
         other pari passu Indebtedness surrendered by Holders exceeds the Offer
         Amount, the Company shall select the Notes and other pari passu
         Indebtedness to be purchased on a pro rata basis based on the principal
         amount of Notes and such other pari passu Indebtedness surrendered
         (with such adjustments as may be deemed appropriate by the Company so
         that only Notes in denominations of $1,000, or integral multiples
         thereof, shall be purchased); and

                  (9)      that Holders whose Notes were purchased only in part
         shall be issued new Notes equal in principal amount to the unpurchased
         portion of the Notes surrendered (or transferred by book-entry
         transfer).

         On or before the Purchase Date, the Company will, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, either directly or through the
Depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee, upon written request from the
Company and receipt of an Authentication Order shall authenticate and mail or
deliver such new Note

                                       44

<PAGE>

to such Holder, in a principal amount equal to any unpurchased portion of the
Note surrendered. Any Note not so accepted shall be promptly mailed or delivered
by the Company to the Holder thereof. The Company shall publicly announce the
results of the Asset Sale Offer on the Purchase Date.

         Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

                                   ARTICLE 4.
                                    COVENANTS

Section 4.01      Payment of Notes.

         The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.

         The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.

Section 4.02      Maintenance of Office or Agency.

         The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes 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 such office or agency. If at any time the Company
fails to maintain any such required office or agency or fails to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.

         The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such 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 in the Borough of
Manhattan, the City of New York 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.

         The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03
hereof.

Section 4.03      Reports.

         (a)      Whether or not required by the Commission's rules and
regulations, so long as any Notes are outstanding, the Company shall furnish to
the holders of Notes, within the time periods specified in the Commission's
rules and regulations:

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                  (1)      all quarterly and annual reports that would be
         required to be filed with the Commission on Forms 10-Q and 10-K if the
         Company were required to file such reports; and

                  (2)      all current reports that would be required to be
         filed with the Commission on Form 8-K if the Company were required to
         file such reports.

         (b)      All such reports shall be prepared in all material respects in
accordance with all of the rules and regulations applicable to such reports.
Each annual report on Form 10-K shall include a report on the Company's
consolidated financial statements by the Company's certified independent
accountants. In addition, the Company shall file a copy of each of the reports
referred to in clauses (1) and (2) in Section 4.03(a) above with the Commission
for public availability within the time periods specified in the rules and
regulations applicable to such reports (unless the Commission shall not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request.

         (c)      If, at any time, the Company is no longer subject to the
periodic reporting requirements of the Exchange Act for any reason, the Company
shall nevertheless continue filing the reports specified in Section 4.03(a) with
the Commission within the time periods specified above unless the Commission
shall not accept such a filing. The Company agrees that it shall not take any
action for the purpose of causing the Commission not to accept any such filings.
If, notwithstanding the foregoing, the Commission shall not accept the Company's
filings for any reason, the Company shall post the reports referred to in
Section 4.03(a) on its website within the time periods that would apply if the
Company were required to file those reports with the Commission.

         (d)      If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by Section 4.03(a) shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto, and
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.

         (e)      In addition, the Company agrees that, for so long as any Notes
remain outstanding, at any time it is not required to file the reports required
by Section 4.03(a) with the Commission, it shall furnish to the holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

Section 4.04      Compliance Certificate.

         (a)      The Company and each Guarantor (to the extent that such
Guarantor is so required under the TIA) shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate prescribed by
the TIA stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and the Security Documents, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Company has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and the Security Documents and is not in default in
the performance or observance of any of the terms, provisions and conditions of
this Indenture or the Security Documents (or, if a Default or Event of Default
has occurred, describing all such Defaults or Events of Default of which he or
she may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest,

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<PAGE>

if any, on the Notes is prohibited or if such event has occurred, a description
of the event and what action the Company is taking or proposes to take with
respect thereto.

         (b)      So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.

         (c)      So long as any of the Notes are outstanding, the Company shall
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.

Section 4.05      Taxes.

         The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.

Section 4.06      Stay, Extension and Usury Laws.

         The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.

Section 4.07      Restricted Payments.

         (a)      The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:

                  (1)      declare or pay any dividend or make any other payment
         or distribution on account of the Company's or any of its Restricted
         Subsidiaries' Equity Interests (including any payment in connection
         with any merger or consolidation involving the Company or any of its
         Restricted Subsidiaries) or to the direct or indirect holders of the
         Company's or any of its Restricted Subsidiaries' Equity Interests in
         their capacity as such (other than dividends or distributions payable
         in Equity Interests (other than Disqualified Stock) of the Company or
         dividends or distributions payable to the Company or a Restricted
         Subsidiary of the Company);

                  (2)      purchase, redeem or otherwise acquire or retire for
         value (including in connection with any merger or consolidation
         involving the Company) any Equity Interests of the Company or any
         direct or indirect parent of the Company;

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<PAGE>

                  (3)      make any payment on or with respect to, or purchase,
         redeem, defease or otherwise acquire or retire for value any
         Indebtedness of the Company that is contractually subordinated to the
         Notes (excluding any intercompany Indebtedness between or among the
         Company and any of its Restricted Subsidiaries and excluding the
         purchase, repurchase or other acquisition of such subordinated
         Indebtedness purchased in anticipation of satisfying a sinking fund
         obligation, principal installment or final maturity, in each case due
         within one year of the date of acquisition), except a payment of
         interest or principal at the Stated Maturity thereof; or

                  (4)      make any Restricted Investment

(all such payments and other actions set forth in these clauses (1) through (4)
above being collectively referred to as "Restricted Payments"), unless after
giving effect to such Restricted Payment:

                  (1)      no Default or Event of Default has occurred and is
         continuing or would occur as a consequence of such Restricted Payment
         (other than any Default or Event of Default that is cured as a result
         of such Restricted Payment);

                  (2)      the Company would, after giving pro forma effect
         thereto as if such Restricted Payment had been made at the beginning of
         the applicable four-quarter period, have been permitted to incur at
         least $1.00 of additional Indebtedness pursuant to the Fixed Charge
         Coverage Ratio test set forth in Section 4.09(a) herein; and

                  (3)      such Restricted Payment, together with the aggregate
         amount of all other Restricted Payments made by the Company and its
         Restricted Subsidiaries since the date of this Indenture (excluding
         Restricted Payments permitted by clauses (2), (3), (4), (5), (6), and
         (9) of the next succeeding paragraph), is less than the sum, without
         duplication, of:

                           (a)      50% of the Consolidated Net Income of the
         Company for the period (taken as one accounting period) from the
         beginning of the first fiscal quarter commencing after the date of this
         Indenture to the end of the Company's most recently ended fiscal
         quarter for which internal financial statements are available at the
         time of such Restricted Payment (or, if such Consolidated Net Income
         for such period is a deficit, less 100% of such deficit), plus

                           (b)      100% of the aggregate net cash proceeds
         received by the Company since the date of this Indenture as a
         contribution to its common equity capital or from the issue or sale of
         Equity Interests of the Company (other than Disqualified Stock) or from
         the issue or sale of convertible or exchangeable Disqualified Stock or
         convertible or exchangeable debt securities of the Company that have
         been converted into or exchanged for such Equity Interests (other than
         Equity Interests (or Disqualified Stock or debt securities) sold to a
         Subsidiary of the Company), plus

                           (c)      to the extent that any Restricted Investment
         that was made after the date of this Indenture is sold for cash or
         otherwise liquidated or repaid for cash, the lesser of (i) the cash
         return of capital with respect to such Restricted Investment (less the
         cost of disposition, if any) and (ii) the initial amount of such
         Restricted Investment, plus

                           (d)      to the extent that any Unrestricted
         Subsidiary of the Company designated as such after the date of this
         Indenture is redesignated as a Restricted Subsidiary after the date of
         this Indenture, the Fair Market Value of the Company's Investment in
         such Subsidiary as of the date of such redesignation, plus

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<PAGE>

                           (e)      100% of any payments of interest on
         Indebtedness, dividends, repayments of loans or advances, or other
         transfers of assets received by the Company or a Restricted Subsidiary
         of the Company after the date of this Indenture from an Unrestricted
         Subsidiary of the Company, to the extent that such payments, dividends,
         repayments or transfers were not otherwise included in Consolidated Net
         Income of the Company for such period, plus

                           (f)      $628.3 million.

                  The preceding provisions shall not prohibit:

                  (1)      the payment of any dividend within 60 days after the
         date of declaration of the dividend, if at the date of declaration the
         dividend payment would have complied with the provisions of this
         Indenture;

                  (2)      the making of any Restricted Payment in exchange for,
         or out of the net cash proceeds of the substantially concurrent sale
         (other than to a Subsidiary of the Company) of, Equity Interests of the
         Company (other than Disqualified Stock) or from the substantially
         concurrent contribution of common equity capital to the Company;
         provided that the amount of any such net cash proceeds that are
         utilized for any such Restricted Payment shall be excluded from clause
         (3)(b) of the preceding paragraph;

                  (3)      the defeasance, redemption, repurchase or other
         acquisition of Indebtedness of the Company that is contractually
         subordinated to the Notes with the net cash proceeds from a
         substantially concurrent incurrence of Permitted Refinancing
         Indebtedness, so long as no Default has occurred and is continuing or
         would be caused thereby;

                  (4)      the payment of any dividend (or, in the case of any
         partnership or limited liability company, any similar distribution) by
         a Restricted Subsidiary of the Company to the holders of any class or
         series of such Restricted Subsidiary's Equity Interests on a pro rata
         basis;

                  (5)      the repurchase, redemption or other acquisition or
         retirement for value of any Equity Interests of the Company or any
         Restricted Subsidiary of the Company held by any current or former
         officer, direct or employee of the Company (or any of its Restricted
         Subsidiaries) pursuant to any equity subscription agreement, stock
         option agreement, shareholders' agreement or similar agreement;
         provided that the aggregate price paid for all such repurchased,
         redeemed, acquired or retired Equity Interests may not exceed $5.0
         million in any twelve-month period, so long as no Default has occurred
         and is continuing or would be caused thereby;

                  (6)      the repurchase of Equity Interests deemed to occur
         upon the exercise of stock options to the extent such Equity Interests
         represent a portion of the exercise price of those stock options;

                  (7)      the declaration and payment of dividends to holders
         of any class or series of Disqualified Stock of the Company or any
         Restricted Subsidiary of the Company issued on or after the date of
         this Indenture in accordance with the Fixed Charge Coverage test
         described under Section 4.09 herein; provided that no Default has
         occurred and is continuing or would be caused thereby (other than any
         Default or Event of Default that is cured as a result of such
         Restricted Payment); and

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<PAGE>

                  (8)      any purchase, redemption, defeasance or other
         acquisition or retirement for value of subordinated Indebtedness upon a
         Change of Control or an Asset Sale to the extent required by this
         Indenture or other agreement pursuant to which such subordinated
         Indebtedness was issued, but only if the Company (a) in the case of a
         Change of Control, has made an offer to repurchase the Notes as
         described under Section 4.15 herein or (b) in the case of an Asset
         Sale, has applied the Net Proceeds from such Asset Sale in accordance
         with the provisions described under Section 4.10 herein, so long as no
         Default has occurred and is continuing or would be caused thereby.

         (b)      The amount of all Restricted Payments (other than cash) shall
be the Fair Market Value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.

Section 4.08      Dividend and Other Payment Restrictions Affecting
Subsidiaries.

         (a)      The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:

                  (1)      pay dividends or make any other distributions on its
         Capital Stock to the Company or any of its Restricted Subsidiaries, or
         with respect to any other interest or participation in, or measured by,
         its profits, or pay any indebtedness owed to the Company or any of its
         Restricted Subsidiaries;

                  (2)      make loans or advances to the Company or any of its
         Restricted Subsidiaries; or

                  (3)      transfer any of its properties or assets to the
         Company or any of its Restricted Subsidiaries.

         However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:

                  (1)      agreements governing Existing Indebtedness and Credit
         Facilities as in effect on the date of this Indenture and any
         amendments, modifications, restatements, renewals, increases,
         supplements, refundings, replacements or refinancings of those
         agreements; provided that the amendments, modifications, restatements,
         renewals, increases, supplements, refundings, replacements or
         refinancings are no more restrictive, taken as a whole, with respect to
         such dividend and other payment restrictions than those contained in
         those agreements on the date of this Indenture;

                  (2)      this Indenture, the Notes, the 2007 Notes and the
         indenture governing such notes, the 2010 Notes and the indenture
         governing such notes and the Term Loan Agreement or any other indenture
         governing letters of credit, loans or debt securities issued by or on
         behalf of the Company that are no more restrictive, taken as a whole,
         with respect to such dividend, distribution or other payment
         restrictions and loan or investment restrictions than those contained
         in this Indenture, the Notes, the 2007 Notes and the indenture
         governing such notes, the 2010 Notes and the indenture governing such
         notes and the Term Loan Agreement as in effect on the date of this
         Indenture;

                  (3)      applicable law, rule, regulation or order;

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<PAGE>

                  (4)      customary non-assignment provisions in leases,
         contracts and licenses entered into in the ordinary course of business
         and consistent with past practices;

                  (5)      purchase money obligations for property acquired in
         the ordinary course of business and Capital Lease Obligations that
         impose restrictions on the property purchased or leased of the nature
         described in clause (3) of Section 4.08(a);

                  (6)      any agreement for the sale or other disposition of a
         Restricted Subsidiary that restricts distributions by that Restricted
         Subsidiary pending the sale or other disposition;

                  (7)      Permitted Refinancing Indebtedness; provided that the
         restrictions contained in the agreements governing such Permitted
         Refinancing Indebtedness are not materially more restrictive, taken as
         a whole, than those contained in the agreements governing the
         Indebtedness being refinanced;

                  (8)      Liens securing Indebtedness otherwise permitted to be
         incurred under the provisions of Section 4.12 herein that limit the
         right of the debtor to dispose of the assets subject to such Liens;

                  (9)      provisions limiting or prohibiting the disposition or
         distribution of assets or property in joint venture agreements, asset
         sale agreements, sale-leaseback agreements, stock sale agreements and
         other similar agreements entered into with the approval of the
         Company's Board of Directors, which limitation or prohibition is
         applicable only to the assets that are the subject of such agreements;

                  (10)     any encumbrance or restriction imposed pursuant to
         the terms of any Non-Recourse Debt incurred pursuant to clause (6) of
         the definition of Permitted Debt or any preferred stock issued pursuant
         to clause (7) of the definition of Permitted Debt; provided that such
         encumbrance or restriction, in the written opinion of the President,
         Vice Chairman, Chief Operating Officer or Chief Financial Officer of
         the Company, (x) is required in order to obtain such financing or to
         place such preferred stock, (y) is customary for such financings or
         placements and (z) applies only to the assets or revenues of the
         applicable Restricted Subsidiary;

                  (11)     any encumbrance or restriction with respect to a
         Restricted Subsidiary pursuant to an agreement relating to any Acquired
         Debt incurred pursuant to clause (10) of the definition of Permitted
         Debt; provided that such encumbrance or restriction was not incurred in
         connection with or in contemplation of such Restricted Subsidiary
         becoming a Restricted Subsidiary; and

                  (12)     restrictions on cash or other deposits or net worth
         imposed by customers or suppliers under contracts entered into in the
         ordinary course of business.

Section 4.09      Incurrence of Indebtedness and Issuance of Preferred Stock.

         (a)      The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), and the Company shall not issue any
Disqualified Stock and shall not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that the Company may
incur Indebtedness (including Acquired Debt) or issue Disqualified Stock if the
Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such

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<PAGE>

Disqualified Stock is issued would have been at least 2.0 to 1, determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.

         (b)      Section 4.09(a) shall not prohibit the incurrence of any of
the following items (collectively, "Permitted Debt"):

                  (1)      the incurrence by the Company and the Guarantee by
         the Canadian Guarantors of additional Indebtedness and letters of
         credit under Credit Facilities in an aggregate principal amount at any
         one time outstanding under this clause (1) (with letters of credit
         being deemed to have a principal amount equal to the maximum potential
         liability of the Company thereunder) not to exceed on any date of
         incurrence the greater of (A) $500.0 million or (B) the dollar amount
         that is equal to 50% of the Company's Consolidated Cash Flow for the
         then most recent four-quarter period for which financial information is
         available;

                  (2)      the incurrence by the Company and its Restricted
         Subsidiaries of the Existing Indebtedness;

                  (3)      the incurrence by the Company and the Canadian
         Guarantors of Indebtedness represented by the Notes, the 2007 Notes,
         the 2010 Notes and the Term Loans to be issued on the date of this
         Indenture, and in each case the related Guarantees;

                  (4)      the incurrence by the Company or any of its
         Restricted Subsidiaries of Indebtedness represented by Capital Lease
         Obligations, mortgage financings or purchase money obligations, in each
         case, incurred for the purpose of financing all or any part of the
         purchase price or cost of design, construction, installation or
         improvement of property, plant or equipment used in the business of the
         Company or any of its Restricted Subsidiaries, in an aggregate
         principal amount (or accreted value, as applicable), including all
         Permitted Refinancing Indebtedness incurred to extend, refund,
         refinance, renew, replace or defease any Indebtedness incurred pursuant
         to this clause (4), not to exceed $100.0 million at any one time
         outstanding;

                  (5)      Indebtedness of the Company which is owed to and
         owned by a Restricted Subsidiary and Indebtedness of a Restricted
         Subsidiary that is owed to and owned by the Company or a Restricted
         Subsidiary; provided that any subsequent issuance or transfer of any
         Capital Stock that results in any such Restricted Subsidiary ceasing to
         be a Restricted Subsidiary or any transfer of such Indebtedness (other
         than to the Company or a Restricted Subsidiary) shall be deemed, in
         each case, to constitute the incurrence of such Indebtedness by the
         Company or by a Restricted Subsidiary, as the case may be;

                  (6)      the incurrence of Non-Recourse Debt by any Restricted
         Subsidiary of the Company (other than a Restricted Subsidiary that
         owns, directly or indirectly, any Material Designated Assets);

                  (7)      the issuance of preferred stock by a Restricted
         Subsidiary of the Company (other than a Restricted Subsidiary that
         owns, directly or indirectly, any Material Designated Assets), the net
         proceeds of which are applied to finance the exploration, drilling,
         development, construction or purchase of or by, or repairs or
         improvements or additions to, property or assets of the Company or any
         Restricted Subsidiary;

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<PAGE>

                  (8)      the incurrence by the Company of Guarantees of
         Indebtedness of Restricted Subsidiaries which, but for such Guarantees,
         would be permitted to be incurred pursuant to clause (6) of Section
         4.09 (b); provided that the aggregate principal amount of Indebtedness
         incurred pursuant to this clause (8) does not exceed $100.0 million at
         any one time outstanding;

                  (9)      the incurrence by the Company or any of its
         Restricted Subsidiaries of Permitted Refinancing Indebtedness in
         exchange for, or the net proceeds of which are used to refund,
         refinance, replace, defease or discharge Indebtedness (other than
         intercompany Indebtedness) that was permitted by this Indenture to be
         incurred under Section 4.09(a) or clauses (2), (3), (4), (5), (6), (8)
         or (10) of this Section 4.09(b) or this clause (9);

                  (10)     the incurrence of Acquired Debt by any Restricted
         Subsidiary of the Company at the time such Restricted Subsidiary
         becomes a Restricted Subsidiary of the Company so long as such Acquired
         Debt was not incurred in connection with or in contemplation of such
         Person becoming a Restricted Subsidiary of the Company; provided that
         the Company would have been able to incur such Indebtedness at the time
         of incurrence thereof by the Restricted Subsidiary pursuant to Section
         4.09 (a);

                  (11)     the incurrence of Indebtedness pursuant to Hedging
         Obligations incurred in the ordinary course of business and not for
         speculative purposes;

                  (12)     the incurrence by the Company or any of its
         Restricted Subsidiaries of Indebtedness in respect of workers'
         compensation claims, self-insurance obligations, bankers' acceptances
         and performance and surety bonds in the ordinary course of business;

                  (13)     the incurrence by the Company or any of its
         Restricted Subsidiaries of Indebtedness arising from the honoring by a
         bank or other financial institution of a check, draft or similar
         instrument inadvertently drawn against insufficient funds, so long as
         such Indebtedness is covered within five business days;

                  (14)     the incurrence by any Restricted Subsidiary of
         Indebtedness represented by letters of credit (or Guarantees thereof)
         entered into in the ordinary course of business to the extent that such
         letters of credit are not drawn upon or, if and to the extent drawn
         upon, such drawing is reimbursed no later than the tenth Business Day
         following a demand for reimbursement following payment on the letter of
         credit; provided that such letters of credit shall not constitute
         Permitted Debt pursuant to this clause (14) if they are issued in
         support of Indebtedness;

                  (15)     the incurrence of Indebtedness by the Company
         represented by letters of credit cash collateralized with the proceeds
         of Priority Lien Debt; and

                  (16)     the incurrence by the Company or any of its
         Restricted Subsidiaries of additional Indebtedness in an aggregate
         principal amount (or accreted value, as applicable) at any time
         outstanding, including all Permitted Refinancing Indebtedness incurred
         to extend, refinance, renew, replace, defease or refund any
         Indebtedness incurred pursuant to this clause (16), not to exceed
         $100.0 million.

         The Company shall not incur and shall not permit any Guarantor to
incur, any Indebtedness (including Permitted Debt) that is contractually
subordinated in right of payment to any other Indebtedness of the Company or
such Guarantor unless such Indebtedness is also contractually subordinated in
right of payment to the Notes (and the Applicable Guarantee) and the Term Loans
on

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<PAGE>

substantially identical terms; provided, however, that no Indebtedness of the
Company shall be deemed to be contractually subordinated in right of payment to
any other Indebtedness of the Company solely by virtue of being unsecured or by
virtue of being secured on a junior basis.

Section 4.10      Asset Sales.

         (a)      The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale (including a Sale of
Designated Assets) unless:

                  (1)      the Company (or the Restricted Subsidiary, as the
         case may be) receives consideration at the time of the Asset Sale at
         least equal to the Fair Market Value of the assets or Equity Interests
         issued or sold or otherwise disposed of;

                  (2)      at least 75% of the consideration received in the
         Asset Sale by the Company or such Restricted Subsidiary is in the form
         of cash or Cash Equivalents. For purposes of this provision, each of
         the following shall be deemed to be cash:

                           (A)      any liabilities, as shown on the Company's
                  most recent consolidated balance sheet, of the Company or any
                  Restricted Subsidiary (other than contingent liabilities and
                  liabilities that are by their terms subordinated to the Notes)
                  that are assumed by the transferee of any such assets pursuant
                  to a customary novation or similar agreement that releases the
                  Company or such Restricted Subsidiary from further liability;

                           (B)      any securities, notes or other obligations
                  received by the Company or any such Restricted Subsidiary from
                  such transferee that are promptly, subject to ordinary
                  settlement periods, converted by the Company or such
                  Restricted Subsidiary into cash, to the extent of the cash
                  received in that conversion; and

                           (C)      except in the case of a Sale of Designated
                  Assets, any stock or assets of the kind referred to in clauses
                  (4) or (6) of Section 4.10(b); and

                  (3)      in the case of a Sale of Designated Assets other than
         Canadian Gas Assets, the Company (or the Restricted Subsidiary, as the
         case may be) shall deposit the Net Proceeds as cash collateral in a
         segregated account (a "Designated Asset Sale Proceeds Account") held by
         the Collateral Trustee or its agent to secure the Secured Obligations;
         provided, that for so long as the terms of any of the Company's senior
         unsecured notes that were issued prior to August 10, 2000 would prevent
         such a pledge by a Restricted Subsidiary, the Company shall deposit
         with the Collateral Trustee or its agent an amount of cash equal to the
         Net Proceeds as cash collateral to secure the Secured Obligations, and
         the applicable Restricted Subsidiary shall not be obligated to do so.

         (b)      Within 365 days after the receipt of any Net Proceeds from an
Asset Sale, other than a Sale of Designated Assets that are not Canadian Gas
Assets, the Company (or the applicable Restricted Subsidiary, as the case may
be) may apply those Net Proceeds:

                  (1)      to repay Priority Lien Debt and/or cash collateralize
         letters of credit constituting Priority Lien Debt;

                  (2)      in the case of an Asset Sale by a Restricted
         Subsidiary, to repay or repurchase Indebtedness of Calpine Canada
         Energy Finance ULC and/or Calpine Canada Energy Finance II ULC existing
         on the date of this Indenture;

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<PAGE>

                  (3)      in the case of an Asset Sale by a Restricted
         Subsidiary, to repay or repurchase Indebtedness of any Restricted
         Subsidiary and, if such Indebtedness is revolving credit Indebtedness,
         to correspondingly reduce commitments with respect thereto;

                  (4)      to acquire all or substantially all of the assets of,
         or any Capital Stock of, another Permitted Business, if, after giving
         effect to any such acquisition of Capital Stock, the Permitted Business
         is or becomes a Restricted Subsidiary of the Company;

                  (5)      to make a capital expenditure; or

                  (6)      to acquire other assets that are not classified as
         current assets under GAAP and that are used or useful in a Permitted
         Business.

         (c)      Within 180 days after the receipt of any Net Proceeds from an
Asset Sale that constitutes a Sale of Designated Assets other than Canadian Gas
Assets, the Company (or the Restricted Subsidiary that disposed of those
Designated Assets, as the case may be) may apply those Net Proceeds to purchase
other assets that would constitute Designated Assets or to repay Priority Lien
Debt and/or cash collateralize letters of credit constituting Priority Lien Debt
and, if such Priority Lien Debt is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto.

         (d)      Any Net Proceeds from Asset Sales (including Sales of
Designated Assets) that are not applied or invested as provided in the preceding
clauses of this Section 4.10 shall constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $50.0 million, or at such earlier
point as may be elected by the Company, the Company shall make an offer to all
holders of the Notes and all holders of other Indebtedness that is pari passu
with the Notes and equally and ratably secured with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets, including the 2007
Notes, the 2010 Notes, the Term Loans and each series of Existing Indebtedness
that contains similar asset sale provisions, when applicable (an "Asset Sale
Offer"), to purchase or redeem the maximum principal amount of notes and such
other pari passu Indebtedness that may be purchased or redeemed out of the
Excess Proceeds (including each series of Existing Indebtedness that contains
similar asset sale provisions). The offer price in any Asset Sale Offer shall be
equal to 100% of principal amount plus accrued and unpaid interest, if any, to
the date of purchase, and shall be payable in cash. If any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use those
Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If
the aggregate principal amount of notes and other pari passu Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
Company shall select the Notes and such other pari passu Indebtedness to be
purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.

         (e)      Notwithstanding the foregoing, to the extent that any or all
of the Net Proceeds of any Foreign Asset Sale is prohibited or delayed by
applicable local law from being repatriated to the United States, the portion of
such Net Proceeds so affected shall not be required to be applied at the time
provided above, but may be retained by the applicable Restricted Subsidiary so
long, but only so long, as the applicable local law shall not permit
repatriation to the United States. The Company shall promptly take or cause the
applicable Restricted Subsidiary to promptly take all actions required by the
applicable local law to permit such repatriation. Once such repatriation of any
of the affected Net Proceeds is permitted under the applicable local law, the
repatriation shall be immediately effected and the repatriated Net Proceeds
shall be applied in the manner set forth in this Section 4.10 as if the Asset
Sale had occurred on the date of such repatriation.

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<PAGE>

         (f)      Notwithstanding the foregoing, to the extent that the Board of
Directors determines, in good faith, that repatriation of any or all of the Net
Proceeds of any Foreign Asset Sale would have a material adverse tax consequence
to the Company, the Net Proceeds so affected may be retained outside of the
United States by the applicable Restricted Subsidiary for so long as such
material adverse tax consequence would continue.

         (g)      The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent those laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
conflict.

Section 4.11      Transactions with Affiliates.

         (a)      The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Company (each, an "Affiliate Transaction"),
unless:

                  (1)      the Affiliate Transaction is on terms that are no
         less favorable to the Company or the relevant Restricted Subsidiary
         than those that would have been obtained in a comparable transaction by
         the Company or such Restricted Subsidiary with an unrelated Person; and

                  (2)      the Company delivers to the Trustee:

                           (a)      with respect to any Affiliate Transaction or
         series of related Affiliate Transactions involving aggregate
         consideration in excess of $2.5 million, an officers' certificate
         certifying that such Affiliate Transaction complies with this Section
         4.11(a); and

                           (b)      with respect to any Affiliate Transaction or
         series of related Affiliate Transactions involving aggregate
         consideration in excess of $10.0 million, a resolution of the Board of
         Directors set forth in an officers' certificate certifying that such
         Affiliate Transaction complies with this Section 4.11 and that such
         Affiliate Transaction has been approved by a majority of the
         disinterested members of the Board of Directors or, if there are no
         disinterested members of the Board of Directors, the Board of Directors
         shall have received a written opinion of an accounting, appraisal or
         investment banking firm of national standing stating that such
         Affiliate Transaction or series of Affiliate Transactions is fair to
         the Company or such Restricted Subsidiary from a financial point of
         view.

         (b)      The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of Section
4.11(a):

                  (1)      any employment agreement, employee benefit plan,
         stock option plan, officer and director indemnification agreement or
         any similar arrangement entered into by the Company or any of its
         Restricted Subsidiaries in the ordinary course of business;

                  (2)      transactions between or among the Company and its
         Restricted Subsidiaries and between or among the Company's Restricted
         Subsidiaries;

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<PAGE>

                  (3)      transactions with a Person (other than an
         Unrestricted Subsidiary of the Company) that is an Affiliate of the
         Company solely because the Company owns, directly or through a
         Restricted Subsidiary, an Equity Interest in, or controls, such Person;

                  (4)      payment of reasonable directors' fees to Persons who
         are not otherwise Affiliates of the Company;

                  (5)      any issuance of Equity Interests (other than
         Disqualified Stock) of the Company to Affiliates of the Company;

                  (6)      Restricted Payments that do not violate the
         provisions of Section 4.07 hereof;

                  (7)      loans or advances to employees in the ordinary course
         of business;

                  (8)      any repurchase, redemption or other retirement of
         Capital Stock of the Company held by employees of the Company or any of
         its Subsidiaries upon death, disability or termination of employment at
         a price not in excess of the Fair Market Value thereof approved by the
         Board of Directors;

                  (9)      any transaction between or among the Company and any
         of its Subsidiaries in the ordinary course of business and consistent
         with past practices of the Company and its Subsidiaries; and

                  (10)     any agreement to do any of the foregoing.

         (c)      Any transaction which has been determined, in the written
opinion of an independent nationally recognized investment banking firm, to be
fair, from a financial point of view, to the Company or the applicable
Restricted Subsidiary shall be deemed to be in compliance with this Section
4.11.

Section 4.12      Liens.

         (a)      The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind on any asset now owned or hereafter
acquired, except Permitted Liens.

         (b)      The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, grant or permit to exist a Lien upon any property
(whether then held by it or to be acquired by it at a future time) as security
for any Priority Lien Debt, unless (1) such Lien secures all Priority Lien Debt
on an equal and ratable basis and (2) the Collateral Trustee holds an
enforceable and perfected Lien upon such property as security equally and
ratably for all Parity Lien Obligations in second priority to Priority Lien
Debt.

Section 4.13      Limitation on Changes in the Nature of the Business.

         The Company and its Restricted Subsidiaries shall engage only in
Permitted Businesses, except to such extent as would not be material to the
Company and its Restricted Subsidiaries taken as a whole. In addition, the
Company will, and shall cause its Subsidiaries, to conduct their respective
businesses in a manner so as to maintain the exemption of the Company and its
Subsidiaries from treatment as a public utility holding company under PUHCA or
an electric utility or public utility under any federal, state or local law;
provided to the extent that any such law is amended following the date of this
Indenture in such a manner that would (absent application of this proviso) make
non-compliance with this Section 4.13 not result in a material adverse effect on
the Company's results of operations or financial condition, then the

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Company shall not be required to comply with this Section 4.13, but only to the
extent of actions or failures to act that would (absent application of this
Section 4.13) constitute violations of this Section 4.13 solely as a result of
such amendment.

Section 4.14      Corporate Existence.

         Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect:

                  (1)      its corporate existence, and the corporate,
         partnership or other existence of each of its Subsidiaries, in
         accordance with the respective organizational documents (as the same
         may be amended from time to time) of the Company or any such
         Subsidiary; and

                  (2)      the rights (charter and statutory), licenses and
         franchises of the Company and its Subsidiaries; provided, however, that
         the Company shall not be required to preserve any such right, license
         or franchise, or the corporate, partnership or other existence of any
         of its Subsidiaries, if the Board of Directors shall determine that the
         preservation thereof is no longer desirable in the conduct of the
         business of the Company and its Subsidiaries, taken as a whole, and
         that the loss thereof is not adverse in any material respect to the
         Holders of the Notes.

Section 4.15      Offer to Repurchase Upon Change of Control.

         (a)      If a Change of Control occurs, each holder of Notes shall have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple of $1,000) of that holder's Notes pursuant to the offer
described below (the "Change of Control Offer") on the terms set forth in this
Indenture. In the Change of Control Offer, the Company shall offer a payment in
cash equal to 101% of the aggregate principal amount of Notes repurchased plus
accrued and unpaid interest, if any, on the Notes repurchased (the "Change of
Control Payment"), to but excluding the date of purchase. Within 30 days
following any Change of Control, the Company shall mail a notice to each holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Notes on the change of control payment date (the
"Change of Control Payment Date") specified in the notice, which date shall be
no earlier than 30 days and no later than 60 days from the date such notice is
mailed, pursuant to the procedures required by this Indenture and described in
such notice. The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with the Change of
Control provisions of this Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the Change of Control provisions of this
Indenture by virtue of such compliance.

         (b)      On the Change of Control Payment Date, the Company will, to
the extent lawful:

                  (1)      accept for payment all Notes or portions of Notes
         properly tendered pursuant to the Change of Control Offer;

                  (2)      deposit with the paying agent an amount equal to the
         Change of Control Payment in respect of all Notes or portions of Notes
         properly tendered; and

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<PAGE>

                  (3)      deliver or cause to be delivered to the trustee the
         Notes properly accepted together with an officers' certificate stating
         the aggregate principal amount of Notes or portions of Notes being
         purchased by the Company.

                  The paying agent shall promptly mail to each holder of Notes
properly tendered the Change of Control Payment for such Notes, and the Trustee
upon receipt of an Authentication Order from the Company shall promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each new note shall be in a principal amount
of $1,000 or an integral multiple of $1,000. The Company shall publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.

         (c)      The Company shall not be required to make a Change of Control
Offer upon a Change of Control if (1) a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes properly tendered and not withdrawn
under the Change of Control Offer, or (2) notice of redemption has been given
pursuant to Section 3.07 herein, unless and until there is a default in payment
of the applicable redemption price.

Section 4.16      Limitation on Sale and Leaseback Transactions.

         (a)      The Company shall not enter into any sale and leaseback
transaction; provided that the Company may enter into a sale and leaseback
transaction if:

                  (1)      the Company could have (a) incurred Indebtedness in
         an amount equal to the Attributable Debt relating to such sale and
         leaseback transaction under the Fixed Charge Coverage Ratio test in
         Section 4.09 (a) herein and (b) incurred a Lien to secure such
         Indebtedness pursuant to Section 4.12 herein;

                  (2)      the gross cash proceeds of that sale and leaseback
         transaction are at least equal to the Fair Market Value, as determined
         in good faith by the Board of Directors and set forth in an officers'
         certificate delivered to the Trustee, of the property that is the
         subject of that sale and leaseback transaction; and

                  (3)      the transfer of assets in that sale and leaseback
         transaction is permitted by, and the Company applies the proceeds of
         such transaction in compliance with, Section 4.10 herein.

         (b)      This Section 4.16 shall not apply to the Company's
Subsidiaries.

Section 4.17      Limitation on Issuances of Guarantees of Indebtedness.

         The Company shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to Guarantee or pledge any assets to secure the payment
of any other Indebtedness of the Company (other than the Existing Guarantees by
the Canadian Guarantors) unless such Restricted Subsidiary simultaneously
executes and delivers (1) supplemental indentures providing for the Guarantees
of the payment of the Notes by such Restricted Subsidiary, which Guarantees
shall be senior to such Restricted Subsidiary's Guarantee of or pledge to secure
such other Indebtedness unless the Indebtedness of the Company so Guaranteed or
secured is senior Indebtedness of the Company, in which case the Guarantees of
the Notes may be pari passu with such Restricted Subsidiary's Guarantee of or
pledge to secure such other Indebtedness of the Company, and (2) a pledge or
security agreement providing for a pledge of such

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assets to secure the Notes and all other Parity Lien Debt on an equal and
ratable basis (subject only to Permitted Prior Liens).

Section 4.18      Payments for Consent.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any holder of
the Notes the 2007 Notes, the 2010 Notes or the Term Loans for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture, the Notes, the 2007 Notes, the 2010 Notes, the Term Loans,
the Term Loan Agreement or any Security Documents unless such consideration is
offered to be paid or agreed to be paid to all holders of such notes and/or Term
Loans that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

Section 4.19      Designation of Restricted and Unrestricted Subsidiaries.

         The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
Fair Market Value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary designated as Unrestricted shall be
deemed to be an Investment made as of the time of the designation and shall
reduce the remaining amount available for Restricted Payments under Section 4.07
herein or under one or more clauses of the definition of Permitted Investments,
as determined by the Company. That designation shall only be permitted if the
Investment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. The Board of
Directors may redesignate any Unrestricted Subsidiary to be a Restricted
Subsidiary if that redesignation would not cause a Default.

Section 4.20      Changes in Covenant When Notes Rated Investment Grade.

         If on any date following the date of this Indenture:

                  (1)      any series of the notes is rated Baa3 or better by
         Moody's and BBB- or better by S&P; and

                  (2)      no Default or Event of Default shall have occurred
         and be continuing, then, beginning on that day and subject to the
         provisions of the following paragraph, the provisions of Section 4.07,
         4.08, 4.09, 4.10, 4.11, 4.13, 4.19 and clause (4) of Section 5.01
         hereof shall be suspended.

         Notwithstanding the foregoing, if the rating assigned by either such
rating agency should subsequently decline to below Baa3 or BBB-, respectively,
the foregoing provisions shall be reinstituted as of and from the date of such
rating decline. Calculations under the reinstated Section 4.07 shall be made as
if Section 4.07 had been in effect since the date of this Indenture except that
no default shall be deemed to have occurred solely by reason of a Restricted
Payment made while that Section 4.07 was suspended. These covenant suspension
provisions shall continue to be applicable following any such reinstatement. The
Company shall notify the Trustee if any covenants are suspended or reinstated
pursuant to this Section 4.20.

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                                   ARTICLE 5.
                                   SUCCESSORS

Section 5.01      Merger, Consolidation, or Sale of Assets.

         The Company may not, directly or indirectly: (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person; unless:

                  (1)      either:

                           (A)      the Company is the surviving corporation; or

                           (B)      the Person formed by or surviving any such
                  consolidation or merger (if other than the Company) or to
                  which such sale, assignment, transfer, conveyance or other
                  disposition has been made is a corporation organized or
                  existing under the laws of the United States, any state of the
                  United States or the District of Columbia;

                  (2)      the Person formed by or surviving any such
         consolidation or merger (if other than the Company) or the Person to
         which such sale, assignment, transfer, conveyance or other disposition
         has been made assumes all the obligations of the Company under the
         Notes, this Indenture, and the Security Documents pursuant to
         agreements reasonably satisfactory to the Trustee and the Collateral
         Trustee;

                  (3)      immediately after such transaction, no Default or
         Event of Default exists;

                  (4)      the Company or the Person formed by or surviving any
         such consolidation or merger (if other than the Company), or to which
         such sale, assignment, transfer, conveyance or other disposition has
         been made:

                           (A)      shall have Consolidated Net Worth
                  immediately after the transaction equal to or greater than the
                  Consolidated Net Worth of the Company immediately preceding
                  the transaction; and

                           (B)      will, on the date of such transaction after
                  giving pro forma effect thereto and any related financing
                  transactions as if the same had occurred at the beginning of
                  the applicable four-quarter period, be permitted to incur at
                  least $1.00 of additional Indebtedness pursuant to the Fixed
                  Charge Coverage Ratio test set forth in Section 4.09(a)
                  herein; and

                  (5)      such transaction shall not impair the ability of the
         Company or any of its Subsidiaries to conduct their respective
         businesses in a manner so as to maintain the exemption of the Company
         and its Subsidiaries from treatment as a public utility holding company
         under PUHCA or an electric utility or public utility under any federal,
         state or local law, unless such exemption is no longer material to the
         Company and its Restricted Subsidiaries taken as a whole or to the
         Person formed by or surviving any such consolidation or merger (if
         other then the Company) and its Restricted Subsidiaries taken as a
         whole.

