Document:

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                                                                  Exhibit 10.1.4

                            REIMBURSEMENT AGREEMENT

                                    Between

                                 PECO II, INC.

                                      AND

                         THE HUNTINGTON NATIONAL BANK

                 Re:  $6,500,000 County of Arapahoe, Colorado
                      Adjustable Rate Demand
                      Industrial Development Revenue Bonds,
                      Series 2001 (PECO II, Inc. Project)
                      Consisting of
                      $2,000,000 Series 2001A Bonds and
                      $4,500,000 Series 2001B Bonds
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                               TABLE OF CONTENTS

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1.  Definitions And Accounting Terms....................................................................   1

    1.1    Defined Terms................................................................................   1

    1.2    Use of Defined Terms.........................................................................   5

    1.3    Accounting Terms.............................................................................   5

    1.4    Exhibits.....................................................................................   5

2.  Bonds...............................................................................................   5

3.  Letter of Credit....................................................................................   5

    3.1    Series 2001A Letter of Credit................................................................   5

    3.2    Series 2001B Letter of Credit................................................................   6

4.  Letter of Credit Documents..........................................................................   6

    4.1    Security Documents...........................................................................   6

    4.2    Other Documents and Actions..................................................................   6

    4.3    Right of Set-Off Against the Borrower; Additional Collateral.................................   7

5.  Conditions to Issuance, Disbursements and Closing...................................................   7

    5.1    Conditions to Issuance.......................................................................   7

    5.2    Bank's Consent to Disbursements..............................................................  10

    5.3    Disbursement Requests........................................................................  10

    5.4    Conditions to Disbursement...................................................................  10

6.  Reimbursement and Other Payments; Extension.........................................................  11

    6.1    Reimbursement and Other Payments.............................................................  11

    6.2    Payments.....................................................................................  13

    6.3    Increased Costs Due to Change in Law.........................................................  13
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    6.4    Obligations Absolute.........................................................................  14

    6.5    Termination and Extension of Letters of Credit...............................................  15

    6.6    Pledge of Remarketing Bonds and Beneficial Ownership Interests...............................  16

    6.7    Reinstatement................................................................................  17

7.  Representations and Warranties by the Borrower......................................................  17

    7.1    Organization of the Borrower.................................................................  17

    7.2    Execution, Delivery and Performance of Letter of Credit Documents and Bond Documents.........  18

    7.3    Financial Statements.........................................................................  19

    7.4    No Material, Adverse Change..................................................................  19

    7.5    Tax Liability................................................................................  19

    7.6    Compliance with Laws.........................................................................  20

    7.7    Litigation...................................................................................  20

    7.8    Compliance with Requirements.................................................................  20

    7.9    Statements...................................................................................  20

    7.10   Pension Plan Liabilities.....................................................................  20

    7.11   Environmental Protection.....................................................................  21

    7.12   Year 2000 Compliance.........................................................................  22

8.  Affirmative Covenants of the Borrower...............................................................  22

    8.1    Protection of Lien on Project Facilities.....................................................  22

    8.2    Protection of Security Interest in Personal Property.........................................  23

    8.3    Payment of Taxes, Assessments and Charges....................................................  23

    8.4    Undisbursed Bond Proceeds....................................................................  23

    8.5    Insurance....................................................................................  23

    8.6    Escrow for Taxes, Assessments and Insurance..................................................  23
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    8.7    Governmental Approvals.......................................................................  24

    8.8    Compliance with Requirements.................................................................  24

    8.9    Books and Records............................................................................  24

    8.10   Notice of Litigation.........................................................................  24

    8.11   Notice of Certain Events.....................................................................  25

    8.12   Opinions and Notices.........................................................................  25

    8.13   Defaults of Others...........................................................................  25

    8.14   Security of Project Facilities...............................................................  25

    8.15   ERISA........................................................................................  25

    8.16   Payment of Taxes and Claims..................................................................  26

    8.17   Maintenance of Property and Existence........................................................  26

    8.18   Sale of Assets, Merger, Subsidiaries and Tradenames..........................................  26

    8.19   Other Borrowings and Contingent Liabilities..................................................  26

    8.20   Ownership and Management.....................................................................  27

    8.21   Financial Statements.........................................................................  27

    8.22   Interim Financial Statements.................................................................  27

    8.23   List of Personal Property....................................................................  27

    8.24   Tax Appeals..................................................................................  28

    8.25   Copies of Leases.............................................................................  28

    8.26   Maintenance and Furnishing of Project Facilities; Substitutions and Removals.................  28

    8.27   Deposit Accounts.............................................................................  29

    8.28.  Optional Redemption of Bonds and Other Payments..............................................  29

9.  Negative Covenants of the Borrower..................................................................  30

    9.1    Liens on Project Facilities..................................................................  30
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     9.2    Liens on Personal Property...................................................................  30

     9.3    Transfers of Project Facilities or Bond Document Obligations.................................  31

     9.4    Leases.......................................................................................  31

     9.5    Easements....................................................................................  31

     9.6    Amendments to Documents......................................................................  31

     9.7    Nature of Business...........................................................................  31

10.  [Reserved]..........................................................................................  31

11.  Events of Default and Remedies Upon Default.........................................................  31

     11.1   Events of Default............................................................................  31

     11.2   Remedies Upon Default........................................................................  33

     11.3   Cumulative Remedies; No Waiver...............................................................  34

12.  Miscellaneous.......................................................................................  35

     12.1   Actions......................................................................................  35

     12.2   Nonliability of the Bank.....................................................................  35

     12.3   No Representations by the Bank...............................................................  35

     12.4   No Third Parties Benefited...................................................................  36

     12.5   Indemnity by the Borrower....................................................................  36

     12.6   Commissions..................................................................................  37

     12.7   Binding Effect...............................................................................  37

     12.8   Execution in Counterparts....................................................................  37

     12.9   Prior Agreements; Amendments; Consents.......................................................  37

     12.10  Cumulative Remedies; No Waiver...............................................................  37

     12.11  Inclusion of Expenditures in Indebtedness....................................................  37

     12.12  Survival of Representations and Warranties...................................................  37

     12.13  Notices......................................................................................  38
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    12.14  Further Assurances...........................................................................  39

    12.15  Governing Law................................................................................  39

    12.17  Severability of Provisions...................................................................  39

    12.17  Headings.....................................................................................  39

    12.18  Time of the Essence..........................................................................  39

    12.19  Waiver of Jury Trial.........................................................................  39

    12.20  Warrant of Attorney..........................................................................  39
</TABLE>

         Exhibit A.1  Series 2001A Letter of Credit

         Exhibit A.2  Series 2001B Letter of Credit

         Exhibit B    Project Site

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                            REIMBURSEMENT AGREEMENT
                            -----------------------

     This Reimbursement Agreement is entered into as of August 1, 2001, by and
between PECO II, INC., an Ohio corporation, (the "Borrower") and THE HUNTINGTON
NATIONAL BANK, a national banking association (the "Bank").