         In addition, the Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person.

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         Notwithstanding the foregoing:

                  (1)      the Company may merge with an Affiliate solely for
         the purpose of reincorporating the Company in another jurisdiction; and

                  (2)      the Company and its Restricted Subsidiaries may sell,
         assign, transfer, lease, convey or otherwise dispose of assets between
         or among each other (including by way of merger).

Section 5.02      Successor Corporation Substituted.

         Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in a transaction that is subject to, and that complies with the
provisions of, Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets in a transaction that is subject to, and that complies with
the provisions of, Section 5.01 hereof.

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

Section 6.01      Events of Default.

         Each of the following is an "Event of Default":

                  (1)      default for 30 days in the payment when due of
         interest on the Notes;

                  (2)      default in payment when due of the principal of, or
         premium, if any, on the Notes;

                  (3)      failure to purchase the Notes when required pursuant
         to Section 4.10, 4.15 or otherwise as required pursuant to this
         Indenture or the Notes;

                  (4)      failure by the Company or any of its Restricted
         Subsidiaries for 30 days after written notice from the Trustee or the
         holders of at least 25% in outstanding aggregate principal amount of
         that series of notes to comply with any of the other agreements in this
         Indenture, the Notes or the Security Documents;

                  (5)      default under any mortgage, indenture or instrument
         under which there may be issued or by which there may be secured or
         evidenced any Indebtedness for money borrowed by the Company or any of
         its Restricted Subsidiaries (or the payment of which is guaranteed by
         the Company or any of its Restricted Subsidiaries) whether such
         Indebtedness or guarantee now exists, or is created after the date of
         this Indenture, if that default:

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                           (a)      is caused by a failure to pay principal of,
         or interest or premium, if any, on such Indebtedness prior to the
         expiration of the grace period provided in such Indebtedness on the
         date of such default (a "Payment Default"); or

                           (b)      results in the acceleration of such
         Indebtedness prior to its express maturity,

         and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $50.0 million or more, and such default shall not have
been cured or waived or any such acceleration rescinded, or such Indebtedness
repaid, within 20 days of the Company or such Restricted Subsidiary becoming
aware of such default; provided that the provisions of this clause (5) shall not
apply to any default on Non-Recourse Debt;

                  (6)      failure by the Company or any of its Significant
         Subsidiaries to pay final judgments (not covered by insurance)
         aggregating in excess of $50.0 million, which judgments are not paid,
         discharged or stayed for a period of 30 days;

                  (7)      the repudiation by the Company or any of its
         Restricted Subsidiaries of any of its obligations under the Security
         Documents or the unenforceability of the Security Documents against the
         Company or any of its Restricted Subsidiaries for any reason; provided
         that such breach, repudiation or unenforceability relates to Collateral
         having an aggregate Fair Market Value of $50.0 million or more;

                  (8)      except as permitted by this Indenture, any note
         Guarantee shall be held in any judicial proceeding to be unenforceable
         or invalid or shall cease for any reason to be in full force and effect
         or any Canadian Guarantor, or any Person acting on behalf of any
         Canadian Guarantor, shall deny or disaffirm its obligations under its
         note Guarantee and such condition shall not have been cured within 30
         days of written notice from the Trustee or the holders of at least 25%
         in outstanding aggregate principal amount of the Notes; and

                  (9)      the Company or any of its Significant Subsidiaries or
         any group of Subsidiaries that, taken as a whole, would constitute a
         Significant Subsidiary pursuant to or within the meaning of Bankruptcy
         Law:

                           (A)      commences a voluntary case,

                           (B)      consents to the entry of an order for relief
                  against it in an involuntary case,

                           (C)      consents to the appointment of a custodian
                  of it or for all or substantially all of its property,

                           (D)      makes a general assignment for the benefit
                  of its creditors, or

                           (E)      generally is not paying its debts as they
                  become due; and

         (10)     a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:

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                           (A)      is for relief against the Company or any of
                  its Significant Subsidiaries or any group of Subsidiaries
                  that, taken as a whole, would constitute a Significant
                  Subsidiary in an involuntary case;

                           (B)      appoints a custodian of the Company or any
                  of its Significant Subsidiaries or any group of Subsidiaries
                  that, taken as a whole, would constitute a Significant
                  Subsidiary or for all or substantially all of the property of
                  the Company or any of its Significant Subsidiaries or any
                  group of Subsidiaries that, taken as a whole, would constitute
                  a Significant Subsidiary; or

                           (C)      orders the liquidation of the Company or any
                  of its Significant Subsidiaries or any group of Subsidiaries
                  that, taken as a whole, would constitute a Significant
                  Subsidiary;

                  and the order or decree remains unstayed and in effect for 60
                  consecutive days.

Section 6.02      Acceleration.

         In the case of an Event of Default specified in clause (9) or (10) of
Section 6.01 hereof, with respect to the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall become due and
payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately.

         Upon any such declaration, the Notes shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (9) of Section 6.01 hereof occurs with respect to the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.

         If an Event of Default occurs on or after July 15, 2008 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to July 15, 2008
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on July 15 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount of the Notes on the date of payment that would otherwise be due but for
the provisions of this sentence):

                                       64

<PAGE>

<TABLE>
<CAPTION>
YEAR                                                                                 PERCENTAGE
----                                                                                 ----------
<S>                                                                                  <C>
2003.............................................................................      8.750%
2004.............................................................................      7.875%
2005.............................................................................      7.000%
2006.............................................................................      6.125%
2007.............................................................................      5.250%
</TABLE>

Section 6.03      Other Remedies.

         If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.

         The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 6.04      Waiver of Past Defaults.

         Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase); provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration. Upon any such waiver, such
Default shall cease to exist, and any Event 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 6.05      Control by Majority.

         Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.

Section 6.06      Limitation on Suits.

         A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:

                  (1)      the Holder of a Note gives to the Trustee written
         notice of a continuing Event of Default;

                  (2)      the Holders of at least 25% in principal amount of
         the then outstanding Notes make a written request to the Trustee to
         pursue the remedy;

                  (3)      such Holder of a Note or Holders of Notes offer and,
         if requested, provide to the Trustee indemnity satisfactory to the
         Trustee against any loss, liability or expense;

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<PAGE>

                  (4)      the Trustee does not comply with the request within
         60 days after receipt of the request and the offer and, if requested,
         the provision of indemnity; and

                  (5)      during such 60-day period the Holders of a majority
         in principal amount of the then outstanding Notes do not give the
         Trustee a direction inconsistent with the request.

         A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.

Section 6.07      Rights of Holders of Notes to Receive Payment.

         Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on the Note, on or after the respective due dates expressed in the Note
(including in connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder; provided that a Holder
shall not have the right to institute any such suit for the enforcement of
payment if and to the extent that the institution or prosecution thereof or the
entry of judgment therein would, under applicable law, result in the surrender,
impairment, waiver or loss of the Lien of this Indenture upon any property
subject to such Lien.

Section 6.08      Collection Suit by Trustee.

         If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

Section 6.09      Trustee May File Proofs of Claim.

         The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian 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 amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. 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 Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

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<PAGE>

Section 6.10      Priorities.

         If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:

                  First: to the Trustee, its agents and attorneys for amounts
         due under Section 7.07 hereof, including payment of all compensation,
         expense and liabilities incurred, and all advances made, by the Trustee
         and the costs and expenses of collection;

                  Second: to Holders of Notes for amounts due and unpaid on the
         Notes for principal, premium, if any, and interest, ratably, without
         preference or priority of any kind, according to the amounts due and
         payable on the Notes for principal, premium, if any and interest,
         respectively; and

                  Third: to the Company or to such party as a court of competent
         jurisdiction shall direct.

         The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

Section 6.11      Undertaking for Costs.

         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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.

                                   ARTICLE 7.
                                    TRUSTEE

Section 7.01      Duties of Trustee.

         (a)      If an Event of Default has occurred and is 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 its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.

         (b)      Except during the continuance of an Event of Default:

                  (1)      the duties of the Trustee shall be determined solely
         by the express provisions of this Indenture and the Trustee need
         perform only those duties that are specifically set forth in this
         Indenture and no others, and no implied covenants or obligations shall
         be read into this Indenture against the Trustee; and

                  (2)      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.

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<PAGE>

         However, the Trustee shall examine the certificates and opinions to
         determine whether or not they conform to the requirements of this
         Indenture (but need not confirm or investigate the accuracy of
         mathematical calculations or other facts stated therein).

         (c)      The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

                  (1)      this paragraph (c) does not limit the effect of
         paragraph (b) of this Section 7.01;

                  (2)      the Trustee shall not be liable for any error of
         judgment made in good faith by a Responsible Officer, unless it is
         conclusively determined by a court of competent jurisdiction that the
         Trustee was negligent in ascertaining the pertinent facts; and

                  (3)      the Trustee shall not be liable with respect to any
         action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 6.05 hereof.

         (d)      Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section 7.01.

         (e)      No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder has offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.

         (f)      The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.

Section 7.02      Rights of Trustee.

         (a)      The Trustee may conclusively rely upon any document believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.

         (b)      Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.

         (c)      The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.

         (d)      The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.

         (e)      Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

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<PAGE>

         (f)      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 of the Holders unless such Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.

         (g)      In no event shall the Trustee be required to take notice of
any default or breach hereof or any Event of Default hereunder, except for
Events of Default specified in Section 6.01(1) and/or 6.01(2) hereof, unless and
until the Trustee shall have received from a Holder of a Note or from the
Company express written notice of the circumstances constituting the breach,
default or Event of Default and stating that said circumstances constitute an
Event of Default hereunder.

         (h)      If the Trustee is acting as Paying Agent and/or Registrar
hereunder, the rights and protections afforded to the Trustee pursuant to this
Article 7 will also be afforded to such Paying Agent and Registrar.

Section 7.03      Individual Rights of Trustee.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days after ascertaining it
has such conflicting interest, apply to the SEC for permission to continue as
trustee or resign to the extent and in the manner provided by, and subject to
the provisions of, the TIA and this Indenture. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.

Section 7.04      Trustee's Disclaimer.

         The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

Section 7.05      Notice of Defaults.

         If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.

Section 7.06      Reports by Trustee to Holders of the Notes.

         (a)      Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be

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<PAGE>

transmitted). The Trustee also shall comply with TIA Section 313(b)(2) to the
extent applicable. The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).

         (b)      A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed by the Trustee to the Company and filed by the
Trustee with the SEC and each stock exchange on which the Notes are listed in
accordance with TIA Section 313(d). The Company shall promptly notify the
Trustee when the Notes are listed on any stock exchange.

Section 7.07      Compensation and Indemnity.

         (a)      The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.

         (b)      The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture (and any other Note
Documents to which it is a party) against the Company (including this Section
7.07) and defending itself against any claim (whether asserted by the Company,
or any Holder or any other Person) or liability in connection with the exercise
or performance of any of its powers or duties hereunder, except to the extent
any such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.

         (c)      The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.

         (d)      To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.

         (e)      When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(9) or (10) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.

Section 7.08      Replacement of Trustee.

         (a)      A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.

         (b)      The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of a majority in principal amount of the then

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<PAGE>

outstanding Notes may remove the Trustee by so notifying the Trustee and the
Company in writing. The Company may remove the Trustee if:

                  (1)      the Trustee fails to comply with Section 7.10 hereof;

                  (2)      the Trustee is adjudged a bankrupt or an insolvent or
         an order for relief is entered with respect to the Trustee under any
         Bankruptcy Law;

                  (3)      a custodian or public officer takes charge of the
         Trustee or its property; or

                  (4)      the Trustee becomes incapable of acting.

         (c)      If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

         (d)      If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

         (e)      If the Trustee, after written request by any Holder who has
been a Holder for at least six months, fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

         (f)      A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

Section 7.09      Successor Trustee by Merger, etc.

         If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.

Section 7.10      Eligibility; Disqualification.

         There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100.0
million as set forth in its most recent published annual report of condition.

         This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).

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<PAGE>

Section 7.11      Preferential Collection of Claims Against Company.

         The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01      Option to Effect Legal Defeasance or Covenant Defeasance.

         The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.

Section 8.02      Legal Defeasance and Discharge.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company will, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from their obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in clauses (1) and (2) below, and to have satisfied all their other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder:

                  (1)      the rights of Holders of outstanding Notes to receive
         payments in respect of the principal of, or interest or premium, if
         any, on such Notes when such payments are due from the trust referred
         to in Section 8.04 hereof;

                  (2)      the Company's obligations with respect to such Notes
         under Article 2 and Section 4.02 hereof;

                  (3)      the rights, powers, trusts, duties and immunities of
         the Trustee hereunder and the Company's obligations in connection
         therewith; and

                  (4)      this Article 8.

         Subject to compliance with this Article 8, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.

Section 8.03      Covenant Defeasance.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company (to the extent applicable) shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be released from each of their obligations under the covenants contained in
Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and
4.19 hereof and clause (4) of Section 5.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section

                                       72

<PAGE>

8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(3) through 6.01(5) hereof shall not constitute Events of Default.

Section 8.04      Conditions to Legal or Covenant Defeasance.

         In order to exercise either Legal Defeasance or Covenant Defeasance
under either Section 8.02 or 8.03 hereof:

                  (1)      the Company must irrevocably deposit with the
         Trustee, in trust, for the benefit of the Holders, cash in United
         States dollars, non-callable Government Securities, or a combination
         thereof, in such amounts as shall be sufficient, in the opinion of a
         nationally recognized investment bank, appraisal firm or firm of
         independent public accountants, to pay the principal of, premium, if
         any, and interest on the outstanding Notes on the stated date for
         payment thereof or on the applicable redemption date, as the case may
         be, and the Company must specify whether such Notes are being defeased
         to maturity or to a particular redemption date;

                  (2)      in the case of an election under Section 8.02 hereof,
         the Company has delivered to the Trustee an Opinion of Counsel in the
         United States reasonably acceptable to the Trustee confirming that:

                           (A)      the Company has received from, or there has
                  been published by, the Internal Revenue Service a ruling; or

                           (B)      since the date of this Indenture, there has
                  been a change in the applicable federal income tax law,

                  in either case to the effect that, and based thereon such
                  Opinion of Counsel shall confirm that, the Holders of the
                  outstanding Notes shall not recognize income, gain or loss for
                  federal income tax purposes as a result of such Legal
                  Defeasance and shall be subject to federal income tax on the
                  same amounts, in the same manner and at the same times as
                  would have been the case if such Legal Defeasance had not
                  occurred;

                  (3)      in the case of an election under Section 8.03 hereof,
         the Company must deliver to the Trustee an Opinion of Counsel in the
         United States reasonably acceptable to the Trustee confirming that the
         Holders of the outstanding Notes shall not recognize income, gain or
         loss for federal income tax purposes as a result of such Covenant
         Defeasance and shall be subject to federal income tax on the same
         amounts, in the same manner and at the same times as would have been
         the case if such Covenant Defeasance had not occurred;

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<PAGE>

                  (4)      no Default or Event of Default shall have occurred
         and be continuing on the date of such deposit (other than a Default or
         Event of Default resulting from the borrowing of funds to be applied to
         such deposit);

                  (5)      such Legal Defeasance or Covenant Defeasance shall
         not result in a breach or violation of, or constitute a default under,
         any material agreement or instrument (other than this Indenture) to
         which the Company or any of its Subsidiaries is a party or by which the
         Company or any of its Subsidiaries is bound;

                  (6)      the Company must deliver to the Trustee an Officers'
         Certificate stating that the deposit was not made by the Company with
         the intent of preferring the Holders of Notes over the other creditors
         of the Company with the intent of defeating, hindering, delaying or
         defrauding any other creditors of the Company or others; and

                  (7)      the Company must deliver to the Trustee an Officers'
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent provided for or relating to the Legal Defeasance or the
         Covenant Defeasance have been complied with.

Section 8.05      Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.

         Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.

         The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

         Notwithstanding anything in this Article 8 to the contrary, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized
investment bank, appraisal firm or firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.04(1) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06      Repayment to the Company.

         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, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter be
permitted to look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money,

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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 repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
shall be repaid to the Company.

Section 8.07      Reinstatement.

         If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01      Without Consent of Holders of Notes.

         Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:

                  (1)      to cure any ambiguity, defect or inconsistency;

                  (2)      to provide for uncertificated Notes in addition to or
         in place of certificated Notes;

                  (3)      to provide for the assumption of the Company's
         obligations to the Holders of the Notes by a successor to the Company
         pursuant to Article 5 hereof;

                  (4)      to make any change that would provide any additional
         rights or benefits to the Holders of the Notes or that does not
         adversely affect the legal rights hereunder of any Holder of the Notes;

                  (5)      to comply with requirements of the SEC in order to
         effect or maintain the qualification of this Indenture under the TIA;

                  (6)      to provide for the issuance of Additional Notes in
         accordance with the limitations set forth in this Indenture as of the
         date hereof;

                  (7)      to allow any Guarantor to execute a supplemental
         indenture and/or a Guarantee with respect to the Notes;

                  (8)      to make, complete or confirm any grant of Collateral
         permitted or required by this Indenture or any of the Security
         Documents or any release of Collateral that becomes effective as set
         forth in this Indenture or any of the Security Documents;

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<PAGE>

                  (9)      to conform the text of this Indenture, the Notes or
         the Security Documents to any provision of the Description of the Notes
         section of the Offering Circular to the extent that such provision of
         the Description of the Notes section of the Offering Circular was
         intended to be a verbatim recitation of a provision of this Indenture,
         the Notes or the Security Documents; or

                  (10)     to reflect any waiver or termination of any right
         arising under the provisions of this Indenture that otherwise would be
         enforceable by any holder of the Term Loan Obligations, if such waiver
         or termination is set forth in the agreement governing such Term Loan
         Obligations, provided that no such waiver or amendment shall adversely
         affect the right of holders of Notes.

         Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.

Section 9.02      With Consent of Holders of Notes.

         Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including, without limitation,
Section 3.09, 4.10 and 4.15 hereof), the Guarantees and the Notes with the
consent of the Holders of at least a majority in principal amount of the Notes
(including, without limitation, Additional Notes, if any) then outstanding
voting as a single class (including, without limitation, consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture, the Guarantees or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes).

         Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.

         It is not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it is sufficient if such consent approves the substance thereof.

         After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount

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<PAGE>

of the Notes then outstanding voting as a single class may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

                  (1)      reduce the principal amount of Notes whose Holders
         must consent to an amendment, supplement or waiver;

                  (2)      reduce the principal of or change the fixed maturity
         of any Note or alter or waive any of the provisions with respect to the
         redemption of the Notes except as provided above with respect to
         Sections 3.09, 4.10 and 4.15 hereof;

                  (3)      reduce the rate of or change the time for payment of
         interest, including default interest, on any Note;

                  (4)      waive a Default or Event of Default in the payment of
         principal of, or interest or premium, if any, on the Notes (except a
         rescission of acceleration of the Notes by the Holders of at least a
         majority in aggregate principal amount of the then outstanding Notes
         and a waiver of the payment default that resulted from such
         acceleration);

                  (5)      make any Note payable in money other than that stated
         in the Notes;

                  (6)      make any change in the provisions of this Indenture
         relating to waivers of past Defaults or the rights of Holders of Notes
         to receive payments of principal of, or interest or premium, if any, on
         the Notes;

                  (7)      waive a redemption payment with respect to any Note
         (other than a payment required under Section 4.10 and Section 4.15);

                  (8)      release (A) any Collateral from the Liens created by
         the Security Documents except as specifically provided in this
         Indenture and the Security Documents as of the date of this Indenture
         or (B) all or substantially all of the Collateral or all or
         substantially all of the Canadian Guarantors from their obligations
         under the Guarantee and Collateral Agreement dated July 16, 2003
         without the prior written consent of all Holders; or

                  (9)      make any change in Section 6.04 or 6.07 hereof or in
         the foregoing amendment and waiver provisions.

Section 9.03      Compliance with Trust Indenture Act.

         Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.

Section 9.04      Revocation and Effect of Consents.

         Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver,

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<PAGE>

supplement or amendment becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.

Section 9.05      Notation on or Exchange of Notes.

         The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

         Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06      Trustee to Sign Amendments, etc.

         The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 and 7.02 hereof) shall
be fully protected in relying upon, in addition to the documents required by
Section 13.04 hereof, an Officers' Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental Indenture is authorized or
permitted by this Indenture.

                                   ARTICLE 10.
                             COLLATERAL AND SECURITY

Section 10.01     Equal and Ratable Sharing of Collateral by Holders of Parity
Lien Debt; Sharing Confirmation.

         Notwithstanding (1) anything to the contrary contained in the Security
Documents, (2) the time of incurrence of any Series of Parity Lien Debt, (3) the
order or method of attachment or perfection of any Liens securing any Series of
Parity Lien Debt, (4) the time or order of filing or recording of financing
statements, mortgages or other documents filed or recorded to perfect any Lien
upon any Collateral, (5) the time of taking possession or control over any
Collateral or (6) the rules for determining priority under any law governing
relative priorities of Liens:

                           (A)      all Liens at any time granted by the Company
                  or any other Obligor to secure any of the Parity Lien Debt
                  shall secure, equally and ratably, all present and future
                  Parity Lien Obligations; and

                           (B)      all proceeds of all Liens at any time
                  granted by the Company or any Obligor to secure any of the
                  Parity Lien Debt and other Parity Lien Obligations shall be
                  allocated and distributed equally and ratably on account of
                  the Parity Lien Debt and other Parity Lien Obligations;
                  provided, that, for the avoidance of doubt, in the absence of
                  an Event of Default, the Company shall be entitled to utilize
                  cash proceeds of Collateral in the ordinary course of its
                  business.

         The foregoing provision is intended for the benefit of, and shall be
enforceable as a third party beneficiary by, each present and future holder of
Parity Lien Obligations, each present and future Parity Debt Representative and
the Collateral Trustee as holder of Parity Liens. The Company shall not incur

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<PAGE>

any future Series of Parity Lien Debt unless the agreement governing such Series
of Parity Lien Debt includes a Sharing Confirmation at the time of incurrence of
such Series of Parity Lien Debt.

Section 10.02     Ranking of Note Liens

         Notwithstanding:

                  (1)      anything to the contrary contained in the Security
         Documents,

                  (2)      the time of incurrence of any Series of Secured Debt,

                  (3)      the order or method of attachment or perfection of
         any Liens securing any Series of Secured Debt,

                  (4)      the time or order of filing or recording of financing
         statements, mortgages or other documents filed or recorded to perfect
         any Lien upon any Collateral,

                  (5)      the time of taking possession or control over any
         Collateral or

                  (6)      the rules for determining priority under any law
         governing relative priorities of Liens,

all Liens at any time granted by the Company or any other Obligor to secure any
of the Parity Lien Debt shall be subject and subordinate to Priority Liens
securing Priority Lien Obligations up to the Priority Lien Cap.

         The foregoing provision is intended for the benefit of, and shall be
enforceable as a third party beneficiary by, each present and future holder of
Priority Lien Obligations, each present and future Priority Lien Agent and the
Collateral Trustee as holder of Priority Liens. No other Person shall be
entitled to rely on, have the benefit of or enforce this provision.

         In addition, the foregoing provision is intended solely to set forth
the relative ranking, as Liens, of the Liens securing Parity Lien Debt as
against the Priority Liens. Neither the Notes, the 2007 Notes, the 2010 Notes
nor the Term Loans nor any other Parity Lien Obligations nor the exercise or
enforcement of any right or remedy for the payment or collection thereof are
intended to be, or shall ever by reason of the foregoing provision, in any
respect subordinated, deferred, postponed, restricted or prejudiced.

Section 10.03     Release of Security Interest in Respect of Notes

         The Collateral Trustee's Liens upon the Collateral shall no longer
secure the Notes or any other Obligations under this Indenture, and the right of
the holders of the Notes and Obligations to the benefits and proceeds of the
Collateral Trustee's Liens on Collateral shall terminate and be discharged:

                  (1)      upon satisfaction and discharge of this Indenture in
         accordance with Article 11 hereof;

                  (2)      upon a Legal Defeasance or Covenant Defeasance of the
         Notes in accordance with Article 8 hereof; or

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<PAGE>

                  (3)      upon payment in full and discharge of all Notes
         outstanding under this Indenture and all related Obligations that are
         outstanding, due and payable under this Indenture at the time the Notes
         are paid in full and discharged.

                                   ARTICLE 11.
                           SATISFACTION AND DISCHARGE

Section 11.01     Satisfaction and Discharge.

         This Indenture shall be discharged and shall cease to be of further
effect as to all Notes issued hereunder, when:

                  (1)      either:

                           (a)      all Notes that have been authenticated under
         this Indenture (except lost, stolen or destroyed Notes that have been
         replaced or paid and Notes for whose payment money has theretofore been
         deposited in trust and thereafter repaid to the Company) have been
         delivered to the Trustee for cancellation; or

                           (b)      all Notes that have not been delivered to
         the Trustee for cancellation have become due and payable by reason of
         the making of a notice of redemption or otherwise or shall become due
         and payable within one year and the Company has irrevocably deposited
         or caused to be deposited with the Trustee as trust funds in trust
         solely for the benefit of the Holders, cash in U.S. dollars,
         non-callable Government Securities, or a combination thereof, in such
         amounts as shall be sufficient without consideration of any
         reinvestment of interest, to pay and discharge the entire indebtedness
         on the Notes not delivered to the Trustee for cancellation for
         principal, premium, if any, and accrued interest to the date of
         maturity or redemption;

                  (2)      no Default or Event of Default has occurred and is
         continuing on the date of such deposit or shall occur as a result of
         such deposit and such deposit shall not result in a breach or violation
         of, or constitute a default under, any other instrument to which the
         Company is a party or by which the Company is bound;

                  (3)      the Company has paid or caused to be paid all sums
         payable by it under this Indenture; and

                  (4)      the Company has delivered irrevocable instructions to
         the Trustee under this Indenture to apply the deposited money toward
         the payment of the Notes at maturity or the redemption date, as the
         case may be.

In addition, the Company must deliver an Officers' Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

         Notwithstanding the satisfaction and discharge of this Indenture, if
money has been deposited with the Trustee pursuant to subclause (b) of clause
(1) of this Section, the provisions of Section 12.02 and Section 8.06 shall
survive. In addition, nothing in this Section 11.01 shall be deemed to discharge
those provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

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<PAGE>

Section 11.02     Application of Trust Money.

         Subject to the provisions of Section 8.06, all money deposited with the
Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.

         If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 11.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 11.01; provided
that if the Company has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or Government Securities held by the Trustee
or Paying Agent.

                                   ARTICLE 12.
                                  MISCELLANEOUS

Section 12.01     Trust Indenture Act Controls.

         If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties or provisions of
the TIA shall control.

Section 12.02     Notices.

         Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:

         If to the Company:

         Calpine Corporation
         50 West San Fernando Street
         San Jose, California 95113
         Telephone No.: (408) 995-5115
         Attention: Ron Fischer

         With a copy to:
         Covington & Burling
         1330 Avenue of the Americas
         New York, NY 10019
         Telecopier No.: (212) 841-1010
         Attention: Bruce Bennett

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<PAGE>

         If to the Trustee:
         Wilmington Trust Company
         Rodney Square North
         1100 North Market Street
         Wilmington, Delaware 19890
         Telecopier No.: (302) 636-4145
         Attention: Corporate Capital Markets

         By notice to the others, the Company or the Trustee may designate
additional or different addresses for subsequent notices or communications.

         All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

         Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.

         If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

         If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

Section 12.03     Communication by Holders of Notes with Other Holders of Notes.

         Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).

Section 12.04     Certificate and Opinion as to Conditions Precedent.

         Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:

                  (1)      an Officer's Certificate in form and substance
         reasonably satisfactory to the Trustee (which must include the
         statements set forth in Section 12.05 hereof) stating that, in the
         opinion of the signer, all conditions precedent and covenants, if any,
         provided for in this Indenture relating to the proposed action have
         been satisfied; and

                  (2)      an Opinion of Counsel in form and substance
         reasonably satisfactory to the Trustee (which must include the
         statements set forth in Section 12.05 hereof) stating that, in the
         opinion of such counsel, all such conditions precedent and covenants
         have been satisfied.

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<PAGE>

Section 12.05     Statements Required in Certificate or Opinion.

         Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) must comply with the provisions of TIA
Section 314(e) and must include:

                  (1)      a statement that the Person making such certificate
         or opinion has read such covenant or condition;

                  (2)      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;

                  (3)      a statement that, in the opinion of such Person, he
         or she has made such examination or investigation as is necessary to
         enable him or her to express an informed opinion as to whether or not
         such covenant or condition has been satisfied; and

                  (4)      a statement as to whether or not, in the opinion of
         such Person, such condition or covenant has been satisfied.

Section 12.06     Rules by Trustee and Agents.

         The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

Section 12.07     No Personal Liability of Directors, Officers, Employees and
Stockholders.

         No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture, the Security
Documents or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.

Section 12.08     Governing Law.

         THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTATION OF GUARANTEES WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 12.09     No Adverse Interpretation of Other Agreements.

         This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.

Section 12.10     Successors.

         All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.

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<PAGE>

Section 12.11     Severability.

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

Section 12.12     Counterpart Originals.

         The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

Section 12.13     Table of Contents, Headings, etc.

         The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.

                         [Signatures on following page]

                                       84

<PAGE>

                                   SIGNATURES

Dated as of July 16, 2003

                                    CALPINE CORPORATION

                                    By: /s/ Michael Thomas
                                        -----------------------------
                                        Name:
                                        Title:

                                       85

<PAGE>

                                    WILMINGTON TRUST COMPANY

                                    By: /s/ Michael W. Diaz
                                        --------------------------------------
                                        Name: Michael W. Diaz
                                        Title: Authorized Signer

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<PAGE>

                                                                       EXHIBIT A

                                 [Face of Note]
--------------------------------------------------------------------------------

                                               CUSIP [131347 BD 7] [U13055 AF 2]

               8.75% Second Priority Senior Secured Notes due 2013

No. ___                                                            $____________

                               CALPINE CORPORATION

promises to pay to CEDE & CO.

or registered assigns,

the principal sum of ___________________________________________________________

Dollars on July 15, 2013.

Interest Payment Dates:  January 15 and July 15

Record Dates: January 1 and July 1

                                    CALPINE CORPORATION

                                    By: ________________________________________
                                        Name:
                                        Title:

Dated:  July 16, 2003

This is one of the Notes referred to
in the within-mentioned Indenture:

WILMINGTON TRUST COMPANY,
  as Trustee

By: ______________________________________
             Authorized Signatory

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

                                       A-1

<PAGE>

                                 [Back of Note]

               8.75% Second Priority Senior Secured Notes due 2013

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE 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. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN AND SHALL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS.

         Capitalized terms used herein have the meanings assigned to them in
this Indenture referred to below unless otherwise indicated.

                                       A-2

<PAGE>

                  (1)      INTEREST. Calpine Corporation, a Delaware corporation
         (the "Company"), promises to pay interest on the principal amount of
         this Note at 8.75% per annum from July 16, 2003 until maturity. The
         Company shall pay interest semi-annually in arrears on January 15 and
         July 15 of each year, or if any such day is not a Business Day, on the
         next succeeding Business Day (each, an "Interest Payment Date").
         Interest on the Notes shall accrue from the most recent date to which
         interest has been paid or, if no interest has been paid, from the date
         of issuance; provided that if there is no existing Default in the
         payment of interest, and if this Note is authenticated between a record
         date referred to on the face hereof and the next succeeding Interest
         Payment Date, interest shall accrue from such next succeeding Interest
         Payment Date; provided, further, that the first Interest Payment Date
         shall be January 15, 2004. The Company shall pay interest (including
         post-petition interest in any proceeding under any Bankruptcy Law) on
         overdue principal and premium, if any, from time to time on demand at a
         rate that is 1% per annum in excess of the rate then in effect; it
         shall pay interest (including post-petition interest in any proceeding
         under any Bankruptcy Law) on overdue installments of interest (without
         regard to any applicable grace periods) from time to time on demand at
         the same rate to the extent lawful. Interest shall be computed on the
         basis of a 360-day year of twelve 30-day months.

                  (2)      METHOD OF PAYMENT. The Company shall pay interest on
         the Notes (except defaulted interest) to the Persons who are registered
         Holders of Notes at the close of business on the January 1 or July 1
         next preceding the Interest Payment Date, even if such Notes are
         canceled after such record date and on or before such Interest Payment
         Date, except as provided in Section 2.12 of the Indenture with respect
         to defaulted interest. The Notes shall be payable as to principal,
         premium, if any, and interest at the office or agency of the Company
         maintained for such purpose within or without the City and State of New
         York, or, at the option of the Company, payment of interest may be made
         by check mailed to the Holders at their addresses set forth in the
         register of Holders; provided that payment by wire transfer of
         immediately available funds shall be required with respect to principal
         of and interest, premium on, all Global Notes and all other Notes the
         Holders of which shall have provided wire transfer instructions to the
         Company or the Paying Agent. Such payment shall be in such coin or
         currency of the United States of America as at the time of payment is
         legal tender for payment of public and private debts.

                  (3)      PAYING AGENT AND REGISTRAR. Initially, Wilmington
         Trust Company, the Trustee under the Indenture, shall act as Paying
         Agent and Registrar. The Company may change any Paying Agent or
         Registrar without prior notice to any Holder. The Company or any of its
         Subsidiaries may act in any such capacity.

                  (4)      INDENTURE. The Company issued the Notes under an
         Indenture dated as of July 16, 2003 (the "Indenture") between the
         Company and the Trustee. The terms of the Notes include those stated in
         the Indenture and those made part of the Indenture by reference to the
         Trust Indenture Act of 1939, as amended (15 U.S. Code Sections
         77aaa-77bbbb). The Notes are subject to all such terms, and Holders are
         referred to the Indenture and such Act for a statement of such terms.
         To the extent any provision of this Note conflicts with the express
         provisions of the Indenture, the provisions of the Indenture shall
         govern and be controlling. The Notes are secured obligations of the
         Company, as evidenced by the Security Documents referred to in the
         Indenture.

                  (5)      OPTIONAL REDEMPTION. (a) Except as set forth in
         subparagraphs (b) and (c) of this Paragraph 5, the Company shall not
         have the option to redeem the Notes prior to July 15, 2008. Thereafter,
         the Company shall have the option to redeem the Notes, in whole or in
         part, upon not less than 30 nor more than 60 days' notice, at the
         redemption prices (expressed as percentages of principal amount) set
         forth below plus accrued and unpaid interest thereon to the

                                       A-3

<PAGE>

         applicable redemption date, if redeemed during the twelve-month period
         beginning on July 15 of the years indicated below:

<TABLE>
<CAPTION>
Year                                                                             Percentage
----                                                                             ----------
<S>                                                                              <C>
2008...........................................................................   104.375%
2009...........................................................................   102.917%
2010...........................................................................   101.458%
2011 and thereafter............................................................   100.000%
</TABLE>

         (b)      Notwithstanding the provisions of subparagraph (a) of this
         Paragraph 5, at any time prior to July 15, 2006, the Company may, on
         any one or more occasions, upon not less than 30 nor more than 60 days
         prior notice mailed by first-class mail to each holder's registered
         address, redeem up to 35% of the aggregate principal amount of Notes
         issued under the Indenture with the net proceeds of an any one or more
         Public Equity Offerings at a redemption price equal to 108.750% of the
         principal amount thereof, plus accrued and unpaid interest, if any, to
         the redemption date; provided that at least 65% in aggregate principal
         amount of the Notes originally issued under the Indenture remains
         outstanding immediately after the occurrence of such redemption and
         that such redemption occurs within 45 days of the date of the closing
         of such Public Equity Offering.

         (c)      Notwithstanding the provisions of subparagraph (a) of this
         Paragraph 5, at any time prior to July 15, 2008, the Company may also
         redeem all or a part of the Notes, upon not less than 30 nor more than
         60 days prior notice mailed by first-class mail to each holder's
         registered address, at a redemption price equal to 100.000% of the
         principal amount of the Notes redeemed plus the Applicable Premium as
         of, and accrued and unpaid interest, if any, to the redemption date,
         subject to the rights of holders on the record date to receive interest
         due on the Interest Payment Date.

                  (6)      MANDATORY REDEMPTION. The Company shall not be
         required to make mandatory redemption or sinking fund payments with
         respect to the Notes.

                  (7)      REPURCHASE AT OPTION OF HOLDER. (a) If a Change of
         Control occurs, each holder of Notes shall have the right to require
         the Company to repurchase all or any part (equal to $1,000 or an
         integral multiple of $1,000) of that holder's Notes pursuant to the
         offer described below (the "Change of Control Offer") on the terms set
         forth in the Indenture. In the Change of Control Offer, the Company
         shall offer a payment in cash equal to 101% of the aggregate principal
         amount of Notes repurchased plus accrued and unpaid interest, if any,
         on the Notes repurchased (the "Change of Control Payment"), to but
         excluding the date of purchase. Within 30 days following any Change of
         Control, the Company shall mail a notice to each holder as required by
         the Indenture. (b) If the Company or a Subsidiary consummates any Asset
         Sales, and when the aggregate amount of Excess Proceeds exceeds $50.0
         million, or at such earlier point as may be elected by the Company, the
         Company shall make an offer to all holders of Notes and all holders of
         other Indebtedness that is pari passu with the Notes and equally and
         ratably secured with the Notes containing provisions similar to those
         set forth in the Indenture with respect to offers to purchase or redeem
         with the proceeds of sales of assets, including the Term Loans and each
         series of Existing Indebtedness that contains similar asset sale
         provisions, when applicable (an "Asset Sale Offer"), to purchase or
         redeem the maximum principal amount of Notes and such other pari passu
         Indebtedness that may be purchased or redeemed out of the Excess
         Proceeds (including each series of Existing Indebtedness that contains
         similar asset sale provisions). The offer price in any Asset Sale Offer
         shall be equal to 100% of principal amount plus accrued and unpaid
         interest, if any, to the date of purchase, and shall be payable in
         cash. If any Excess Proceeds remain after consummation of an Asset Sale
         Offer, the Company may use those Excess

                                       A-4

<PAGE>

         Proceeds for any purpose not otherwise prohibited by the Indenture.
         If the aggregate principal amount of Notes and other pari passu
         Indebtedness tendered into such Asset Sale Offer exceeds the amount of
         Excess Proceeds, the Company shall select the Notes and such other pari
         passu Indebtedness to be purchased on a pro rata basis. Upon completion
         of each Asset Sale Offer, the amount of Excess Proceeds shall be reset
         at zero. Holders of Notes that are the subject of an offer to purchase
         shall receive an Asset Sale Offer from the Company prior to any related
         purchase date and may elect to have such Notes purchased by completing
         the form entitled "Option of Holder to Elect Purchase" on the reverse
         of the Notes.

                  (8)      NOTICE OF REDEMPTION. Notice of redemption shall be
         mailed at least 30 days but not more than 60 days before the redemption
         date to each Holder whose Notes are to be redeemed at its registered
         address. Notes in denominations larger than $1,000 may be redeemed in
         part but only in whole multiples of $1,000, unless all of the Notes
         held by a Holder are to be redeemed. On and after the redemption date
         interest ceases to accrue on Notes or portions thereof called for
         redemption.