            1.   Definitions And Accounting Terms.
                 --------------------------------

                 1.1 Defined Terms. As used in this Reimbursement Agreement, the
                     -------------
following terms shall have the meaning set forth respectively after each:

            "Agreement" means this Reimbursement Agreement, either as originally
executed or as it may from time to time be supplemented or amended.

            "ALTA Policy" means the policy of title insurance covering the
Project Site required pursuant to Section 5.1.1 of this Agreement.

            "Beneficial Owner" means, with respect to a Bond, a person with a
Beneficial Ownership Interest therein, as evidenced to the satisfaction of the
Trustee.

            "Beneficial Ownership Interest" means the right to receive payments
and notices with respect to the Bonds that are held by the Depository under a
book entry system.

            "Bond Documents" means all of the instruments and agreements which
may become effective or be executed from time to time by the Issuer, the
Trustee, and/or the Borrower in connection with the Bonds, including without
limitation the following, as from time to time supplemented or amended:

     (i)    the Trust Indenture;

     (ii)   the Loan Agreement;

     (iii)  the Notes;

     (iv)   the Bond Purchase Agreement;

     (v)    the Bond Legislation;

     (vi)   the Tax Regulatory Agreement, dated as of August 1, 2001, among the
Borrower, the Issuer and the Trustee;

     (vii)  the Letter of Representations;

     (viii) the Remarketing Agreement; and

     (ix)   the Offering Memorandum.

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          "Bond Fund" means, the Bond Fund as defined in the Trust Indenture.

          "Bond Legislation" means the Bond Legislation as defined in the Trust
Indenture.

          "Bond Proceeds" means the proceeds of the Bonds, including without
limitation the amounts held from time to time by the Trustee in the Project
Fund, and any reserve or other fund, as well as any insurance or condemnation
proceeds or other assets held by the Trustee in special funds established
pursuant to the Bond Documents or otherwise, but excluding any amounts deposited
in the Bond Fund and in any fund established to comply with the rebate
requirements of Section 148 of the Internal Revenue Code of 1986, as amended.

          "Bond Purchase Agreement" means the Bond Purchase Agreement dated
August 8, 2001, among the Issuer, the Borrower, the Bank and the Underwriter, as
from time to time supplemented or amended with the prior written consent of the
Bank.

          "Bonds" means the $6,500,000 County of Arapahoe, Colorado Adjustable
Rate Demand Industrial Development Revenue Bonds, Series 2001 (PECO II, Inc.
Project) to be issued pursuant to the Trust Indenture for the purpose of
financing and/or refinancing the Project Costs.

          "Borrower Representative" means each of one or more Persons authorized
in writing from time to time by the Borrower, to deliver certificates, requests
for disbursements and other documents and instruments to the Bank pursuant to
this Agreement and, in the absence of such designation, means any officer of the
Borrower.

          "Business Day" means any day of the year, other than (a) a Saturday;
(b) a Sunday; (c) a day on which commercial banks located in the cities in which
the principal corporate trust office of the Trustee and the principal offices of
the Bank and the Remarketing Agent are located are required or authorized by law
to remain closed; or (d) a day on which the New York Stock Exchange is closed.

          "Depository" means any securities depository that is a clearing agency
under federal law operating and maintaining, with its participants or otherwise,
a book entry system to record ownership of book entry interests in the Bonds,
and to effect transfers of book entry interests in Bonds, and includes and means
initially The Depository Trust Company (a limited purpose trust company), New
York, New York.

          "Determination of Taxability" means a Determination of Taxability as
determined in accordance with the terms of the Trust Indenture.

          "Disbursement" means each of the disbursements by the Trustee from the
Project Fund pursuant to this Agreement and the Bond Documents.

          "Event of Default" means each of those events so designated in Section
11.1 of this Agreement.

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          "Financing Statements" means the UCC-1 financing statements required
pursuant to Section 4.1 of this Agreement, as from time to time supplemented or
amended.

          "Fiscal Year" means the fiscal year of the Borrower.

          "Issuer" means the County of Arapahoe, Colorado, a county and
political subdivision duly organized and existing under the laws of the State of
Colorado.

          "Letters of Credit" means the letters of credit to be issued by the
Bank pursuant to this Agreement in the form attached hereto as Exhibit A.1 and
                                                               ---------------
A.2, respectively, either as originally executed or as it they from time to time
---
be extended, renewed or replaced pursuant to this Agreement.

          "Letter of Credit Documents" means, collectively, this Agreement and
the Security Documents, as from time to time supplemented or amended.

          "Letter of Representations" means the blanket Letter of
Representations from the Issuer and the Trustee to the Depository, as
supplemented and amended from time to time.

          "Loan Agreement" means the Loan Agreement of even date herewith, by
and between the Issuer and the Borrower, as from time to time supplemented or
amended with the written consent of the Bank.

          "Mortgage" means the Deed of Trust, Assignment of Rents, and Security
Agreement of even date herewith executed and delivered by the Borrower for the
benefit of the Bank, as from time to time supplemented or amended.

          "Notes" means the Series 2001A Note and the Series 2001B Note (as
defined in the Loan Agreement) of the Borrower payable to the Trustee, dated
August 8, 2001, in the form attached to the Loan Agreement as Exhibit C.

          "Offering Memorandum" means the Offering Memorandum dated August 8,
2001 with respect to the Bonds, as amended and supplemented in accordance with
the terms of the Bond Purchase Agreement and the Remarketing Agreement.

          "Participant" means any financial institution which may become liable
for funding a portion of draws under the Letter of Credit pursuant to the terms
of a participation agreement between the Bank and the Participant.

          "Permitted Encumbrances" means the utility, access and other
easements, rights-of-way, mineral rights, restrictions and exceptions of record
encumbering the Project Site and approved by the Bank for inclusion as
exceptions in the policy of title insurance in favor of the Bank insuring the
lien of the Mortgage on the Project Site, as from time to time supplemented or
amended with the prior written consent of the Bank.

                                       3
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          "Person" means and includes an individual, corporation, partnership,
limited liability company, trust, unincorporated organization or association and
a government or any department or agency thereof.

          "Prime Rate" means the interest rate per annum established by The
Huntington National Bank from time to time as such bank's prime commercial rate
based on its consideration of economic, money market, business and competitive
factors, and is not necessarily such bank's most favored rate.  Subject to any
minimum or maximum rate limitations specified by applicable law, the Prime Rate
will automatically and immediately change from time to time effective as of the
effective date of each such change in the prime commercial rate of such bank.

          "Project" means the facility for the manufacture of communications
power systems, power distribution equipment and systems integration equipment
and services, to be located on the Project Site, and the acquisition,
construction, installation, renovation and equipping thereof.

          "Project Costs" means all costs of any nature whatsoever incurred by
or on behalf of the Borrower in connection with the acquisition, construction,
installation, renovation and equipping of the Project.

          "Project Facilities" means the Project Site and the Project, together
with any additions, modifications and substitutions to those facilities or any
other improvements to the Project Site.

          "Project Site" means the real property described in Exhibit B hereto,
                                                              ---------
and any additions thereto, less any removals therefrom, made in the manner and
to the extent provided in the Mortgage and this Agreement, and all existing
improvements, fixtures, furniture, equipment and machinery located thereon or
used in connection therewith.