                  (9)      DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
         registered form without coupons in denominations of $1,000 and integral
         multiples of $1,000. The transfer of Notes may be registered and Notes
         may be exchanged as provided in the Indenture. The Registrar and the
         Trustee may require a Holder, among other things, to furnish
         appropriate endorsements and transfer documents and the Company may
         require a Holder to pay any taxes and fees required by law or permitted
         by the Indenture. The Company need not exchange or register the
         transfer of any Note or portion of a Note selected for redemption,
         except for the unredeemed portion of any Note being redeemed in part.
         Also, the Company need not exchange or register the transfer of any
         Notes for a period of 15 days before a selection of Notes to be
         redeemed or during the period between a record date and the
         corresponding Interest Payment Date.

                  (10)     PERSONS DEEMED OWNERS. The registered Holder of a
         Note may be treated as its owner for all purposes.

                  (11)     AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
         exceptions, the Indenture or the Notes may be amended or supplemented
         with the consent of the Holders of at least a majority in principal
         amount of the then outstanding Notes and Additional Notes, if any,
         voting as a single class, and any existing default or compliance with
         any provision of the Indenture or the Notes may be waived with the
         consent of the Holders of a majority in principal amount of the then
         outstanding Notes and Additional Notes, if any, voting as a single
         class. Without the consent of any Holder of a Note, the Indenture, the
         Guarantees or the Notes may be amended or supplemented to cure any
         ambiguity, defect or inconsistency, to provide for uncertificated Notes
         in addition to or in place of certificated Notes, to provide for the
         assumption of the Company's obligations to Holders of the Notes in case
         of a merger or consolidation, to make any change that would provide any
         additional rights or benefits to the Holders of the Notes or that does
         not adversely affect the legal rights under the Indenture of any such
         Holder, to comply with the requirements of the SEC in order to effect
         or maintain the qualification of the Indenture under the Trust
         Indenture Act, to provide for the issuance of Additional Notes in
         accordance with the limitations set forth in the Indenture, to allow
         any Guarantor to execute a supplemental indenture to the Indenture
         and/or a Guarantee with respect to the Notes, to make, complete or
         confirm any grant of Collateral permitted or required by the Indenture
         or any of the Security Documents or any release of Collateral that
         becomes effective as set forth in the Indenture or any of the Security
         Documents, to conform the text of the Indenture, the Notes or the
         Security Documents to any provision of the Description of the Notes
         section of the Offering

                                       A-5

<PAGE>

         Circular to the extent that such provision of the Description of the
         Notes section of the Offering Circular was intended to be a verbatim
         recitation of a provision of the Indenture, the Notes or the Security
         Documents, or to reflect any waiver or termination of any right arising
         under the provisions of the Indenture that otherwise would be
         enforceable by any holder of the Term Loan Obligations, if such waiver
         or termination is set forth in the agreement governing such Term Loan
         Obligations, provided that no such waiver or amendment shall adversely
         affect the right of holders of Notes.

                  (12)     DEFAULTS AND REMEDIES. Events of Default include:
         (i) default for 30 days in the payment when due of interest on the
         Notes; (ii) default in payment when due of principal of or premium, if
         any, on the Notes, (iii) failure by the Company to purchase the Notes
         when required pursuant to Section 4.10 or 4.15 of the Indenture or
         otherwise as required pursuant to the Indenture or Notes; (iv) failure
         by the Company or any of its Restricted Subsidiaries for 30 days after
         written notice from the Trustee or the holders of at least 25% in
         outstanding aggregate principal amount of the Notes to comply with any
         of the other agreements in the Indenture, the Notes or the Security
         Documents; (v) default under certain other agreements relating to
         Indebtedness of the Company which default results in the acceleration
         of such Indebtedness prior to its express maturity; (vi) certain final
         judgments for the payment of money that remain undischarged for a
         period of 30 days; (vii) certain events of bankruptcy or insolvency
         with respect to the Company or any of its Restricted Subsidiaries that
         would constitute a Significant Subsidiary or any group of Restricted
         Subsidiaries that, taken together, would constitute a Significant
         Subsidiary; (viii) the repudiation by the Company or any of its
         Restricted Subsidiaries or the unenforceability of the Security
         Documents if such breach, repudiation or unenforceability relates to
         Collateral having an aggregate Fair Market Value of $50.0 million or
         more and (ix) except as permitted by the Indenture, any Guarantee shall
         be held in any judicial proceeding to be unenforceable or invalid or
         shall cease for any reason to be in full force and effect or any
         Guarantor or any Person acting on its behalf shall deny or disaffirm
         its obligations under such Guarantor's Guarantee. If any Event of
         Default occurs and is continuing, the Trustee or the Holders of at
         least 25% in principal amount of the then outstanding Notes may declare
         all the Notes to be due and payable. Notwithstanding the foregoing, in
         the case of an Event of Default arising from certain events of
         bankruptcy or insolvency, all outstanding Notes shall become due and
         payable without further action or notice. Holders may not enforce the
         Indenture or the Notes except as provided in the Indenture. Subject to
         certain limitations, Holders of a majority in principal amount of the
         then outstanding Notes may direct the Trustee in its exercise of any
         trust or power. The Trustee may withhold from holders of the Notes
         notice of any continuing Default or Event of Default if it determines
         that withholding Notes is in their interest, except a Default or Event
         of Default relating to the payment of principal or interest. The
         Holders of a majority in aggregate principal amount of the Notes then
         outstanding by notice to the Trustee may on behalf of the Holders of
         all of the Notes waive any existing Default or Event of Default and its
         consequences under the Indenture except a continuing Default or Event
         of Default in the payment of interest on, or the principal of, the
         Notes. The Company is required to deliver to the Trustee annually a
         statement regarding compliance with the Indenture, and the Company is
         required upon becoming aware of any Default or Event of Default under
         clauses (3) through (8) of the Section 6.01(a) of the Indenture, to
         deliver to the Trustee a statement specifying such Default or Event of
         Default.

                  (13)     TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
         individual or any other capacity, may make loans to, accept deposits
         from, and perform services for the Company or its Affiliates, and may
         otherwise deal with the Company or its Affiliates, as if it were not
         the Trustee.

                                       A-6

<PAGE>

                  (14)     NO RECOURSE AGAINST OTHERS. A director, officer,
         employee, incorporator or stockholder, of the Company as such, shall
         not have any liability for any obligations of the Company under the
         Notes, the Indenture or for any claim based on, in respect of, or by
         reason of, such obligations or their creation. Each Holder by accepting
         a Note waives and releases all such liability. The waiver and release
         are part of the consideration for the issuance of the Notes.

                  (15)     AUTHENTICATION. This Note shall not be valid until
         authenticated by the manual signature of the Trustee or an
         authenticating agent.

                  (16)     ABBREVIATIONS. Customary abbreviations may be used in
         the name of a Holder or an assignee, such as: TEN COM (= tenants in
         common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants
         with right of survivorship and not as tenants in common), CUST (=
         Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

                  (17)     CUSIP NUMBERS. Pursuant to a recommendation
         promulgated by the Committee on Uniform Security Identification
         Procedures, the Company has caused CUSIP numbers to be printed on the
         Notes and the Trustee may use CUSIP numbers in notices of redemption as
         a convenience to Holders. No representation is made as to the accuracy
         of such numbers either as printed on the Notes or as contained in any
         notice of redemption and reliance may be placed only on the other
         identification numbers placed thereon.

         The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:

                  Calpine Corporation
                  50 West San Fernando Street
                  San Jose, California 95113
                  Attention:  Ron Fischer

                                       A-7

<PAGE>

                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: __________________________________
                                                 (Insert assignee's legal name)

________________________________________________________________________________
                 (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date: _______________

                                    Your Signature: ____________________________
                                       (Sign exactly as your name appears on the
                                       face of this Note)

Signature Guarantee*: _________________________

*   Participant in a recognized Signature Guarantee Medallion Program (or other
    signature guarantor acceptable to the Trustee).

                                       A-8

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:

                    Section 4.10            Section 4.15

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                                 $_________________

Date: _______________

                                    Your Signature: ____________________________
                                           (Sign exactly as your name appears on
                                           the face of this Note)

                                    Tax Identification No.: ____________________

Signature Guarantee*: _________________________

*   Participant in a recognized Signature Guarantee Medallion Program (or other
    signature guarantor acceptable to the Trustee).

                                       A-9

<PAGE>

             SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:

<TABLE>
<CAPTION>
                                                                       Principal Amount
                       Amount of decrease    Amount of increase in    of this Global Note       Signature of
                       in Principal Amount      Principal Amount        following such       authorized officer
                               of                      of                  decrease             of Trustee or
Date of Exchange        this Global Note        this Global Note         (or increase)            Custodian
----------------       -------------------   ---------------------    -------------------    ------------------
<S>                    <C>                   <C>                      <C>                    <C>
</TABLE>

*   This schedule should be included only if the Note is issued in global form.

                                      A-10

<PAGE>

                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Calpine Corporation
50 West San Fernando Street
San Jose, California 95113

Wilmington Trust Company
520 Madison Avenue, 33rd Floor
New York, NY 10022

         Re: 8.75% Second Priority Senior Secured Notes due 2013

         Reference is hereby made to the Indenture, dated as of July 16, 2003
(the "Indenture"), between Calpine Corporation, as issuer (the "Company"), and
Wilmington Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

         ___________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:

                             [CHECK ALL THAT APPLY]

         1. [ ]   CHECK IF TRANSFEREE SHALL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly,
the Transferor hereby further certifies that the beneficial interest or
Definitive Note is being transferred to a Person that the Transferor reasonably
believed and believes is purchasing the beneficial interest or Definitive Note
for its own account, or for one or more accounts with respect to which such
Person exercises sole investment discretion, and such Person and each such
account is a "qualified institutional buyer" within the meaning of Rule 144A in
a transaction meeting the requirements of Rule 144A and such Transfer is in
compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
shall be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.

         2. [ ]   CHECK IF TRANSFEREE SHALL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a Person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of

                                      B-1

<PAGE>

the Indenture, the transferred beneficial interest or Definitive Note shall be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note and/or the Definitive Note and in
the Indenture and the Securities Act.

         3. [ ]   CHECK AND COMPLETE IF TRANSFEREE SHALL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

                  (a) [ ]  such Transfer is being effected pursuant to and in
         accordance with Rule 144 under the Securities Act;

                                       or

                  (b) [ ]  such Transfer is being effected to the Company or a
         subsidiary thereof;

                                       or

                  (c) [ ]  such Transfer is being effected pursuant to an
         effective registration statement under the Securities Act and in
         compliance with the prospectus delivery requirements of the Securities
         Act;

                                       or

                  (d) [ ]  such Transfer is being effected to an Institutional
         Accredited Investor and pursuant to an exemption from the registration
         requirements of the Securities Act other than Rule 144A, Rule 144 or
         Rule 904, and the Transferor hereby further certifies that it has not
         engaged in any general solicitation within the meaning of Regulation D
         under the Securities Act and the Transfer complies with the transfer
         restrictions applicable to beneficial interests in a Restricted Global
         Note or Restricted Definitive Notes and the requirements of the
         exemption claimed, which certification is supported by (1) a
         certificate executed by the Transferee in the form of Exhibit D to the
         Indenture and (2) an Opinion of Counsel provided by the Transferor or
         the Transferee (a copy of which the Transferor has attached to this
         certification), to the effect that such Transfer is in compliance with
         the Securities Act. Upon consummation of the proposed transfer in
         accordance with the terms of the Indenture, the transferred beneficial
         interest or Definitive Note shall be subject to the restrictions on
         transfer enumerated in the Private Placement Legend printed on the IAI
         Global Note and/or the Definitive Notes and in the Indenture and the
         Securities Act.

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                     ___________________________________________
                                             [Insert Name of Transferor]

                                     By:________________________________________
                                        Name:
                                        Title:

         Dated: _______________________

                                      B-2

<PAGE>

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

               (a) [ ]  a beneficial interest in the:

                   (i)    [ ]  144A Global Note (CUSIP _________), or

                   (ii)   [ ]  Regulation S Global Note (CUSIP _________), or

                   (iii)  [ ]  IAI Global Note (CUSIP _________); or

               (b) [ ]  a Restricted Definitive Note.

2.       After the Transfer the Transferee shall hold:

                                   [CHECK ONE]

               (a) [ ]  a beneficial interest in the:

                   (i)    [ ]  144A Global Note (CUSIP _________), or

                   (ii)   [ ]  Regulation S Global Note (CUSIP _________), or

                   (iii)  [ ]  IAI Global Note (CUSIP _________); or

               (b) [ ]  a Restricted Definitive Note,

               in accordance with the terms of the Indenture.

                                      B-3

<PAGE>

                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Calpine Corporation
50 West San Fernando Street
San Jose, California 95113

Wilmington Trust Company
520 Madison Avenue, 33rd Floor
New York, NY 10022

         Re: 8.75% Second Priority Senior Secured Notes due 2013

                       (CUSIP [131347 BD 7] [U13055 AF 2])

         Reference is hereby made to the Indenture, dated as of July 16, 2003
(the "Indenture"), among Calpine Corporation, as issuer (the "Company") and
Wilmington Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

         __________________________, (the "Owner") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:

         EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES

         (a) [ ]  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued shall continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.

         (b) [ ]  CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] 144A Global Note, Regulation S Global Note, IAI Global Note with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued shall be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the relevant Restricted Global Note and in
the Indenture and the Securities Act.

                                      C-1

<PAGE>

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                    ____________________________________________
                                             [Insert Name of Transferor]

                                    By: ________________________________________
                                     Name:
                                     Title:

Dated: ______________________

                                      C-2

<PAGE>

                                                                       EXHIBIT D

                             FORM OF CERTIFICATE OF
                   ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Calpine Corporation
50 West San Fernando Street
San Jose, California 95113

Wilmington Trust
520 Madison Avenue, 33rd Floor
New York, NY 10022

         Re: 8.75% Second Priority Senior Secured Notes due 2013

         Reference is hereby made to the Indenture, dated as of July 16, 2003
(the "Indenture"), among Calpine Corporation, as issuer (the "Company") and
Wilmington Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

         In connection with our proposed purchase of $____________ aggregate
principal amount of:

         (a) [ ]      a beneficial interest in a Global Note, or

         (b) [ ]      a Definitive Note,

         we confirm that:

         1.       We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").

         2.       We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we shall do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and an Opinion
of Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any Person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.

         3.       We understand that, on any proposed resale of the Notes or
beneficial interest therein, we shall be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
shall bear a legend to the foregoing effect.

                                      D-1

<PAGE>

                                                                       EXHIBIT D

         4.       We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.

         5.       We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.

         You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.

                                    ____________________________________________
                                        [Insert Name of Accredited Investor]

                                    By: ________________________________________
                                     Name:
                                     Title:

Dated: _______________________

                                      D-2<PAGE>
                                                                     Exhibit 4.4

                                                                  EXECUTION COPY

================================================================================

                        POWER CONTRACT FINANCING, L.L.C.,
                                     Issuer,

                                       and

                            WILMINGTON TRUST COMPANY,
               Trustee, Accounts Agent, Paying Agent and Registrar

                                   ----------

                                    INDENTURE

                            Dated as of June 13, 2003

                      5.200% Senior Secured Notes due 2006

                      6.256% Senior Secured Notes due 2010

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>
                                                 ARTICLE ONE
                           DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101.    Definitions....................................................................           1
SECTION 102.    Compliance Certificates and Opinions...........................................           2
SECTION 103.    Form of Documents Delivered to Trustee.........................................           3
SECTION 104.    Acts of Holders................................................................           4
SECTION 105.    Notices, Etc. to Trustee and Issuer............................................           5
SECTION 106.    Notice to Holders: Waiver......................................................           5
SECTION 107.    Effect of Headings and Table of Contents.......................................           6
SECTION 108.    Successors and Assigns.........................................................           6
SECTION 109.    Severability Clause............................................................           6
SECTION 110.    Benefits of Indenture..........................................................           6
SECTION 111.    Conflict with Trust Indenture Act..............................................           6
SECTION 112.    Governing Law; Consent to Jurisdiction and Service of Process..................           6
SECTION 113.    Legal Holidays.................................................................           8
SECTION 114.    Incorporators, Shareholders, Members, Officers and Directors of Issuer
                Exempt from Individual Liability...............................................           8
SECTION 115.    Execution in Counterparts......................................................           8

                                                 ARTICLE TWO
                                                FORM OF NOTES

SECTION 201.    Form of Note...................................................................           8
SECTION 202.    Restrictive Legends............................................................          10

                                                ARTICLE THREE
                                                  THE NOTES

SECTION 301.    Amount ........................................................................          13
SECTION 302.    Denominations..................................................................          14
SECTION 303.    Execution, Authentication, Delivery and Dating.................................          14
SECTION 304.    Temporary Notes................................................................          16
SECTION 305.    Registration, Registration of Transfer and Exchange............................          16
SECTION 306.    Book Entry Provisions for Global Notes.........................................          17
SECTION 307.    Special Transfer Provisions....................................................          19
SECTION 308.    Mutilated, Destroyed, Lost and Stolen Notes....................................          22
SECTION 309.    Payment on Notes; Rights Preserved.............................................          23
SECTION 310.    Persons Deemed Owners..........................................................          24
SECTION 311.    Cancellation...................................................................          24
SECTION 312.    Computation of Interest........................................................          25
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                      <C>
SECTION 313.    CUSIP and CINS Numbers.........................................................          25
SECTION 314.    Parity of Notes................................................................          25

                                                ARTICLE FOUR
                                 APPLICATION OF PROCEEDS FROM SALE OF NOTES

SECTION 401.    Application of Proceeds from Sale of Notes.....................................          25

                                                ARTICLE FIVE
                                                  ACCOUNTS

SECTION 501.    Establishment of Accounts......................................................          25
SECTION 502.    Collections Account............................................................          26
SECTION 503.    Working Capital Account........................................................          28
SECTION 504.    Reserve Account................................................................          29
SECTION 505.    Reserve Investments Account....................................................          29
SECTION 506.    Damages and Indemnity Account..................................................          29
SECTION 507.    Statements; Investment of Funds................................................          31

                                                 ARTICLE SIX
                                         SATISFACTION AND DISCHARGE

SECTION 601.    Satisfaction and Discharge of Indenture........................................          32
SECTION 602.    Application of Trust Money.....................................................          33

                                                   ARTICLE
                                    SEVEN EVENTS OF DEFAULT AND REMEDIES

SECTION 701.    Events of Default..............................................................          33
SECTION 702.    Acceleration of Maturity: Rescission and Annulment.............................          35
SECTION 703.    Remedies upon an Event of Default..............................................          37
SECTION 704.    Certain Sales of Collateral....................................................          37
SECTION 705.    No Marshaling..................................................................          38
SECTION 706.    Trustee May Recover Unpaid Indebtedness After Sale of Collateral...............          38
SECTION 707.    Recovery of Judgment Does Not Affect Rights....................................          38
SECTION 708.    Collection of Indebtedness and Suits for Enforcement by Trustee................          38
SECTION 709.    Trustee May File Proofs of Claim...............................................          39
SECTION 710.    Trustee May Enforce Claims Without Possession of Notes.........................          40
SECTION 711.    Application of Money Collected.................................................          40
SECTION 712.    Limitation on Suits............................................................          41
SECTION 713.    Unconditional Right of Holders to Receive Principal, Make-Whole
                Premium and Interest...........................................................          41
SECTION 714.    Restoration of Rights and Remedies.............................................          41
SECTION 715.    Rights and Remedies Cumulative.................................................          42
SECTION 716.    Delay or Omission Not Waiver...................................................          42
SECTION 717.    Control by Holders.............................................................          42
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                      <C>
SECTION 718.    Waiver of Past Defaults........................................................          42
SECTION 719.    Waiver of Force Majeure and Stay or Extension Laws.............................          43
SECTION 720.    Trustee to Give Notice of Default, but May Withhold in Certain Circumstances...          43
SECTION 721.    Undertaking for Costs..........................................................          43

                                                   ARTICLE
                                              EIGHT THE TRUSTEE

SECTION 801.    Duties and Responsibilities of the Trustee; During Default; Prior to Default...          44
SECTION 802.    Certain Rights of Trustee......................................................          45
SECTION 803.    Trustee Not Responsible for Recitals or Issuance of Notes......................          46
SECTION 804.    May Hold Notes.................................................................          47
SECTION 805.    Money Held In Trust............................................................          47
SECTION 806.    Compensation and Indemnification of Trustee, Accounts Agent,
                Paying Agent and Registrar and Its Prior Claim.................................          47
SECTION 807.    Right of Trustee to Rely on Officer's Certificate, Etc.........................          48
SECTION 808.    Corporate Trustee Required; Eligibility........................................          48
SECTION 809.    Qualification of Trustee; Conflicting Interests................................          49
SECTION 810.    Resignation and Removal; Appointment of Successor Trustee......................          49
SECTION 811.    Acceptance of Appointment by Successor.........................................          51
SECTION 812.    Merger Conversion, Consolidation or Succession to Business.....................          51
SECTION 813.    Preferential Collection of Claims Against Issuer...............................          52
SECTION 814.    No Liability for Clean-up of Hazardous Materials...............................          52
SECTION 815.    Accounts Agent Registrar and Paving Agent......................................          52
SECTION 816.    Filing Fees....................................................................          52
SECTION 817.    Fee Agreement..................................................................          53

                                                ARTICLE NINE
                              HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER

SECTION 901.    Holder Lists...................................................................          53
SECTION 902.    Disclosure of Names and Addresses of Holders...................................          53
SECTION 903.    Reports by Trustee.............................................................          53
SECTION 904.    Reports by Issuer..............................................................          53

                                                 ARTICLE TEN
                       SUPPLEMENTS AND AMENDMENTS TO INDENTURE AND SECURITY DOCUMENTS

SECTION 1001.   Without Vote of Holders........................................................          54
SECTION 1002.   With Consent of Holders........................................................          55
SECTION 1003.   Execution of Supplemental Indentures...........................................          56
SECTION 1004.   Effect of Supplemental Indentures..............................................          56
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                                                      <C>
SECTION 1005.   Conformity with Trust Indenture Act............................................          56
SECTION 1006.   Reference in Notes to Supplemental Indentures..................................          56
SECTION 1007.   Notice of Supplemental Indentures..............................................          57

                                               ARTICLE ELEVEN
                                            AFFIRMATIVE COVENANTS

SECTION 1101.   Payment of Principal and Interest..............................................          57
SECTION 1102.   Maintenance of Office or Agency................................................          57
SECTION 1103.   Maintenance of Existence, Properties...........................................          57
SECTION 1104.   Payments of Taxes and Other Claims.............................................          58
SECTION 1105.   Material Agreements............................................................          58
SECTION 1106.   Notice of Certain Events.......................................................          58
SECTION 1107.   Compliance with Laws and Other Agreements......................................          59
SECTION 1108.   Maintenance of Books and Records...............................................          59
SECTION 1109.   Approvals......................................................................          59
SECTION 1110.   Rule 144A Information for the Holders..........................................          60
SECTION 1111.   Recording......................................................................          60
SECTION 1112.   Further Assurances.............................................................          60
SECTION 1113.   Collateral.....................................................................          61
SECTION 1114.   Performance of Obligations.....................................................          61
SECTION 1115.   Return of Monies Held by Trustee...............................................          61
SECTION 1116.   Schedule and Delivery of Energy Under the CDWR Power Sales Agreement...........          61

                                               ARTICLE TWELVE
                                             NEGATIVE COVENANTS

SECTION 1201.   Liens .........................................................................          61
SECTION 1202.   Indebtedness...................................................................          62
SECTION 1203.   Guaranties.....................................................................          62
SECTION 1204.   Transactions with Affiliates...................................................          62
SECTION 1205.   Investments, Loans and Advances................................................          62
SECTION 1206.   Material Agreements; Additional Contracts......................................          62
SECTION 1207.   Fundamental Change.............................................................          62
SECTION 1208.   Restricted Payments............................................................          63

                                              ARTICLE THIRTEEN
                                             REDEMPTION OF NOTES

SECTION 1301.   Applicability of Article.......................................................          63
SECTION 1302.   Election to Redeem; Notice to Trustee..........................................          63
SECTION 1303.   Selection by Trustee of Notes to Be Redeemed...................................          63
SECTION 1304.   Notice of Redemption...........................................................          64
SECTION 1305.   Deposit of Redemption Price....................................................          64
SECTION 1306.   Notes Payable on Redemption Date...............................................          65
SECTION 1307.   Notes Redeemed in Part.........................................................          65
</TABLE>

                                       iv
<PAGE>

<TABLE>
<S>                                                                                                      <C>
                                              ARTICLE FOURTEEN
                                     DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1401.   Issuer's Option to Effect Defeasance or Covenant Defeasance....................          65
SECTION 1402.   Defeasance and Discharge.......................................................          65
SECTION 1403.   Covenant Defeasance............................................................          66
SECTION 1404.   Conditions to Defeasance or Covenant Defeasance................................          66
SECTION 1405.   Deposited Money to Be Held in Trust; Other Miscellaneous Provisions............          68
SECTION 1406.   Reinstatement..................................................................          68

                                               ARTICLE FIFTEEN
                                        MEETINGS OF HOLDERS OF NOTES

SECTION 1501.   Purposes for Which Holders' Meetings May Be Called.............................          68
SECTION 1502.   Call of Meetings by Trustee....................................................          69
SECTION 1503.   Issuer and Holders May Call Meeting............................................          69
SECTION 1504.   Persons Entitled to Vote at Meeting............................................          69
SECTION 1505.   Determination of Voting Rights: Conduct and Adjournment of Meeting.............          69
SECTION 1506.   Counting Votes and Recording Action of Meeting.................................          70

                                               ARTICLE SIXTEEN
                                        COVENANTS OF HOLDERS OF NOTES

SECTION 1601.   Treatment of Notes as Indebtedness for Tax Purposes............................          71
</TABLE>

EXHIBIT A           Definitions

EXHIBIT B1          Form of Face of Note Power Contract Financing, L.L.C.
                    5.200% Senior Secured Note Due 2006

EXHIBIT B2          Form of Face of Note Power Contract Financing, L.L.C.
                    6.256% Senior Secured Note Due 2010.

EXHIBIT C           Form of Certificate to Be Delivered upon Termination of
                    Distribution Compliance Period on or after July 23, 2003

EXHIBIT D           Form of Certificate to Be Delivered in Connection with
                    Transfers to Non-QIB Institutional Accredited Investors

EXHIBIT E           Form of Certificate to Be Delivered in Connection with
                    Transfers Pursuant to Regulation S

EXHIBIT F           Form of Issuer Order and Officer's Certificate of Power
                    Contract Financing, L.L.C.

                                       v
<PAGE>

                        POWER CONTRACT FINANCING, L.L.C.

               RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT
                OF 1939 AND INDENTURE, DATED AS OF JUNE 13, 2003

<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION                                                 INDENTURE SECTION
<S>                                                                         <C>
Section 310 (a)(1)     ................................................     808
            (a)(2)     ................................................     808
            (b)        ................................................     808, 809, 810
Section 311 (a)        ................................................     813
            (b)        ................................................     813
Section 312 (a)        ................................................     901
            (b)        ................................................     902
            (c)        ................................................     902
Section 313 (a)        ................................................     903
            (b)        ................................................     903
            (c)        ................................................     720, 903
            (d)        ................................................     903
Section 314 (a)        ................................................     904, 1106
            (b)        ................................................     1111
            (c)(1)     ................................................     102
            (c)(2)     ................................................     102
            (d)        ................................................     1111
            (e)        ................................................     102
Section 315 (a)        ................................................     801
            (b)        ................................................     720
            (c)        ................................................     801
            (d)        ................................................     801
            (e)        ................................................     721
Section 316 (a)        (last sentence).................................     101 ("Outstanding")
            (a)(1)(A)  ................................................     717
            (a)(1)(B)  ................................................     718
            (b)        ................................................     713
            (c)        ................................................     104
Section 317 (a)(1)     ................................................     708, 709
            (a)(2)     ................................................     709
            (b)        ................................................     1115
Section 318 (a)        ................................................     111
            (c)        ................................................     111
</TABLE>
----------
Note:       This reconciliation and tie shall not, for any purpose, be deemed
            part of the Indenture

                                       vi
<PAGE>

            This INDENTURE, dated as of June 13, 2003 (this "Indenture"), is
made by and between POWER CONTRACT FINANCING, L.L.C., a limited liability
company organized and existing under the laws of the State of Delaware, having
its principal executive offices at 50 West San Fernando Street, Suite 670, San
Jose, California 95113 (the "Issuer"), and WILMINGTON TRUST COMPANY, a Delaware
banking corporation (the "Trustee").

                                    RECITALS

            WHEREAS, the Issuer has duly authorized the execution and delivery
of this Indenture to provide for the creation and issuance on the Closing Date,
of 5.200% Senior Secured Notes due February 1, 2006 initially to be issued in
the aggregate principal amount of $339,929,000 (the "Notes due 2006") and 6.256%
Senior Secured Notes due February 1, 2010 initially to be issued in the
aggregate principal amount of $462,317,000 (the "Notes due 2010");

            WHEREAS, all necessary actions to ensure that this Indenture is a
valid indenture and agreement according to its terms have been taken;

            WHEREAS, as security for the payment and performance by the Issuer
of its obligations under this Indenture and the Notes (as defined below), the
Issuer has agreed to assign and pledge the Collateral (as defined below) as
collateral to the Trustee for the benefit of the Trustee and the Holders (as
defined below); and

            WHEREAS, the Trustee has agreed to act as trustee, accounts agent,
paying agent and registrar under this Indenture on the following terms and
conditions.

            NOW, THEREFORE, for and in consideration of the premises herein
contained and the purchase of the Notes by the Holders, it is mutually
covenanted and agreed, for the benefit of the parties hereto and the equal and
proportionate benefit of all Holders, as follows:

                                  ARTICLE ONE
             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

            SECTION 101. Definitions. For all purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:

            (a) capitalized terms used herein shall have the respective meanings
assigned to them in Exhibit A;

            (b) the terms defined in Exhibit A include the plural as well as the
singular;

            (c) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;

<PAGE>

            (d) 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;

            (e) except as otherwise expressly provided herein, (i) all
accounting terms used herein shall be interpreted, (ii) all financial statements
and all certificates and reports as to financial matters required to be
delivered to the Trustee hereunder shall be prepared and (iii) all calculations
made for the purposes of determining compliance with this Indenture shall
(except as otherwise expressly provided herein) be made in accordance with, or
by application of, GAAP applied on a basis consistent with that used in the
preparation of the latest corresponding financial statements furnished hereunder
to the Trustee;

            (f) all references in this Indenture to "Articles," "Sections,"
"Exhibits" and other subdivisions of this Indenture are to the designated
articles, sections and other subdivisions of, and the exhibits to, this
Indenture;

            (g) unless otherwise expressly specified or the context otherwise
requires, all references in this Indenture or any Exhibit to any agreement,
contract or document (including this Indenture) shall include reference to all
exhibits to such agreement, contract or document;

            (h) unless otherwise expressly specified or the context otherwise
requires, any agreement, contract or document defined or referred to herein
shall mean such agreement, contract or document as in effect as of the date
hereof, as the same may thereafter be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof;

            (i) unless otherwise expressly specified or the context otherwise
requires, pronouns having a masculine or feminine gender shall be deemed to
include the other;

            (j) any reference to any Person shall include its permitted
successors and assigns in accordance with the terms of this Indenture and the
other Financing Documents and, in the case of any Governmental Agency, any
Person succeeding to its functions and capacities; and

            (k) the term "including" denotes an example and not a limitation.

            SECTION 102. Compliance Certificates and Opinions. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture (including any covenant compliance with which constitutes
a condition precedent) 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, except that in the case
of any application or request as to which the furnishing of such

                                       2
<PAGE>

documents is specifically required by any provision of this Indenture, no
additional certificate or opinion need be furnished.

            (b) Every Officer's Certificate or Opinion of Counsel with respect
to compliance with a covenant or condition provided for in this Indenture shall
include: (i) a statement that each individual signing such Officer's Certificate
or Opinion of Counsel has read such covenant or condition and the definitions
herein relating thereto; (ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions contained
in such Officer's Certificate or Opinion of Counsel are based; (iii) a statement
that, in the opinion of each such individual, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with; (iv) a
statement as to whether, in the opinion of each such individual, such covenant
or condition has been complied with; and (v) a statement that, in the opinion of
each such individual, such Officer's Certificate or Opinion of Counsel complies
with the provisions of this Section 102 and that the Trustee may rely on such
Officer's Certificate or Opinion of Counsel.

            (c) Any certificate, statement or opinion of an officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or Opinion of Counsel or representations by counsel (which shall also be
addressed to the Trustee and the Holders), unless such officer knows that the
certificate or Opinion of Counsel or representations with respect to the matters
upon which his certificate, statement or Opinion of Counsel will be based are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or Opinion of Counsel may be based,
insofar as it relates to factual matters or information which is in the
possession of the Issuer, upon the certificate, statement or opinion of or
representations by an officer or officers of the Issuer, unless such counsel
knows that the certificate, statement or opinion or representations with respect
to the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous.

            (d) Any certificate, statement or opinion of an officer of the
Issuer or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of an Accountant in the employ of the Issuer
(which shall be additionally addressed to the Trustee and the Holders), unless
such officer or counsel, as the case may be, knows that the certificate or
opinion with respect to the accounting matters upon which his certificate,
statement or opinion may be based as aforesaid are erroneous, or in the exercise
of reasonable care should know that the same are erroneous.

            (e) Any certificate or opinion of any Independent Accountant filed
with the Trustee shall contain a statement that such Accountant is Independent.

            SECTION 103. Form of Documents Delivered to Trustee. (a) 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

                                       3
<PAGE>

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.

            (b) 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.

            SECTION 104. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders may be embodied in and
evidenced by (i) one or more instruments of substantially similar tenor signed
by the Holders in person or by their respective agents or proxies duly appointed
in writing, (ii) the record of Holders voting in favor thereof, either in person
or by their respective agents or proxies duly appointed in writing, at any
meeting of Holders duly called and held in accordance with the provisions of
Article Fifteen, or (iii) 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 expressly required hereby, to the Issuer. 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 or 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 Note, shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the Issuer,
if made in the manner provided in this Section 104. The record of any meeting of
Holders shall be proved in the manner provided in Section 1506.

            (b) The affidavit of a witness of such execution sworn to before a
notary public or other officer authorized by law to take acknowledgments of
deeds or administer oaths, or by a certificate of such notary or other officer,
certifying that the individual signing such instrument or writing acknowledged
to him the execution thereof shall be conclusive evidence of the fact and date
of execution by any Person of any such instrument or writing. 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 authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.

            (c) Entries in the Security Register shall be conclusive evidence of
the principal amount and serial numbers of Notes held by any Person, and the
date of holding the same, and the Trustee shall not be affected by notice to the
contrary.

            (d) If the Issuer shall solicit from the Holders of either Series of
the Notes any request, demand, authorization, direction, notice, consent, waiver
or other Act, the Issuer may, at its option, by or pursuant to a Management
Committee's Consent, fix in advance a record date for the determination of such
Holders entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Issuer shall

                                       4
<PAGE>

have no obligation to do so. Notwithstanding Trust Indenture Act Section 316(c),
such record date shall be the record date specified in or pursuant to such
Management Committee's Consent, which shall be a date not earlier than the date
thirty (30) days prior to the first solicitation of Holders generally in
connection therewith and not later than the date such solicitation is completed
unless otherwise specified herein. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Notes have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Notes shall be computed as of such record date;
provided, that no such authorization, agreement or consent by the Holders on
such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven (11) months
after the record date.

            (e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note 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 Issuer in
reliance thereon, whether or not notation of such action is made upon such Note.

            SECTION 105. Notices, Etc. to Trustee and Issuer. Any request,
demand, authorization, direction, notice, consent, waiver or other Act of
Holders or other documents provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with:

            (a) the Trustee by any Holder or by the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office; or

            (b) the Issuer by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Issuer addressed to it
at the address of its principal office specified in the first paragraph of this
Indenture or at any other address previously furnished in writing to the Trustee
by the Issuer.

            SECTION 106. Notice to Holders: Waiver. (a) Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, or delivered by overnight courier or facsimile, to
each Holder, at its address or facsimile number (as applicable) as it appears in
the Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. Where
this Indenture provides for notice in any manner, such notice and the manner of
its giving may be waived in writing by the Person entitled to receive such
notice, either before or after the event and such waiver shall be the

                                       5
<PAGE>

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. In any case where notice to
Holders is given by mail or fax (as applicable), neither the failure to mail or
fax such notice, nor any defect in any notice so mailed or faxed (as the case
may be), to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders, and any notice that is mailed or faxed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not such Holder actually receives notice.

            (b) In case by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause, it shall be impracticable
to mail or deliver notice of any event to Holders when such notice is required
to be given pursuant to any provision of this Indenture, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice for every purpose hereunder.

            SECTION 107. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the meaning or construction of any of the provisions
hereof.

            SECTION 108. Successors and Assigns. All covenants, stipulations,
promises and agreements in this Indenture by or on behalf of each of the Trustee
and the Issuer shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed or not.

            SECTION 109. Severability Clause. In case any provision in this
Indenture or in any Note shall 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 110. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto, any Accounts Agent, any Paying Agent, any Registrar, and their
successors and permitted assigns hereunder, and the Holders of Notes, any
benefit or any legal or equitable right, remedy or claim under this Indenture.

            SECTION 111. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with the duties imposed by the Trust
Indenture Act Sections 310 to 318, inclusive, or conflicts with any provision of
the Trust Indenture Act that is required under the Trust Indenture Act to be a
part of and govern this Indenture, such duties or provision of the Trust
Indenture Act shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded by its terms, such provision shall be deemed to apply to this Indenture
as so modified or to be excluded, as the case may be.

            SECTION 112. Governing Law; Consent to Jurisdiction and Service of
Process. (a) This Indenture and the Notes shall be governed by, and construed in

                                       6
<PAGE>

accordance with, the law of the State of New York without giving effect to the
principles thereof relating to conflicts of law except Section 5-1401 of the New
York General Obligations Law.

            (b) The Issuer consents to the non-exclusive jurisdiction of any
court of the State of New York or any United States federal court sitting in the
Borough of Manhattan, New York City, New York, United States, and any appellate
court from any thereof, and waives any immunity from the jurisdiction of such
courts over any suit, action, or proceeding that may be brought in connection
with this Indenture, the Financing Documents or the Notes. The Issuer
irrevocably waives, to the fullest extent permitted by law, any objection to any
suit, action, or proceeding that may be brought in connection with this
Indenture, the Financing Documents or the Notes in such courts whether on the
grounds of venue, residence or domicile or on the ground that any such suit,
action or proceeding has been brought in an inconvenient forum. The Issuer
agrees that final judgment in any such suit, action or proceeding brought in
such court shall be conclusive and binding upon the Issuer and may be enforced
in any court to the jurisdiction of which the Issuer is subject by a suit upon
such judgment.

The Issuer agrees that service of all writs, process and summonses in any suit,
action or proceeding brought in connection with this Indenture, the Financing
Documents or the Notes against the Issuer, or with respect to its property and
assets, in any court of the State of New York or any United States federal court
sitting in the Borough of Manhattan, New York City may be made upon National
Corporate Research, Ltd. ("NCR") at 225 W. 34th Street, Suite 910, New York, NY
10122, whom the Issuer appoints as its authorized agent for service of process.
The Issuer represents and warrants that NCR has agreed to act as the Issuer's
agent for service of process. The Issuer agrees that such appointment shall be
irrevocable so long as any of the Notes remain outstanding or until the
irrevocable appointment by the Issuer of a successor in New York City as its
authorized agent for such purpose and the acceptance (on terms reasonably
satisfactory to the Trustee) of such appointment by such successor. The Issuer
further agrees to take any and all action, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment in
full force and effect as aforesaid. If NCR shall cease to act as the Issuer's
agent for service of process, the Issuer shall appoint without delay another
such agent and provide prompt written notice to the Trustee of such appointment.
With respect to any such action in any court of the State of New York or any
United States federal court in the Borough of Manhattan, City of New York,
service of process upon NCR, as the authorized agent of the Issuer for service
of process, and written notice of such service to the Issuer, shall be deemed in
every respect effective service of process upon the Issuer. Without prejudice to
the foregoing, the Issuer hereby irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Issuer at the address of its principal office specified in the first
paragraph of this Indenture or at any other address previously furnished in
writing to the Trustee by the Issuer.