          "Remarketing Agent" means the Remarketing Agent as designated from
time to time pursuant to the provisions of the Trust Indenture.

          "Remarketing Agreement" means the Remarketing Agreement of even date
herewith between the Borrower and the Remarketing Agent, as from time to time
supplemented or amended.

          "Security Agreement" means the Security Agreement (Equipment,
Fixtures, Inventory, and Receivables), dated as of even date herewith from the
Borrower to the Bank, as from time to time supplemented or amended.

          "Security Documents" means, collectively, the Mortgage, the Security
Agreement, the Financing Statements, and any other mortgage, security agreement,
guaranty, financing statement or assignment now, heretofore or hereafter
executed to secure the obligations of the Borrower under this Agreement, in each
case either as originally executed or as the same may from time to time be
supplemented or amended.

                                       4
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          "Series 2001A Bonds" means a portion of the Bonds in the original
aggregate principal amount of $2,000,000 designated "County of Arapahoe,
Colorado Adjustable Rate Demand Industrial Development Revenue Bonds, Series
2001A (PECO II, Inc. Project.)"

          "Series 2001B Bonds" means a portion of the Bonds in the original
aggregate principal amount of $4,500,000 designated "County of Arapahoe,
Colorado Adjustable Rate Demand Industrial Development Revenue Bonds, Series
2001B (PECO II, Inc. Project.)"

          "Trustee" means The Huntington National Bank, a national banking
association, with its principal corporate trust office located in Columbus,
Ohio, or its successors as trustee under the Trust Indenture.

          "Trust Indenture" means the Trust Indenture of even date herewith
executed and delivered by the Issuer and the Trustee, as from time to time
supplemented or amended.

          "Underwriter" means Huntington Capital Corp., an Ohio corporation.

          1.2   Use of Defined Terms. Any defined term used in the plural shall
                --------------------
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any number of the members of the relevant class.

          1.3   Accounting Terms. All accounting terms not specifically defined
                ----------------
in this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
generally accepted accounting principles ("GAAP"), applied on a consistent
basis.

          1.4   Exhibits. All Exhibits to this Agreement, either as now existing
                --------
or as the same may from time to time be supplemented or amended, are
incorporated herein by this reference.

     2.   Bonds. The Borrower contemplates entry into the Bond Documents to
          -----
which it is a party in order to cause the issuance of the Bonds, so that the
Bond Proceeds may be used to finance and/or refinance the cost of the
acquisition, construction, installation, renovation and equipping of the
Project.

     3.   Letters of Credit.
          -----------------

          3.1   Series 2001A Letter of Credit. The Borrower has requested the
                -----------------------------
Bank to issue an irrevocable direct pay letter of credit in the form attached
hereto as Exhibit "A.1" (the "Series 2001A Letter of Credit") in an aggregate
amount not exceeding $2,029,590, of which (a) an amount not exceeding $2,000,000
shall be available to pay the principal amount of the Series 2001A Bonds and the
portion of purchase or redemption price corresponding to principal of the Series
2001A Bonds, and (b) an amount not exceeding $29,590 shall be available to pay
for up to 45 days' interest accrued on the Series 2001A Bonds and the portion of
purchase or redemption price corresponding to interest on the Series 2001A Bonds
at the actual interest rate on the Series 2001A Bonds not to exceed a maximum
interest rate of 12% per annum, all as more particularly

                                       5
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provided in the Series 2001A Letter of Credit. The Bank is willing to issue the
Series 2001A Letter of Credit on the terms and conditions contained in this
Agreement and the other Letter of Credit Documents.

          3.2  Series 2001B Letter of Credit.  The Borrower has requested the
               -----------------------------
Bank to issue an irrevocable direct pay letter of credit in the form attached
hereto as Exhibit "A.2" (the "Series 2001B Letter of Credit") in an aggregate
amount not exceeding $4,566,576, of which (a) an amount not exceeding $4,500,000
shall be available to pay the principal amount of the Series 2001B Bonds and the
portion of purchase or redemption price corresponding to principal of the Series
2001B Bonds, and (b) an amount not exceeding $66,576 shall be available to pay
for up to 45 days' accrued interest on the Series 2001B Bonds and the portion of
purchase or redemption price corresponding to interest on the Series 2001B Bonds
at the actual interest rate on the Series 2001B Bonds not to exceed a maximum
interest rate of 12% per annum, all as more particularly provided in the Series
2001B Letter of Credit.  The Bank is willing to issue the Series 2001B Letter of
Credit on the terms and conditions contained in this Agreement and the other
Letter of Credit Documents.

     4.   Letter of Credit Documents.
          --------------------------

          4.1  Security Documents. In consideration of the Bank's entry into
               ------------------
this Agreement and the other Letter of Credit Documents, and as security for the
prompt payment when due of all sums of principal, interest and purchase price
advanced by the Bank pursuant to the Letter of Credit as well as for payment of
any other sums owing pursuant to this Agreement or any of the other Letter of
Credit Documents, together with any and all extensions, renewals, modifications
and amendments thereof and as security for the performance and observance of all
of the covenants, agreements and conditions contained in the Letter of Credit,
this Agreement and all of the other Letter of Credit Documents, the Borrower
shall, at its sole expense, execute and deliver or cause to be executed and
delivered to the Bank and record or cause to be recorded, if appropriate, the
following documents, each of which shall be in such form and content, and
executed by such persons and/or entities, as the Bank shall in its reasonable
discretion require:

               (a)  the Mortgage;

               (b)  the Security Agreement; and

               (c)  the Financing Statements.

          4.2  Other Documents and Actions.  The Borrower agrees to execute,
               ---------------------------
acknowledge and/or deliver or cause to be executed, acknowledged and/or
delivered to the Bank such other instruments, agreements and other documents,
and to take such actions, upon request by the Bank, as the Bank may reasonably
request in order to carry out the purposes of this Agreement and the other
Letter of Credit Documents and the transactions contemplated thereby and to
protect and/or further the validity, priority and/or enforceability of the
Security Documents or subject to the Security Documents and the security
interest and/or lien thereby created, any property, together with any renewals,
additions, substitutions, replacements or

                                       6
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betterments thereto, intended by the terms of this Agreement or the other Letter
of Credit Documents to be covered by the Security Documents.

          4.3    Right of Set-Off Against the Borrower; Additional Collateral.
                 ------------------------------------------------------------

                 (a)   Upon the occurrence and during the continuance of any
Event of Default hereunder, the Bank is hereby authorized at any time and from
time to time, without notice to the Borrower (any such notice being expressly
waived by the Borrower) and to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the Bank
to or for the credit or the account of the Borrower, against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement or
the other Letter of Credit Documents, irrespective of whether or not the Bank
shall have made any demand hereunder and although such obligations may be
unmatured.

                 (b)   The Bank agrees promptly to notify the Borrower and the
Trustee after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of the Bank under this Section 4.3 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which the
Bank may have.