            (c) Nothing in this Section 112 shall affect the right of any party
to serve legal process in any other manner permitted by law or affect the right
of any party

                                       7
<PAGE>

to bring any action or proceeding against any other party or its property in the
courts of other jurisdictions.

            SECTION 113. Legal Holidays. If any Payment Date, Redemption Date or
Stated Maturity of any Note or of any installment of principal thereof or
payment of interest thereon, or any date on which any defaulted interest is
proposed to be paid, shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of any Note) payment
of interest or principal (or Make-Whole 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 Payment Date or Redemption Date, or at the Stated Maturity, or on the
date on which the defaulted interest is proposed to be paid; provided, that no
interest shall accrue on the amount then due for the period from and after such
Payment Date, Redemption Date, Stated Maturity or the date on which the
defaulted interest is proposed to be paid, as the case may be, to the date of
such payment.

            SECTION 114. Incorporators, Shareholders, Members, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or upon
any obligation, covenant or agreement contained in this Indenture or any
Security Document, or because of any indebtedness evidenced thereby, shall be
had against any incorporator, as such, or against any past, present or future
stockholder, member, manager, officer or director, as such, of the Issuer or the
Issuer's Members, or of any successor, either directly or through the Issuer or
the Issuer's Members, as the case may be, or any successor, under any rule of
law, statute, or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the Notes by
the Holders and as part of the consideration for the issuance of the Notes.
Nothing contained in this Section 114 shall, however, limit the liability of any
Person for any fraud, gross negligence or willful misconduct on their part.

            SECTION 115. Execution in Counterparts. This instrument may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

                                  ARTICLE TWO
                                 FORM OF NOTES

            SECTION 201. Form of Note. (a) The Notes due 2006 and the
accompanying Trustee's certificate of authentication shall be substantially in
the form annexed hereto as Exhibit B1. The Notes due 2010 and the accompanying
Trustee's certificate of authentication shall be substantially in the form
annexed hereto as Exhibit B2. The Notes may have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture and may have letters, notations or other marks of identification
and such notations, legends or endorsements required by law, the rules of any
stock exchange, agreements to which the Issuer is subject or usage. Any portion
of the text of any Note may be set forth on the reverse thereof, with an

                                       8
<PAGE>

appropriate reference thereto on the face of the Note. The Issuer shall approve
the form of the Notes and any notation, legend or endorsement on the Notes. Each
Note shall be dated the date of its authentication.

            (b) The definitive Notes shall be printed, lithographed or engraved
on steel-engraved borders or may be produced in any other manner permitted by
the rules under any applicable securities laws, all as determined by the
officers of the Issuer executing such Notes, as evidenced by their execution of
such Notes.

            (c) The terms and provisions contained in the form of the Notes
annexed hereto as Exhibit B1 or B2, as applicable shall constitute, and are
hereby expressly made, a part of this Indenture; provided, that to the extent
any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling. To
the extent applicable, the Issuer and the Trustee, by their execution and
delivery of this Indenture, and the Holders and beneficial owners of the Notes
by their acceptance of the Notes expressly agree to such terms and provisions
and to be bound thereby.

            (d) Notes offered and sold to QIBs in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global Notes in registered
form, substantially in the form set forth in Exhibit B1 or B2, as applicable
(each, a "Rule 144A Global Note"), deposited with the Trustee as custodian for
DTC and registered in the name of a nominee of DTC, duly executed by the Issuer
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of each Rule 144A Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC or its nominee, as hereinafter provided.

            (e) Notes offered and sold in offshore transactions in reliance on
Regulation S shall be initially issued in the form of one or more temporary
global Notes in registered form, substantially in the form set forth in Exhibit
B1 or B2, as applicable (each, a "Temporary Regulation S Global Note"),
deposited with the Trustee as custodian for DTC and registered in the name of a
nominee of DTC for the accounts of Euroclear Bank, S.A./N.V., as operator of
Euroclear and Clearstream Luxembourg, duly executed by the Issuer and
authenticated by the Trustee as hereinafter provided. Each Temporary Regulation
S Global Note will be exchangeable for one or more permanent global Notes (each,
a "Permanent Regulation S Global Note"; and together with the Temporary
Regulation S Global Notes, the "Regulation S Global Notes") after the fortieth
(40th) day following the Closing Date, upon certification (substantially in the
form of Exhibit C) that the beneficial interests in such global Note are owned
by either Non-U.S. Persons or U.S. Persons who purchased such interests pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act. The aggregate principal amount of each
Regulation S Global Note may from time to time be increased or decreased by
adjustments made in the records of the Trustee, as custodian for DTC or its
nominee, as herein provided.

            (f) Notes offered and sold to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who are
not QIBs

                                       9
<PAGE>

(excluding Non-U.S. Persons) shall initially be issued in the form of permanent
certificated Notes in registered form in substantially the form of Exhibit B1 or
B2, as applicable ("U.S. Physical Notes"). Notes issued pursuant to Section 306
in exchange for or upon transfer of interests in a Rule 144A Global Note or a
Regulation S Global Note shall be in the form of U.S. Physical Notes and
permanent certificated Notes in registered form substantially in the form set
forth in Exhibit B1 or B2, as applicable (the "Regulation S Physical Note"),
respectively.

            (g) The U.S. Physical Notes and the Regulation S Physical Notes are
sometimes collectively herein referred to as the "Physical Notes." The
Regulation S Global Notes and the Rule 144A Global Notes are sometimes
collectively referred to as the "Global Notes."

            SECTION 202. Restrictive Legends. (a) (i) Each Rule 144A Global Note
and each U.S. Physical Note shall bear the legend set forth below (the "Private
Placement Legend") on the face thereof, except as otherwise provided in Section
307(e), and (ii), and each Regulation S Global Note and each Regulation S
Physical Note shall bear the legend set forth below on the face thereof until at
least July 23, 2003, and receipt by the Issuer and the Trustee of a certificate
substantially in the form of Exhibit C:

            THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
            AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
            NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
            OFFERED, RESOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
            OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
            SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
            REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
            LAWS. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER
            OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
            SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

            THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES THAT ANY
            OFFER, SALE OR OTHER TRANSFER OF SUCH SECURITY, PRIOR TO THE DATE
            WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
            AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER
            WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) (THE
            "RESALE RESTRICTION TERMINATION

                                       10
<PAGE>

            DATE"), SHALL ONLY BE MADE: (A) TO THE ISSUER OR ANY SUBSIDIARY, (B)
            PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
            ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT
            TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
            REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER," AS DEFINED
            IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
            OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
            TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
            OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
            STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
            (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
            SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
            SECURITIES ACT THAT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT, OR
            FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
            INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO, OR FOR OFFER OR
            RESALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
            SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR (F) PURSUANT
            TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
            THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT,
            PRIOR TO ANY SUCH OFFER, RESALE OR TRANSFER (i) PURSUANT TO CLAUSE
            (D) PRIOR TO THE END OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD
            WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR
            PURSUANT TO CLAUSE (E) OR (F) PRIOR TO THE RESALE RESTRICTION
            TERMINATION DATE, TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
            CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM
            AND FURTHER SUBJECT, IN EACH OF THE FOREGOING CASES, EXCEPT (D), TO
            COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (ii) IN EACH
            OF THE FOREGOING CASES, TO REQUIRE THAT A

                                       11
<PAGE>

            CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS
            COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
            LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
            RESTRICTION TERMINATION DATE.

            (b) Each Global Note shall also bear the following legend on the
face thereof

            UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
            OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
            THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
            PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
            CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
            REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
            OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
            REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
            VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
            REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

            TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
            WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
            THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
            THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE
            WITH THE RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE
            INDENTURE. THE HOLDER OF THIS GLOBAL NOTE REPRESENTS THAT (i) IT IS
            NOT AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF THE
            EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
            ("ERISA") (AN "ERISA PLAN") OR OTHER PLAN, AN ENTITY WHOSE
            UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY SUCH ERISA PLAN OR OTHER
            PLAN OR A GOVERNMENTAL PLAN THAT IS SUBSTANTIALLY SIMILAR TO THE
            PROVISIONS OF SECTION 406 OF

                                       12
<PAGE>

            ERISA OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
            AMENDED (THE "CODE"), OR (ii) THE PURCHASE AND HOLDING BY IT OF THIS
            NOTE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406
            OF ERISA OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A
            GOVERNMENTAL PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL
            LAW) FOR WHICH AN EXEMPTION IS NOT AVAILABLE.

                                 ARTICLE THREE
                                   THE NOTES

            SECTION 301. Amount. (a) The Notes due 2006 and the Notes due 2010
to be issued under this indenture are hereby created. The maximum aggregate
principal amount of Notes due 2006 that may be authenticated and delivered under
this Indenture on the Closing Date is $339,929,000 and the maximum aggregate
principal amount of Notes due 2010 that may be authenticated and delivered under
this Indenture on the Closing Date is $462,317,000.

            (b) The Notes due 2006 shall be known and designated as the "5.200%
Senior Secured Notes due 2006" of the Issuer and the Notes due 2010 shall be
known and designated as the "6.256% Senior Secured Notes due 2010" of the
Issuer. The Stated Maturity of the Notes due 2006 shall be February 1, 2006 and
the Stated Maturity of the Notes due 2010 shall be February 1, 2010. Interest on
the Notes due 2006 will accrue at the rate of 5.200% per annum and interest on
the Notes due 2010 will accrue at the rate of 6.256% per annum, in each case
from the Closing Date, or from the most recent Interest Payment Date on which
interest has been paid or duly provided for, payable each applicable Interest
Payment Date, until the full principal thereof is paid or duly provided for.

            (c) Principal payments on the Notes due 2006 will be made on the
Principal Payment Dates in an amount equal to the amount, if any, set forth
opposite the applicable Principal Payment Date on the amortization schedule set
out below. The aggregate principal amount of the Notes due 2006 payable on each
Principal Payment Date is:

<TABLE>
<CAPTION>
            Principal Payment Date                Principal Payable Amount
            ----------------------                ------------------------
<S>                                               <C>
            February 1, 2004                            $  43,150,835
            August 1, 2004                              $  70,728,895
            February 1, 2005                            $  74,102,631
            August 1, 2005                              $  73,994,448
            February 1, 2006                            $  77,952,191
</TABLE>

                                       13
<PAGE>

            (d) Principal payments on the Notes due 2010 will be made on the
Principal Payment Dates in an amount equal to the amount, if any, set forth
opposite the applicable Principal Payment Date on the amortization schedule set
out below. The aggregate principal amount of the Notes due 2010 payable on each
Principal Payment Date is:

<TABLE>
<CAPTION>
            Principal Payment Date                  Principal Payable Amount
            ----------------------                  ------------------------
<S>                                                 <C>
            February 1, 2004                             $            0
            August 1, 2004                               $            0
            February 1, 2005                             $            0
            August 1, 2005                               $            0
            February 1, 2006                             $            0
            August 1, 2006                               $   77,945,061
            February 1, 2007                             $   82,418,034
            August 1, 2007                               $   45,757,654
            February 1, 2008                             $   48,607,171
            August 1, 2008                               $   49,017,109
            February 1, 2009                             $   51,660,859
            August 1, 2009                               $   52,056,612
            February 1, 2010                             $   54,854,500
</TABLE>

            (e) The principal of, Make-Whole Premium, if any, and interest on,
the Notes shall be payable to, and the Notes shall be exchangeable and
transferable by, at the office or agency of the Issuer in the Borough of
Manhattan, the City of New York, maintained for such purposes (which initially
shall be the Corporate Trust Office of the Trustee), the Person in whose name
such Note is registered at the close of business on the Regular Record Date
applicable to each Principal Payment Date or otherwise in accordance with
Section 309.

            (f) The Notes shall be redeemable as provided in Article Thirteen.

            (g) This Indenture shall, to the extent applicable, incorporate and
be governed by the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust Indenture Act.

            SECTION 302. Denominations. The Notes shall be issuable only in
registered form without coupons and initially only in minimum denominations of
$100,000 and integral multiples of $1,000 in excess thereof; provided, that
initial purchases of the Notes by purchasers who are institutional "accredited
investors" who are not QIBs shall be in minimum amounts of $250,000; and
provided, further that after initial issuance, Notes may be issued upon exchange
or transfer in such amounts as may be necessary to evidence the entire unpaid
principal amount of any Note surrendered or exchanged.

            SECTION 303. Execution, Authentication, Delivery and Dating. (a) The
Notes shall be executed on behalf of the Issuer by its President or a Vice

                                       14
<PAGE>

President and attested by a Vice President, its Secretary or an Assistant
Secretary. The signature of any of these officers on the Notes may be manual or
facsimile signatures of the present or any future such authorized officer and
may be imprinted or otherwise reproduced on the Notes.

            (b) Notes bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.

            (c) At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Notes executed by the Issuer
to the Trustee for authentication, together with an Issuer Order for the
authentication and delivery of such Notes, directing the Trustee to authenticate
the Notes; and the Trustee, in accordance with such Issuer Order, shall
authenticate and deliver such Notes as in this Indenture provided and not
otherwise. Each such Issuer Order shall specify the Series and amount of Notes
to be authenticated, the date on which the Notes are to be authenticated,
whether the Notes are to be Initial Notes or Unrestricted Notes and whether the
Notes are to be issued as Physical Notes or Global Notes or such other
information as the Trustee may reasonably request. The Trustee shall receive, as
part of any such Issuer Order, an Officer's Certificate certifying that all
conditions precedent to the issuance of Notes contained herein have been fully
complied with. Any Issuer Order and Officer's Certificate delivered by the
Issuer to the Trustee pursuant to this Section 303(c) shall be substantially in
the form annexed hereto as Exhibit F. The Trustee may also request an Opinion of
Counsel of the Issuer in connection with such authentication of Notes. Upon
receipt of any such Issuer Order, the Trustee shall, in accordance with such
Issuer Order, authenticate Notes due 2006 for original issue in the aggregate
principal amount not to exceed $339,929,000 and Notes due 2010 for original
issue in the aggregate principal amount not to exceed $462,317,000. The
aggregate principal amount of Notes due 2006 outstanding at any time may not
exceed $339,929,000 and the aggregate principal amount of Notes due 2010
outstanding at any time may not exceed $462,317,000.

            (d) Each Note shall be dated the date of its authentication.

            (e) The Trustee may appoint an authenticating agent or agents
reasonably acceptable to the Issuer to authenticate Notes. Unless limited by
terms of such appointment, an authenticating agent may authenticate Notes
whenever the Trustee may do so. Any authenticating agent has the same rights as
an agent to deal with the Issuer or an Affiliate of the Issuer.

            (f) No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for in Exhibit
B1 or B2, as applicable duly executed by the Trustee by manual signature of an
authorized signatory, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such

                                       15
<PAGE>

Note has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.

            (g) In case the Issuer shall have executed an indenture supplemental
hereto with the Trustee pursuant to Section 1001(a), any of the Notes
authenticated or delivered prior to the assumption of the Issuer's obligations
by any successor Person, may, from time to time, at the request of the successor
Person, be exchanged for other Notes executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance and of like tenor as the Notes surrendered for such
exchange and of like principal amount, and the Trustee, upon Issuer Request of
the successor Person, shall authenticate and deliver Notes as specified in such
request for the purpose of such exchange. If Notes shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 303 in exchange or substitution for or upon registration of
transfer of any Notes, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Notes at the time
Outstanding for Notes authenticated and delivered in such new name.

            SECTION 304. Temporary Notes. (a) Pending the preparation of
definitive Notes, the Issuer may execute, and upon an Issuer Order, the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Notes may determine, as conclusively
evidenced by their execution of such Notes.

            (b) If temporary Notes are issued, the Issuer will cause definitive
Notes to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive Notes
upon surrender of the temporary Notes at the office or agency of the Issuer
designated for such purpose pursuant to Section 1102, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Issuer shall execute, and the Trustee, upon receipt of an Issuer Order, shall
authenticate and deliver, in exchange therefor a like principal amount of
definitive Notes of authorized denominations. Until so exchanged, the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as definitive Notes.

            SECTION 305. Registration, Registration of Transfer and Exchange.
(a) The Issuer shall cause to be kept at the Corporate Trust Office of the
Registrar a register which, subject to such reasonable regulations as the Issuer
may prescribe, shall provide for the registration of Notes and for the
registration of transfers and exchanges of Notes, and the Trustee is hereby
appointed "Registrar" for the purposes of registering Notes and transfers and
exchanges of Notes as herein provided. This register shall be sometimes referred
to herein as the "Security Register," and shall be in written form or any other
form capable of being converted into written form within a

                                       16
<PAGE>

reasonable time. At all reasonable times, the Security Register shall be open to
inspection by the Trustee.

            (b) The Notes shall be transferable only upon the surrender of a
Note to the Issuer for registration of transfer. Subject to the provisions of
Section 307, upon surrender for registration of transfer of any Note at the
office or agency of the Issuer designated pursuant to Section 1102, the Issuer
shall execute, and the Trustee, upon receipt of an Issuer Order, shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denomination or
denominations of a like aggregate principal amount.

            (c) At the option of the Holder thereof, Notes may be exchanged for
other Notes to be registered in the name of such Holder, of authorized
denominations and of like tenor, maturity and aggregate principal amount, upon
surrender of the Notes to be exchanged at any office or agency maintained for
such purpose. Whenever any Notes are so surrendered for exchange, the Issuer
shall execute, and the Trustee, upon receipt of an Issuer Order, shall
authenticate and make available for delivery, the Notes which the Holder making
the exchange is entitled to receive.

            (d) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

            (e) Every Note presented or surrendered for registration of transfer
or for exchange shall (if so required by the Issuer or the Registrar) be duly
endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Registrar, duly executed by the Holder
thereof or his or her attorney duly authorized in writing.

            (f) No service charge shall be made for any registration of transfer
or exchange or redemption of Notes; provided, that the Issuer may require
payment in certain circumstances 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 Notes, other than exchanges pursuant to Section 304,
1006 or 1307 not involving any transfer.

            (g) The Issuer shall not be required (i) to issue, register the
transfer of or exchange any Notes during a period beginning at the opening of
business 15 days before the selection of Notes to be redeemed under Section 1303
and ending at the close of business on the day of such mailing of the relevant
notice of redemption or (ii) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.

            SECTION 306. Book Entry Provisions for Global Notes. (a) Each Global
Note initially shall (i) be registered in the name of Cede & Co., as nominee of
DTC (such nominee being referred to herein as the "Global Note Holder"), (ii) be

                                       17
<PAGE>

deposited with, or on behalf of, DTC or with the Trustee, as custodian for DTC
and (iii) bear legends as set forth in Section 202.

            (b) Members of, or participants in, DTC (collectively, the
"Participants" or the "DTC Participants") shall have no rights under this
Indenture with respect to any Global Note held on their behalf by DTC, or the
Trustee as its custodian, or under any Global Note, and DTC may be treated by
the Issuer, the Trustee and any agent of the Issuer or the Trustee as the
absolute owner of such Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent
of the Issuer or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by DTC or shall impair, as between DTC
and its Participants, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.

            (c) Transfers of any Global Note shall be limited to transfers of
such Global Note in whole, but not in part, to DTC, its successors or their
respective nominees. Interests of beneficial owners in a Global Note may be
transferred in accordance with the applicable rules and procedures of DTC and
the provisions of Section 307. In addition, U.S. Physical Notes or Regulation S
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the Rule 144A Global Notes or Regulation S Global
Notes, respectively, if (i) the Issuer notifies the Trustee in writing that DTC
is unwilling or unable to continue as depository for the Global Notes or DTC
ceases to be a "Clearing Agency" registered under the Exchange Act and a
successor depository is not appointed by the Issuer within ninety (90) days or
(ii) the Issuer, at its option, notifies the Trustee in writing that it elects
to have the Physical Notes so issued.

            (d) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in the
other Global Note will, upon transfer, cease to be an interest in such Global
Note and become an interest in the other Global Note and, accordingly, will
thereafter be subject to all transfer restrictions, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.

            (e) In connection with the transfer of an entire Rule 144A Global
Note or Regulation S Global Note to beneficial owners pursuant to paragraph (c)
of this Section 306, the Rule 144A Global Note or Regulation S Global Note, as
the case may be, shall be deemed to be surrendered to the Trustee for
cancellation, and the Issuer shall execute, and the Trustee, upon receipt of an
Issuer Order, shall authenticate and deliver, to each beneficial owner
identified by DTC in exchange for its beneficial interest in the Rule 144A
Global Note or Regulation S Global Note, as the case may be, an equal aggregate
principal amount of Physical Notes of authorized denominations.

            (f) Any U.S. Physical Note delivered in exchange for an interest in
the Rule 144A Global Note pursuant to subsection (c) of this Section 306 shall,
unless such exchange is made on or after the Resale Restriction Termination Date
for such Note, bear the Private Placement Legend.

                                       18
<PAGE>

            (g) The registered Global Note Holder may grant proxies and
otherwise authorize any person, including DTC's Participants and persons that
may hold interests through DTC's Participants, to take any action which a Holder
is entitled to take under this Indenture or the Notes.

            (h) Any beneficial owner of interests in a Global Note may receive
Physical Notes (which shall bear the Private Placement Legend if required by
Section 202) in accordance with the procedures of DTC. In connection with the
execution, authentication and delivery of such Physical Notes in exchange for
beneficial interests in a Global Note pursuant to this paragraph (h) or
paragraph (c) above, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of the applicable Global Note in an
amount equal to the principal amount of the beneficial interest in such Global
Note to be transferred, and the Issuer shall execute, and the Trustee, upon
receipt of an Issuer Order, shall authenticate and deliver, one or more Physical
Notes of like tenor and having an equal aggregate principal amount.

            SECTION 307. Special Transfer Provisions. Unless and until a Note is
sold under an effective Registration Statement, the following provisions shall
apply:

            (a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) which is not a QIB (excluding Non-U.S. Persons):

                  (i) The Registrar shall register the transfer of any Note,
      whether or not such Note bears the Private Placement Legend, if (x) the
      requested transfer is on or after the Resale Restriction Termination Date
      or (y) the proposed transferee has delivered to the Registrar a
      certificate substantially in the form of Exhibit D.

                  (ii) If the proposed transferor is a DTC Participant holding a
      beneficial interest in the Rule 144A Global Note, upon receipt by the
      Registrar of (x) the documents, if any, required by paragraph (i) above
      and (y) instructions given in accordance with DTC's and the Registrar's
      procedures therefor, the Registrar shall reflect on its books and records
      the date and a decrease in the principal amount of the Rule 144A Global
      Note in an amount equal to the principal amount of the beneficial interest
      in the Rule 144A Global Note to be transferred, and the Issuer shall
      execute, and the Trustee, upon receipt of an Issuer Order, shall
      authenticate and deliver, one or more Physical Notes of like tenor and
      amount.

            (b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a U.S. Physical Note or
an interest in the Rule 144A Global Note to a QIB (excluding Non-U.S. Persons):

                                       19
<PAGE>

                  (i) If the Note to be transferred consists of (x) a U.S.
      Physical Note, the Registrar shall register the transfer and the Issuer
      shall execute, and the Trustee shall authenticate and deliver, one or more
      U.S. Physical Notes if such transfer is being made by a proposed
      transferor who has checked the box provided for on the form of Note
      stating, or has otherwise advised the Issuer and the Registrar in writing,
      that the sale has been made in compliance with the provisions of Rule 144A
      to a transferee who has signed the certification provided for on the form
      of Note stating, or has otherwise advised the Issuer and the Registrar in
      writing, that it is purchasing the Note for its own account or an account
      with respect to which it exercises sole investment discretion and that it,
      or the Person on whose behalf it is acting with respect to any such
      account, is a QIB within the meaning of Rule 144A, is aware that the sale
      to it is being made in reliance on Rule 144A and acknowledges that it has
      received such information regarding the Issuer as it has requested
      pursuant to Rule 144A or has determined not to request such information
      and that it is aware that the transferor is relying upon its foregoing
      representations in order to claim the exemption from registration provided
      by Rule 144A or (y) an interest in a Rule 144A Global Note, the transfer
      of such interest may be effected only through the book-entry system
      maintained by DTC.

                  (ii) If the proposed transferee is a DTC Participant, and the
      Notes to be transferred consist of U.S. Physical Notes, upon receipt by
      the Registrar of instructions given in accordance with DTC's and the
      Registrar's procedures therefor, the Registrar shall reflect on its books
      and records the date and an increase in the principal amount of the Rule
      144A Global Note in an amount equal to the principal amount of the U.S.
      Physical Notes to be transferred, and the Trustee shall cancel the U.S.
      Physical Notes so transferred.

            (c) Transfers of Interests in the Regulation S Global Note or
Regulation S Physical Notes to U.S. Persons. The following provisions shall
apply with respect to any transfer of interests in the Regulation S Global Note
or Regulation S Physical Notes to U.S. Persons:

                  (i) prior to the removal of the Private Placement Legend for
      the Regulation S Global Notes or the Regulation S Physical Notes pursuant
      to Section 202, the Registrar shall refuse to register such transfer; and

                  (ii) after such removal pursuant to Section 202, the Registrar
      shall register the transfer of any such Note without requiring any
      additional certification.

            (d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Note to a Non-U.S.
Person:

                                       20
<PAGE>

                  (i) Prior to July 23, 2003, the Registrar shall register any
      proposed transfer of a Note to a Non-U.S. Person upon receipt of a
      certificate substantially in the form of Exhibit E from the proposed
      transferor and the Issuer shall execute, and the Trustee shall, upon
      receipt of an Issuer Order, authenticate and deliver, one or more
      Temporary Regulation S Global Notes of like tenor and amount.

                  (ii) On and after July 23, 2003, the Registrar shall register
      any proposed transfer to any Non-U.S. Person (x) if the Note to be
      transferred is a Regulation S Physical Note, (y) if the Note to be
      transferred is a U.S. Physical Note or an interest in the Rule 144A Global
      Note, upon receipt of a certificate substantially in the form of Exhibit E
      from the proposed transferor and, (z) in the case of either clause (x) or
      (y), the Issuer shall execute, and the Trustee, upon receipt of an Issuer
      Order, shall authenticate and deliver, one or more Physical Notes of like
      tenor and amount.

                  (iii) If the proposed transferor is a DTC Participant holding
      a beneficial interest in the Rule 144A Global Note, upon receipt by the
      Registrar of (x) the document, if any, required by paragraph (i) and (y)
      instructions in accordance with DTC's and the Registrar's procedures
      therefor, the Registrar shall reflect on its books and records the date
      and a decrease in the principal amount of the Rule 144A Global Note in an
      amount equal to the principal amount of the beneficial interest in the
      Rule 144A Global Note to be transferred and the Issuer shall execute, and
      the Trustee, upon receipt of an Issuer Order, shall authenticate and
      deliver, one or more Regulation S Global Notes or Physical Notes of like
      tenor and amount.

            (e) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend unless the
Issuer has reasonable cause to believe that a Note is a Restricted Security and
delivers to the Trustee an Issuer Order, in which case the Trustee shall
authenticate and deliver a new Note bearing a Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless either (i) the circumstances contemplated by paragraph (a)(i)(x) of this
Section 307 exist or (ii) there is delivered to the Registrar an Opinion of
Counsel reasonably satisfactory to the Issuer and the Registrar to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.

            (f) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture and such Note.

                                       21
<PAGE>

            (g) Retention of Records. The Registrar shall retain until such time
as no Notes remain Outstanding copies of all letters, notices and other written
communications received pursuant to Section 306 or this Section 307. The Issuer
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Registrar.

            (h) No Duty to Monitor. Neither the Trustee nor the Registrar shall
have an obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Indenture or under
applicable law with respect to any transfer of any interest in any Note other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

            SECTION 308. Mutilated, Destroyed, Lost and Stolen Notes. (a) If any
mutilated Note is surrendered to the Trustee or the Registrar, the Issuer shall
execute, and the Trustee, upon receipt of an Issuer Order and such security or
indemnity as may be required by the Trustee, Registrar and the Issuer to save
each of them and any agent of theirs harmless, shall authenticate and deliver,
in exchange therefor a new Note of like tenor and principal amount and bearing a
number not contemporaneously Outstanding, or, in case any such mutilated Note
has become or is about to become due and payable, the Issuer in its discretion
may, instead of issuing a new Note, pay such Note.

            (b) If there shall be delivered to the Issuer and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Issuer or the Trustee that such Note has been acquired by a bona fide purchaser,
the Issuer shall execute, and the Trustee, upon receipt of an Issuer Order,
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Note, a new Note of like tenor and principal amount and bearing a number not
contemporaneously Outstanding, or, in case any such destroyed, lost or stolen
Note has become or is about to become due and payable, the Issuer in its
discretion may, instead of issuing a new Note, pay such Note.

            (c) Upon the issuance of any new Note under this Section 308, the
Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

            (d) Every new Note issued pursuant to this Section 308 in lieu of
any destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes, duly issued hereunder.

                                       22
<PAGE>

            (e) The provisions of this Section 308 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 Notes.

            SECTION 309. Payment on Notes; Rights Preserved. (a) Principal of,
Make-Whole Premium, if any, and interest on any Note which is payable, and is
punctually paid or duly provided for, on any Payment Date shall be paid in
accordance with Section 502(b) hereof to the Person in whose name such Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date applicable to such Payment Date at the office or agency of
the Issuer in the Borough of Manhattan, the City of New York, maintained for
such purposes (which initially shall be the Corporate Trust Office) pursuant to
Section 1102 or, at the option of the Issuer, interest may be paid by check
mailed to the address of the Person entitled thereto pursuant to Section 310 as
such address appears in the Security Register; provided, that (i) all payments
with respect to the Global Notes and Physical Notes the Holders of which have
given wire transfer instructions to the Trustee by the Regular Record Date shall
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof; (ii) the payment of the final
installment of principal of, or interest on, each Note shall only be made upon
presentation and surrender of such Note at the Corporate Trust Office or such
other place as may be designated pursuant to this Indenture; and (iii) upon
written request from any Holder of Outstanding Notes in the aggregate principal
amount of $1,000,000, payments of interest on, or principal (other than the
final payment of principal) of, such Notes shall be made by wire transfer to
such Holder.

            (b) Any principal of, Make-Whole Premium, if any, or interest on any
Note which is payable, but is not punctually paid or duly provided for, on the
relevant Payment Date shall forthwith cease to be payable to the Holder on the
Regular Record Date by virtue of having been such Holder, and such defaulted
principal or interest and (to the extent lawful) interest on such defaulted
principal or interest at the applicable rate borne by such Note plus additional
interest at the rate of one percent (1%) per annum (such defaulted interest and
interest thereon herein collectively called "Defaulted Payments") shall be paid
by the Issuer as provided in clause (c) below.

            (c) The Issuer shall make payment of any Defaulted Payment to the
Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Payment, which shall be fixed in the following manner. The Issuer
shall notify the Trustee in writing of the amount of the Defaulted Payment
proposed to be paid on each Note and the date of the proposed payment and, at
the same time, the Issuer shall deposit in the Collections Account an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Payment or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Payment as provided in this clause (c). Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Payment, which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10

                                       23
<PAGE>

days after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Issuer of such Special Record Date and, in the
name and at the expense of the Issuer, shall cause notice of the proposed
payment of such Defaulted Payment and the Special Record Date therefor to be
given in the manner provided for in Section 106 not less than ten (10) days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Payment and the Special Record Date therefor having been so given,
such Defaulted Payment shall be paid by the Trustee to the Persons in whose
names the Notes (or their respective Predecessor Notes) are registered at the
close of business on such Special Record Date.

            (d) Subject to the foregoing provisions of this Section 309, each
Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.

            SECTION 310. Persons Deemed Owners. (a) Prior to the due presentment
of a Note for registration of transfer, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name such Note is
registered as the owner of such Note for the purpose of receiving payment of
principal of, Make-Whole Premium, if any, and (subject to Section 309) interest
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Trustee or any agent of the Issuer or the
Trustee shall be affected by notice to the contrary.

            (b) None of the Issuer, the Trustee and any agent of the Issuer or
the Trustee shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Note in global form or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.

            SECTION 311. Cancellation. All Notes surrendered for payment,
redemption, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer at any time may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever and any Notes previously authenticated
hereunder which the Issuer has not issued and sold, and all Notes so delivered
shall be promptly canceled by the Trustee. If the Issuer shall so acquire any of
the Notes, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 311, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be disposed of by the Trustee in accordance with
its customary procedures and certification of their disposal delivered to the
Issuer unless by Issuer Order the Issuer shall direct that canceled Notes be
returned to it; provided, that such Issuer Order is timely and the Notes have
not

                                       24
<PAGE>

been previously disposed of by the Trustee; and provided further, that the
Trustee shall not be required to destroy such canceled Notes.

            SECTION 312. Computation of Interest. Interest on the Notes shall be
computed on the basis of a 360-day year of twelve 30-day months.

            SECTION 313. CUSIP and CINS Numbers. The Issuer in issuing the Notes
may use "CUSIP" and "CINS" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" or "CINS" numbers in notices of redemption or exchange
as a convenience to Holders; provided, that any such notice shall state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of a redemption or exchange, that
reliance may be placed only on the other identification numbers printed on the
Notes and that any such redemption shall not be affected by any defect in or
omission of such numbers.

            SECTION 314. Parity of Notes. All Notes issued and Outstanding
hereunder, regardless of the time or times of their issuance, rank on a parity
with each other Note and each Note shall be secured equally and ratably by this
Indenture and the Security Documents with each other Note, without preference,
priority or distinction of any one thereof over any other by reason of
difference in time of issuance or otherwise, and each Note shall be entitled to
the same benefits and security in this Indenture and the Security Documents as
each other Note.

                                  ARTICLE FOUR
                   APPLICATION OF PROCEEDS FROM SALE OF NOTES

            SECTION 401. Application of Proceeds from Sale of Notes. The Issuer
covenants to use the net proceeds from the issuance and sale of the Notes (a) to
pay approximately $326,000,000 to Calpine Energy Services, L.P. ("CES") in
partial payment for the purchase of the CDWR Power Sales Agreement and the
Morgan Stanley CDWR Guarantee, (b) to pay approximately $361,400,000 to CES in
partial payment for the purchase of the MSCG power purchase agreement and the
Morgan Stanley MSCG Guarantee, (c) to fund the reserve account in an amount
equal to $94,441,188, (d) to pay approximately $20,300,000 for all costs, fees
and expenses incurred in connection with this offering, including fees to Morgan
Stanley & Co. Incorporated for structuring the offering of the Notes and acting
as initial purchaser of the Notes in this offering and (e) to transfer any
remaining amounts to the Working Capital Account.

                                  ARTICLE FIVE
                                    ACCOUNTS

            SECTION 501. Establishment of Accounts. (a) Wilmington Trust
Company, a Delaware banking corporation, is hereby appointed as the "Accounts
Agent" and, in such capacity, will act, in accordance with Article 8 of the UCC,
as the "securities intermediary" with respect to any "securities accounts" and
as a "bank" with respect to any "deposit accounts" (as each such term is defined
in the UCC) in which a security interest may be granted under the UCC pursuant
hereto and pursuant to the Assignment

                                       25
<PAGE>

and Security Agreement (together with its successors and permitted assigns in
each such capacity, the "Accounts Agent"). Pursuant hereto and to the Assignment
and Security Agreement, the Accounts Agent shall establish and maintain the
following non-interest bearing accounts (collectively, the "Accounts") in the
name of the Trustee for its own benefit and the equal and ratable benefit of the
Holders as provided in this Indenture: (i) the Collections Account; (ii) the
Working Capital Account; (iii) the Reserve Account; (iv) the Reserve Investments
Account; and (v) the Damages and Indemnity Account (each as defined below). The
Accounts Agent will invest funds in each such Account in accordance with Section
507 and act with respect to all "financial assets" (as such term is defined in
Article 8 of the UCC) credited to the Accounts as a "securities intermediary"
(as such term is defined in Article 8 of the UCC). The Accounts Agent shall hold
and safeguard the Accounts during the term of this Indenture and the Assignment
and Security Agreement and shall treat the "security entitlements" (as such term
is defined in Article 8 of the UCC) in the Accounts as security entitlements
pledged by the Issuer to the Trustee for its own benefit and the equal and
ratable benefit of the Holders to be held in accordance with the provisions of
this Indenture and the Assignment and Security Agreement. Neither the Issuer nor
any Affiliate of the Issuer shall have any rights against the Accounts Agent
hereunder (other than rights which may arise as a result of the Accounts Agent's
gross negligence or willful misconduct as determined by a court of competent
jurisdiction in a final, non-appealable judgment), as a third-party beneficiary
or otherwise, including, any right to direct the Accounts Agent to distribute or
allocate any funds in the Accounts (except as expressly provided herein or as
provided in the Assignment and Security Agreement). The Accounts Agent shall
comply with Part 5 of Article 8 of the UCC.

            (b) All monies and Permitted Investments credited to the Accounts
from time to time shall constitute part of the Collateral and shall be
collateral security for the payment and performance by the Issuer of all its
obligations under the Financing Documents and, subject to the terms of this
Indenture, shall at all times be subject to the sole dominion and control of the
Trustee for the purposes and on the terms set forth in this Indenture and the
other Financing Documents. Until payment and performance of all the obligations
of the Issuer under the Financing Documents in accordance with the provisions
hereof, the Issuer shall have no right to the funds credited to the Accounts,
except as provided in this Article Five. If a Notice of an Actionable Event
shall have been given and be outstanding, the Trustee shall apply all or any of
the monies in the Accounts in accordance with the express terms of the Indenture
and in the order of priority set forth in Section 711.

            SECTION 502. Collections Account. (a) On or prior to the Closing
Date, the Accounts Agent shall establish and maintain a segregated trust account
no. 61186-1, in the name of the Trustee in its trust capacity and entitled
"Collections Account" (the "Collections Account"). Thereafter, without
limitation of any other amounts required under this Indenture to be deposited in
the Collections Account (including any profit or interest earned on the
investment of moneys held in any Account pursuant to Section 507), all
Collections and all Account Transfer Payments shall be deposited with the
Accounts Agent for the benefit of the Trustee in the Collections Account. The
Issuer shall instruct each Person from whom it receives or is entitled to

                                       26
<PAGE>

receive Collections to pay such Collections (identifying them as such in writing
to the Trustee) directly to the Trustee for deposit in the Collections Account,
and the Trustee shall be entitled to receive directly all Collections from the
Persons owing the same. In furtherance of the foregoing, the Consents have been
executed and delivered concurrently with the execution and delivery of this
Indenture. In the event that any Collections are remitted directly to, or are
otherwise received by, the Issuer, all such Collections shall be held by the
Issuer as the agent of and in trust for the Trustee, and the Issuer shall
promptly remit such Collections in the form received (with any necessary
endorsement) to the Trustee for deposit in the Collections Account.

            (b) Unless a Notice of an Actionable Event shall have been given in
writing to the Trustee and be outstanding, in which case the provisions of
Section 711 shall be applicable, the Trustee shall apply amounts in the
Collections Account on the dates specified below and in the following order of
priority for payment to the appropriate Person, but in each case only to the
extent that all current and past due amounts ranking prior thereto have been
paid in full:

                  (i) FIRST, on the first day of August of each year, beginning
      on August 1, 2004, to pay to the Trustee the amount of Trustee Fees due
      and payable at such time in connection with the Notes;

                  (ii) SECOND, on or before the later of (A) the twenty first
      day of each month, or (B) the eleventh day after receipt of an invoice
      from Morgan Stanley Capital or, if such day is not a Business Day, then on
      the next Business Day, to pay Morgan Stanley Capital for electric energy
      sold or made available to Issuer by Morgan Stanley Capital under the MSCG
      Power Purchase Agreement (as specified in an Officer's Certificate of the
      Issuer delivered to the Trustee at least three Business Days prior to such
      payment date);

                  (iii) THIRD, on the first day of each month, to pay to the
      payee thereof all governmental fees and other expenses (including legal
      fees and the expenses of the independent members of the Management
      Committee, the Administrative Agent and the Trustee, but excluding the
      annual fees of any of the foregoing) required to be paid by the Issuer to
      third-parties in order for the Issuer to remain in compliance with its
      obligations under this Indenture (as specified in an Officer's Certificate
      of the Issuer delivered to the Trustee at least three Business Days prior
      to the first day of each month);

                  (iv) FOURTH, on each Interest Payment Date, to pay, on a pro
      rata basis to the Holders of each Series of the Notes, an amount equal to
      all interest due and payable (including past due amounts, if any) at such
      time on the Notes;

                  (v) FIFTH, on each Principal Payment Date, to pay, on a pro
      rata basis to the Holders of each Series of the Notes, an amount equal

                                       27
<PAGE>

      to the principal and Make-Whole Premium (if any, with respect to any Notes
      called for optional redemption) due and payable (including past due
      amounts, if any) at such time on such Notes (as specified in an Officer's
      Certificate of the Issuer delivered to the Trustee at least three Business
      Days prior to such payment date);

                  (vi) SIXTH, on each Payment Date, to transfer to the Reserve
      Account an amount, if any, necessary to cause the amount on deposit in the
      Reserve Account to be equal to the Reserve Required Balance (as specified
      in an Officer's Certificate of the Issuer delivered to the Trustee at
      least three Business Days prior to such payment date);

                  (vii) SEVENTH, on the first day of August of each year
      (beginning on August 1, 2003), in arrears, to pay to Morgan Stanley
      Capital's an amount equal to the annual fees payable to Morgan Stanley
      Capital under the Scheduling Services Agreement (as specified in an
      Officer's Certificate of the Issuer delivered to the Trustee at least
      three Business Days prior to such payment date);

                  (viii) EIGHTH, on the first day of August of each year
      (beginning on August 1, 2004), to pay (1) to the Administrative Agent an
      amount equal to the annual fees payable to the Administrative Agent under
      the Administrative Services Agreement; (2) the fees of the Issuer's
      independent managers; (3) the fees of the rating agencies; and (4) the
      premiums, fees or other charges for insurance (in each case, as specified
      in an Officer's Certificate of the Issuer delivered to the Trustee at
      least three Business Days prior to such payment date); and

                  (ix) NINTH, on each Payment Date, provided, that (as specified
      in an Officer's Certificate of the Issuer delivered to the Trustee no
      later than 10:00 a.m. (EDT) on such Payment Date) (A) no Event of Default
      or Default has occurred and is continuing on such Payment Date and (B) the
      Debt Service Coverage Ratio calculated as of such Payment Date equals or
      exceeds 1.01 to 1.00, to deposit the remaining Distributable Collections
      in the Working Capital Account.

            SECTION 503. Working Capital Account. On or prior to the Closing
Date, the Accounts Agent shall establish and maintain a segregated trust account
no. 61186-5, in the name of the Trustee in its trust capacity and entitled
"Working Capital Account" (the "Working Capital Account"). The Working Capital
Account shall be funded with all amounts released from the Collections Account
in accordance with clause (ix) of Section 502(b). In addition, any amounts
remaining after application of the proceeds from sale of the Notes will be
transferred to the Working Capital Account. Subject to Section 3(d)(v) of the
Assignment and Security Agreement, any amounts held in the Working Capital
Account may be used by the Issuer pursuant to an Issuer Request to the Trustee
at least three Business Days prior to the requested fund transfer date, for
working capital or other purposes, including for distribution to its Members. So
long as

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<PAGE>

no Event of Default has occurred and is continuing, the Trustee shall not issue
instructions or orders with respect to the Working Capital Account and any funds
held therein which are contrary to those issued by the Issuer pursuant to an
Issuer Request with respect to the Working Capital Account and any funds held
therein.

            SECTION 504. Reserve Account. (a) On or prior to the Closing Date,
the Accounts Agent shall establish and maintain a segregated trust account no.
61186-2, in the name of the Trustee in its trust capacity and entitled "Reserve
Account" (the "Reserve Account"). The Reserve Account shall be funded (i) on the
Closing Date with the net proceeds from the issuance and sale of the Notes in an
amount equal to the Reserve Required Balance as of the Closing Date and (ii)
thereafter, by a transfer of funds, if funds are available for such purpose,
from the Collections Account to the Reserve Account in accordance with clause
(vi) of Section 502(b).

            (b) In the event that on any Interest Payment Date or Principal
Payment Date, as applicable, the aggregate amount of funds on deposit in and
available to be withdrawn from the Collections Account shall be insufficient for
the payment of interest or principal then due and payable on the Notes (any such
deficiency, a "Reserve Deficiency"), the Trustee shall forthwith transfer to the
Collections Account from the Reserve Account an amount equal to such Reserve
Deficiency. If on any Payment Date the aggregate amount of funds on deposit in
and available to be withdrawn from the Reserve Account shall exceed the then
current Reserve Required Balance, any such excess funds shall be transferred on
the next Payment Date to the Collections Account for application in accordance
with the provisions of Section 502.

            SECTION 505. Reserve Investments Account. On or prior to the Closing
Date, the Accounts Agent shall establish and maintain a segregated trust account
no. 61186-3, in the name of the Trustee in its trust capacity and entitled
"Reserve Investments Account" (the "Reserve Investments Account"). Thereafter,
all earnings on Permitted Investments made with funds on deposit in the Reserve
Account shall be deposited and retained in the Reserve Investments Account until
the Trustee shall have received from each of Moody's and Standard & Poor's a
written consent to the release of such amounts in the Reserve Investments
Account. Upon receipt by the Trustee of such consents from Moody's and Standard
& Poor's, the Trustee shall transfer all amounts held in the Reserve Investments
Account to the Collections Account, and following the date of such consents, all
earnings thereafter on Permitted Investments made with funds on deposit in the
Reserve Account shall be deposited in the Collections Account.

            SECTION 506. Damages and Indemnity Account. (a) On or prior to the
Closing Date, the Accounts Agent shall establish and maintain a segregated trust
account no. 61186-4, in the name of the Trustee in its trust capacity and
entitled "Damages and Indemnity Account" (the "Damages and Indemnity Account").
The Damages and Indemnity Account shall be funded with all amounts paid by
Morgan Stanley Capital under the MSCG Power Purchase Agreement and all amounts
paid by Morgan Stanley under the Morgan Stanley MSCG Guarantee, in each case,
with respect to (i) all damages payable by Morgan Stanley Capital to the Issuer
pursuant to Article Four of the MSCG Power Purchase Agreement, (ii) any
Termination Payment payable by Morgan Stanley Capital to the Issuer pursuant to
Article Five of the MSCG Power Purchase Agreement and (iii) all indemnity
payments payable by

                                       29
<PAGE>

Morgan Stanley Capital to the Issuer pursuant to Section 10.4 of the MSCG Power
Purchase Agreement. The Damages and Indemnity Account shall also be funded with
all amounts paid by CDWR under the CDWR Power Sales Agreement with respect to
(i) all damages payable by CDWR to the Issuer pursuant to Article Four of the
CDWR Power Sales Agreement, (ii) any Termination Payment payable by CDWR to the
Issuer pursuant to Article Five of the CDWR Power Sales Agreement and (iii) all
indemnity payments payable by CDWR to the Issuer pursuant to Section 10.4 of the
CDWR Power Sales Agreement.

            (b) The Trustee shall, from time to time, as specified in an
Officer's Certificate of the Issuer, withdraw from the Damages and Indemnity
Account and pay to CDWR, when due (i) all damages payable by the Issuer to CDWR
pursuant to Article Four of the CDWR Power Sales Agreement and (ii) all
indemnity payments payable by the Issuer to CDWR pursuant to Section 10.4 of the
CDWR Power Sales Agreement. The Trustee shall, from time to time, as specified
in an Officer's Certificate of the Issuer, withdraw from the Damages and
Indemnity Account and pay to Morgan Stanley Capital, when due (i) all damages
payable by the Issuer to Morgan Stanley Capital pursuant to Article Four of the
MSCG Power Purchase Agreement and (ii) all indemnity payments payable by the
Issuer to Morgan Stanley Capital pursuant to Section 10.4 of the MSCG Power
Purchase Agreement

            (c) In the event any Termination Payment is made into the Damages
and Indemnity Account, the Trustee shall apply amounts in the Damages and
Indemnity Account in the following order of priority for payment to the
appropriate Person:

                  (i) FIRST, if amounts payable under the Notes are accelerated
      as a result of the occurrence and continuation of an Event of Default, to
      pay, on a pro rata basis to the Holders, an amount equal to the entire
      principal amount of the Notes as of the Early Termination Date and any
      interest thereon accrued and unpaid as of the Early Termination Date and,
      in the event such Termination Payment is made by Morgan Stanley Capital as
      a result of its default under the MSCG Power Purchase Agreement and the
      CDWR Power Sales Agreement terminates as a result of such default, a
      Make-Whole Premium on the notes, calculated as if an optional redemption
      pursuant to Section 1302 had occurred on the date such Termination Payment
      is made; provided that the Issuer is obliged to pay such Make-Whole
      Premium if, and only to the extent that an amount equal to such Make-Whole
      Premium is paid to Issuer by Morgan Stanley or Morgan Stanley Capital in
      connection with such Termination Payment.

                  (ii) SECOND, to pay the Termination Payment, if any, payable
      by the Issuer to CDWR pursuant to Article Five of the CDWR Power Sales
      Agreement; and

                                       30
<PAGE>

                  (iii) THIRD, to pay the Termination Payment, if any, payable
      by the Issuer to Morgan Stanley Capital pursuant to Article Five of the
      MSCG Power Purchase Agreement.

            SECTION 507. Statements; Investment of Funds. On or before the fifth
(5th) Business Day of each calendar month the Trustee shall provide the Issuer
with a written statement of (a) the balances in each of the Accounts at the end
of the immediately preceding calendar month, (b) the amounts deposited into each
of the Accounts for the immediately preceding calendar month (and the sources of
such amounts) and (c) the application and payees of amounts withdrawn from each
of the Accounts for the immediately preceding calendar month. Funds on deposit
in the Accounts shall be invested by the Trustee, as specified in an Issuer
Order, in Permitted Investments. The Issuer shall deliver to the Trustee on the
date hereof an Issuer Order specifying its initial investment instructions which
shall remain in effect until changed by a subsequent Issuer Order given not less
than five (5) Business Days before the effective date of such change. All such
Permitted Investments shall be maintained in the name of the Trustee and pledged
to the Trustee to be held by it as part of the Collateral hereunder, and the
Trustee shall be authorized to endorse any of such Permitted Investments in a
manner satisfactory to it, on behalf of the Issuer. The Trustee and, as
applicable, the Accounts Agent may rely and shall be fully protected, as
provided in Section 807, in their reliance on an Issuer Order that complies with
the provisions of this Section 507, and shall be indemnified as provided in
Section 806. All earnings on Permitted Investments shall be credited to the
Collections Account upon receipt thereof by the Trustee, provided, that all
earnings on Permitted Investments made with funds on deposit in the Reserve
Account shall be deposited in the Reserve Investments Account in accordance with
Section 505, all earnings on Permitted Investments made with funds on deposit in
the Reserve Investments Account shall be retained in the Reserve Investments
Account in accordance with Section 505 and all such amounts held in the Reserve
Investments Account shall be released in accordance with Section 505. All losses
shall be charged to the applicable Account. Whenever the Trustee or the Accounts
Agent is required or permitted to make any payment or transfer under this
Indenture, the Trustee or the Accounts Agent, as the case may be, shall have the
right, and is hereby irrevocably authorized, to sell or otherwise liquidate any
Permitted Investments to the extent necessary to make such payment or transfer
and shall have no liability for and shall be fully protected from and against
any losses incurred in connection with such sale or liquidation. The Trustee or
the Accounts Agent shall have no obligation to invest and reinvest any cash held
in the Accounts in the absence of timely and specific written investment
direction from the Issuer. Other than by reason of each of their own negligent
failure to act or each of their own willful misconduct, in no event shall the
Trustee or the Accounts Agent, as the case may be, be liable for the selection
of investments or for investment losses incurred thereon. Other than by reason
of each of their own negligent failure to act or each of their own willful
misconduct, the Trustee or the Accounts Agent, as the case may be, shall have no
liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity or the failure of the Issuer to provide
timely written investment direction.

                                       31
<PAGE>

                                  ARTICLE SIX
                           SATISFACTION AND DISCHARGE

            SECTION 601. Satisfaction and Discharge of Indenture. (a) This
Indenture shall, upon receipt by the Trustee of an Issuer Request, cease to be
of further effect with respect to the Notes of either Series (except as to any
surviving rights of registration of transfer or exchange of Notes of such Series
herein expressly provided for and except as otherwise specifically provided in
this Indenture) and the Trustee, at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
when:

                  (i) either:

                              (A) all Notes of such Series theretofore
                  authenticated and delivered (other than (1) Notes of such
                  Series which have been destroyed, lost or stolen and which
                  have been replaced or paid as provided in Section 308 and (2)
                  Notes of such Series for whose payment money has theretofore
                  been deposited in trust with the Trustee or any Paying Agent
                  or segregated and held in trust by the Issuer and thereafter
                  repaid to the Issuer, as provided in Section 1402) have been
                  delivered to the Trustee for cancellation; or

                              (B) all Notes of such Series not theretofore
                  delivered to the Trustee for cancellation

                                    (1) have become due and payable, or

                                    (2) will become due and payable at their
                        Stated Maturity within one year, or

                                    (3) if redeemable at the option of the
                        Issuer, are to be called for redemption within one year
                        under arrangements satisfactory to the Trustee for the
                        giving of notice of redemption by the Trustee in the
                        name, and at the expense, of the Issuer,

      and the Issuer, in the case of (i)(B)(1), (2) or (3) above, has
      irrevocably deposited .or caused to be deposited with the Trustee as trust
      funds in trust for the purpose an amount sufficient to pay and discharge
      the entire indebtedness on such Notes of such Series not theretofore
      delivered to the Trustee for cancellation, for principal, Make-Whole
      Premium, if any, and interest to the date of such deposit (in the case of
      Notes of such Series which have become due and payable) or to the Stated
      Maturity or Redemption Date, as the case may be;

                                       32
<PAGE>

                  (ii) the Issuer has paid or caused to be paid all other sums
      then payable hereunder by the Issuer with respect to such Series of the
      Notes; and

                  (iii) the Issuer 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 with respect to such Series of the Notes have been
      complied with.

            (b) Notwithstanding the satisfaction and discharge of this Indenture
pursuant to this Article Six, the obligations of the Issuer to the Trustee or
any agent of the Trustee appointed in accordance with the provisions hereof and
the Paying Agent under Section 806 and, if money shall have been deposited with
the Trustee pursuant to subclause (B) of clause (i) of this Section 601, the
obligations of the Trustee under Section 801 shall survive.

            SECTION 602. Application of Trust Money. All money deposited with
the Trustee pursuant to Section 601 shall be held in trust and applied by the
Trustee, in accordance with the provisions of the Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Issuer
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal, Make-Whole Premium, if any, and interest for
whose payment such money has been deposited with the Trustee; provided, that
such money need not be segregated from other funds except to the extent required
in this Indenture or by law.

                                 ARTICLE SEVEN
                         EVENTS OF DEFAULT AND REMEDIES

            SECTION 701. Events of Default. "Event of Default," wherever used
herein, means the occurrence of any one of the following events with respect to
any Series of the Notes (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
(including, but not limited to, force majeure and any other impossibility of
performance) or pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental body):

            (a) the Issuer shall default in the payment of any principal or
Make-Whole Premium, if any, with respect to any Notes of such Series called for
optional redemption, on any Notes of such Series when the same shall become due
and payable, whether by scheduled maturity or acceleration, or otherwise, and
such default shall continue for a period of at least five (5) days; or

            (b) the Issuer shall default in the payment of interest required to
be paid with respect to, any of the Notes of such Series in each case when the
same shall become due and payable, and such default shall continue for a period
of at least fifteen (15) days; or

                                       33
<PAGE>

            (c) the Issuer shall fail to observe or perform any term, covenant
or obligation of any Material Agreement or Financing Document (including,
without limitation, the furnishing of notices) and such failure (i) could
reasonably be expected to result in a Material Adverse Effect and (ii) shall
continue for a period of at least thirty (30) days after the date notice thereof
shall have been given to the Issuer by the Trustee or by the Majority Holders of
such Series of the Notes; or

            (d) CDWR shall fail to observe or perform any term, covenant or
obligation of the CDWR Power Sales Agreement or the CDWR Consent and such
failure (i) could reasonably be expected to result in a Material Adverse Effect
and (ii) shall continue for a period of at least thirty (30) days after the date
notice thereof shall have been given to the Issuer by the Trustee or by the
Majority Holders of such Series of the Notes; or

            (e) Morgan Stanley shall fail to observe or perform any term,
covenant or obligation of the Morgan Stanley MSCG Guarantee or the Morgan
Stanley Consent and such failure (i) could reasonably be expected to result in a
Material Adverse Effect and (ii) shall continue for a period of at least thirty
(30) days after the date notice thereof shall have been given to the Issuer by
the Trustee or by the Majority Holders of such Series of the Notes; or

            (f) any Material Agreement or Financing Document (other than the
CDWR Power Sales Agreement and the Morgan Stanley MSCG Guarantee) shall cease at
any time to be valid, enforceable and binding and in full force and effect and
such invalidity or unenforceability could reasonably be expected to result in a
Material Adverse Effect; or

            (g) (i) any Lien granted to the Trustee hereunder or under any
Financing Document on any material portion of the Collateral shall cease to be
valid and effective, shall cease to be perfected or otherwise fails to be a
first priority security interest, or (ii) any creditor of the Issuer (other than
the Trustee or the Holders) shall assert any right or interest with respect to
the Collateral and such assertion of rights or interests could reasonably be
expected to result in a Material Adverse Effect, or (iii) the Issuer's right to
receive payments with respect to the Collateral (other than pursuant to any Lien
granted by the Indenture or any Financing Document) shall otherwise be
terminated or impaired and such termination or impairment of the right to
receive payments could reasonably be expected to result in a Material Adverse
Effect; or

            (h) the Issuer shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee, liquidator or
other similar Person of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts as
such debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the Federal Bankruptcy Code, (v)
file a petition or any other document seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, composition or
readjustment of debts or other similar laws or (vi) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition or

                                       34
<PAGE>

other pleading filed against the Issuer in an involuntary case under the Federal
Bankruptcy Code or any other similar law; or

            (i) a proceeding or case shall be commenced without the application
or consent of the Issuer in any court of competent jurisdiction seeking (i) its
liquidation, reorganization, dissolution, winding-up, the composition or
readjustment of debts or any other similar relief, (ii) the appointment of a
trustee, receiver, custodian, liquidator or other similar Person of the Issuer
under any law relating to bankruptcy, insolvency, reorganization, winding-up,
composition or adjustment of debts or other similar laws, and such proceeding or
case shall continue undismissed, or any order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect for a period of sixty (60) or more consecutive days, or any order for
relief or other similar order against the Issuer shall be entered in an
involuntary case under the Federal Bankruptcy Code or any other similar law; or

            (j) it becomes unlawful for the Issuer to perform any of its
obligations under this Indenture, any Security Document, or any Note of such
Series, or any of its obligations hereunder or thereunder ceases to be valid,
binding and enforceable, unless such event or occurrence could not reasonably be
expected to result in a Material Adverse Effect; or

            (k) the CDWR Power Sales Agreement or the Morgan Stanley MSCG
Guarantee shall for any reason be terminated or abrogated at any time (prior to
its scheduled expiration) or ceases at any time to be valid, enforceable and
binding and in full force and effect; or

            (l) a judgment or judgments for the payment of money in excess of
$30 million in the aggregate, which is or are not adequately covered by
insurance or a payment or performance bond, shall be entered against the Issuer
and such judgment or judgments shall not have been vacated, discharged, stayed
or bonded pending appeal within sixty (60) days from the entry thereof.

            SECTION 702. Acceleration of Maturity: Rescission and Annulment. (a)
If an Event of Default (other than a Bankruptcy Event of Default) occurs and is
continuing, then and in every such case the Trustee, upon the direction of the
Holders of no less than twenty-five percent (25%) of the Outstanding Notes so
affected (for an Event of Default specified in clauses (a) and (b) of Section
701) or the Majority Holders of either Series of the Notes (for any Event of
Default other than those specified in clauses (a) and (b) of Section 701), shall
declare the principal amount of all the Notes to be due and payable immediately,
by a notice in writing to the Issuer (and to the Trustee, if given by the
Holders), and upon any such declaration such principal amount, any accrued and
unpaid interest, any Make-Whole Premium previously due and owing by the Issuer
in connection with an optional redemption pursuant to Section 1302, and all
other amounts payable under the Notes shall become immediately due and payable.

            (b) If a Bankruptcy Event of Default occurs, the principal amount
of, any accrued interest on, any Make-Whole Premium previously due and owing by
the

                                       35
<PAGE>

Issuer in connection with an optional redemption pursuant to Section 1302, and
all other amounts payable under the Notes then Outstanding shall become
immediately due and payable.

            (c) In addition, if one or more of the Events of Default (other than
a Bankruptcy Event of Default) shall have occurred and be continuing, the
Trustee may accelerate the maturity of the Notes as provided in clause (a) of
this Section 702 notwithstanding the absence of direction from the Holders if in
the judgment of the Trustee such action is necessary to protect the interests of
the Holders.

            (d) At any time after the principal of the Notes shall have become
due and payable upon a declared acceleration as provided in this Section 702,
and before any judgment or decree for the payment of the money so due, or any
portion thereof, shall be entered, the Majority Holders of either Series of the
Notes, by written notice to the Issuer and the Trustee, may rescind and annul
such declaration and its consequences if all Events of Default giving rise to
such acceleration have been cured or waived.

            (e) At any time after a declaration of acceleration under this
Indenture, but before a judgment or decree for payment of the principal amount
of the Notes (or the applicable Series of the Notes so affected, as the case may
be) then due has been obtained by the Trustee, the Issuer by written notice to a
Responsible Officer of the Trustee, may rescind and annul such declaration and
its consequences if:

                  (i) the Issuer has paid or deposited with the Trustee a sum
      sufficient to pay:

                        (A) all overdue interest on all the Notes;

                        (B) all unpaid principal of and Make-Whole Premium, if
            any, on any Outstanding Notes that have become due otherwise than by
            such declaration of acceleration and interest thereon at the
            respective interest rates borne by the Notes;

                        (C) to the extent that payment of such interest is
            lawful, interest upon overdue interest and overdue principal at the
            rate borne by the Notes; and

                        (D) all sums paid or advanced by the Trustee under this
            Indenture and the reasonable compensation, expenses, disbursements
            and advances of the Trustee, its agents and counsel; and

                  (ii) all Defaults and Events of Default, other than the
      nonpayment of amounts of principal of, Make-Whole Premium, if any, or
      interest on the Notes that have become due solely by such declaration of
      acceleration have been cured or waived as provided in Section 718.

                                       36
<PAGE>

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

            SECTION 703. Remedies upon an Event of Default. If any Event of
Default shall have occurred and be continuing and acceleration shall have
occurred pursuant to Section 702, the Trustee may, subject in each case to the
provisions of Section 807, exercise any or all of the rights and remedies
granted to it in any Security Document. Without limiting the generality of the
foregoing, the Issuer expressly agrees that in any such event the Trustee,
without demand of performance or any other demand, advertisement or notice of
any kind (except the notice specified below of the time and place of public or
private sale) to or upon the Issuer or any other Person (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the extent
permitted by applicable law), may, and at the written instruction of the
Majority Holders of either Series of the Notes shall, subject to the provisions
of the Consents and to the provisions of any law or regulation having the force
of law: (a) collect, receive and appropriate any or all of the Collateral and
exercise any right, remedy, power or privilege of the Issuer under any Material
Agreement; (b) set off against all amounts due and payable hereunder with funds
held in the Accounts; (c) proceed by suit at law or in equity to seek specific
performance of any obligation of the Issuer; (d) take possession of the
Collateral forthwith or any time thereafter, in which case the Issuer shall
marshal and deliver the Collateral to the Trustee or its designee at such time
or times and such place or places as the Trustee may reasonably specify; (e)
subject to the provisions of Section 704, forthwith sell, lease, assign, give an
option or options to purchase or otherwise dispose of and deliver all or any
part of the Collateral (or contract to do so) at one or more public or private
sales, at any exchange, broker's board or at any of the Trustee's offices or
elsewhere at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk; (f) institute legal
proceedings for the appointment of a receiver with respect to any or all of the
Collateral or with respect to the Issuer; or (g) proceed by suit at law or in
equity to foreclose upon, or appoint a receiver with respect to, the Collateral
or exercise any other right or remedy (including specific performance of the
Issuer's obligations under the Financing Documents) available under applicable
law. The Trustee may sell any or all of the Collateral as provided above at any
private or public sale, it being hereby agreed that twenty (20) Business Days'
notice by the Trustee to the Issuer shall be deemed to be reasonable notice of
any such sale. The Issuer hereby waives, to the extent permitted by applicable
law, any claims against the Trustee arising by reason of the fact that the price
at which Collateral may have been sold at any such private sale was less than
the price which might have been obtained at a public sale.

            SECTION 704. Certain Sales of Collateral. In connection with the
exercise of any remedies under Section 703(e) the Trustee will not sell the
Collateral or any portion thereof without the written consent of all of the
Holders of the Notes Outstanding unless the proceeds of such sale will be
sufficient to satisfy all of the outstanding principal amount, accrued and
unpaid interest, Make-Whole Premium, if any, and all other amounts due and
payable under the Notes.

                                       37
<PAGE>

            SECTION 705. No Marshaling. To the extent that it lawfully may, the
Issuer hereby agrees that it will not at any time plead, claim or take the
benefit of any appraisement, valuation, stay, extension, moratorium or
redemption law now or hereafter in force and any requirement of marshaling in
the event of foreclosure of the security interests hereby created, the effect of
which might be to prevent or delay the enforcement of any Security Document or
the absolute sale of the whole or any part of the Collateral or the possession
thereof by the Trustee or any purchaser at any sale by the Trustee. The Issuer,
for itself and all who may claim under the Issuer, as far as the Issuer may
lawfully do so, hereby waives and releases the benefit of all such laws. Except
as otherwise expressly provided in this Indenture, to the extent permitted by
applicable law, the Issuer hereby waives presentment, demand, protest or any
notice of any kind in connection with, and not expressly set forth in, any
Security Document or herein.

            SECTION 706. Trustee May Recover Unpaid Indebtedness After Sale of
Collateral. Subject to Section 114, in the case of a sale of the Collateral and
of the application of the proceeds of such sale to the payment of the
indebtedness secured by this Indenture and the Security Documents, the Trustee
in its own name, and as trustee of an express trust, shall be entitled and
empowered, by any appropriate means, legal, equitable or otherwise to enforce
payment of, and to receive all amounts then remaining due and unpaid upon, all
or any of the Notes, for the equal and ratable benefit of the Holders thereof,
and upon any other portion of the indebtedness remaining unpaid, including the
Make-Whole Premium, if any, with interest at the rates specified in the
respective Notes on the overdue principal, Make-Whole Premium, if any, and (to
the extent that payment of such interest is legally enforceable) on the overdue
installments of interest.

            SECTION 707. Recovery of Judgment Does Not Affect Rights. No
recovery of any such judgment or final decree by the Trustee and no levy of any
execution under any such judgment upon any of the Collateral, or upon any other
property, shall in any manner or to any extent affect any rights, powers or
remedies of the Trustee, or any liens, rights, powers or remedies of the
Holders, but all such liens, rights, powers or remedies shall continue
unimpaired as before.

            SECTION 708. Collection of Indebtedness and Suits for Enforcement by
Trustee. (a) The Issuer covenants that if:

                  (i) default is made in the payment of any installment of
      interest on any Note when such interest becomes due and payable and such
      default continues for a period of thirty (30) days, or

                  (ii) default is made in the payment of the principal of or
      Make-Whole Premium, if any, on any Note when such becomes due and payable,

      the Issuer will, upon demand of the Trustee, pay to the Trustee for the
      benefit of the Holders of such Notes, the whole amount then due and
      payable on such Notes for principal, Make-Whole Premium, if any, and
      interest, and interest on any overdue

                                       38
<PAGE>

      principal, Make-Whole Premium, if any, and, to the extent that payment of
      such interest shall be legally enforceable, upon any overdue installment
      of interest, at the applicable rate borne by the Notes, and, in addition
      thereto, such further amount as shall be sufficient to cover the costs and
      expenses of collection, including the reasonable compensation, expenses,
      disbursements and advances of the Trustee, its agents and counsel.

            (b) If the Issuer fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name as trustee of an express trust, at the
direction of the Holders as set forth herein, 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
Issuer or any other obligor upon the Notes and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the property of the
Issuer or any other obligor upon the Notes, wherever situated.

            (c) If an Event of Default with respect to the Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Notes by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.

            SECTION 709. Trustee May File Proofs of Claim. (a) In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Issuer or any other obligor upon the Notes or the
Property of the Issuer or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes 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 Issuer for the payment of
overdue principal, Make-Whole Premium, if any, or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

                  (i) to file and prove a claim for the whole amount of
      principal (and Make-Whole Premium, if any) and interest owing and unpaid
      in respect of the Notes 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 the reasonable compensation, expenses,
      disbursements and advances of the Trustee, its agents and counsel) and of
      the Holders allowed in such judicial proceeding, and

                  (ii) 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 amount due it for the

                                       39
<PAGE>

reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 806.

            (b) 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
Notes 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; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.

            SECTION 710. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes 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.

            SECTION 711. Application of Money Collected. Any money collected by
the Trustee pursuant to this Article Seven or the Security Documents shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or Make-Whole
Premium, if any) or interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:

            (a) First, to the payment of all amounts due to the Trustee and each
predecessor Trustee, if any, under Section 806;

            (b) Second, to the payment of the amounts then due and unpaid for
principal of, Make-Whole Premium (with respect to Notes called for optional
redemption), if any, and any interest on the Notes in respect of which or for
the benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts then due and payable on such
Notes for principal, Make-Whole Premium, if any, and any interest, respectively;

            (c) Third, to the payment of all amounts due and payable to CDWR
under the CDWR Power Sales Agreement, to Morgan Stanley Capital under the MSCG
Power Purchase Agreement and to the Administrative Agent under the
Administrative Services Agreement, as the case may be, as set forth in an
Officer's Certificate or as determined by a court of competent jurisdiction; and

            (d) Fourth, to the Issuer or to whoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct.

                                       40
<PAGE>

            SECTION 712. Limitation on Suits. No Holder of any Note 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 has previously given written notice to the Trustee
of a continuing Event of Default, with respect to the Notes of such Series;

            (b) the Majority Holders of the Outstanding Notes of such Series
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 have offered to the Trustee indemnity
reasonably satisfactory to the Trustee 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 has failed to institute any such
proceeding; and

            (e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Majority Holders of the
Outstanding Notes of such Series;

            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 Holders of Notes, 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 Holders.

            SECTION 713. Unconditional Right of Holders to Receive Principal,
Make-Whole Premium and Interest. Notwithstanding any other provision in this
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment, as provided herein (including, if applicable,
Article Fourteen), of the principal of, Make-Whole Premium, if any, on and
(subject to Section 309) interest on, such Note on the Stated Maturity expressed
in such Note (or, in the case of redemption, on the Redemption Date), including
any interest accrued during any grace period provided in Section 701, 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 714. 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 has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Issuer, the Trustee and the Holders shall be restored severally and respectively
to their former positions hereunder and

                                       41
<PAGE>

thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

            SECTION 715. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes in clause (e) of Section 308, 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 716. 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 Seven 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 717. Control by Holders. (a) The Majority Holders of each
Series of the Notes shall have the right to direct in writing 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, provided, that such
Majority Holders have provided the Trustee with indemnity acceptable to the
Trustee against the costs, expenses (including reasonable attorneys' fees and
expenses) and liabilities to be incurred in following such direction and that
direction shall not be in conflict with any law and the provisions of this
Indenture and provided, further, that (subject to the provisions of Section 801)
the Trustee shall have the right to decline to follow any such direction if such
directions are unclear or inconsistent with any other directives given to the
Trustee or if the Trustee, being advised by counsel, shall determine that the
action or proceeding so directed may not lawfully be taken or if the Trustee in
good faith by a Responsible Officer of the Trustee shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability or if the Trustee in good faith shall so determine that the actions or
forbearances specified in or pursuant to such direction would be unduly
prejudicial to the interests of Holders so affected not joining in the giving of
said direction, it being understood that (subject to Section 801) the Trustee
shall have no duty to ascertain whether or not such actions or forbearances are
unduly prejudicial to such Holders.

            (b) Nothing in this Indenture shall impair the right of the Trustee
in its discretion to take any action deemed proper by the Trustee and which is
not inconsistent with such direction or directions by such Majority Holders.

            SECTION 718. Waiver of Past Defaults. (a) The Majority Holders of
the Outstanding Notes of either Series may on behalf of the Holders of all the
Notes of

                                       42
<PAGE>

such Series waive any past default with respect to such Notes, except a default
in the payment of the principal of, Make-Whole Premium, if any, or any interest
on any Note or in respect of a covenant or provision hereof that cannot be
modified or amended without the unanimous affirmative vote of all Holders of
such Series.

            (b) Upon any such waiver, any such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture and the Trustee, Issuer and the Holders of such
Series of the Notes, as the case may be, shall be restored respectively to their
former positions and rights hereunder; provided, that no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.

            SECTION 719. Waiver of Force Majeure and Stay or Extension Laws. The
Issuer 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 force majeure, impossibility of performance and any
stay or extension law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture, and the
Issuer (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such force majeure, impossibility or law and
covenants that the Issuer will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted or such force majeure or
impossibility grounds have occurred.

            SECTION 720. Trustee to Give Notice of Default, but May Withhold in
Certain Circumstances. Within forty-five (45) days after a Responsible Officer
assigned to the Corporate Trust Office of the Trustee obtains actual knowledge
of the occurrence of any Default hereunder, the Trustee shall transmit by mail
to all Holders as their names shall appear on the Security Register, in the
manner and to the extent provided in Trust Indenture Act Section 313(c), notice
of such Default hereunder, unless such Default shall have been cured or waived;
provided, that except in the case of a default in the payment of the principal
of, Make-Whole Premium, if any, or interest on any Note, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders.

            SECTION 721. Undertaking for Costs. 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, a court may require
any party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs (including reasonable attorneys' fees and expenses)
against any such party litigant, in the manner and to the extent provided in the
Trust Indenture Act; provided, that the provisions of this Section 721 shall not
apply to any suit instituted by the Trustee, or the Issuer to any suit
instituted by any Holder or group of Holders, holding in the aggregate more than
ten percent (10%) in principal amount of the Outstanding Notes of either Series,
or any suit instituted by any Holder for the enforcement of the payment of

                                       43
<PAGE>

the principal of, Make-Whole Premium, if any, or interest, if any, on any Note
on or after the respective due dates expressed in such Note (or, in the case of
redemption, on or after the Redemption Date).

                                 ARTICLE EIGHT
                                  THE TRUSTEE

            SECTION 801. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. (a) The Trustee, prior to the occurrence of an Event
of Default and after the curing or waiving of all Events of Default that may
have occurred, shall undertake to perform such duties and only such duties as
are specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) 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 man would exercise or use under
the circumstances in the conduct of his own affairs.

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

                  (i) during the continuance of an Event of Default:

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

                        (B) in the absence of bad faith on the part of the
            Trustee, the Trustee may conclusively rely, as to the truth of the
            statements and the correctness of the opinions expressed therein,
            upon any statements, certificates or opinions furnished to the
            Trustee and conforming to the requirements of this Indenture;
            provided, that in the case of any such statements, certificates or
            opinions which by any provision 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 (but need not confirm or investigate
            the accuracy of mathematical calculations or other facts stated
            therein);

                  (ii) the Trustee shall not be liable for any error of judgment
      made in good faith by a Responsible Officer or Responsible Officers of the
      Trustee, unless it shall be conclusively determined by a court of
      competent jurisdiction that the Trustee was negligent in ascertaining the
      pertinent facts; and

                                       44
<PAGE>

                  (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 pursuant to Section 717 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.

            (c) None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there shall be reasonable ground for
believing that the repayment of such funds or indemnity satisfactory to it
against such liability is not assured to it. Notwithstanding anything to the
contrary contained herein, in no event shall the Trustee be liable under this
Indenture or any of the other Financing Documents to which it is a party for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits).

            SECTION 802. Certain Rights of Trustee. Subject to the provisions of
Section 801:

            (a) the Trustee and, as applicable, the Accounts Agent, may
conclusively rely and shall be fully protected in acting or refraining from
acting in reliance upon any resolution, Officer's Certificate or any other
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, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officer's Certificate, Issuer
Request or Issuer Order (unless other evidence in respect thereof be herein
specifically prescribed), and any Management Committee's Consent may be
sufficiently evidenced to the Trustee by a copy thereof certified by the
secretary or a Member of the Issuer;

            (c) the Trustee may consult with counsel of its selection and any
advice of counsel or Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder or under any Security Document in good faith and in accordance with
such advice or Opinion of Counsel;

            (d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture or under any other Financing
Document at the request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee security or
indemnity reasonably satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred therein or thereby;

                                       45
<PAGE>

            (e) 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, consent, order, approval,
appraisal, bond, debenture, notice, security or other paper or document unless
requested in writing so to do by the Majority Holders of either Series of the
Notes; provided, that if the payment within a reasonable time to the Trustee of
the costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require indemnity satisfactory to it against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every such
investigation shall be paid by the Issuer or, if paid by the Trustee, any
predecessor trustee or the Holders of any Outstanding Notes, shall be repaid by
the Issuer upon demand;

            (f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder or under any other Financing Document either
directly or by or through agents or attorneys not regularly in its employ 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;

            (g) neither the Trustee nor the Accounts Agent shall be liable for
any action taken, suffered or omitted by either of them in good faith and
believed by the Trustee or the Accounts Agent, as the case may be, to be
authorized or within the discretion or rights or powers conferred upon the
Trustee or the Accounts Agent, as the case may be, by this Indenture;

            (h) except during the continuance of an Event of Default, the
Trustee need perform only those duties as are specifically set forth in this
Indenture;

            (i) the Trustee is hereby authorized and directed to enter into the
Security Documents;

            (j) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture; and

            (k) the rights, privileges, protections, immunities and benefits
given to the Trustee, including its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
and to each agent, custodian and other Person employed to act hereunder and
under the Security Documents.

            SECTION 803. Trustee Not Responsible for Recitals or Issuance of
Notes. Other than as specifically provided in the Trustee recitals of this
Indenture; the recitals contained herein and in the Notes, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Issuer, and the Trustee assumes no

                                       46
<PAGE>

responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of any disclosure document or
offering materials or of the Notes. Neither the Trustee nor its agents appointed
in accordance with the provisions hereof shall be accountable for the use or
application by the Issuer of the Notes or the proceeds thereof.

            SECTION 804. May Hold Notes. The Trustee, any Paying Agent, the
Registrar or any other agent of the Issuer or of the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and, subject to
Trust Indenture Act Sections 310(b) and 311, may otherwise deal with the Issuer
with the same rights it would have if it were not the Trustee, any Paying Agent,
the Registrar or any other agent of the Issuer or such agent and, subject to
Sections 809 and 813, if operative, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee, any Paying Agent, the Registrar
or any other agent of the Issuer.