     5.   Conditions to Issuance, Disbursements and Closing.
          -------------------------------------------------

          5.1    Conditions to Issuance. The obligation of the Bank to issue the
                 ----------------------
Letter of Credit is subject to the following conditions precedent, unless
specifically waived in writing by the Bank:

                 5.1.1 The Bank shall have received all the following, each of
which shall be in form and substance satisfactory to the Bank:

                 (a)   manually executed counterparts of the Letter of Credit
Documents and the Bond Documents and the fees and expenses required by Section
6.1 of this Agreement to be paid on the date of issuance of the Letter of
Credit;

                 (b)   a copy of the Articles of Incorporation of the Borrower,
as amended, certified by the Secretary of State of Ohio, the Code of
Regulations, as amended, of the Borrower, certified by the Secretary or an
Assistant Secretary of the Borrower, a certificate of the Secretary of State of
Ohio as to the Borrower's good standing as a corporation duly organized and
existing under the laws of the State of Ohio, and a certificate of the Secretary
of State of Colorado as to the authorization of the Borrower to do business as a
foreign corporation in the State of Colorado;

                 (c)   copies of such currently effective licenses, permits and
approvals of governmental authorities as are necessary to evidence the legal
authority of the Borrower to operate the Project;

                                       7
<PAGE>

               (d)  corporate resolutions in form and substance satisfactory to
the Bank and certified to the date of issuance of the Letters of Credit by the
Secretary or Assistant Secretary of the Borrower authorizing the Borrower's
execution and delivery of the Letter of Credit Documents and the Bond Documents
to which it is a party and empowering the signatories thereto to act on behalf
of the Borrower;

               (e)  all of the opinions, certificates, and other documents
specified in, or requested by the Bank, the Issuer, the Underwriter or the
Borrower pursuant to the Bond Purchase Agreement;

               (f)  written opinions of the Borrower's Ohio and Colorado
counsel, in form and substance satisfactory to the Bank, covering such matters
relating to the Borrower, the Project, the Letter of Credit Documents and the
Bond Documents as may be required by the Bank;

               (g)  a written opinion of bond counsel, in form and substance
satisfactory to the Bank, covering such matters relating to the Issuer and the
Bond Documents as may be required by the Bank;

               (h)  a current property survey of the Project Site certified to
the Bank and the title insurance company issuing the ALTA Policy prepared by a
registered surveyor in conformity with the Bank's survey standards and locating
all access roads, easements and other encumbrances set forth in the ALTA Policy;

               (i)  (i) a standard ALTA mortgagee title insurance commitment, in
form and substance and issued by a title insurance company satisfactory to the
Bank, together with satisfactory evidence of reinsurance of a portion of the
title insurance company's obligations under the final policy of title insurance
if required by the Bank in its discretion, naming the Bank as insured in a
policy amount of not less than $6,596,166, reflecting the Borrower's marketable
title in and to the Project Facilities and containing only exceptions acceptable
to the Bank; (ii) in the event the title insurance commitment shows restrictive
covenants affecting the Project Site, evidence that such restrictive covenants
are not now being violated and will not be violated by the development,
construction and renovation of the Project Facilities thereon; and (iii) after
closing and recording, a final policy of title insurance on the ALTA 1970
(Revised 1984) form naming the Bank as insured, containing no exceptions for
filed or unfiled mechanics' or materialmen's liens, the rights of parties in
possession or as to matters of survey, together with such other endorsements and
coverages as may from time to time be required by the Bank, and insuring the
Mortgage as a valid first lien on the Project, subject only to Permitted
Encumbrances, all in conformity to the Bank's title insurance requirements;

               (j)  certificates of insurance and certified copies of policies
in accordance with the Bank's insurance requirements and the other insurance
requirements set forth in the Mortgage;

               (k)  an opinion of counsel acceptable to the Bank, to the effect
that, in connection with the offer and sale of the Bonds and the issuance of the
Letter of Credit, it is not

                                       8
<PAGE>

necessary to register any security under the Securities Act of 1933, as amended,
or the securities laws of any State or, if such registration is necessary, that
all necessary registrations have been made; and the Bank shall, if requested by
the Bank, be supplied with a Blue Sky memorandum in form and content acceptable
to the Bank;

               (l)  current Uniform Commercial Code searches made in such places
as the Bank may specify, covering the Borrower, showing no filings relating to,
or which could relate to, the tangible and intangible personal property of the
Borrower other than those made hereunder and under the Security Documents and
Bond Documents;

               (m)  evidence satisfactory to the Bank that there is satisfactory
ingress and egress to the Project Site;

               (n)  a current "Phase One" environmental report regarding
hazardous wastes, toxic materials and other environmental hazards on the Project
Site, which report shall be certified by an environmental consultant and shall
conform in all respects with the Bank's "Phase One Environmental Report
Requirements." If warranted by the Phase One environmental report, the Borrower
shall provide a detailed audit of the same matters. Such consultant must appear
on the Bank's list of approved environmental consultants or be specifically
approved in writing by the Bank;

               (o)  evidence satisfactory to the Bank indicating that no portion
of the Project Site is located in a flood hazard area designated by the U.S.
Department of Housing and Urban Development;

               (p)  receipt with respect to the Project Facilities of (i)
evidence that public water, sewer, and other required utilities are available at
the Project Site and that the capacity of each such utility is sufficient to
adequately service the Project Facilities, (ii) copies of the applicable
occupancy permits with respect to the Project and evidence that the Project and
its use comply with all applicable building and other governmental laws,
regulations and requirements, and (iii) evidence that the Project Site is
finally and unappealably zoned to permit the existing and proposed uses of the
Project Site and the Project Facilities;

               (q)  evidence that the Project Site comprises one or more
separate tax parcels;

               (r)  evidence that all approvals required for the development,
construction, renovation, equipping, use and operation of the Project have been
granted by all governmental authorities having jurisdiction;

               (s)  an appraisal of the Project Facilities in form and amount
acceptable to the Bank on the date of issuance by an MAI appraiser acceptable to
the Bank and confirmed by the Bank's review appraiser; and

               (t)  current financial statements for the Borrower, in form and
substance satisfactory to the Bank.

                                       9
<PAGE>

          5.1.2  The Bank shall have received confirmation to its satisfaction
that the Security Documents and Bond Documents have been duly executed,
acknowledged, delivered and recorded or filed as appropriate.

          5.1.3  The Bonds shall have been duly executed and delivered, and all
of the Bonds shall have been sold and the purchase price for the Bonds received
by the Trustee, as required pursuant to the Bond Documents, simultaneously with
the issuance of the Letter of Credit.

          5.1.4  The Bank shall have received, in form and substance
satisfactory to the Bank, such additional certificates, documents, consents or
opinions as the Bank may reasonably request.

          5.2    Bank's Consent to Disbursements.  The Bank's written consent
                 -------------------------------
shall be required as a condition precedent to each Disbursement.

          5.3    Disbursement Requests.  The Bank's consent to Disbursements
                 ---------------------
shall be given, subject to the conditions contained in Section 5.4 of this
Agreement, only upon written request of the Borrower signed by a Borrower's
Representative.