            SECTION 805. Money Held In Trust. All moneys received by the Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. Neither the Trustee nor any agent of
the Issuer shall be under any liability for interest on any moneys received by
it hereunder except as otherwise agreed with the Issuer.

            SECTION 806. Compensation and Indemnification of Trustee, Accounts
Agent, Paying Agent and Registrar and Its Prior Claim. (a) The Issuer covenants
and agrees to pay to the Trustee, the Accounts Agent and to each Paying Agent
and Registrar, and the Trustee, the Accounts Agent and each Paying Agent and
Registrar shall be entitled to, such compensation as set forth in any fee
agreement between the Issuer and the Trustee entered into in connection with the
execution and delivery of this Indenture by the parties hereto or in connection
with the issuance of the Notes (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust) and the
Issuer covenants and agrees to pay or reimburse the Trustee, the Accounts Agent
and each Paying Agent and Registrar and their respective predecessors upon its
request for all reasonable expenses, disbursements and advances incurred or made
by or on behalf of it in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the reasonable expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ) except any such expenses, disbursement or advance as may arise
from its negligence or bad faith. As security for such payment and for all of
the other obligations of the Issuer set forth in this Section 806 (and any fees
referred to in Section 816), the Trustee shall have a security interest and Lien
prior to the Notes upon all Collateral. The provisions of this Section 806 shall
survive the resignation or removal of the Trustee and the termination of the
other provisions of this Indenture.

            (b) The Issuer also covenants to indemnify the Trustee, the Accounts
Agent and each Paying Agent and Registrar and their respective predecessors,
officers, directors, employees, representatives and agents for, and to hold it
harmless against, any

                                       47
<PAGE>

and all loss, liability, damage, claim or expense, including taxes (other than
taxes based on the income of the Trustee, the Accounts Agent and each Paying
Agent and Registrar and their respective predecessors, officers, directors,
employees, representatives and agents) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance, administration
or enforcement of this Indenture and under the other Financing Documents or the
trusts hereunder and its duties hereunder and the other Financing Documents,
including any liability which the Trustee, the Accounts Agent or any Paying
Agent or Registrar may incur as a result of failure to withhold, pay or report
any tax, assessment or other governmental charge and the costs and expenses of
defending itself against or investigating any claim of liability in the
premises. The obligations of the Issuer under this Section 806(b) to compensate
and indemnify the Trustee, the Accounts Agent and each Paying Agent and
Registrar and their respective predecessors and to pay or reimburse the Trustee,
the Accounts Agent and each Paying Agent and Registrar and their respective
predecessors for expenses, disbursements and advances shall constitute
additional indebtedness hereunder and shall survive the termination,
satisfaction and discharge of this Indenture. References herein to the "Trustee"
shall be deemed to also refer to the Trustee acting in its capacity as Accounts
Agent, Paying Agent, Registrar or in any other capacity as contemplated herein
or in any Financing Document.

            (c) Where the Trustee incurs expenses or renders services in
connection with a Bankruptcy Event of Default, such expenses (including
reasonable attorneys' fees and expenses) and the compensation for the services
are intended to constitute expenses of administration under applicable federal
or state bankruptcy, insolvency or other law.

            SECTION 807. Right of Trustee to Rely on Officer's Certificate, Etc.
Subject to Sections 801 and 802, whenever in the administration of the trusts of
this Indenture the Trustee, or in the carrying out of its duties under Article
Five, the Accounts Agent, shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on the part of the
Trustee or the Accounts Agent, as the case may be, be deemed to be conclusively
proved and established by an Officer's Certificate delivered to the Trustee or
the Accounts Agent, as the case may be, and such certificate, in the absence of
bad faith on the part of the Trustee or the Accounts Agent, as the case may be,
shall be full warranty to the Trustee or the Accounts Agent, as the case may be,
for any action taken, suffered or omitted by the Trustee or the Accounts Agent,
as the case may be, under the provisions of this Indenture upon the faith
thereof.

            SECTION 808. Corporate Trustee Required; Eligibility. There shall at
all times be a Trustee hereunder which shall be eligible to act as Trustee under
Trust Indenture Act Section 310(a)(1) and (2) and which shall have a combined
capital and surplus of at least one hundred fifty million Dollars
($150,000,000). If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then for the
purposes of this Section 808, the combined capital and surplus of such
corporation

                                       48
<PAGE>

shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. The Trustee shall comply with the
provisions of the Trust Indenture Act Section 310(b). If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
808, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article Eight.

            SECTION 809. Qualification of Trustee; Conflicting Interests. If the
Trustee has or shall acquire any conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall, within 90 days after ascertaining that
it has a conflicting interest and if the Event of Default to which such
conflicting interest relates has not been cured or duly waived before the end of
such 90 day period, either eliminate such conflicting interest or resign, to the
extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture.

            SECTION 810. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee may at anytime resign by giving written notice of
resignation to the Issuer and by mailing written notice thereof by first-class
mail, postage prepaid, to all Holders at their last addresses as they shall
appear on the Security Register specifying the day upon which the resignation is
to take effect, and such resignation will take effect immediately upon the later
of the appointment of a successor trustee pursuant to this Article Eight and
such specified day. Upon receiving such notice of resignation, the Issuer, by a
Management Committee's Consent, shall promptly appoint a successor trustee
satisfying the requirements of Section 808 by written instrument in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee or trustees. If no successor trustee shall have
been so appointed and have accepted appointment within thirty (30) days after
the mailing of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor trustee,
or any Holder who has been a bona fide Holder of a Note or Notes for at least
six (6) months may, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper, appoint a
successor trustee.

            (b) In case at any time any of the following shall occur:

                  (i) the Trustee shall fail to comply with the provisions of
      Section 809 and Trust Indenture Act Section 310(b) after written request
      therefor by the Issuer or by any Holder who has been a bona fide Holder
      for at least six (6) months, except when the Trustee's duty to resign is
      stayed in accordance with the provisions of Trust Indenture Act Section
      310(b); or

                  (ii) the Trustee shall cease to be eligible in accordance with
      the provisions of Section 808 and shall fail to resign after written
      request therefor by the Issuer or by any Holder who has been a bona fide
      Holder for at least six (6) months; or

                                       49
<PAGE>

                  (iii) the Trustee shall become incapable of acting or shall be
      adjudged a bankrupt or insolvent, or a receiver or liquidator 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, the Issuer may, by Management Committee's Consent,
remove the Trustee and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Members, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Section 811, unless the Trustee's duty to
resign is stayed as provided herein, any Holder who has been a bona fide Holder
for at least six (6) months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee.

            (c) 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, the
Issuer, by a Management Committee's Consent, shall promptly appoint a successor
trustee satisfying the requirements of Section 808. If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy, a
successor trustee shall be appointed by an Act of the Majority Holders of either
Series of the Notes delivered to the Issuer and the retiring Trustee, the
successor trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor trustee with respect to such Series of the
Notes and to that extent supersede the successor trustee appointed by the
Issuer. If no successor trustee shall have been so appointed by the Issuer or
the Holders and accepted appointment in the manner hereinafter provided within
60 days, any Holder who has been a bona fide Holder for at least six (6) months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor trustee.

            (d) It is the purpose of this Indenture that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as an indenture
trustee in such jurisdiction.

            (e) The Issuer shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor trustee in the manner
provided for in Section 106. Each notice shall include the name of the successor
trustee and the address of its Corporate Trust Office.

            (f) The Holders, by Act of the Majority Holders of either Series of
the Notes, may at any time remove the Trustee with respect to such Series of the
Notes and appoint a successor trustee with respect to such Series of the Notes
by delivering to the Trustee so removed, to the successor trustee so appointed
and to the Issuer the evidence provided for in Section 104 of the action in that
regard taken by the Majority Holders of such Series of the Notes.

                                       50
<PAGE>

            (g) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to any of the provisions of this Section 810 shall
become effective until the acceptance of appointment by the successor trustee as
provided in Section 811.

            SECTION 811. 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 Issuer 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;
provided, that on the request of the Issuer or the successor trustee, such
retiring Trustee shall, upon payment of its charges, 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 Issuer shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in clause (a) of this Section 811.

            (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 Eight.

            (d) In no event shall the retiring Trustee be liable for the acts or
omissions of any successor trustee.

            SECTION 812. 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, that
such corporation shall be otherwise qualified and eligible under this Article
Eight, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes 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 Notes so authenticated with the same effect
as if such successor trustee had itself authenticated such Notes; and in case at
that time any of the Notes shall not have been authenticated, any successor
trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have;
provided, further, that the right to adopt the certificate of authentication of
any predecessor Trustee or to

                                       51
<PAGE>

authenticate Notes in the name of any predecessor trustee shall apply only to
its successor or successors by merger, conversion or consolidation.

            SECTION 813. Preferential Collection of Claims Against Issuer. If
and when the Trustee shall be or become a creditor of the Issuer (or any other
obligor under the Notes), the Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Issuer (or
any such other obligor), excluding any creditor relationships described in Trust
Indenture Act Section 311(b). A Trustee who has resigned or has been removed
shall be subject to Trust Indenture Act Section 311 (a) to the extent indicated
therein.

            SECTION 814. No Liability for Clean-up of Hazardous Materials. (a)
In the event that the Trustee is required to acquire title to an asset for any
reason, or take any managerial action of any kind in regard thereto, in order to
carry out any fiduciary or trust obligation for the benefit of another, which in
the Trustee's sole discretion may cause the Trustee to be considered an "owner
or operator" under the provisions of the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA), 42 U.S.C. Sections 9601, et seq., or
otherwise cause the Trustee to incur liability under CERCLA or any other
federal, state or local law, the Trustee reserves the right to, instead of
taking such action, either resign as Trustee or arrange for the transfer of the
title or control of the asset to a court appointed receiver.

            (b) The Trustee shall not be liable to the Issuer or Holders or any
other person for any environmental claims or contribution actions under any
federal, state or local law, rule or regulation by reason of the Trustee's
actions and conduct as authorized, empowered and directed hereunder or relating
to the discharge, release or threatened release of hazardous materials into the
environment, except to the extent of the Trustee's negligence or willful
misconduct.

            SECTION 815. Accounts Agent Registrar and Paving Agent. Insofar as
such provisions may be applicable, the Accounts Agent, the Registrar, the Paying
Agent and any other agent appointed in accordance with the provisions hereof
shall enjoy the same protections, immunities and indemnities as are provided for
in this Article Eight with respect to the Trustee.

            SECTION 816. Filing Fees. The Issuer agrees to pay or to reimburse
the Trustee for any and all amounts in respect of all filing, recording and
registration fees which may be payable or determined to be payable in respect of
the execution, delivery, performance and enforcement of the Financing Documents
and agrees to save the Trustee harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omitting to pay such
fees. The obligations of the Issuer under this Section 816 shall survive the
resignation or removal of the Trustee and the termination of the other
provisions of this Indenture.

                                       52
<PAGE>

            SECTION 817. Fee Agreement. The Fee Agreement provides for the
compensation of the Trustee hereunder for its services as such, and the Trustee
will not look to the holders of the Notes for any payment for such services,
provided, that this Section 817 shall not alter the provisions of Section
502(b)(i) or the lien provided in Section 806(a).

                                  ARTICLE NINE
                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER

            SECTION 901. Holder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of the Holders. If the Trustee is not the Registrar, the
Issuer shall furnish to the Trustee at least five (5) Business Days before each
Payment Date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of the Holders. The Trustee may conclusively rely upon
such list provided by the Issuer until otherwise notified by the Issuer or such
list is amended by the Issuer.

            SECTION 902. Disclosure of Names and Addresses of Holders. Every
Holder of Notes, by receiving and holding the same, agrees with the Issuer and
the Trustee that none of the Issuer or the Trustee or any agent of either of
them shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Trust Indenture
Act Section 312(b).

            SECTION 903. Reports by Trustee. (a) Within sixty (60) days after
May 1 of each year commencing with the first May 1 after the first issuance of
Notes pursuant to this Indenture, the Trustee shall transmit to the Holders in
the manner and to the extent provided in Trust Indenture Act Section 313(c), a
brief report dated as of such May 1 if required by Trust Indenture Act Section
313(a).

            (b) The Trustee shall transmit to the Holders, in the manner and to
the extent provided in Trust Indenture Act Section 313(c), a brief report, if
required, by Trust Indenture Act Section 313(b).

            SECTION 904. Reports by Issuer. (a) The Issuer shall:

                  (i) file with the Trustee, within fifteen (15) days after the
      Issuer is required to file the same with the Commission, copies of the
      annual reports and of the information, documents and other reports (or
      copies of such portions of any of the foregoing as the Commission may from
      time to time by rules and regulations prescribe) which the Issuer may be
      required to file with the Commission pursuant to Section 13 or Section
      15(d) of the Securities Exchange Act or, if the Issuer is not required to
      file information, documents or reports pursuant to either of such
      Sections, then

                                       53
<PAGE>

      it shall file with the Trustee and the Commission, in accordance with
      rules and regulations prescribed from time to time by the Commission, such
      of the supplementary and periodic information, documents and reports which
      may be required pursuant to Section 13 of the Securities Exchange Act in
      respect of a security listed and registered on a national securities
      exchange as may be prescribed from time to time in such rules and
      regulations;

                  (ii) file with the Trustee and the Commission, in accordance
      with rules and regulations prescribed from time to time by the Commission,
      such additional information, documents and reports with respect to
      compliance by the Issuer with the conditions and covenants of this
      Indenture as may be required from time to time by such rules and
      regulations; and

                  (iii) transmit to all Holders, in the manner and to the extent
      provided in Trust Indenture Act Section 313(c), within thirty (30) days
      after the filing thereof with the Trustee, such summaries of any
      information, documents and reports required to be filed by the Issuer
      pursuant to paragraphs (i) and (ii) of clause (a) of this Section 904 as
      may be required by rules and regulations prescribed from time to time by
      the Commission.

            (b) 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 Issuer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).

                                  ARTICLE TEN
                           SUPPLEMENTS AND AMENDMENTS
                       TO INDENTURE AND SECURITY DOCUMENTS

            SECTION 1001. Without Vote of Holders. Without the vote or approval
of any Holders of either Series of the Notes, the Issuer, when authorized by or
pursuant to a Management Committee's Consent, and the Trustee, at any time and
from time to time, may amend or supplement this Indenture, any Security
Documents or the Notes, in form satisfactory to the Trustee, for any of the
following purposes:

            (a) to evidence the succession of another Person to the Issuer and
the assumption by any such successor of the covenants of the Issuer contained
herein and in the Notes; or

            (b) to add to the covenants of the Issuer for the benefit of the
Holders or to surrender any right or power herein conferred upon the Issuer; or

            (c) to add any additional Events of Default; or

                                       54
<PAGE>

            (d) to secure the Notes with additional collateral; or

            (e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee and to add to or change any of the provisions
hereof as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one trustee; or

            (f) to cure any ambiguity, to correct or supplement any provision
hereof which may be inconsistent with any other provision in this Indenture
provided that such action shall not adversely affect the interests of the
Holders of such Series of the Notes in any material respect; or

            (g) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of the Notes; provided, that any such action does not adversely affect
the interests of the Holders of such Series of the Notes in any material
respect.

            SECTION 1002. With Consent of Holders. (a) The Issuer, when
authorized by or pursuant to a Management Committee's Consent, and the Trustee
may amend or supplement this Indenture or the Notes for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or the Notes or of modifying in any manner the rights of the
Holders under this Indenture with the consent of the Majority Holders of the
Notes affected by such amendment or supplement (voting as a single class), by
Act of said Holders delivered to the Issuer and the Trustee; provided, that no
such amendment or supplement shall, without the consent of the Holder of each
Outstanding Note,

                  (i) change the Stated Maturity of the Principal of, or any
      installment of interest on, any Note;

                  (ii) reduce the principal amount of any Note, or any
      Make-Whole Premium payable upon the redemption of any Note, or reduce the
      rate of interest on any Note, including discharge of repayment of
      principal of or interest on any Note;

                  (iii) reduce the percentage in principal amount of Outstanding
      Notes, the consent of the Holders of which is required for the adoption of
      a resolution or the quorum required at any meeting of Holders at which a
      resolution is adopted or the percentage in principal amount of Outstanding
      Notes the Holders of which are entitled to request the calling of a
      Holder's meeting;

                  (iv) change the percentage rules established for adopting
      resolutions at meetings of Holders or regarding the quorum necessary to
      constitute a meeting;

                  (v) modify any of the provisions of this Section 1002 and
      Section 718, except to increase any percentage specified herein or
      therein;

                                       55
<PAGE>

                  (vi) change the place or coin or currency for payment of
      principal of, Make-Whole Premium, if any, or interest on any Note;

                  (vii) impair the right to institute suit for the enforcement
      of any such payment on or after the Stated Maturity thereof or any
      Redemption Date or Payment Date therefor;

                  (viii) permit the creation of any Lien with respect to all or
      any substantial portion of the Collateral, or release or terminate the
      Lien of the Security Documents on all or any substantial portion of the
      Collateral or deprive any Holder of the security afforded by the Lien of
      the Security Documents, except to the extent expressly permitted by this
      Indenture or any of the Security Documents;

                  (ix) modify the ranking or priority of the Notes; or

                  (x) waive a default in the payment of principal of, Make-Whole
      Premium, if any, or interest on, the Notes.

            (b) It shall not be necessary for any Act of Holders under this
Section 1002 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

            SECTION 1003. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any amended or supplemental
indenture permitted by this Article Ten or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
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 or
immunities under this Indenture or otherwise.

            SECTION 1004. Effect of Supplemental Indentures. Upon the execution
of any supplemental indenture under this Article Ten, (a) this Indenture or the
applicable Security Document shall be modified in accordance therewith, (b) such
supplemental indenture, amendment, modification or waiver shall form a part of
this Indenture or the applicable Security Document (as the case may be) for all
purposes and (c) every Holder of Notes theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.

            SECTION 1005. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Ten shall conform to
the requirements of the Trust Indenture Act as then in effect.

            SECTION 1006. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article Ten 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

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<PAGE>

indenture. If the Issuer shall so determine, new Notes so modified as to
conform, in the opinion of the Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer, and, upon receipt of an
Issuer Order, authenticated and delivered by the Trustee, in exchange for
Outstanding Notes. Failure to make the appropriate notation or to issue a new
Note shall not affect the validity of such supplemental indenture, amendment,
modification or waiver.

            SECTION 1007. Notice of Supplemental Indentures. Promptly after the
execution by the Issuer and the Trustee of any supplemental indenture,
amendment, modification or waiver pursuant to the provisions of Section 1002,
the Issuer shall give notice thereof to the Holders, in the manner provided for
in Section 106, setting forth in general terms the substance of such
supplemental indenture, amendment, modification or waiver.

                                 ARTICLE ELEVEN
                              AFFIRMATIVE COVENANTS

            SECTION 1101. Payment of Principal and Interest. The Issuer shall
duly and punctually pay the principal of, Make-Whole Premium, if any, and
interest on the Notes in accordance with the terms of the Notes and this
Indenture.

            SECTION 1102. Maintenance of Office or Agency. (a) The Issuer will
maintain in the Borough of Manhattan, the City of New York, and in each Place of
Payment, an office or agency where Notes may be presented or surrendered for
payment, where Notes may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served.

            (b) The Issuer will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuer shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee and the Issuer hereby appoints the same as its agent to
receive such respective presentations, surrenders, notices and demands.

            (c) The Issuer may also from time to time designate one or more
other offices or agencies where Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind any such designation;
provided, that no such designation or rescission shall in any manner relieve the
Issuer of its obligation to maintain an office or agency in accordance with the
requirements set forth above for such purposes. The Issuer will 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.

            SECTION 1103. Maintenance of Existence, Properties. (a) The Issuer
shall preserve and maintain its legal existence and form as a bankruptcy-remote

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<PAGE>

special purpose entity separate from any other entity, and shall preserve and
maintain all registrations necessary therefor.

            (b) The Issuer shall preserve and maintain all of its licenses,
rights, privileges and franchises necessary for the conduct of its business and
the performance of its obligations under the Material Agreements and the
Financing Documents, except to the extent failure to do so could not reasonably
be expected to result in a Material Adverse Effect.

            SECTION 1104. Payments of Taxes and Other Claims. The Issuer shall
pay and discharge or cause to be paid and discharged, before the same shall
become delinquent, all taxes, assessments and governmental charges levied or
imposed upon the Issuer, and all lawful claims or obligations which, if unpaid,
might by law become a Lien upon the Property of the Issuer; provided, that the
Issuer will not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claims whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which adequate funds have been set aside.

            SECTION 1105. Material Agreements. The Issuer will enforce all of
its rights, powers and remedies under each of the Material Agreements, unless
the failure to enforce such rights, powers and remedies could not reasonably be
expected to result in a Material Adverse Effect.

            SECTION 1106. Notice of Certain Events. The Issuer shall furnish to
the Trustee:

            (a) within 120 days after the end of each fiscal year of the Issuer
ending after the date hereof, an Officer's Certificate of a Responsible Officer
stating that (i) no Default has occurred and is continuing (or if any such
Default has occurred and is continuing, describing such Default in reasonable
detail and describing the steps being taken to remedy such Default) and (ii) the
Issuer is in compliance with all conditions and covenants under this Indenture,
the Notes and the other Financing Documents to which it is a party; and

            (b) each of the following items promptly after the Issuer learns of
the occurrence or existence thereof:

                  (i) written notice of the occurrence of any event or condition
      which constitutes a Default or an Event of Default, stating that such
      event or condition has occurred and describing it and any action being or
      proposed to be taken with respect thereto;

                  (ii) written notice of the Issuer's failure to observe or
      perform any term, covenant or obligation of the LLC Agreement (unless such
      failure could not reasonably be expected to result in a Material Adverse
      Effect), stating that failure has occurred and describing it and any
      action being or proposed to be taken with respect thereto;

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<PAGE>

                  (iii) any actually proposed amendment, termination,
      rescission, discharge (other than by performance) or waiver under or with
      respect to any Financing Document or Material Agreement;

                  (iv) written notice of any Force Majeure Event under the CDWR
      Power Sales Agreement;

                  (v) any written notice requiring the Issuer to make any
      indemnity payments under any Material Agreement;

                  (vi) written notice of any material litigation filed against
      the Issuer; and

                  (vii) written notice of any change which could be reasonably
      expected to result in a Material Adverse Effect.

With respect to the information and documents required to be delivered to the
Trustee pursuant to clauses (a) and (b) of this Section 1106, the Issuer hereby
further covenants and agrees to deliver or cause to be delivered any such
documents and information (i) to each Holder who makes a request in writing to
the Issuer and (ii) to any owner of a beneficial interest in a Global Note who
makes a request in writing to the Issuer (which request may indicate that it is
a continuing request for such information until further notice from a Holder or
such owner of a beneficial interest in a Global Note to the contrary) for such
documents or information. Delivery of such reports, information and documents to
the Trustee is for information purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
(other than an expressly stated notice of Default or Event of Default) or
determinable from information contained therein, including the Issuer's
compliance with any of its covenants hereunder.

            SECTION 1107. Compliance with Laws and Other Agreements. The Issuer
shall comply with (a) all applicable laws, rules, regulations, orders and
directions of any Governmental Agency having jurisdiction over it or its
business and (b) all of its covenants and obligations contained in any agreement
to which the Issuer is a party, unless, in each case, the failure to so comply
could not reasonably be expected to result in a Material Adverse Effect.

            SECTION 1108. Maintenance of Books and Records. The Issuer shall at
all times maintain proper books, accounts and records in accordance with GAAP.
The Issuer shall permit the Trustee and its representatives, upon reasonable
notice and during normal business hours, to visit its premises and inspect all
books, accounts and records of the Issuer.

            SECTION 1109. Approvals. The Issuer will maintain in full force and
effect and comply in all respects with the conditions and obligations under all
applicable Government Approvals which it has obtained or which may from time to
time become necessary in connection with any of (a) the execution, delivery and
performance

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<PAGE>

in accordance with their respective terms of the Material Agreements or the
Financing Documents to which it is a party, and (b) the taking of any action
contemplated hereby or thereby, in each case except to the extent that failure
to do so could not reasonably be expected to result in a Material Adverse
Effect. Without limiting the generality of the foregoing, the Issuer will make
all required filings as a public utility under the FPA on or prior to the time
such filings are required to be made and shall take all actions, if required,
necessary to maintain its FERC market-based rate authority.

            SECTION 1110. Rule 144A Information for the Holders. At any time
when the Issuer is not subject to Section 13 or 15(d) of the Securities Exchange
Act, upon the request of a Holder, the Issuer shall promptly furnish to such
Holder or to a prospective purchaser who is a qualified institutional buyer of
such Note designated by such Holder, as the case may be, information specified
in Rule 144A(d)(4) under the Securities Act ("Rule 144A Information") in order
to permit compliance by such Holder with Rule 144A in connection with the resale
of such Note by such Holder; provided, that the Issuer shall not be required to
furnish Rule 144A Information in connection with any request made on or after
the date which is two (2) years from the later of (a) the date such Note (or any
Predecessor Note) was acquired from the Issuer or (b) the date such Note (or any
Predecessor Note) was last acquired from an "affiliate" of the Issuer within the
meaning of Rule 144 under the Securities Act; provided, further, that the Issuer
shall not be required to furnish such information at any time to a prospective
purchaser located outside the United States who is not a "United States Person"
within the meaning of Regulation S under the Securities Act if such Note may
then be sold to such prospective purchaser in accordance with Rule 904 under the
Securities Act (or any successor provision thereto).

            SECTION 1111. Recording. (a) The Issuer shall cause, at its own
expense, this Indenture and each of the Security Documents, and all amendments
or supplements thereto, to be registered, recorded and filed or re-recorded,
re-filed and renewed in such manner and in such place or places, if any, as may
be required by law in order fully to preserve and protect the security interests
created under the Security Documents and to effectuate and preserve the security
therein granted to the Trustee hereunder for the benefit of the Trustee and the
Holders.

            (b) Without prejudice to the above, the Issuer will comply with all
applicable provisions of the Trust Indenture Act, including Trust Indenture Act
Sections 314(b) and (d).

            SECTION 1112. Further Assurances. The Issuer shall, at its own cost
and expense, execute and deliver, and cause to be executed and delivered, to the
Trustee all such documents, instruments and agreements, and do all such other
acts and things as may be reasonably required to preserve the Liens in favor of
the Trustee with the required first-ranking priority and to enable the Trustee
to exercise and enforce its rights under this Indenture, the Security Documents
and the other documents, instruments and agreements required under this
Indenture and to carry out the intent of this Indenture and the other Financing
Documents.

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<PAGE>

            SECTION 1113. Collateral. The Issuer shall take all actions
necessary to maintain and preserve the perfection and priority of all Liens in
favor of the Trustee on the Collateral, and shall from time to time execute or
cause to be executed and filed any and all further instruments (including
financing statements required by the Uniform Commercial Code, continuation
statements and similar statements with respect to the Liens in favor of the
Trustee created by the Financing Documents) as are necessary to maintain and
preserve such Liens, or which the Trustee may reasonably request.

            SECTION 1114. Performance of Obligations. The Issuer may contract
with other Persons to assist it in performing its duties under this Indenture
and the other Financing Documents, and any performance of such duties by a
Person identified to the Trustee in an Officer's Certificate of the Issuer shall
be deemed to be action taken by the Issuer. As of the Closing Date, the Issuer
has contracted with the Administrative Agent to assist the Issuer in performing
its duties under this Indenture and the other Financing Documents and any action
taken by the Administrative Agent on behalf of the Issuer to assist it in
performing its duties under this Indenture and the other Financing Documents
shall be deemed to be action taken by the Issuer.

            SECTION 1115. Return of Monies Held by Trustee. (a) On any date on
which the principal of any Note becomes due in full, if the outstanding
principal of such Note, together with all interest accruing thereon to the due
date, and any other amounts payable by the Issuer to the Trustee or the Holders
under this Indenture or any other Financing Document, have been finally and
irrevocably paid to the Trustee for the benefit of the Holders, all interest on
such Notes shall cease to accrue on the date of such payment.

            (b) Moneys so deposited with the Trustee or then held by the Issuer
in trust for the payment of the principal of, Make-Whole Premium, if any, or
interest on, any Note which remain unclaimed two (2) years after the date that
all amounts payable by the Issuer to the Trustee or to the Holders under this
Indenture or any other Financing Document has been finally and irrevocably paid
to the Trustee for the benefit of the Holders, shall, at the request of the
Issuer if at the time, to the knowledge of the Trustee, no Event of Default
shall have occurred and be continuing, be paid to the Issuer and the Holders
shall thereafter look solely to the Issuer for payment with respect to amounts
deposited with the Trustee and returned to the Issuer pursuant to this Section
1115(b).

            SECTION 1116. Schedule and Delivery of Energy Under the CDWR Power
Sales Agreement. The Issuer shall schedule and deliver, or cause to be scheduled
and delivered, the full amount of energy required by the CDWR Power Sales
Agreement in accordance with the terms of the CDWR Power Sales Agreement.

                                 ARTICLE TWELVE
                               NEGATIVE COVENANTS

            SECTION 1201. Liens. The Issuer shall not create, incur, assume or
permit to exist any Lien upon any of the Collateral, other than the Liens
created by this

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Indenture and the Security Documents, unless the failure to so comply could not
reasonably be expected to result in a Material Adverse Effect.

            SECTION 1202. Indebtedness. The Issuer shall not create, assume,
incur or otherwise become or remain obligated in respect of, or permit to remain
outstanding, any Indebtedness, except for Indebtedness represented by the Notes.

            SECTION 1203. Guaranties. The Issuer shall not at any time be or
become obligated, contingently or otherwise, with respect to any Guaranty.

            SECTION 1204. Transactions with Affiliates. The Issuer shall not
effect any transaction with any of its Affiliates on a basis more favorable to
such Affiliate than would at the time be obtainable for a comparable transaction
on an arm's-length dealing with an unrelated third party, except for the
Material Agreements entered into on or before the Closing Date.

            SECTION 1205. Investments, Loans and Advances. The Issuer shall not
purchase, hold or acquire any capital stock, evidences of Indebtedness or other
securities of, make or permit to exist any loans or advances to or make or
permit to exist any investment or other interest in, any other Person, except
Permitted Investments.

            SECTION 1206. Material Agreements; Additional Contracts. (a) The
Issuer shall not assign any of its rights or obligations under any Material
Agreement nor will the Issuer amend in any respect or terminate or suffer any
such amendment or termination of, or grant any waiver of material and timely
performance with respect to, or agree to the assignment of the rights or
obligations of any party to, any Material Agreement; provided, that the Issuer
may make amendments to the Material Agreements which are of a routine,
ministerial or administrative nature to the extent that what is contemplated
under any such amendment is not otherwise expressly prohibited hereunder or
could reasonably be expected to result in a Material Adverse Effect; provided,
however, that any amendment or modification to any Material Agreement which
extends or modifies the time for payment due thereunder shall not be deemed to
be an amendment of a routine, ministerial or administrative nature; provided,
further, that nothing in this Section 1206(a) shall prevent the Issuer or the
Trustee from terminating the Administrative Services Agreement in connection
with a breach thereof by the Administrative Agent in accordance with the
Administrative Agent Consent.

            (b) The Issuer shall not become a party to any contract, lease,
agreement or instrument other than the agreements expressly identified in the
definitions of Material Agreements and Financing Documents to the extent such
action could reasonably be expected to result in a Material Adverse Effect.

            SECTION 1207. Fundamental Change. The Issuer shall not (a) sell,
lease, transfer or otherwise dispose of any of its right, title or interest in
or to the Collateral, unless the failure to so comply could not reasonably be
expected to result in a Material Adverse Effect, (b) conduct any business or own
any assets other than the business and assets conducted and owned by it as of
the Closing Date, (c) directly or

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<PAGE>

indirectly merge, amalgamate or consolidate with any other Person, liquidate,
wind up, terminate, reorganize or dissolve itself, or otherwise wind up, (d)
change its legal form or its state of formation or (e) establish any subsidiary.

            SECTION 1208. Restricted Payments. Except as permitted in accordance
with the conditions set forth in Section 401 and clause (ix) of Section 502(b),
the Issuer shall not, directly or indirectly, (a) make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to its Members or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (b) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (c) set aside or otherwise
segregate any amounts for any such purpose. The Issuer will not, directly or
indirectly, make payments to or distributions from the Collections Account
except in accordance with this Indenture and the Financing Documents.

                                ARTICLE THIRTEEN
                               REDEMPTION OF NOTES

            SECTION 1301. Applicability of Article. Either Series of the Notes
shall be redeemable (in whole or in part) before their Stated Maturity in
accordance with the terms of such Notes and in accordance with this Article
Thirteen.

            SECTION 1302. Election to Redeem; Notice to Trustee. The Issuer may,
at any time and from time to time, elect to redeem either Series of the Notes,
in whole or in part, such election to be evidenced by or pursuant to a
Management Committee's Consent. In case of any redemption at the election of the
Issuer pursuant to this Article 13, the Issuer shall, at least sixty (60) days
prior to the Redemption Date fixed by the Issuer (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date and
of the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1303.

            SECTION 1303. Selection by Trustee of Notes to Be Redeemed. (a) If
less than all the Notes of such Series are to be redeemed pursuant to Section
1302, the particular Notes of such Series to be redeemed shall be selected not
more than sixty (60) days prior to the Redemption Date by the Trustee, from the
Outstanding Notes of such Series not previously called for redemption, by such
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions of the principal of Notes of such
Series; provided, that no such partial redemption shall reduce the portion of
the principal amount of a Note not redeemed to less than the minimum authorized
denomination for Notes established pursuant to Section 302.

            (b) The Trustee shall promptly notify the Issuer in writing of the
Notes of such Series selected for redemption pursuant to Section 1302 and, in
the case of any Notes selected for partial redemption, the principal amount
thereof to be redeemed.

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<PAGE>

            (c) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part pursuant to Section
1302, to the portion of the principal amount of such Note which has been or is
to be redeemed.

            SECTION 1304. Notice of Redemption. (a) Notice of redemption
pursuant to Section 1302 shall be given in the manner provided for in Section
106 not less than thirty (30) nor more than sixty (60) days prior to the
Redemption Date to each Holder of Notes of the applicable Series to be redeemed,
but failure to give such notice in the manner herein provided to the Holder of
any Note of the applicable Series designated for redemption in whole or in part,
or any defect in the notice of any such Holder, shall not affect the validity of
the proceedings for the redemption of any other Note or portion thereof.

            (b) Any notice that is mailed to the Holders in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the Holder receives the notice.

            (c) All notices of redemption shall state:

                  (i) the Redemption Date,

                  (ii) the Redemption Price,

                  (iii) if less than all the Outstanding Notes are to be
      redeemed, the identification (and, in the case of partial redemption, the
      principal amounts) of the particular Notes to be redeemed,

                  (iv) that on the Redemption Date the Redemption Price
      (together with accrued interest, if any, to the Redemption Date payable as
      provided in Section 1306) will become due and payable upon each Note, or
      the portion thereof, to be redeemed and, if applicable, that interest
      thereon will cease to accrue on and after said date, and

                  (v) the Place of Payment where such Notes, maturing after the
      Redemption Date, are to be surrendered for payment of the Redemption
      Price.

            (d) Notice of redemption of Notes to be redeemed at the election of
the Issuer shall be given by the Issuer or, at the Issuer's request made not
less than fifteen (15) days prior to the latest date such notice of redemption
may be given, by the Trustee in the name and at the expense of the Issuer.

            SECTION 1305. Deposit of Redemption Price. Not later than one (1)
Business Day before any Redemption Date, the Issuer shall deposit with the
Trustee or with a Paying Agent an amount of money sufficient to pay the
Redemption Price of, and accrued interest on, all the Notes of the applicable
Series which are to be redeemed on that date.

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<PAGE>

            SECTION 1306. Notes Payable on Redemption Date. (a) Notice of
redemption having been given in accordance with Section 1304, the Notes of the
applicable Series to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price thereof (together with accrued interest, if any,
to the Redemption Date), and from and after such Redemption Date (unless the
Issuer shall default in the payment of the Redemption Price and accrued
interest) such Notes shall cease to bear interest. Upon surrender of any such
Note for redemption in accordance with said notice, such Note shall be paid by
the Issuer at the Redemption Price, together with accrued interest, if any, to
the Redemption Date; provided, that installments of interest on Notes whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Notes, or one or more Predecessor Notes, registered as such at
the close of business on the relevant Regular Record Dates according to their
terms and the provisions of Section 310.

            (b) If any Note of the applicable Series called for redemption shall
not be so paid upon surrender thereof for redemption, the principal (and
Make-Whole Premium, if any) shall, until paid, bear interest from the Redemption
Date at the rate of interest set forth in such Note.

            SECTION 1307. Notes Redeemed in Part. Any Note of the applicable
Series which is to be redeemed only in part (pursuant to the provisions of this
Article Thirteen or of Article Fourteen) shall be surrendered at a Place of
Payment therefor (with, if the Issuer or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Issuer shall execute, and, upon
receipt of an Issuer Order, the Trustee shall authenticate and deliver to the
Holder of such Note of the applicable Series without service charge, a new Note
or Notes, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Note so surrendered.

                                ARTICLE FOURTEEN
                       DEFEASANCE AND COVENANT DEFEASANCE

            SECTION 1401. Issuer's Option to Effect Defeasance or Covenant
Defeasance. The provisions of this Article Fourteen shall apply to the Notes of
either Series, and the Issuer may, at its option by a Management Committee's
Consent, effect defeasance of such Series of the Notes under Section 1402, or
covenant defeasance under Section 1403 in accordance with this Article Fourteen.

            SECTION 1402. Defeasance and Discharge. Upon the Issuer's exercise
of the option provided in Section 1401 applicable to this Section 1402 the
Issuer shall be deemed to have been discharged from its obligations with respect
to the Outstanding Notes of such Series on the date the conditions set forth in
Section 1404 are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Issuer shall be deemed to have paid and discharged the
entire indebtedness represented by the Outstanding Notes of such Series, which
shall thereafter be deemed to be

                                       65
<PAGE>

"Outstanding" only for the purposes of Section 1405 and the other Sections of
this Indenture referred to in (a) and (b) below, and to have satisfied all of
its other obligations under such Notes and this Indenture insofar as such Notes
are concerned (and the Trustee, at the expense of the Issuer, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of such Outstanding Notes of such Series to receive, solely from the
trust fund described in Section 1404(a) and as more fully set forth in such
Section, payments in respect of the principal of, Make-Whole Premium, if any,
and interest on such Notes when such payments are due; (b) the Issuer's
obligations with respect to such Notes under Sections 305, 306, 307, 308, and
1102; (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and (d) this Article Fourteen. Subject to compliance with this Article
Fourteen, the Issuer may exercise its option under this Section 1402
notwithstanding the prior exercise of its option under Section 1403.

            SECTION 1403. Covenant Defeasance. Upon the Issuer's exercise of the
option provided in Section 1401 applicable to this Section 1403, (a) the Issuer
shall be released from its obligations under Sections 1104 through 1116,
inclusive, and Sections 1201 through 1208, inclusive and (b) the occurrence of
any event specified in Section 701(c) (with respect to any of Sections 1104
through 1116, inclusive, and Sections 1201 through 1208, inclusive) shall be
deemed not to be an Event of Default on or after the date the conditions set
forth in Section 1404 are satisfied (hereinafter, "covenant defeasance"). For
this purpose, such covenant defeasance means that the Issuer may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such Section or clause, whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or clause or by
reason of reference in any such Section or clause to any other provision herein
or in any other document and any such omission shall not be deemed to be an
Event of Default, but, the remainder of this Indenture and such Notes shall be
unaffected thereby.

            SECTION 1404. Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 1402 or
Section 1403 to the Outstanding Notes of either Series:

            (a) The Issuer shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 808 who shall agree to comply with the provisions of this Article
Fourteen applicable to such trustee) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Notes of such Series, an
amount sufficient, in the opinion of an internationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied by
the Trustee (or other qualifying trustee) to pay and discharge, (i) the
principal of and installment of interest on the Outstanding Notes of such Series
on the Stated Maturity (or Redemption Date, if applicable) of such principal,
Make-Whole Premium, if any, or installment of interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to the Outstanding Notes
of such Series on the day on which such

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<PAGE>

payments are due and payable in accordance with the terms of this Indenture and
of the Notes.

            (b) In the case of an election under Section 1402, the Issuer shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the Issuer
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (ii) since the date of execution of this Indenture, there has been
a change in the applicable United States federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm that, the
Holders of Outstanding Notes of such Series will not recognize income, gain or
loss for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance had not occurred.

            (c) In the case of an election under Section 1403, the Issuer shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of Outstanding Notes of such Series will not recognize gain or loss for
United States federal income tax purposes as a result of such covenant
defeasance and will be subject to United States federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred.

            (d) The Issuer shall have delivered to the Trustee an Officer's
Certificate to the effect that the Notes of such Series, if then listed on any
securities exchange, will not be delisted as a result of such deposit.

            (e) No Default or Event of Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit or, insofar as
Bankruptcy Events of Default are concerned, at any time during the period ending
on the one hundred twenty-first (121") day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period).

            (f) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 809 and for
purposes of the Trust Indenture Act with respect to any securities of the
Issuer.

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

            (h) The Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 1402 or
the covenant defeasance under Section 1403 (as the case may be) have been
complied with, and that such defeasance or covenant defeasance shall not result
in the trust arising from such deposit constituting an "investment company," as
defined in the Investment Company Act of 1940, as amended, or such trust shall
be qualified under such act or exempt from regulation thereunder.

                                       67
<PAGE>

            SECTION 1405. Deposited Money to Be Held in Trust; Other
Miscellaneous Provisions. (a) All money (or other property as may be provided
hereunder) (including the proceeds thereof) deposited with the Trustee or other
qualifying trustee (collectively for purposes of this Section 1405 and Section
1406, the "Trustee") pursuant to Section 1404 in respect of Outstanding Notes of
such Series shall be held in trust and applied by the Trustee, in accordance
with the provisions of the Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Issuer acting as its own
Paying Agent) as the Trustee may determine, to the Holders of the Notes of such
Series of all sums due and to become due thereon in respect of principal,
Make-Whole Premium, if any, and interest, but such money need not be segregated
from other funds except to the extent required by law.

            (b) Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Issuer from time to
time upon Issuer Request any money (or other property and any proceeds
therefrom) held by it as provided in Section 1404 which, in the opinion of an
internationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, is in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent defeasance or covenant defeasance, as applicable, in accordance with
this Article Fourteen.

            SECTION 1406. Reinstatement. If the Trustee or any Paying Agent is
unable to apply any money in accordance with Section 1405 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Issuer's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 1402 or 1403, as the case may be, until such time
as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1405; provided, that if the Issuer makes any payment of
principal of, Make-Whole Premium, if any, or interest on any Note following the
reinstatement of its obligations, the Issuer shall be subrogated to the rights
of the Holders of such Note to receive such payment from the money held by the
Trustee or Paying Agent.

                                ARTICLE FIFTEEN
                          MEETINGS OF HOLDERS OF NOTES

            SECTION 1501. Purposes for Which Holders' Meetings May Be Called. A
meeting of Holders may be called at any time and from time to time pursuant to
this Article Fifteen for any of the following purposes:

            (a) to give any notice to the Issuer or to the Trustee, or to give
any directions to the Trustee, or to waive or to consent to the waiving of any
Default hereunder with respect to such Series of the Notes and its consequences,
or to take any other action authorized to be taken by Holders of either Series
of the Notes pursuant to Article Seven;

                                       68
<PAGE>

            (b) to remove the Trustee as trustee with respect to such Series of
the Notes pursuant to Section 810;

            (c) to consent to the execution of an indenture or indentures
supplemental hereto with respect to such Series of the Notes pursuant to Section
1002; or

            (d) to take any other action authorized to be taken by or on behalf
of the Holders of any specified aggregate principal amount of the Notes of such
Series under any other provision of this Indenture or under applicable law.

            SECTION 1502. Call of Meetings by Trustee. The Trustee may at any
time call a meeting of Holders of either Series of the Notes to be held at such
time and at such place in the Borough of Manhattan, the City of New York, for
any purpose specified in Section 1501 as the Trustee at the time shall
determine. Notice of every meeting of Holders, setting forth the time and the
place of such meeting and in general terms the action proposed to be taken at
such meetings shall be given by the Trustee, in the manner provided in Section
106, not less than twenty (20) nor more than one hundred twenty (120) days prior
to the date fixed for the meeting, to the Holders.

            SECTION 1503. Issuer and Holders May Call Meeting. In case the
Issuer, pursuant to a Management Committee's Consent, or the Holders of at least
ten percent (10%) in aggregate principal amount of the Notes of such Series then
outstanding, shall have requested the Trustee to call a meeting of Holders of
such Series, by written request setting forth in general terms the action
proposed to be taken at the meeting, and the Trustee shall not have made the
mailing of the notice of such meeting within twenty (20) days after receipt of
such request, then the Issuer or the Holders in the amount above specified may
determine the time and the place in the Borough of Manhattan, the City of New
York, for such meeting and may call such meeting to take any action authorized
in Section 1501 by giving notice thereof as provided in Section 1502.

            SECTION 1504. Persons Entitled to Vote at Meeting. To be entitled to
vote at any meeting of Holders of such Series a person shall be (a) a Holder of
one or more Notes of such Series or (b) a person appointed by an instrument in
writing as proxy for a Holder of such Series of the Notes. The only persons who
shall be entitled to be present or to speak at any meeting of Holders of such
Series of the Notes shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Trustee and its counsel and any
representatives of the Issuer and its counsel.

            SECTION 1505. Determination of Voting Rights: Conduct and
Adjournment of Meeting. (a) 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 Notes of either Series, in regard to
proof of the holding of Notes 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 think
fit. Such regulations may provide that written instruments

                                       69
<PAGE>

appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 104 or other proof. Except as otherwise
permitted or required by any such regulations, the holding of Notes of such
Series shall be proved in the manner specified in Section 104 and the
appointment of any proxy shall be proved in the manner specified in said Section
104 or by having the signature of the person executing the proxy witnessed or
guaranteed by any bank, banker, trust company or firm satisfactory to the
Trustee.

            (b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Issuer or by Holders as provided in Section 1503, in which case the Issuer
or the Holders 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 Holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote.

            (c) At any meeting, each Holder of a Note or a proxy shall be
entitled to one vote for each $1,000 principal amount of Notes held or
represented by it. The chairman of the meeting shall have no right to vote other
than by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Holders. Any meeting of
Holders duly called pursuant to Section 1502 or 1503 may be adjourned from time
to time to a place, date and time announced at such meeting, and the meeting may
be held as so adjourned without further notice.

            (d) At any meeting duly called pursuant to this Article Fifteen, the
presence of persons holding or representing Notes of either Series in an
aggregate principal amount sufficient to take action upon the business for the
transaction of which such meeting was called shall be necessary to constitute a
quorum; provided, that if less than a quorum be present, the persons holding or
representing a majority of the Notes of such Series represented at the meeting
may adjourn such meeting with the same effect, for all intents and purposes, as
though a quorum had been present.

            SECTION 1506. Counting Votes and Recording Action of Meeting. 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 serial numbers and principal amounts of the
Notes held or represented by them. The permanent chairman of the meeting shall
appoint two 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 in duplicate 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
said 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
said notice was given as provided in Section 1502. The record shall show the
serial numbers of the Notes voting in favor of or against any resolution. The
record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one

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<PAGE>

of the duplicates shall be delivered to the Issuer and the other 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.

                                ARTICLE SIXTEEN
                          COVENANTS OF HOLDERS OF NOTES

            SECTION 1601. Treatment of Notes as Indebtedness for Tax Purposes.
Each Holder of a Note by its acceptance of such note covenants and agrees to
treat such Note as indebtedness for United States federal income tax purposes.

                                       71
<PAGE>

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

                                     POWER CONTRACT FINANCING,
                                     L.L.C., as Issuer

                                     By: /s/ Eric Pryor
                                        ----------------------------------------
                                        Name:
                                        Title:

                                     WILMINGTON TRUST COMPANY,
                                     as Trustee, Accounts Agent,
                                     Paying Agent and Registrar

                                     By /s/ James J. McGinley
                                        ----------------------------------------
                                        Name: James J. McGinley
                                        Title: Authorized Signer

<PAGE>

                                                                       EXHIBIT A
                                   DEFINITIONS

            "Account Transfer Payment" means the amounts that are to be
transferred from the Reserve Account to the Collections Account pursuant to
Section 502(a) of this Indenture.

            "Accountant" means a Person engaged in the practice of accounting
who (except when this Indenture provides that an Accountant must be Independent)
may be employed by or affiliated with the Issuer or an Affiliate of the Issuer.

            "Accounts" has the meaning specified in Section 501 of this
Indenture.

            "Accounts Agent" means the Person named as the "Accounts Agent" in
Section 501 (a) of this Indenture until a successor Accounts Agent shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Accounts Agent" shall mean such successor Accounts Agent.

            "Act" when used with respect to any Holder, has the meaning
specified in Section 104 of this Indenture.

            "Administrative Agent" means, initially, Lord Securities Corporation
pursuant to the original Administrative Services Agreement and, thereafter, any
other Person that has entered into an Administrative Services Agreement with the
Issuer.

            "Administrative Agent Consent" means the Consent and Agreement,
dated as of the date of this Indenture, among the Administrative Agent, the
Issuer and the Trustee as it may from time to time be supplemented, amended or
restated pursuant to the applicable provisions thereof.

            "Administrative Services Agreement" means the Administrative
Services Agreement, dated as of the date of this Indenture, between the
Administrative Agent and the Issuer as originally executed and as it may from
time to time be supplemented, amended or restated pursuant to the applicable
provisions thereof, and any replacement agreement substantially in the form of
the original Administrative Services Agreement between a replacement
Administrative Agent and the Issuer and entered into as contemplated by the
Administrative Agent Consent.

            "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 the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

            "Assignment and Security Agreement" means the Assignment and
Security Agreement among the Issuer, the Trustee and the Accounts Agent, for the

                                      A-1
<PAGE>

benefit of the Trustee and the Holders, dated as of the date of this Indenture,
as originally executed and as it may from time to time be supplemented, amended
or restated pursuant to the applicable provisions thereof.

            "Bankruptcy Event of Default" means the events described in clause
(h) or (i) of Section 701 of this Indenture.

            "Business Day" means, each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the same jurisdiction
as the Corporate Trust Office of the Trustee or of any relevant Place of Payment
or other relevant location are authorized or obligated by law or executive order
to close.

            "Capacity" has the meaning ascribed thereto under the MSCG Power
Purchase Agreement.

            "CDWR" means the State of California Department of Water Resources
or any successor to CDWR as the counterparty to a Replacement Agreement (as
defined in the CDWR Power Sales Agreement) or assignee of CDWR pursuant to the
CDWR Power Sales Agreement.

            "CDWR Consent" means the Consent and Agreement, dated as of the date
of this Indenture, among CDWR and the Trustee, as it may from time to time be
supplemented, amended or restated pursuant to the applicable provisions thereof.

            "CDWR Letter Agreement" means the Letter Agreement, dated as of June
5, 2003, among CES and CDWR, as it may from time to time be supplemented,
amended or restated pursuant to the applicable provisions thereof.

            "CDWR Power Sales Agreement" means the EEI Master Power Purchase and
Sale Agreement, dated as of April 22, 2002, between CDWR and the Issuer, as
modified by the amended and restated cover sheet, dated as of April 22, 2002,
between CDWR and the Issuer and the amended and restated confirmation letter
related thereto referred to as "Calpine 1", dated as of April 22, 2002, between
CDWR and the Issuer, or any Replacement Agreement (as defined in the CDWR Power
Sales Agreement) pursuant to Section 10.5 of the CDWR Power Sales Agreement.

            "Clearstream Luxembourg" means Clearstream Banking, societe anonyme.

            "Closing Date" means June 13, 2003, being the date of issuance and
delivery of the Initial Notes.

            "Collateral" has the meaning ascribed thereto in the Assignment and
Security Agreement.

            "Collections" means all amounts payable to the Issuer from CDWR
pursuant to the CDWR Power Sales Agreement and all earnings on Permitted
Investments made with funds in any Account.

                                      A-2
<PAGE>

            "Collections Account" has the meaning set forth in Section 502(a) of
this Indenture.

            "Collections Period" means the period from January 1 through June 30
of each year (for August Payment Dates) and from July 1 through December 31 of
each year (for February Payment Dates), and the final Payment Date of February
1, 2006 with respect to the Notes due 2006 and February 1, 2010 with respect to
the Notes due 2010. (except with respect to the first payment date of February
1, 2004, for which the collections period is the period from the closing date of
the offering of these notes through December 31, 2003).

            "Commission" means the U.S. Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act, or, if
at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

            "Consent" means, individually, the Administrative Agent Consent, the
Scheduling Services Consent, the CDWR Consent, the Morgan Stanley Capital
Consent and the Morgan Stanley Consent; collectively, the "Consents."

            "Corporate Trust Office" means the corporate trust office of the
Trustee, at which, at any particular time, its corporate trust business shall be
principally administered, which office on the date of execution of this
Indenture is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, except that with respect to presentation of Notes
for payment or for registration of transfer or exchange, such term shall mean
the office or agency of the Trustee at which, at any particular time, its
corporate agency business shall be conducted.

            "Damages and Indemnity Account" shall have the meaning set forth in
Section 506(a) of this Indenture.

            "Debt Service Coverage Ratio" means, as of each Payment Date, the
ratio of (a) Net Collections for the Collections Period preceding such Payment
Date divided by (b) Mandatory Debt Service payable on such Payment Date.

            "Default" means any condition or event that, with the giving of
notice or lapse of time or both, would become an Event of Default.

            "Defaulted Payments" has the meaning specified in Section 309(b) of
this Indenture.

            "Distributable Collections" means, as of any Payment Date, the
amount of Collections then on deposit in the Collections Account after the
operation of priorities first through eighth of Section 502(b) and corresponding
to electric energy actually delivered, or that should have been delivered, to
CDWR during the Collections Period preceding the Payment Date.

                                      A-3
<PAGE>

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

            "DTC" means The Depository Trust Company, its nominees and
successors.

            "DTC Participants" or "Participants" has the meaning set forth in
Section 306(b) of this Indenture.

            "Early Termination Date" has the meaning ascribed thereto in the
MSCG Power Purchase Agreement.

            "Energy" has the meaning ascribed thereto in the MSCG Power Purchase
Agreement.

            "Euroclear" means the accounts of purchasers at the Euroclear
System.

            "Event of Default" has the meaning specified in Section 701 of this
Indenture.

            "Federal Bankruptcy Code" means Title 11 of the United States Code
or any other Federal Bankruptcy Code hereafter in effect.

            "Fee Agreement" means the Schedule of Fees, dated as of June 13,
2003, between the Issuer and the Trustee.

            "FERC" means the Federal Energy Regulatory Commission and any
successor thereto.

            "Financing Document" means, individually, the Indenture, each
Security Document, each Note, the Fee Agreement and any and all purchase
agreements, filings and other instruments evidencing, securing or relating in
any way to the Collateral or any other Financing Document, as shall from time to
time be executed and delivered to the Trustee by or on behalf of the Issuer or
any other Person pursuant to or as contemplated by this Indenture; collectively,
the "Financing Documents."

            "Force Majeure Event" shall mean an event of "Force Majeure" as
described in Section 1.23 of the CDWR Power Sales Agreement.

            "FPA" means the Federal Power Act of 1920, as amended.

            "GAAP" means, as of any date of determination, generally accepted
accounting principles then in effect in the United States of America, applied on
a consistent basis.

            "Global Note" or "Global Notes" collectively or individually, as the
case may be, has the meaning set forth in Section 201(g) of this Indenture.

                                      A-4
<PAGE>

            "Global Note Holder" has the meaning set forth in Section 306(a) of
this Indenture.

            "Governmental Agency" means any public legal entity or public agency
of the United States, whether created by federal, state or local government or
any other legal entity now existing or hereafter created, or now or hereafter
owned or controlled, directly or indirectly, by any public legal entity or
public agency of the United States.

            "Government Approval" means any authorization, approval, consent,
waiver, exception, license, filing, registration, ruling, permit, tariff,
certification, exemption and other action or requirement by or with any
Governmental Agency. Without limiting the generality of the foregoing, with
respect to the Issuer, Governmental Approvals shall include the approval from
the FERC pursuant to Section 205 of the FPA for the rates to be charged by the
Issuer under the CDWR Power Sales Agreement.

            "Guaranty" of or "Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness, or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness; provided, that the terms
Guarantee and Guaranty shall not include endorsements for collection or deposit,
in either case in the ordinary course of business.

            "Holder" means the Person in whose name a Note is registered in the
Security Register.

            "Indebtedness" means with respect to any Person, (a) any liability
of such Person (i) for borrowed money, or under any reimbursement obligation
relating to a letter of credit, or (ii) evidenced by a bond, note, debenture or
similar instrument (including a purchase money obligation) given in connection
with the acquisition of any businesses, properties or assets of any kind (other
than a trade payable or a current liability arising in the ordinary course of
business), or (iii) for the payment of money relating to any obligations under
any capital lease of real or personal property which has been recorded as a
capitalized lease obligation, (b) all redeemable stock issued by such Person
(the amount of Indebtedness represented by any involuntary liquidation
preference plus accrued and unpaid dividends), (c) any liability of others
described in the preceding clause (a) that the Person has guaranteed or that is
otherwise its legal liability; and (d) (without duplication) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (a), (b) and (c) above. For
purposes of determining any particular amount of Indebtedness under this
definition, guarantees of (or obligations with respect to letters of credit
supporting)

                                      A-5
<PAGE>

Indebtedness otherwise included in the determination of such amount shall not
also be included.

            "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.

            "Independent," when used with respect to any specified Person, means
a Person who (a) is in fact independent of the Issuer and any other obligor upon
the Notes and of any Affiliate of the Issuer or of such other obligor, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer or in any such other obligor or in any Affiliate of the
Issuer or of such other obligor and (c) is not connected with the Issuer or any
such other obligor or any Affiliate of the Issuer or of such other obligor as an
officer, member employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such Person shall be appointed by an Issuer Order and approved by the Trustee in
the exercise of reasonable care and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning hereof. "Independent Investment Banker" means Morgan Stanley & Co.
Incorporated, or its successor.

            "Initial Notes" means collectively, the Initial Notes due 2006 and
the Initial Notes due 2010.

            "Initial Notes due 2006" means the Notes due 2006 of the Issuer
issued on the Closing Date for so long as such securities constitute Restricted
Securities.

            "Initial Notes due 2010" means the Notes due 2010 of the Issuer
issued on the Closing Date for so long as such securities constitute Restricted
Securities.

            "Interest Payment Date" means the first (1st) calendar day of each
February and August commencing on and from February 1, 2004 (or if any such day
is not a Business Day, then the next succeeding Business Day).

            "Issuer" means the Person named as the "Issuer" 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 "Issuer"
shall mean such successor Person.

            "Issuer Request" or "Issuer Order" means a written request or order
signed in the name of the Issuer by its President or a Vice President or the
President or Vice President of the Administrative Agent acting on behalf of the
Issuer and delivered to the Trustee.

            "Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, assignment in trust, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other security agreement
(including, without limitation,

                                      A-6
<PAGE>

any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code of any state
of the United States or comparable law of any jurisdiction).

            "LLC Agreement" means the limited liability company operating
agreement of the Issuer, dated as of June 13, 2003

            "Majority Holders" means with respect to any Series of the Notes,
Holders of not less than fifty-one percent (51%) in aggregate principal amount
of the Outstanding Notes of such Series (voting as a single class).

            "Make-Whole Premium" means, with respect to the Notes of either
Series, an amount calculated by the Issuer equal to the Discounted Present Value
calculated for any Note of such Series called for redemption less the unpaid
principal amount of that Note; provided, that the Make-Whole Premium shall not
be less than zero; provided, further, that a Make-Whole Premium shall not be due
for any reason, or result from any event, other than in connection with an
optional redemption of the Notes of such Series pursuant to Section 1302 of this
Indenture or in the event Morgan Stanley Capital makes a Termination Payment to
the Issuer that includes a Make-Whole Premium. For purposes of this definition,
the "Discounted Present Value" of any Note subject to redemption shall be equal
to the discounted present value of all principal and interest payments scheduled
to become due in respect of that Note after the date of this redemption,
calculated by an Independent Investment Banker using a discount rate equal to
the sum of (a) the yield to maturity on the United States treasury security
having an average life equal to the remaining average life of that Note and
trading in the secondary market at the price closest to par and (b) thirty seven
and one-half (37.5) basis points; provided, that, if there is no United States
treasury security having an average life equal to the remaining average life of
that Note, this discount rate shall be calculated using a yield to maturity
interpolated or extrapolated on a straight-line basis (rounding to the nearest
month, if necessary) from the yields to maturity for two United States treasury
securities having average lives most closely corresponding to the remaining
average life of that Note and trading in the secondary market at the price
closest to par.

            "Management Committee" means the management committee of the Issuer.

            "Management Committee's Consent" means a copy of a consent certified
by a Responsible Officer of the Issuer to have been duly adopted by the
Management Committee and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

            "Mandatory Debt Service" means all scheduled interest and principal
payments on the Notes due on any Payment Date.

            "Material Adverse Effect" means, with respect to either Series of
the Notes, an event, occurrence or condition which has or could reasonably be
expected to

                                      A-7
<PAGE>

have a material adverse effect on (a) the business, operations, property,
condition (financial or otherwise) of the Issuer, (b) the rights or remedies of
the Trustee in respect of such Series of the Notes or Holders of such Series of
the Notes under the Financing Documents, (c) the ability of any of the Issuer,
Morgan Stanley, Morgan Stanley Capital or CDWR to perform its obligations under
the Financing Documents or the Material Agreements to which it is a party or (d)
the validity, enforceability or priority of the Liens on the Collateral.

            "Material Agreement" means, individually, the CDWR Power Sales
Agreement, the MSCG Power Purchase Agreement, the PPA Purchase Agreement; the
Administrative Services Agreement, the Scheduling Services Agreement, the Morgan
Stanley MSCG Guarantee, the Morgan Stanley CDWR Guarantee the Administrative
Agent Consent, the Scheduling Services Consent, the Morgan Stanley Consent, the
Morgan Stanley Capital Consent, the CDWR Consent, the CDWR Letter Agreement and
the LLC Agreement; collectively, the "Material Agreements."

            "Maturity," when used with respect to any Note, means the date on
which the principal of such Note or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption or otherwise.

            "Member" means any member of the Issuer; collectively, the "Members"
of the Issuer.

            "Moody's" means Moody's Investors Service, Inc.

            "Morgan Stanley" means Morgan Stanley, a Delaware corporation, or
its successors or assigns under the Morgan Stanley MSCG Guarantee.

            "Morgan Stanley Capital" means Morgan Stanley Capital Group Inc., a
Delaware corporation, or any Replacement Supplier (as defined in the MSCG Power
Purchase Agreement) or other successor to or assignee of Morgan Stanley Capital
pursuant to the MSCG Power Purchase Agreement.

            "Morgan Stanley Capital Consent" means the Consent and Agreement,
dated as of the date of this Indenture, among Morgan Stanley Capital, the Issuer
and the Trustee as it may from time to time be supplemented, amended or restated
pursuant to the applicable provisions thereof.

            "Morgan Stanley Capital Payments" for any month, means the amount
payable to Morgan Stanley Capital by the Issuer pursuant to the MSCG Power
Purchase Agreement for Energy and Capacity provided to the Issuer by Morgan
Stanley Capital in such month.

            "Morgan Stanley Consent" means the Consent and Agreement, dated as
of the date of this Indenture, among Morgan Stanley, the Issuer and the Trustee
as it may from time to time be supplemented, amended or restated pursuant to the
applicable provisions thereof.

                                      A-8
<PAGE>

            "Morgan Stanley CDWR Guarantee" means the Guarantee Agreement, dated
as of May 1, 2002, between Calpine Corporation and CDWR, which was assumed by
Morgan Stanley pursuant to the Assignment and Assumption Agreement, dated as of
June 13, 2003, between Morgan Stanley and Calpine, and pursuant to which Morgan
Stanley provides a guarantee in favor of CDWR with respect to the Issuer's
payment obligations under the CDWR Power Sales Agreement, as it may from time to
time be supplemented, amended or restated pursuant to the applicable provisions
thereof.

            "Morgan Stanley MSCG Guarantee" means the Guarantee, dated as of
June 13, 2003, by Morgan Stanley in favor of the Issuer with respect to Morgan
Stanley Capital's payment obligations under the MSCG Power Purchase Agreement,
as it may from time to time be supplemented, amended or restated pursuant to the
applicable provisions thereof.

            "MSCG Power Purchase Agreement" means the EEI Master Power Purchase
and Sale Agreement, dated as of June 13, 2003, between Morgan Stanley Capital
and the Issuer, as modified by a cover sheet, dated as of June 13, 2003, between
Morgan Stanley Capital and the Issuer and the confirmation letter related
thereto, dated as of June 13, 2003, between Morgan Stanley Capital and the
Issuer, as it may from time to time be replaced, supplemented, amended or
restated pursuant to the applicable provisions thereof.

            "Net Collections" means, for any Collections Period, the difference,
if positive, between (a) all Collections corresponding to energy actually
delivered, or that should have been delivered, to CDWR during the Collections
Period minus (b) the sum of all amounts paid during the Collections Period
pursuant to clauses (i), (ii), (vi), (vii) (viii) of Section 502(b).

            "Non-U.S. Person" means a Person that is not a "U.S. Person" as
defined in Regulation S and certified to the Trustee and the Registrar by such
Person.

            "Notes" means, collectively, the Initial Notes and the Unrestricted
Notes, as amended or supplemented from time to time in accordance with the terms
of this Indenture, that are authenticated and delivered pursuant to this
Indenture; individually, a "Note;" it being understood that "Notes" may, but
does not necessarily include Notes of more than one Series.

            "Notes due 2006" has the meaning specified in the first recital.

            "Notes due 2010" has the meaning specified in the first recital.

            "Notice of an Actionable Event" means (a) a certificate of any
Holder that an Event of Default has occurred or (b) whether or not any
certificate or notice thereof shall have been delivered to the Trustee, a
Bankruptcy Event of Default. A Notice of an Actionable Event has been "given"
(i) in the case of a Bankruptcy Event of Default, when such Bankruptcy Event of
Default occurs or (ii) in the case of any other Notice of an Actionable Event,
when the certificate referred to in clause (a) of the immediately preceding
sentence has actually been received by a Responsible Officer of the Trustee. A

                                      A-9
<PAGE>

Notice of an Actionable Event has been "rescinded" when, after a Notice of an
Actionable Event (other than in connection with a Bankruptcy Event of Default)
has been given, the Majority Holders have subsequently delivered to a
Responsible Officer of the Trustee a certificate stating that such Event of
Default has been waived or cured or when, after a Bankruptcy Event of Default,
such Bankruptcy Event of Default is no longer continuing and a Responsible
Officer of the Trustee has received a certificate to this effect from the
Majority Holders or the Issuer, provided, that a Notice of an Actionable Event
may not be rescinded without the consent of the Holders of all of the Notes
unless all amounts of interest on the Notes and all payments on account of the
principal of and Make-Whole Premium (if any) on the Notes, other than amounts of
principal of and Make-Whole Premium, if any, on any Outstanding Notes that have
become due solely by reason of a declared acceleration as provided in Section
702 or interest thereon (with interest on such principal, Make-Whole Premium (if
any) and, to the extent permitted by law, on overdue payments of interest, at
the rates specified herein and the Notes with respect to overdue payments), and
an additional amount sufficient to reimburse the Holders for the reasonable
costs and expenses incurred in connection with the giving and rescinding of any
such Notice of an Actionable Event shall have been paid prior to the entry of
any judgment in respect of such amounts. A Notice of an Actionable Event is
"outstanding" at all times after such Notice of an Actionable Event has been
given until such time, if any, as such Notice of an Actionable Event has been
rescinded.

            "Officer's Certificate" means a certificate signed by the president
or any Vice President of the Issuer or any of the foregoing officers of the
Administrative Agent acting on behalf of the Issuer, as the case may be, and by
the principal accounting officer or the principal financial officer or the
secretary of the Issuer or any of the foregoing officers of the Administrative
Agent acting on behalf of the Issuer, as the case may be, and delivered to the
Trustee.

            "Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Issuer or the Administrative Agent, acting on behalf of the
Issuer, including an employee of the Issuer or the Administrative Agent, acting
on behalf of the Issuer, and who shall be acceptable to the Trustee.

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

                  (a) Notes theretofore cancelled by the Trustee or delivered to
            the Trustee for cancellation;

                  (b) Notes, or portions thereof, for whose payment or
            redemption money in the necessary amount has been theretofore
            deposited with the Trustee or any Paying Agent (other than the
            Issuer) in trust or set aside and segregated in trust by the Issuer
            (if the Issuer shall act as its own Paying Agent) for the Holders of
            such Notes; provided, that if such Notes are to be redeemed, notice
            of such redemption has been duly given

                                      A-10
<PAGE>

            pursuant to this Indenture or provision therefor satisfactory to the
            Trustee has been made;

                  (c) Notes, except to the extent provided in Sections 1402 and
            1403 of this Indenture, with respect to which the Issuer has
            effected defeasance and/or covenant defeasance as provided in
            Article Fourteen; and

                  (d) Notes which have been paid pursuant to Section 309 of this
            Indenture or in exchange for or in lieu of which other Notes have
            been authenticated and delivered pursuant to this Indenture, other
            than any such Notes in respect of which there shall have been
            presented to the Trustee proof satisfactory to it that such Notes
            are held by a bona fide purchaser in whose hands such Notes are
            valid obligations of the Issuer;

provided, that for purposes of Section 303 of this Indenture and for purposes of
determining whether the Holders of the requisite principal amount of the
Outstanding Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or are present at a meeting of Holders for
quorum purposes, and for the purpose of making the calculations required by
Trust Indenture Act Section 313, Notes owned by the Issuer or any other obligor
upon the Notes or any Affiliate of the Issuer or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in making such calculation or in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer or any other obligor upon the Notes or any Affiliate
of the Issuer or such other obligor.

            "Paying Agent" means the Trustee or any other Person (including the
Issuer acting as Paying Agent) authorized by the Issuer to pay the principal of
or interest on any Notes on behalf of the Issuer.

            "Payment Date" means an Interest Payment Date and/or a Principal
Payment Date.

            "Permanent Regulation S Global Note" has the meaning set forth in
Section 201(e) of this Indenture.

            "Permitted Investments" means the following investments maturing, in
each case, not less than one (1) Business Day before the Payment Date next
following the date such investment is made; provided, however, that in the case
of any investment pursuant to clause (b) of this definition which is made with
the Trustee, such investment may mature on such Payment Date:

                                      A-11
<PAGE>

                  (a) any direct obligations of, or obligations fully and
            unconditionally guaranteed by, the United States of America, or any
            agency or instrumentality of the United States of America, the
            obligations of which are fully and unconditionally backed by the
            full faith and credit of the United States of America;

                  (b) demand and time deposits in, certificates of deposit of,
            bankers' acceptances issued by, or federal funds sold by any
            depository institution or trust company incorporated under the laws
            of the United States of America or any state thereof and subject to
            supervision and examination by federal and/or state authorities, or
            incorporated under the laws of any other jurisdiction, so long as at
            the time of such investment or contractual commitment providing for
            such investment the unsecured commercial paper or other unsecured
            short-term debt obligations of such depository institution or trust
            company have at least the Required Credit Rating from Moody's and
            Standard & Poor's;

                  (c) repurchase obligations with respect to any security
            described in clauses (a) or (b) above, in each case entered into
            with either (i) a depository institution or trust company (acting as
            principal) which in respect of its short-term unsecured debt has
            credit ratings of at least the Required Credit Rating from Moody's
            and Standard & Poor's or (ii) a money market fiend maintained by a
            broker which in respect of its short-term unsecured debt has at
            least the Required Credit Rating from Moody's and Standard & Poor's;

                  (d) unsecured debt securities bearing interest or sold at a
            discount issued by any corporation incorporated under the laws of
            the United States of America or any state thereof which have at the
            time of such investment at least the Required Credit Rating from
            Moody's and Standard & Poor's;

                  (e) unsecured commercial paper which has at the time of such
            investment a rating of at least the Required Credit Rating from
            Moody's and Standard & Poor's; and

                  (f) investments in money market funds or money market mutual
            funds which have at the time of such investment at least the
            Required Credit Rating from Moody's and Standard & Poor's (including
            such funds for which the Trustee or any of its Affiliates is
            investment manager or advisor and for which the Trustee or any of
            its Affiliates may receive a fee).

            "Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

                                      A-12
<PAGE>

            "Physical Note" or "Physical Notes" collectively or individually, as
the case may be, has the meaning set forth in Section 201(g) of this Indenture.

            "Place of Payment" means, when used with respect to the Notes, the
place or places where the principal of, Make-Whole Premium, if any, and interest
on the Notes are payable as specified as contemplated by Sections 301(e) and
1102 of this Indenture.

            "PPA Purchase Agreement" means the Purchase Agreement and Assignment
Agreement, dated as of June 13, 2003, among CES and the Issuer, as it may from
time to time be supplemented, amended or restated pursuant to the applicable
provisions thereof.

            "Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note and, for the purposes of this definition, any Note authenticated
and delivered under Section 308 of this Indenture in exchange for or in lieu of
a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.

            "Principal Payment Date of the Notes" means the first (1st) calendar
day of each February and August commencing on and from February 1, 2004 (or if
such day is not a Business Day, then the next succeeding Business Day).

            "Private Placement Legend" has the meaning set forth in Section
202(a) of this Indenture.

            "Property" means any asset, revenue or any other property, whether
tangible or intangible, real or personal, including, without limitation, any
right to receive income.

            "QIB" means a "Qualified Institutional Buyer" under Rule 144A.

            "Rating Agencies" means Moody's and Standard & Poor's to the extent
that, at the relevant time of determination, each such Rating Agency has an
active rating in effect on the Notes or, if fewer than all such Rating Agencies
have a current rating in effect on the Notes, each such Rating Agency that has
an active rating in effect on the Notes; provided, that if none of such Rating
Agencies has a current rating in effect on the Notes at any relevant time of
determination, at least two (2) other internationally recognized rating
institutions selected in good faith by the Management Committee.

            "Redemption Date" when used with respect to any Note to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.

            "Redemption Price" when used with respect to any Note to be
redeemed, means the price at which such Note is to be redeemed pursuant to this
Indenture.

                                      A-13
<PAGE>

            "Registrar" means the Trustee, until a successor Registrar shall
have become such pursuant to the applicable provisions of this Indenture, and,
thereafter, "Registrar" shall mean such successor Registrar.

            "Registration Statement" means a registration statement with respect
to the Notes meeting the requirements of the Securities Act.

            "Regular Record Date," with respect to any Payment Date, means the
date which is fifteen (15) Business Days immediately preceding such Payment
Date.

            "Regulation S" means Regulation S under the Securities Act.

            "Regulation S Global Note" has the meaning set forth in Section
201(e) of this Indenture.

            "Regulation S Physical Note" has the meaning set forth in Section
201(f) of this Indenture.

            "Required Credit Rating" means A-1 (or its equivalent) or higher
from Standard & Poor's and P-1 (or its equivalent) or higher from Moody's, as
the case may be.

            "Resale Restriction Termination Date" means the date that is two
years after the later of the original issue date and the last date on which the
Issuer or any Affiliate of the Issuer was the owner of a Note (or any
Predecessor Note).

            "Reserve Account" has the meaning specified in Section 504(a) of
this Indenture.

            "Reserve Deficiency" has the meaning specified in Section 504(b) of
this Indenture.

            "Reserve Investments Account" has the meaning specified in Section
505 of this Indenture.

            "Reserve Required Balance" means an amount equal to the greatest
scheduled payment of principal and interest due on the Notes on any Payment
Date.

            "Responsible Officer" means, with respect to any person other than
the Trustee or the Issuer, a duly elected or appointed authorized and acting
officer, agent or representative of such Person. "Responsible Officer" when used
with respect to the Trustee, means the chairman or any vice-chairman of the
board of directors, the chairman or any vice-chairman of the executive committee
of the board of directors, the chairman of the trust committee, the president,
any Vice President, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller or any assistant controller or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above-designated officers, and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge

                                      A-14
<PAGE>

of and familiarity with the particular subject. "Responsible Officer" when used
with respect to the Issuer means, unless the context otherwise requires, the
managing member, president, chief executive officer, chief financial officer,
vice president, principal accounting officer or treasurer of the Issuer or any
of the foregoing officers of the Administrative Agent acting on behalf of the
Issuer or other executive officer of the Issuer or the Administrative Agent
acting on behalf of the Issuer who in the normal performance of his or her
operational duties would have knowledge of the subject matter relating to any
certificate, report or notice to be delivered or given under this Indenture or
knowledge of any Default or Event of Default thereunder.

            "Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, that the Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.

            "Rule 144A" means Rule 144A under the Securities Act.

            "Rule 144A Global Note" has the meaning set forth in Section 201 (d)
of this Indenture.

            "Rule 144A Information" has the meaning set forth in Section 1110 of
this Indenture.

            "Scheduling Services Agreement" means the Scheduling Services
Agreement, dated as of the date of this Indenture, between the Morgan Stanley
Capital and the Issuer as originally executed and as it may from time to time be
supplemented, amended or restated pursuant to the applicable provisions thereof,
and any replacement agreement substantially in the form of the original
Scheduling Services Agreement between a replacement scheduling coordinator and
the Issuer and entered into as contemplated by the Morgan Stanley Capital
Consent.

            "Scheduling Services Consent" means the Consent and Agreement, dated
as of the date of this Indenture, among the Morgan Stanley Capital, the Issuer
and the Trustee as it may from time to time be supplemented, amended or restated
pursuant to the applicable provisions thereof with respect to the Scheduling
Services Agreement.

            "Securities Act" means the Securities Act of 1933, as from time to
time amended.

            "Securities Exchange Act" means the Securities Exchange Act of 1934,
as from time to time amended.

            "Security Document" means, individually, the Assignment and Security
Agreement, the Consents and all UCC financing statements required by this
Indenture in connection with the Collateral; collectively, the "Security
Documents."

            "Security Register" has the meaning specified in Section 305(a) of
this Indenture.

                                      A-15
<PAGE>

            "Series" means either the Notes due 2010 or the Notes due 2006, but
not both, as the context requires.

            "Special Record Date" for the payment of any defaulted principal or
interest on the Notes means a date fixed by the Trustee pursuant to Section
309(c) of this Indenture.

            "Standard & Poor's" means Standards & Poor's Rating Services.

            "Stated Maturity" when used with respect to any Note or any
installment of principal thereof or interest thereon, means the date specified
in such Note as the fixed date on which the principal of such Note or such
installment of principal or interest is due and payable.

            "Temporary Regulation S Global Note" has the meaning set forth in
Section 201 (e) of this Indenture.

            "Termination Payment" (a) when used with respect to the MSCG Power
Purchase Agreement has the meaning ascribed thereto in the MSCG Power Purchase
Agreement and (b) when used with respect to the CDWR Power Sales Agreement has
the meaning ascribed thereto in the CDWR Power Sales Agreement.

            "Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force on the date this Indenture was executed, except as provided in Section
1005 of this Indenture.

            "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 or include each Person who is then a Trustee hereunder.

            "Trustee Fees" means the amount of fees, expenses (including
reasonable attorneys fees and expenses) and indemnities due to the Trustee, the
Accounts Agent, each Paying Agent and the Registrar under this Indenture, the
Fee Agreement and the other Financing Documents.