          5.4    Conditions to Disbursement.  The Bank's consent to
                 --------------------------
Disbursements required pursuant to Section 5.3, above, shall be given only
following satisfaction of each of the following conditions, unless waived by the
Bank:

                 5.4.1  The Borrower shall be in full compliance with all of the
conditions set forth in Section 5.1, above, and all of such conditions shall
have been satisfied, as of the date of the Disbursement;

                 5.4.2  There shall have occurred no Event of Default which
remains unwaived or uncured or event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default and, if the Bank
shall so require, the Bank shall have received a certificate to that effect
signed by a Borrower's Representative;

                 5.4.3  The representations and warranties contained in Section
7.1 through 7.12 below, shall be correct on and as of the date of the
Disbursement as though made on and as of that date and, if so requested by the
Bank, the Bank shall have received a certificate to that effect signed by a
Borrower's Representative;

                 5.4.4  The Borrower shall, at its sole expense, have delivered
or caused to be delivered to the Bank originals of the "date down" endorsements
to the ALTA Policy as may from time to time be reasonably required by the Bank;
and

                 5.4.5  On and as of the date of the Bank's consent to the
Disbursement, the Borrower shall have complied in all material respects with all
applicable laws, ordinances, regulations and other requirements relating to the
Project, and all necessary consents or

                                       10
<PAGE>

approvals of any court or governmental department, public body, authority,
commission, board, bureau, agency or instrumentality shall have been regularly
and finally received with respect thereto, to the extent reasonably obtainable
by the date of such Disbursement, including without limitation each of the
following as applicable:

          (a)  all zoning, land use and planning requirements;

          (b)  subdivision and/or parcel map requirements;

          (c)  construction and building permit requirements; and,

if the Bank shall so require, the Bank shall have received, dated as of the date
of the Bank's consent to the Disbursement, a certificate signed by a Borrower's
Representative that, to the best of the Borrower's knowledge, such requirements
have been complied with; and

               5.4.6  The Borrower shall be in compliance with all of the terms
and conditions imposed by the Bond Documents in connection with such
Disbursement and, if the Bank shall so require, the Bank shall have received a
certificate to that effect signed by a Borrower's Representative.

     6.   Reimbursement and Other Payments; Extension.
          -------------------------------------------

          6.1  Reimbursement and Other Payments.  The Borrower hereby agrees to
               --------------------------------
pay to the Bank:

               (a)  on the date of any Principal Drawing or Interest Drawing (as
such terms are defined in the Letter of Credit), a sum equal to the amount of
such Principal Drawing or Interest Drawing plus the sum of $50 for each such
Principal or Interest Drawing made on the Letter of Credit;

               (b)  the portion of any Remarketing Drawing (as defined in the
Letters of Credit) used by the Trustee to pay the principal portion of Bonds or
Beneficial Ownership Interests duly tendered, or deemed tendered, for purchase
and not remarketed on the applicable Bond Purchase Date (as defined in the Trust
Indenture) shall be due and payable to the Bank ninety (90) days after the date
of such Remarketing Drawing or on the date the Pledged Bonds (as defined in
Section 6.6 below) which were the subject of such Remarketing Drawing are
remarketed, whichever shall first occur, and the unreimbursed portion of the
Remarketing Drawing shall bear interest from the date of such Remarketing
Drawing until payment of such portion thereof in full at the interest rate
provided in subsection (d) of this Section 6.1, payable on the first business
day of each month, commencing on the first business day of the month following
the month in which such Remarketing Drawing occurs. The portion of a Remarketing
Drawing used by the Trustee to pay the interest portion of the purchase price of
Bonds or Beneficial Ownership Interests duly tendered, or deemed tendered, for
purchase on the applicable Bond Purchase Date shall be paid on the date of such
Remarketing Drawing, together with the sum of $50 for each such Remarketing
Drawing. Any payment of interest on Bonds held by the Bank pursuant to Section
6.6 hereof, if and when received by the Bank, shall be

                                       11
<PAGE>

applied by the Bank to the payment of interest owed by the Borrower pursuant to
the first sentence of this Section 6.1(b);

               (c)  on demand, all reasonable amounts expended, advanced or
incurred by the Bank to satisfy any obligation of the Borrower under this
Agreement or any other Letter of Credit Document or to enforce the rights of the
Bank under this Agreement or any other Letter of Credit Document or Bond
Document (including without limitation any costs incurred by the Bank in
connection with any insolvency or bankruptcy proceeding affecting the Borrower,
or any tenant, sub-tenant, licensee or occupant with respect to any portion of
the Project, or any guarantor of the Borrower's obligations under this Agreement
or any of the Security Documents), which amounts will include all court costs,
reasonable attorneys' fees, fees of auditors and accountants and investigation
expenses reasonably incurred by the Bank in connection with any such matter;

               (d)  on demand, except as otherwise provided herein, interest on
any and all amounts unpaid by the Borrower to the Bank when due under this
Agreement or any other Letter of Credit Document from the date such amounts
become due until paid in full at a fluctuating rate per annum (computed on the
basis of a year of 360 days but calculated on the actual number of days
outstanding) equal to two percent (2%) per annum in excess of the Prime Rate;
provided, however, that amounts drawn under a Remarketing Drawing pursuant to
the first sentence of subsection (b) of this Section 6.1 shall bear interest at
an interest rate per annum equal to one percent (1%) in excess of the Prime Rate
from the date of such Remarketing Drawing until such amounts are due and
payable, and thereafter at a rate equal to two percent (2%) per annum in excess
of the Prime Rate;

               (e)  on demand, any other amounts owing to the Bank by the
Borrower under this Agreement or any of the other Letter of Credit Documents;

               (f)  on the date of issuance of the Letters of Credit: (i) all
attorneys' fees and out-of-pocket expenses incurred by the Bank counsel and bond
counsel in connection with the negotiation, preparation and execution of this
Agreement, the Letters of Credit and any and all of the other Letter of Credit
Documents and security documents in connection therewith, the Bond Documents and
the transactions contemplated thereby (including any amendments hereto or
thereto or consents or waivers hereunder or thereunder); and (ii) all fees,
charges or taxes for the recording or filing of Security Documents paid by the
Bank;

               (g)  on the date of issuance of the Letter of Credit, the initial
annual fee equal to $65,961.66 (the "Annual Fee"), being 1.00% of the original
stated amount of the Letters of Credit, for the period from the date of issuance
of the Letter of Credit through August 15, 2002; and

               (h)  for each subsequent year that a Letter of Credit remains in
effect, the Borrower will pay to the Bank for the one-year period commencing on
the 16th day of August of such year (a "Fee Period") an Annual Fee equal to
1.00% of the undrawn amount available to be drawn under such Letter of Credit on
such date (which amount will take into

                                       12
<PAGE>

account all reductions or increases in such undrawn amount through such August
16), payable in advance on the August 1 immediately preceding the commencement
of such Fee Period.

If subsequent to the payment of an Annual Fee under this subsection, any amount
is reinstated under a Letter of Credit which increases the undrawn amount
available to be drawn under such Letter of Credit to an amount greater than the
amount on which such fee was calculated (the "Increase Amount"), the Borrower
will pay to the Bank the Annual Fee on the Increase Amount within five days of
demand therefor by the Bank.  In no event shall the Bank have any obligation to
make reimbursement or to otherwise account to the Borrower in respect of fees
paid by the Borrower as a result of any reduction in the undrawn amount under a
Letter of Credit and/or any later adjustment to a fixed rate of interest on the
Bonds secured thereby at less than the maximum interest rate of 12% per annum.
If at any point in time the Borrower fixes the interest rate on a series of
Bonds at a rate less than the maximum rate of 12% per annum, the letter of
credit fee due and payable annually thereafter shall be due and payable on the
undrawn amount of such Letter of Credit representing the actual rate of interest
on the Bonds for the next respective Fee Period, if fixed for such Fee Period,
but if the rate of interest on the Bonds can vary during such Fee Period, the
annual letter of credit fee shall be calculated on the assumed maximum interest
rate of 12% per annum.  Provided, however, that upon termination of all
obligations of the Bank under a Letter of Credit, receipt by the Bank of such
original Letter of Credit for cancellation, receipt of all payments pursuant to
this Agreement with respect thereto, purchase of all Pledged Bonds held by the
Bank pursuant to Section 6.6 hereof with respect thereto and if there exists no
default on the part of the Borrower hereunder, the Bank agrees to refund to the
Borrower a portion of the Annual Fee paid in advance with respect to such Letter
of Credit by the Borrower, the amount of such refund to be determined by
multiplying the amount of such Annual Fee paid in advance by a fraction, the
numerator of which is the number of days remaining in the period for which such
fee has been paid following termination of such Letter of Credit and the
denominator of which is the total number of days in such period.

          6.2  Payments.  All payments by the Borrower to the Bank hereunder
               --------
shall be made in lawful currency of the United States of America and in
immediately available funds before 2:00 p.m., Columbus, Ohio time on the date
when such payment is due at the office of the Bank at 7 Easton Oval - EA4E63,
Columbus, Ohio  43219, Attention: International Division, Letter of Credit
Department, or at such other location as the Bank shall designate to the
Borrower from time to time in writing.  Any payment received and accepted by the
Bank after such time shall be considered for all purposes (including the
calculation of interest, to the extent permitted by law) as having been made on
the Bank's next following business day (as defined in the Letter of Credit).

               If the date for any payment hereunder falls on a day that is not
a business day, then for all purposes of this Agreement the same shall be deemed
to have fallen on the next following business day, and such extension of time
shall in such case be included in the computation of payments of interest.

          6.3  Increased Costs Due to Change in Law.  If any change in any law
               ------------------------------------
or regulation or in the interpretation thereof by any court or administrative
agency shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against or

                                       13
<PAGE>

in connection with letters of credit issued by the Bank or against commitments
by any Participant in connection with participation in letters of credit similar
to the commitment made by such Participant under its participation agreement
with the Bank, if any, or (ii) impose on the Bank or any Participant any other
condition regarding this Agreement or a Letter of Credit (other than changes in
the rates of income taxation generally applicable to the Bank or any
Participant), and the result of any such event shall be to increase the cost to
the Bank of issuing or maintaining such Letter of Credit or to increase the
costs to any Participant of maintaining its commitments under its participation
agreement (which increase in cost shall be determined by the Bank's or such
Participant's reasonable allocation of the aggregate of such cost increases
resulting from such events), then (a) the Bank or the Participant (as the case
may be) shall so notify the Borrower, and (b) upon receipt of such notice from
the Bank or the Participant (as the case may be), the Borrower shall promptly
pay to the Bank or to the Participant (as the case may be) from time to time as
specified by the Bank or the Participant (as the case may be) additional amounts
which shall be sufficient to compensate the Bank or the Participant (as the case
may be) for such increased costs, together with interest on each such amount for
the period from the date of such notice until payment in full thereof at the
Prime Rate plus two percent (2%) (computed on the basis of a year of 360 days
but calculated on the actual number of days outstanding). A certificate setting
forth in reasonable detail such increased cost incurred by the Bank or the
Participant as a result of any such event, submitted by the Bank or the
Participant to the Borrower, shall be prima facie evidence, absent manifest
                                      ----- -----
error, as to the amount thereof.

          6.4  Obligations Absolute.  The obligations of the Borrower under
               --------------------
this Agreement shall be absolute, unconditional and irrevocable, and shall be
paid and performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including, without limitation, the following
circumstances:

               (a)  any lack of validity or enforceability of the Letter of
Credit, or any of the Letter of Credit Documents or the Bond Documents or any
other agreement or instrument related thereto;

               (b)  any amendment or waiver of, or any consent to departure
from, the terms of the Letter of Credit or any of the Letter of Credit Documents
or the Bond Documents or any other agreement or instrument related thereto;

               (c)  the existence of any claim, set-off, defense or other right
which the Issuer or the Borrower may have at any time against the Trustee, any
beneficiary or any transferee of a Letter of Credit (or any Person for whom the
Trustee, any such beneficiary or any such transferee may be acting), the Bank or
any other Person, whether in connection with this Agreement, such Letter of
Credit, any of the other Letter of Credit Documents, the Bonds or any other
agreement or instrument related thereto, or in connection with the Project or
any unrelated transaction;

               (d)  any statement, draft or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect, or any statement therein being untrue or inaccurate in any respect
whatsoever (except to the extent

                                       14
<PAGE>

acceptance or reliance upon any such statement, draft or other document is a
result of the Bank's gross negligence or willful misconduct);

               (e)  the surrender or impairment of any security for the
performance or observance of the terms of this Agreement, any of the other
Letter of Credit Documents or any other agreement related thereto; or

               (f)  any other circumstance, happening or omission whatsoever,
whether or not similar to any of the foregoing, provided, that such
circumstance, happening or omission is not a result of the Bank's gross
negligence or willful misconduct.

          6.5  Termination and Extension of Letters of Credit.  Each Letter of
               ----------------------------------------------
Credit shall terminate in accordance with the terms and conditions of such
Letter of Credit; provided, however, that, subject to such terms and conditions,
the Expiration Date, as set forth in such Letter of Credit, may be extended
pursuant to, and otherwise in accordance with, the following terms and
conditions:

               (a)  On August 16, 2006, and on each successive August 16
thereafter, if the Extension Notice (as hereinafter described) with respect to a
Letter of Credit shall have theretofore been timely delivered by the Bank to the
Borrower and the Trustee, the Expiration Date thereof shall be extended for one
full year. If the Expiration Date is so extended on any such August 16, the
Trustee shall, not later than thirty (30) days thereafter surrender such
outstanding Letter of Credit to the Bank and accept, upon such surrender, a
substitute irrevocable letter of credit in the form of Exhibit A.1 or A.2, as
appropriate, to this Agreement, dated the date of such substitution and having
an Expiration Date which is one year later than the Expiration Date, but
otherwise having terms identical to the surrendered Letter of Credit. In lieu of
surrendering such Letter of Credit and accepting a substitute therefor, the
Trustee may accept a written notice of extension from the Bank notifying the
Trustee that the Bank has extended the Expiration Date for a period of one year.