            "Uniform Commercial Code" or "UCC" means the Uniform Commercial Code
as in effect from time to time in the State of New York and any other
jurisdiction the laws of which control the creation or perfection of security
interests under the Security Documents.

            "United States" or "U.S." means the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.

            "Unrestricted Notes" means one or more Notes that do not and are not
required to bear the restrictive legends set forth in Section 202.

                                      A-16
<PAGE>

            "U.S. Person" has the meaning ascribed to such term in Regulation S
and certified to the Trustee and the Registrar by such Person.

            "U.S. Physical Note" has the meaning set forth in Section 201(f) of
this Indenture.

            "Vice President" when used with respect to the Issuer or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "Vice President."

            "Working Capital Account" has the meaning specified in Section 503
of this Indenture.

                                      A-17
<PAGE>

                                                                      EXHIBIT B1

                              FORM OF FACE OF NOTE
                        POWER CONTRACT FINANCING, L.L.C.
                       5.200% SENIOR SECURED NOTE DUE 2006

                                                              CUSIP [__________]

No. [__________]                                                     $[________]

            POWER CONTRACT FINANCING, L.L.C., a Delaware limited liability
company (the "Issuer," which term includes any successor under the Indenture
hereinafter referred to), for value received, promises to pay to [_________], or
its registered assigns, the outstanding principal sum of [WRITTEN AMOUNT]
($[amount]), on or prior to February 1, 2006, or such earlier date as this Note
due 2006 may be redeemed (the "Maturity Date"), such payment to be made in
semi-annual installments on February 1 and August 1 in each year commencing on
February 1, 2004, and ending on the Maturity Date set forth above (or if any
such day is not a Business Day, then the next succeeding Business Day), each
such installment to be in the amount set forth opposite the applicable Payment
Date on Annex A attached hereto (provided, that the portion of the principal
amount remaining unpaid on the Maturity Date, together with all interest accrued
and unpaid thereon, shall in any and all cases be due and payable on the
Maturity Date), and to pay interest thereon from the Closing Date or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on February 1 and August 1 in each year commencing
on February 1, 2004 in each year (or, if any such day is not a Business Day,
then the next succeeding Business Day), at a rate of 5.200% per annum, until the
principal hereof is paid or made available for payment, plus additional interest
(to the extent that the payment of such interest shall be legally enforceable)
at the rate of 1.0% per annum on any overdue principal and Make-Whole Premium
and on any overdue installment of interest. The principal and interest so
payable, and punctually paid or duly provided for, on any Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Note due
2006 (or one or more Predecessor Notes) is registered at the close of business
on the Regular Record Date next preceding such Payment Date. Any such principal
or interest not so punctually paid or duly provided for (collectively,
"Defaulted Payments") will forthwith cease to be payable to the Holder on such
Regular Record Date and shall be paid to the Person in whose name this Note due
2006 (or one or more Predecessor Notes) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Payment to be fixed
by the Issuer, notice whereof shall be given by the Trustee to Holders of Notes
due 2006 not less than 10 days prior to such Special Record Date.

            Reference is hereby made to the further provisions of this Note due
2006 set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

            Terms used but not otherwise defined in this Note due 2006 shall
have the meanings as defined in the Indenture. The provisions of this Note due
2006 do not

                                      B1-1
<PAGE>

purport to be complete and are subject to, and qualified in their entirety by
reference to, the provisions of the Indenture.

            Unless the certificate of authentication hereon has been executed by
the Trustee referred to below by manual signature, this Note due 2006 shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

            IN WITNESS WHEREOF, the Issuer has caused this Note due 2006 to be
duly executed manually or by facsimile by its duly authorized officers.

Dated: ________________

                                             POWER CONTRACT FINANCING, L.L.C.

                                             By_________________________________
                                               Name:
                                               Title: [President/Vice President]

Attest:

By______________________________________
  Name:
  Title: [Secretary/Assistant Secretary]

                                      B1-2
<PAGE>

                          CERTIFICATE OF AUTHENTICATION

Dated:______________

            This is one of the 5.200% Senior Secured Notes due 2006 of the
Issuer described in the within-mentioned Indenture.

                                               Wilmington Trust Company,
                                                 as Trustee

                                               By_______________________________
                                                       Authorized Signatory

                                      B1-3
<PAGE>

                          FORM OF REVERSE SIDE OF NOTE
                        POWER CONTRACT FINANCING, L.L.C.
                       5.200% SENIOR SECURED NOTE DUE 2006

1.    Principal and Interest.

            The Issuer will pay the principal of this Note due 2006 on or prior
to February 1, 2006, in the manner set forth on the face of this Note due 2006.

            The Issuer promises to pay accrued and unpaid interest on the
principal amount of this Note due 2006 on each Interest Payment Date, as set
forth below, at the rate per annum shown above.

            Principal of and interest on this Note will be payable semi-annually
(to the Holders of record of the Notes (or any predecessor Notes) at the close
of business on the Regular Record Date immediately preceding the Principal
Payment Date) on each Principal Payment Date and on each Interest Payment Date
commencing February 1, 2004.

            Interest on this Note due 2006 will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the
Closing Date; provided, that if there is no existing default in the payment of
interest and if this Note due 2006 is authenticated between a Regular Record
Date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such Interest Payment Date. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

2.    Method of Payment.

            The principal of, Make-Whole Premium, if any, and interest on the
Notes due 2006 shall be payable and the Notes due 2006 shall be exchangeable and
transferable at the office or agency of the Issuer in the Borough of Manhattan,
the City of New York, maintained for such purposes (which initially shall be the
Corporate Trust Office of the Trustee) or, at the option of the Issuer, interest
may be paid by check mailed to the address of the Person entitled thereto as
such address shall appear on the Security Register; provided, that (a) all
payments with respect to the Global Notes and the Physical Notes the Holders of
which have given wire transfer instructions to the Trustee by the Regular Record
Date shall be required to be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof; (b) the payment of the
final installment of principal of, or interest on, each Note due 2006 shall only
be made upon presentation and surrender of such Note due 2006 at the Corporate
Trust Office, or such other place as may be designated pursuant to the
Indenture; and (c) pursuant to the Indenture, upon written request from any
Holder of Outstanding Notes due 2006 in the aggregate principal amount of
$1,000,000 payments of interest on, or principal (other than the final payment
of principal) of, such Notes due 2006 shall be made by wire transfer to such
Holder. The Notes due 2006 will not be entitled to the benefit of any sinking
fund.

                                      B1-4
<PAGE>

3.    Registrar.

            The Trustee will act as the Registrar.

4.    Indenture; Limitations.

            The Issuer issued the Notes due 2006 under an Indenture dated as of
June 13, 2003 (the "Indenture"), between the Issuer and Wilmington Trust
Company, as trustee (the "Trustee"). The terms of the Notes due 2006 include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The Notes due 2006 are subject to all such terms and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note due 2006 and the terms
of the Indenture, the terms of the Indenture shall control.

            The Notes due 2006 are general obligations of the Issuer. The
aggregate principal amount of Notes due 2006 issued on the Closing Date is
$339,929,000.

5.    Optional Redemption.

            The Notes due 2006 may be redeemed at the option of the Issuer, in
whole or in part, at any time and from time to time at a Redemption Price equal
to 100% of the Outstanding principal amount, plus accrued and unpaid interest to
but excluding the Redemption Date, plus a Make-Whole Premium, if any.

            Notice of a redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of a Note due 2006 to be
redeemed at such Holder's last address as it appears in the Security Register.
On and after the Redemption Date, interest ceases to accrue on Notes due 2006 or
portions of Notes due 2006 called for redemption, unless the Issuer defaults in
the payment of the Redemption Price described above.

6.    Denominations; Transfer; Exchange.

            The Notes due 2006 are issued only in registered form without
coupons and initially only in minimum denominations of $100,000 and any integral
multiple of $1,000 above that amount; provided, that initial purchases of the
Notes due 2006 by purchasers who are institutional "accredited investors" who
are not Qualified Institutional Buyers shall be in minimum amounts of $250,000;
and provided, further that, after initial issuance, Notes due 2006 may be issued
upon exchange or transfer in such amounts as may be necessary to evidence the
entire unpaid principal amount of any Note due 2006 surrendered or exchanged. A
Holder may register the transfer or exchange of Notes due 2006 in accordance
with the Indenture. The Issuer may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Issuer need not register
the transfer or exchange of any Notes due 2006 selected for redemption (except
the unredeemed portion of any Note due 2006 being redeemed in part). Also, it
need not

                                      B1-5
<PAGE>

register the transfer or exchange of any Notes due 2006 for a period of 15 days
before a selection of Notes due 2006 to be redeemed is made.

7.    Persons Deemed Owners.

            A Holder may be treated as the owner of a Note due 2006 for all
purposes.

8.    Treatment of Notes as Indebtedness for Tax Purposes.

            Each Holder of a Note due 2006 by its acceptance of such Note due
2006 covenants and agrees to treat such Note as indebtedness for United States
federal income tax purposes.

9.    Unclaimed Money.

            If money for the payment of principal, Make-Whole Premium, if any,
or interest remains unclaimed for two years after the date that all amounts
payable by the Issuer to the Trustee or the Holders under any Financing Document
have been finally and irrevocably paid to the Trustee for the benefit of the
Holders, the Trustee will pay the money back to the Issuer at its request. After
that, the Holders entitled to the money must look solely to the Issuer for
payment and all liability of the Trustee will cease with respect to money
deposited with the Trustee or held in trust by the Issuer and returned to the
Issuer as unclaimed money.

10.   Discharge Prior to Redemption or Maturity.

            If the Issuer irrevocably deposits, or causes to be deposited, with
the Trustee money sufficient to pay the then outstanding principal of,
Make-Whole Premium, if any, and accrued and unpaid interest on the Notes due
2006 to redemption or maturity, the Issuer will be discharged from the Indenture
and the Notes due 2006, except in certain circumstances for certain sections
thereof.

11.   Amendment; Supplement; Waiver.

            Subject to certain exceptions, the Indenture or the Notes due 2006
may be amended or supplemented with the consent of the Majority Holders of any
Outstanding Notes due 2006, and any existing default or compliance with any
provision may be waived with the consent of the Majority Holders (other than for
a default in the payment of the principal of, Make-Whole Premium, if any, or
interest on any Note due 2006 or in respect of a covenant or provision of the
Indenture that cannot be modified or amended without the unanimous affirmative
vote of all Holders) of the principal amount of the Notes due 2006 then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes due 2006 to, among other
things, cure any ambiguity, defect or inconsistency; provided, that such cure
shall not materially adversely affect the interests of the Holders.

12.   Restrictive Covenants.

                                      B1-6
<PAGE>

            The Indenture contains certain covenants, including, without
limitation, covenants with respect to the following matters: (i) Indebtedness of
the Issuer; (ii) restricted payments; (iii) transactions with Affiliates; (iv)
fundamental change; and (v) compliance with Material Agreements.

13.   Successor Persons.

            When a successor person or other entity assumes all the obligations
of its predecessor under the Notes due 2006 and the Indenture, the predecessor
person will be released from those obligations.

14.   Remedies for Events of Default.

            If an Event of Default (other than a Bankruptcy Event of Default)
occurs and is continuing, then and in every such case the Trustee, upon the
direction of Holders of no less than 25% of the Outstanding Notes due 2006 (for
an Event of Default with respect to a default in payment of principal,
Make-Whole Premium, if any, or interest) or either the Majority Holders of the
Outstanding Notes due 2006 (for any other Event of Default), shall declare the
principal amount of all the Notes due 2006 to be due and payable immediately, by
a notice in writing to the Issuer, and, upon any such declaration, such
principal amount, any accrued and unpaid interest and all other amounts payable
under the Notes due 2006 shall become immediately due and payable.

            If a Bankruptcy Event of Default occurs, the principal amount of,
any accrued interest on and all other amounts payable under the Notes due 2006
then Outstanding shall become immediately due and payable. The Trustee may
require indemnity reasonably satisfactory to it before it enforces the Indenture
or the Notes due 2006. Subject to certain limitations, the Majority Holders may
direct the Trustee in its exercise of any trust or power.

15.   Trustee Dealings with Issuer.

            The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Notes due 2006 and may make loans
to, accept deposits from, perform services for, and otherwise deal with, the
Issuer and its Affiliates as if it were not the Trustee; provided, that no
conflicting interest results.

16.   No Recourse Against Certain Others.

            Except as otherwise specifically provided in the Material
Agreements, no recourse under or upon any obligation, covenant or agreement
contained in this Note due 2006, the Indenture or any Security Document, or
because of any indebtedness evidenced thereby, shall be had against any
incorporator, as such, or against any past, present or future stockholder,
member, manager, officer or director, as such, of the Issuer or the Issuer's
Members or of any successor, either directly or through the Issuer or the
Issuer's. Members, as the case may be, or any successor, under any rule of law,
statute, or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released

                                      B1-7
<PAGE>

by the acceptance of the Notes due 2006 by the Holders thereof and as part of
the consideration for the issuance of the Notes due 2006. Nothing contained
herein shall, however, limit the liability of any Person for any fraud, gross
negligence or willful misconduct on their part.

17.   Authentication.

            This Note due 2006 shall not be valid until the Trustee manually
signs the certificate of authentication on the other side of this Note due 2006.

18.   Governing Law.

            The Indenture and this Note due 2006 shall be governed by, and
construed in accordance with, the law of the State of New York without giving
effect to the principles thereof relating to conflicts of law except Section
5-1401 of the New York General Obligations Law.

            The Issuer will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to POWER CONTRACT
FINANCING, L.L.C., 50 West San Fernando Street, Suite 670, San Jose, California
95113, Attention: President.

                                      B1-8
<PAGE>

                                                                      ANNEX A to
                                                                            Note
                       REPAYMENT SCHEDULE FOR INITIAL NOTE

<TABLE>
<CAPTION>
        Principal Payment Date              Principal Amount Payable
        ----------------------              ------------------------
<S>                                         <C>
      February 1, 2004                             $
      August 1, 2004                               $
      February 1, 2005                             $
      August 1, 2005                               $
      February 1, 2006                             $
</TABLE>

                                      B1-9
<PAGE>

                             Form of Transfer Notice

(To be executed by the registered Holder if such Holder desires to transfer this
Note)

To    [__________]
      [__________]
      Attention: [__________]

            FOR VALUE RECEIVED the undersigned registered Holder hereby sells,
assigns and transfers unto:

Name of Assignee:______________________________________________

Taxpayer Identification Number of Assignee:__________________________

(Please print or typewrite name and address including zip code of assignee)

      [_________]
      [_________]
      [_________]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing [__________] attorney to transfer such Note on the books of the
Issuer with full power of substitution in the premises.

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES EXCEPT PERMANENT
REGULATION S PHYSICAL NOTES]

            In connection with any transfer of this Note occurring prior to the
date which is the earlier of the date of an effective Registration Statement or
[__________] the undersigned confirms that without utilizing any general
solicitation or general advertising that:

            [Check One]

            | |(a) this Note is being transferred in compliance with the
                   exemption from registration under the Securities Act of 1933,
                   as amended, provided by Rule 144A thereunder.

            or

            | |(b) this Note is being transferred other than in accordance
                   with (a) above and documents are being furnished which comply
                   with the conditions of transfer set forth in this Note and
                   the Indenture.

If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof

                                     B1-10
<PAGE>

unless and until the conditions to any such transfer of registration set forth
herein and in Section 307 of the Indenture shall have been satisfied.

Dated:____________________

                                          By____________________________________
                                            NOTICE: The signature to this
                                            assignment must correspond with the
                                            name as written upon the face of the
                                            within-mentioned instrument in every
                                            particular, without alteration or
                                            any change whatsoever.

Signature Guarantee:

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

            The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Issuer as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

Dated:

                                          By____________________________________
                                            NOTICE: To be executed by an
                                            executive officer

                                     B1-11
<PAGE>

                                                                      EXHIBIT B2

                              FORM OF FACE OF NOTE
                        POWER CONTRACT FINANCING, L.L.C.
                       6.256% SENIOR SECURED NOTE DUE 2010

                                                              CUSIP [__________]

No. [__________]                                                     $[________]

            POWER CONTRACT FINANCING, L.L.C., a Delaware limited liability
company (the "Issuer," which term includes any successor under the Indenture
hereinafter referred to), for value received, promises to pay to [_________], or
its registered assigns, the outstanding principal sum of [WRITTEN AMOUNT]
($[amount]), on or prior to February 1, 2010, or such earlier date as this Note
due 2010 may be redeemed (the "Maturity Date"), such payment to be made in
semi-annual installments on February 1 and August 1 in each year commencing on
February 1, 2004, and ending on the Maturity Date set forth above (or if any
such day is not a Business Day, then the next succeeding Business Day), each
such installment to be in the amount set forth opposite the applicable Payment
Date on Annex A attached hereto (provided, that the portion of the principal
amount remaining unpaid on the Maturity Date, together with all interest accrued
and unpaid thereon, shall in any and all cases be due and payable on the
Maturity Date), and to pay interest thereon from the Closing Date or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on February 1 and August 1 in each year commencing
on February 1, 2004 in each year (or, if any such day is not a Business Day,
then the next succeeding Business Day), at a rate of 6.256% per annum, until the
principal hereof is paid or made available for payment, plus additional interest
(to the extent that the payment of such interest shall be legally enforceable)
at the rate of 1.0% per annum on any overdue principal and Make-Whole Premium
and on any overdue installment of interest. The principal and interest so
payable, and punctually paid or duly provided for, on any Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Note due
2010 (or one or more Predecessor Notes) is registered at the close of business
on the Regular Record Date next preceding such Payment Date. Any such principal
or interest not so punctually paid or duly provided for (collectively,
"Defaulted Payments") will forthwith cease to be payable to the Holder on such
Regular Record Date and shall be paid to the Person in whose name this Note due
2010 (or one or more Predecessor Notes) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Payment to be fixed
by the Issuer, notice whereof shall be given by the Trustee to Holders of Notes
due 2010 not less than 10 days prior to such Special Record Date.

            Reference is hereby made to the further provisions of this Note due
2010 set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

            Terms used but not otherwise defined in this Note due 2010 shall
have the meanings as defined in the Indenture. The provisions of this Note due
2010 do not

                                      B2-1
<PAGE>

purport to be complete and are subject to, and qualified in their entirety by
reference to, the provisions of the Indenture.

            Unless the certificate of authentication hereon has been executed by
the Trustee referred to below by manual signature, this Note due 2010 shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

            IN WITNESS WHEREOF, the Issuer has caused this Note due 2010 to be
duly executed manually or by facsimile by its duly authorized officers.

Dated: _____________________
                                        POWER CONTRACT FINANCING, L.L.C.

                                        By _____________________________________
                                           Name:
                                           Title: [President/Vice President]

Attest:

By ______________________________________
   Name:
   Title: [Secretary/Assistant Secretary]

                                      B2-2
<PAGE>

                          CERTIFICATE OF AUTHENTICATION

Dated:__________________

            This is one of the 6.256% Senior Secured Notes due 2010 of the
Issuer described in the within-mentioned Indenture.

                                               Wilmington Trust Company,
                                                 as Trustee

                                               By_______________________________
                                                      Authorized Signatory

                                      B2-3
<PAGE>

                          FORM OF REVERSE SIDE OF NOTE
                        POWER CONTRACT FINANCING, L.L.C.
                       6.256% SENIOR SECURED NOTE DUE 2010

1.    Principal and Interest.

            The Issuer will pay the principal of this Note due 2010 on or prior
to February 1, 2010, in the manner set forth on the face of this Note due 2010.

            The Issuer promises to pay accrued and unpaid interest on the
principal amount of this Note due 2010 on each Interest Payment Date, as set
forth below, at the rate per annum shown above.

            Principal of and interest on this Note will be payable semi-annually
(to the Holders of record of the Notes (or any predecessor Notes) at the close
of business on the Regular Record Date immediately preceding the Principal
Payment Date) on each Principal Payment Date and on each Interest Payment Date
commencing February 1, 2004.

            Interest on this Note due 2010 will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the
Closing Date; provided, that if there is no existing default in the payment of
interest and if this Note due 2010 is authenticated between a Regular Record
Date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such Interest Payment Date. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

2.    Method of Payment.

            The principal of, Make-Whole Premium, if any, and interest on the
Notes due 2010 shall be payable and the Notes due 2010 shall be exchangeable and
transferable at the office or agency of the Issuer in the Borough of Manhattan,
the City of New York, maintained for such purposes (which initially shall be the
Corporate Trust Office of the Trustee) or, at the option of the Issuer, interest
may be paid by check mailed to the address of the Person entitled thereto as
such address shall appear on the Security Register; provided, that (a) all
payments with respect to the Global Notes and the Physical Notes the Holders of
which have given wire transfer instructions to the Trustee by the Regular Record
Date shall be required to be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof; (b) the payment of the
final installment of principal of, or interest on, each Note due 2010 shall only
be made upon presentation and surrender of such Note due 2010 at the Corporate
Trust Office, or such other place as may be designated pursuant to the
Indenture; and (c) pursuant to the Indenture, upon written request from any
Holder of Outstanding Notes due 2010 in the aggregate principal amount of
$1,000,000 payments of interest on, or principal (other than the final payment
of principal) of, such Notes due 2010 shall be made by wire transfer to such
Holder. The Notes due 2010 will not be entitled to the benefit of any sinking
fund.

                                      B2-4
<PAGE>

3.    Registrar.

            The Trustee will act as the Registrar.

4.    Indenture; Limitations.

            The Issuer issued the Notes due 2010 under an Indenture dated as of
June 13, 2003 (the "Indenture"), between the Issuer and Wilmington Trust
Company, as trustee (the "Trustee"). The terms of the Notes due 2010 include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The Notes due 2010 are subject to all such terms and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note due 2010 and the terms
of the Indenture, the terms of the Indenture shall control.

            The Notes due 2010 are general obligations of the Issuer. The
aggregate principal amount of Notes due 2010 issued on the Closing Date is
$462,317,000.

5.    Optional Redemption.

            The Notes due 2010 may be redeemed at the option of the Issuer, in
whole or in part, at any time and from time to time at a Redemption Price equal
to 100% of the Outstanding principal amount, plus accrued and unpaid interest to
but excluding the Redemption Date, plus a Make-Whole Premium, if any.

            Notice of a redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of a Note due 2010 to be
redeemed at such Holder's last address as it appears in the Security Register.
On and after the Redemption Date, interest ceases to accrue on Notes due 2010 or
portions of Notes due 2010 called for redemption, unless the Issuer defaults in
the payment of the Redemption Price described above.

6.    Denominations; Transfer; Exchange.

            The Notes due 2010 are issued only in registered form without
coupons and initially only in minimum denominations of $100,000 and any integral
multiple of $1,000 above that amount; provided, that initial purchases of the
Notes due 2010 by purchasers who are institutional "accredited investors" who
are not Qualified Institutional Buyers shall be in minimum amounts of $250,000;
and provided, further that, after initial issuance, Notes due 2010 may be issued
upon exchange or transfer in such amounts as may be necessary to evidence the
entire unpaid principal amount of any Note due 2010 surrendered or exchanged. A
Holder may register the transfer or exchange of Notes due 2010 in accordance
with the Indenture. The Issuer may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Issuer need not register
the transfer or exchange of any Notes due 2010 selected for redemption (except
the unredeemed portion of any Note due 2010 being redeemed in part). Also, it
need not

                                      B2-5
<PAGE>

register the transfer or exchange of any Notes due 2010 for a period of 15 days
before a selection of Notes due 2010 to be redeemed is made.

7.    Persons Deemed Owners.

            A Holder may be treated as the owner of a Note due 2010 for all
purposes.

8.    Treatment of Notes as Indebtedness for Tax Purposes.

            Each Holder of a Note due 2010 by its acceptance of such Note due
2010 covenants and agrees to treat such Note as indebtedness for United States
federal income tax purposes.

9.    Unclaimed Money.

            If money for the payment of principal, Make-Whole Premium, if any,
or interest remains unclaimed for two years after the date that all amounts
payable by the Issuer to the Trustee or the Holders under any Financing Document
have been finally and irrevocably paid to the Trustee for the benefit of the
Holders, the Trustee will pay the money back to the Issuer at its request. After
that, the Holders entitled to the money must look solely to the Issuer for
payment and all liability of the Trustee will cease with respect to money
deposited with the Trustee or held in trust by the Issuer and returned to the
Issuer as unclaimed money.

10.   Discharge Prior to Redemption or Maturity.

            If the Issuer irrevocably deposits, or causes to be deposited, with
the Trustee money sufficient to pay the then outstanding principal of,
Make-Whole Premium, if any, and accrued and unpaid interest on the Notes due
2010 to redemption or maturity, the Issuer will be discharged from the Indenture
and the Notes due 2010, except in certain circumstances for certain sections
thereof.

11.   Amendment; Supplement; Waiver.

            Subject to certain exceptions, the Indenture or the Notes due 2010
may be amended or supplemented with the consent of the Majority Holders of any
Outstanding Notes due 2010, and any existing default or compliance with any
provision may be waived with the consent of the Majority Holders (other than for
a default in the payment of the principal of, Make-Whole Premium, if any, or
interest on any Note due 2010 or in respect of a covenant or provision of the
Indenture that cannot be modified or amended without the unanimous affirmative
vote of all Holders) of the principal amount of the Notes due 2010 then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes due 2010 to, among other
things, cure any ambiguity, defect or inconsistency; provided, that such cure
shall not materially adversely affect the interests of the Holders.

12.   Restrictive Covenants.

                                      B2-6
<PAGE>

            The Indenture contains certain covenants, including, without
limitation, covenants with respect to the following matters: (i) Indebtedness of
the Issuer; (ii) restricted payments; (iii) transactions with Affiliates; (iv)
fundamental change; and (v) compliance with Material Agreements.

13.   Successor Persons.

            When a successor person or other entity assumes all the obligations
of its predecessor under the Notes due 2010 and the Indenture, the predecessor
person will be released from those obligations.

14.   Remedies for Events of Default.

            If an Event of Default (other than a Bankruptcy Event of Default)
occurs and is continuing, then and in every such case the Trustee, upon the
direction of Holders of no less than 25% of the Outstanding Notes due 2010 (for
an Event of Default with respect to a default in payment of principal,
Make-Whole Premium, if any, or interest) or either the Majority Holders of the
Outstanding Notes due 2010 (for any other Event of Default), shall declare the
principal amount of all the Notes due 2010 to be due and payable immediately, by
a notice in writing to the Issuer, and, upon any such declaration, such
principal amount, any accrued and unpaid interest and all other amounts payable
under the Notes due 2010 shall become immediately due and payable.

            If a Bankruptcy Event of Default occurs, the principal amount of,
any accrued interest on and all other amounts payable under the Notes due 2010
then Outstanding shall become immediately due and payable. The Trustee may
require indemnity reasonably satisfactory to it before it enforces the Indenture
or the Notes due 2010. Subject to certain limitations, the Majority Holders may
direct the Trustee in its exercise of any trust or power.

15.   Trustee Dealings with Issuer.

            The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Notes due 2010 and may make loans
to, accept deposits from, perform services for, and otherwise deal with, the
Issuer and its Affiliates as if it were not the Trustee; provided, that no
conflicting interest results.

16.   No Recourse Against Certain Others.

            Except as otherwise specifically provided in the Material
Agreements, no recourse under or upon any obligation, covenant or agreement
contained in this Note due 2010, the Indenture or any Security Document, or
because of any indebtedness evidenced thereby, shall be had against any
incorporator, as such, or against any past, present or future stockholder,
member, manager, officer or director, as such, of the Issuer or the Issuer's
Members or of any successor, either directly or through the Issuer or the
Issuer's. Members, as the case may be, or any successor, under any rule of law,
statute, or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released

                                      B2-7
<PAGE>

by the acceptance of the Notes due 2010 by the Holders thereof and as part of
the consideration for the issuance of the Notes due 2010. Nothing contained
herein shall, however, limit the liability of any Person for any fraud, gross
negligence or willful misconduct on their part.

17.   Authentication.

            This Note due 2010 shall not be valid until the Trustee manually
signs the certificate of authentication on the other side of this Note due 2010.

18.   Governing Law.

            The Indenture and this Note due 2010 shall be governed by, and
construed in accordance with, the law of the State of New York without giving
effect to the principles thereof relating to conflicts of law except Section
5-1401 of the New York General Obligations Law.

            The Issuer will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to POWER CONTRACT
FINANCING, L.L.C., 50 West San Fernando Street, Suite 670, San Jose, California
95113, Attention: President.

                                      B2-8
<PAGE>

                                                                      ANNEX A to
                                                                            Note

                       REPAYMENT SCHEDULE FOR INITIAL NOTE

<TABLE>
<CAPTION>
             Principal Payment Date          Principal Amount Payable
             ----------------------          ------------------------
<S>                                          <C>
           February 1, 2004                        $         --
           August 1, 2004                          $         --
           February 1, 2005                        $
           August 1, 2005                          $
           February 1, 2006                        $
           August 1, 2006                          $
           February 1, 2007                        $
           August 1, 2007                          $
           February 1, 2008                        $
           August 1, 2008                          $
           February 1, 2009                        $
           August 1, 2009                          $
           February 1, 2010                        $
</TABLE>

                                      B2-9
<PAGE>

                             Form of Transfer Notice

(To be executed by the registered Holder if such Holder desires to transfer this
Note)

To    [__________]
      [__________]
      Attention: [__________]

            FOR VALUE RECEIVED the undersigned registered Holder hereby sells,
assigns and transfers unto:

Name of Assignee:___________________________________

Taxpayer Identification Number of Assignee:_____________________

(Please print or typewrite name and address including zip code of assignee)

      [__________]
      [__________]
      [__________]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing [__________] attorney to transfer such Note on the books of the
Issuer with full power of substitution in the premises.

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES EXCEPT PERMANENT
REGULATION S PHYSICAL NOTES]

            In connection with any transfer of this Note occurring prior to the
date which is the earlier of the date of an effective Registration Statement or
[__________] the undersigned confirms that without utilizing any general
solicitation or general advertising that:

            [Check One]

            | |(a) this Note is being transferred in compliance with the
                   exemption from registration under the Securities Act of 1933,
                   as amended, provided by Rule 144A thereunder.

            or

            | |(b) this Note is being transferred other than in accordance with
                   (a) above and documents are being furnished which comply with
                   the conditions of transfer set forth in this Note and the
                   Indenture.

If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof

                                     B2-10
<PAGE>

unless and until the conditions to any such transfer of registration set forth
herein and in Section 307 of the Indenture shall have been satisfied.

Dated:____________________

                                          By____________________________________
                                            NOTICE: The signature to this
                                            assignment must correspond with the
                                            name as written upon the face of
                                            the within-mentioned instrument in
                                            every particular, without
                                            alteration or any change
                                            whatsoever.

Signature Guarantee:

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

            The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Issuer as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

Dated:

                                          By____________________________________
     NOTICE: To be executed by an executive officer

                                     B2-11
<PAGE>

                                                                       EXHIBIT C

              FORM OF CERTIFICATE TO BE DELIVERED UPON TERMINATION
         OF DISTRIBUTION COMPLIANCE PERIOD ON OR AFTER FEBRUARY 1, 2004

                                     [date]

Power Contract Financing, L.L.C.
50 West San Fernando Street
San Jose, California 95113
Attn: Secretary

Wilmington Trust Company, as Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Office

      Re:   Power Contract Financing, L.L.C. (the "Issuer") [ ]% Senior Secured
            Notes due 20[ ] (the "Notes")

Ladies and Gentlemen:

            This letter relates to U.S.$ __________ principal amount of Notes
represented by the Regulation S Global Note (as defined in the Indenture) which
bears a legend outlining restrictions upon transfer of such Regulation S Global
Note. Pursuant to Section 201 of the Indenture (the "Indenture"), dated as of
June 13, 2003, relating to the Notes, we hereby certify that we are (or we will
hold such Notes on behalf of) a person who is not a U.S. person, as defined in
Regulation S ("Regulation S") promulgated under the Securities Act of 1933, as
amended (the "Securities Act") or who is a U.S. person who purchased such
interests pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. Accordingly, you are hereby
requested to exchange the legended certificate for an unlegended certificate
representing an identical principal amount at maturity of Notes, all in the
manner provided by the Indenture.

            You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.

                                                 Very truly yours,

                                                 [Name of Holder]

                                                 By_____________________________
                                                        Authorized Signature

                                      C-1
<PAGE>

                                                                       EXHIBIT D

                       FORM OF CERTIFICATE TO BE DELIVERED
                     IN CONNECTION WITH TRANSFERS TO NON-QIB
                       INSTITUTIONAL ACCREDITED INVESTORS

                                     [date]

Wilmington Trust Company, as Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Office

Power Contract Financing, L.L.C.
50 West San Fernando Street
San Jose, California 95113
Attn: Secretary

      Re:   Power Contract Financing, L.L.C. (the "Issuer") [ ]% Senior Secured
            Notes due 20[ ] (the "Notes")

Ladies and Gentlemen:

            In connection with our proposed purchase of $[__________] aggregate
principal amount of the Notes:

            1. We understand that the Notes have not been and will not be
      registered under the Securities Act of 1933, as amended (the "Securities
      Act"), and may not be sold except as permitted in the following sentence.
      We agree on our own behalf and on behalf of any investor account for which
      we are purchasing the Notes to offer, sell or otherwise transfer such
      Notes prior to the date which is two years after the later of the date of
      original issue and the last date on which the Issuer or any affiliate of
      the Issuer was the owner of such Notes, or any predecessor thereto (the
      "Resale Restriction Termination Date") only (a) to the Issuer, (b)
      pursuant to a registration statement which has been declared effective
      under the Securities Act, (c) for so long as the Notes are eligible for
      resale pursuant to Rule 144A under the Securities Act ("Rule 144A"), to a
      person we reasonably believe is a qualified institutional buyer under Rule
      144A (a "QIB") that purchases for its own account or for the account of a
      QIB to whom notice is given that the transfer is being made in reliance on
      Rule 144A, (d) pursuant to offers and sales to Non-U.S. Persons (as
      defined in the Indenture pursuant to which the Notes were issued) that
      occur outside the United States within the meaning of Regulations S under
      the Securities Act, (e) to an institutional "accredited investor" within
      the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
      Securities Act

                                      D-1
<PAGE>

      that is acquiring the Notes for its own account or for the account of such
      an institutional "accredited investor" for investment purposes and not
      with a view to, or for offer or sale in connection with, any distribution
      thereof in violation of the Securities Act or (f) pursuant to any other
      available exemption from the registration requirements of the Securities
      Act, subject in each of the foregoing cases to any requirement of law that
      the disposition of our property and the property of such investor account
      or accounts be at all times within our or their control and to compliance
      with any applicable state securities laws. The foregoing restrictions on
      resale will not apply subsequent to the Resale Restriction Termination
      Date. If any resale or other transfer of the Notes is proposed to be made
      pursuant to clause (e) above prior to the Resale Restriction Termination
      Date, the transferor shall deliver a letter from the transferee
      substantially in the form of this letter to the Trustee, which shall
      provide, among other things, that the transferee is an institutional
      "accredited investor" within the meaning of subparagraph (a)(1), (2), (3)
      or (7) or Rule 501 under the Securities Act and that it is acquiring such
      Notes for investment purposes and not for distribution in violation of the
      Securities Act. We acknowledge that the Issuer and the Trustee reserve the
      right prior to any offer, sale or other transfer prior to the Resale
      Restriction Termination Date of the Notes pursuant to clauses (d), (e) and
      (t) above to require the delivery of an Opinion of Counsel (as defined in
      the Indenture pursuant to which the Notes were issued) certifications
      and/or other information satisfactory to the Issuer and the Trustee.

            2. We are an institutional "accredited investor" (as defined in Rule
      501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
      purchasing for our own account or for the account of such an institutional
      "accredited investor," and we are acquiring the Notes for investment
      purposes and not with a view to, or for offer or sale in connection with,
      any distribution in violation of the Securities Act and we have such
      knowledge and experience in financial and business matters as to be
      capable of evaluating the merits and risks of our investment in the Notes,
      and we and any accounts for which we are acting are each able to bear the
      economic risk of our or its investment.

            3. We are acquiring the Notes purchased by us for our own account,
      or for one or more accounts as to each of which we exercise sole
      investment discretion and have authority to make, and do make, the
      statements contained in this letter.

            4. You are entitled to rely upon this letter and you are irrevocably
      authorized to produce this letter or a copy hereof to any interested party
      in any administrative or legal proceeding or official inquiry with respect
      to the matters covered hereby.

                                      D-2
<PAGE>

                                                  Very truly yours,

                                                  [Insert Name of Transferor]

                                                  By____________________________
                                                    Name:
                                                    Title:
Dated:_______________

            Upon transfer, the Notes should be registered in the name of the new
beneficial owner as follows:

Name:

Address:

Taxpayer ID Number:

                                      D-3
<PAGE>

                                                                       EXHIBIT E

                       FORM OF CERTIFICATE TO BE DELIVERED
              IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S

                                     [date]

Power Contract Financing, L.L.C.
50 West San Fernando Street
San Jose, California 95113

Wilmington Trust Company, as Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Office

      Re:   Power Contract Financing, L.L.C. (the "Issuer") [  ]% Senior Secured
            Notes due 20[ ] (the "Notes")

Ladies and Gentlemen:

            In connection with our proposed sale of $[__________] aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S ("Regulation S") under the
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:

            (1) the offer of the Notes was not made to a person in the United
States and the proposed transferee is a Non-U.S. Person (as defined in the
Indenture pursuant to which the Notes were issued);

            (2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been prearranged with a buyer in the
United States;

            (3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable; and

            (4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.

            In addition, if the sale is made during a distribution compliance
period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S
are applicable thereto,

                                      E-1
<PAGE>

we confirm that such sale has been made in accordance with the applicable
provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.

            You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.

                                           Very truly yours,

                                           [Insert Name of Transferor]

                                           By___________________________________
                                             Name:
                                             Title:
Dated:_______________________

                                      E-2
<PAGE>

                                                                       EXHIBIT F

                 FORM OF ISSUER ORDER AND OFFICER'S CERTIFICATE
                                       OF
                        POWER CONTRACT FINANCING, L.L.C.

Wilmington Trust Company
   as Trustee under the Indenture,
   dated as of June 13, 2003,
   between Wilmington Trust Company and
   Power Contract Financing, L.L.C.

Attention: Corporate Trust Department

      Re:   Delivery to Trustee of $[__________] Power Contract
            Financing, L.L.C. [  ]% Senior Secured Notes due 20[ ]

Ladies and Gentlemen:

            The undersigned, Power Contract Financing, L.L.C. (the "Issuer"),
hereby delivers to you, in your capacity as Trustee under the above-referenced
Indenture (the "Indenture"), $[__________] in aggregate principal amount of the
Issuer's [ ]% Senior Secured Notes due 20[ ] (the "Notes"). This Issuer Order
and Officer's Certificate (this "Issuer Order") is delivered pursuant to Section
303(c) of the Indenture and terms used and not otherwise defined herein have the
respective meanings assigned to such terms in the Indenture. The Notes delivered
with this Issuer Order are [Initial Notes/Unrestricted Notes], are to be issued
as [Physical Notes/Global Notes] in accordance with the terms of the Indenture
and are to be authenticated as of the date of this Issuer Order. Pursuant to
Section 303(c) of the Indenture, the Issuer hereby directs that you (i)
authenticate the Notes and (ii) upon such authentication, deliver each of such
Notes to the respective Holder thereof or to special New York counsel for such
Holder, acting on such Holder's behalf.

            The Issuer hereby certifies that the Notes delivered with this
Issuer Order have been duly executed by the Issuer and that all conditions
precedent to the issuance of the Notes contained in the Indenture have been
fully complied with.

                                            Very truly yours,

                                            POWER CONTRACT FINANCING, L.L.C.

                                            By:_________________________________
                                               Name:
                                               Title: [President/Vice President]
                                               Dated:___________________________

                                      F-1

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