               (b)  Not later than 90 days prior to August 16, 2006, and,
provided the Bank has theretofore timely given the Borrower and the Trustee the
Extension Notice, not later than 90 days prior to each subsequent August 16,
through and including August 16, 2020, the Bank may, in its sole and absolute
discretion, by notice in writing given by the Bank to the Borrower and the
Trustee (the "Extension Notice"), advise the Borrower and the Trustee that the
Expiration Date of a Letter of Credit will be extended in accordance with
paragraph (a) of this Section 6.5.

                                       15
<PAGE>

          6.6  Pledge of Remarketing Bonds and Beneficial Ownership Interests.
               --------------------------------------------------------------

               (a)  As security for the payment and performance of all
obligations of the Borrower to the Bank hereunder and under the other Letter of
Credit Documents, the Borrower hereby agrees that upon the making of a
Remarketing Drawing (as defined in the Letters of Credit, respectively) the
Borrower will forthwith deliver or cause to be delivered (or recorded through
the Depository) to the Bank Bonds or Beneficial Ownership Interests secured by
such Letter of Credit free and clear of all other liens and encumbrances in an
aggregate principal amount equal to the amount of such Remarketing Drawing, less
(i) any portion of such Remarketing Drawing representing interest on the Bonds
or Beneficial Ownership Interests so purchased, and (ii) the amounts the Bank is
reimbursed by 2:00 p.m. Columbus, Ohio time on the Bond Purchase Date
corresponding to the date of such Remarketing Drawing (collectively, the
"Pledged Bonds"), and the Borrower hereby grants to the Bank a security interest
in the Pledged Bonds and in the proceeds thereof.

               (b)  The Borrower hereby agrees to deliver or cause to be
delivered immediately (or recorded through the Depository) to the Bank the
Pledged Bonds which shall be registered by the Trustee (or recorded through the
Depository) in the names of the Borrower as pledgor and the Bank as pledgee,
with the Borrower's endorsements of the Pledged Bonds so delivered to the order
of the Bank. The Borrower further agrees to record through the Depository (if
the Pledged Bonds are held by a Depository in a book entry system) or cause the
Trustee to enter into its registration books (if the Bonds are not held by a
Depository in a book entry system), as the address to which payments of
principal, premium, if any, and interest with respect to Pledged Bonds are to be
sent, the Bank's address for notices pursuant to Section 12.13 hereof as in
effect from time to time.

               (c)  If the Borrower shall become entitled to receive or shall
receive any Pledged Bonds, any payment of interest with respect to the Pledged
Bonds, or any and all other proceeds thereof, the Borrower shall accept any such
items as the Bank's agent, shall hold them in trust for the Bank, and shall
deliver them forthwith to the Bank in the exact form received, with the
Borrower's endorsement to the order of the Bank when necessary, to be held by
the Bank, subject to the terms hereof, as security for the payment and
performance of all obligations of the Borrower hereunder and under the other
Letter of Credit Documents, except that the Bank shall credit all payments and
proceeds received by the Bank directly against the Borrower's obligations under
Section 6.1 of this Agreement as provided below.

               (d)  All principal, premium, if any, and interest paid on the
Pledged Bonds shall be retained by the Bank (or if received by the Borrower
shall be forthwith delivered by it to the Bank in the original form received)
and applied by the Bank to the payment of amounts due the Bank from the Borrower
hereunder and under the other Letter of Credit Documents.

               (e)  If the Borrower makes or causes to be made to the Bank a
payment of a Remarketing Drawing pursuant to Section 6.1(b) hereof, or a
Remarketing Agent resells Pledged Bonds on behalf of the Borrower, the Bank
agrees to release from the lien of this Agreement and deliver (or record through
the Depository) to the Borrower or the Remarketing

                                       16
<PAGE>

Agent, as the case may be, Pledged Bonds, endorsed in blank without recourse (if
not held by a Depository in a book entry system) in an aggregate principal
amount equal to the amount of such payment with respect to principal so made, or
the principal amount of the Pledged Bonds so resold to the extent that the
proceeds of such resale are delivered to the Bank.

               (f)  In addition to the rights and remedies granted to the Bank
in this Agreement, the Bank shall have all of the rights and remedies of a
secured party under Chapter 1309 of the Ohio Revised Code and such other rights
and remedies as are granted to a secured party in similar situations to the
extent of the security interest granted under paragraph (a) above.

               (g)  The Borrower shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Pledged Bonds by the Bank are
insufficient to pay all amounts to which the Bank is entitled, including
principal and interest as provided herein, and the reasonable fees of any
outside attorneys employed by the Bank to collect such deficiency.

          6.7  Reinstatement.
               -------------

               (a)  In connection with any Remarketing Drawing, upon receipt by
the Trustee of Pledged Bonds or Beneficial Ownership Interests for the Bank's
benefit in the aggregate principal amount equal to the unpaid amount of the
principal portion of such Remarketing Drawing delivered (or recorded through the
Depository) by the Borrower or on its behalf, registered or recorded in the name
of the Borrower as pledgor and the Bank as pledgee in accordance with Section
6.6 hereof, the Trustee's right to draw on the related Letter of Credit shall
automatically be reinstated in an amount equal to the principal portion plus the
interest portion of such Remarketing Drawing, or the aggregate principal amount
of such Bonds plus the interest portion of such Remarketing Drawing, as the case
may be.

               (b)  In the event of an Interest Drawing, the Stated Amount of
the related Letter of Credit shall automatically be reinstated in the amount of
the related Interest Drawing at the close of business on the tenth day following
the date of such drawing unless the Bank shall have delivered to the Trustee a
notice in the form of Exhibit 5 to such Letter of Credit in the event the Bank
has not been reimbursed for such drawing or an Event of Default has occurred
under this Agreement and is continuing.

     7.   Representations and Warranties by the Borrower.  As a material
          ----------------------------------------------
inducement to the Bank's entry into this Agreement and the transactions
contemplated hereby, the Borrower represents and warrants to the Bank, as of the
date of this Agreement and as of the date of issuance of the Letter of Credit,
that:

          7.1  Organization of the Borrower.  The Borrower is a corporation duly
               ----------------------------
organized, validly existing and in good standing under the laws of the State of
Ohio and is duly licensed to transact business as a foreign corporation in the
State of Colorado. The Borrower (a) has all requisite power and authority to
conduct its business and to own and lease its properties, (b) is duly qualified
to do business in every jurisdiction in which the nature of business conducted
by it makes such qualification necessary or where failure to so qualify would
have a material, adverse effect on its business or financial condition or its
performance of its obligations

                                       17
<PAGE>

under the Letter of Credit Documents, or the Bond Documents, and (c) is duly and
validly licensed and holds all permits and approvals necessary for the conduct
of the business in which it is engaged and for the intended use of the Project
Facilities. The Borrower is governed by its Articles of Incorporation, as
amended, and Code of Regulations, as amended, true and correct copies of which
have been delivered to the Bank, which documents have not been further restated,
amended or modified and remain in full force and effect.

          7.2  Execution, Delivery and Performance of Letter of Credit Documents
               -----------------------------------------------------------------
and Bond Documents.
------------------

               7.2.1  The Borrower has all requisite power and authority to
execute and deliver, and to perform all of its obligations under, the Letter of
Credit Documents and the Bond Documents, and shall execute and deliver to the
Bank, prior to the issuance of the Letters of Credit and as a condition thereto,
a certificate evidencing the due authorization of the signing corporate
officer(s) of the Borrower to the execution of the Letter of Credit Documents
and Bond Documents and the entry by the Borrower into the transactions
contemplated thereby.

               7.2.2  The execution and delivery by the Borrower of, and the
performance by the Borrower of all of its obligations under, each Letter of
Credit Document and Bond Document have been duly authorized by all necessary
corporate action and do not and will not:

               (a)    require any consent or approval not heretofore obtained of
any shareholder, director or officer of the Borrower;

               (b)    violate any provision of, or require any consent not
heretofore obtained under the Articles of Incorporation or Code of Regulations
of the Borrower, or any action or resolution of its shareholders or Board of
Directors, or any committee thereof.

               (c)    result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge, right
of others, or other encumbrance of any nature (other than as contemplated under
the Letter of Credit Documents and the Bond Documents) upon or with respect to
any property or assets now owned or leased or hereafter acquired by the
Borrower;

               (d)    violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in effect
having applicability to the Borrower; or

               (e)    result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any indenture or
loan or credit agreement, lease, or instrument to which the Borrower is a party
or by which the Borrower or any of its property or assets is bound or affected.

               7.2.3  At the time of execution of this Agreement, the Borrower
is not in default in any respect that is materially adverse to the interests of
the other parties to the Letter of

                                       18
<PAGE>

Credit Documents or the Bond Documents or the holders of the Bonds or that would
have any material adverse effect on the financial condition of the Borrower or
the conduct of its business under any law, rule, regulation, order, writ,
judgment, injunction, decree, determination, award, indenture, agreement, lease
or instrument described in Section 7.2.2(d) or Section 7.2.2(e), above.

               7.2.4  No authorization, consent, approval, order, license,
exemption from, or filing or registration or qualification with, any court or
governmental department, public body, authority, commission, board, bureau,
agency, or instrumentality, not heretofore obtained or not reasonably obtainable
by the date of issuance and delivery of the Letters of Credit is or will be
required to authorize, or is otherwise required in connection with the
following:

               (a)    the execution and delivery by the Borrower of, and the
performance by the Borrower of all of its obligations under, the Letter of
Credit Documents and the Bond Documents, or

               (b)    the creation of the liens, security interests, or other
charges or encumbrances described in the Letter of Credit Documents and the Bond
Documents.

               7.2.5  The officers of the Borrower executing the Letter of
Credit Documents and the Bond Documents on behalf of the Borrower are fully
authorized to do so.

               7.2.6  Each of the Letter of Credit Documents and the Bond
Documents, when executed and delivered, will constitute the legal, valid, and
binding obligations of the Borrower (to the extent the Borrower is a party
thereto or obligated thereunder), enforceable against the Borrower in accordance
with its terms, except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws and
equitable principles in effect from time to time affecting the rights of
creditors generally as such laws and insolvency, reorganization or moratorium
relate to the Borrower, and subject to limitations which may be imposed on
equitable remedies.

          7.3  Financial Statements.  The Borrower has furnished to the Bank the
               --------------------
current financial statements for the Borrower, and such statements and any other
financial statements or reports with respect to the Borrower submitted by the
Borrower to the Bank fairly present the financial position of the Borrower as of
the date thereof.

          7.4  No Material, Adverse Change.  There has been no material, adverse
               ---------------------------
change in the condition, financial or otherwise, of the Borrower since the dates
of the financial statements described in Section 7.3, above.

          7.5  Tax Liability.  The Borrower has filed all tax returns (federal,
               -------------
state and local) required to be filed and has paid all taxes shown thereon to be
due and payable by the Borrower, and all property taxes due, including interest
and penalties, if any; provided, however, that the Borrower shall not be
required to pay and discharge any such tax so long as the legality thereof shall
be promptly and actively contested in good faith and by appropriate proceedings.

                                       19
<PAGE>

The Borrower has established and will maintain adequate reserves for tax
liabilities, if any (including any tax liabilities contested pursuant to this
Section 7.5).

          7.6  Compliance with Laws. The Borrower is and shall remain in
               --------------------
compliance in all material respects with all laws, regulations and requirements
applicable to its business and has obtained all authorization, consents,
approvals, orders, licenses, exemptions from, and has accomplished all filings
or registrations or qualifications with, any court or governmental department,
public body, authority, commission, board, bureau, agency or instrumentality,
that are necessary for the transaction of its business.

          7.7  Litigation. There are no material actions, suits, or proceedings
               ----------
pending or threatened against or affecting the Borrower, the Project, the
Project Facilities, or assets of the Borrower before any court or governmental
department, public body, authority, commission, board, bureau, agency or
instrumentality.

          7.8  Compliance with Requirements. The Borrower has obtained and
               ----------------------------
examined all conditions, covenants, restrictions, easements, reservations,
rights of way and all applicable laws, ordinances, regulations, use permits,
occupancy permits, building permits and other requirements affecting or relating
to the Project and the Project Facilities of which it has knowledge after due
investigation or affecting or relating to acquisition, construction,
installation, renovation and equipping of the Project, and to best of the
Borrower's knowledge after due investigation the Project Facilities do not and
will not violate any of the same in any material respect and the intended use of
the Project Facilities will not be materially affected thereby.

          7.9  Statements.  Any certificate or written statement or the most
               ----------
recent projections furnished prior to the issuance of the Letter of Credit by
the Borrower to the Bank, the Issuer, the Trustee or any other Person in
connection with the negotiation of this Agreement or any of the other Letter of
Credit Documents or the Bond Documents or the transactions contemplated thereby
to the best knowledge of the Borrower after reasonable inquiry does not contain
any untrue statement of a material fact and does not omit any material fact
necessary to make the statements contained herein or therein, in the light of
the circumstances under which they were made, not misleading.

          7.10 Pension Plan Liabilities.  No pension plan for the benefit of
               ------------------------
the Borrower's employees ("Pension Plan") has been terminated; the Borrower has
not incurred any liability to the Pension Benefit Guaranty Corporation other
than for required insurance premiums which have been paid when due; no
Reportable Event described in Section 4043 ("Reportable Event") of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or in the
regulations issued thereunder, or other event or condition which presents a risk
of termination of any Pension Plan by the Pension Benefit Guaranty Corporation
has occurred; the Borrower has not withdrawn from any pension plan prescribed in
Section 4001(a)(3) of ERISA, as amended by the Multiemployer Pension Plan
Amendment Act of 1980, as amended ("Multiemployer Plan") in a complete
withdrawal or a partial withdrawal; and no Pension Plan, and no other employee
pension benefit plan described in Section 3 of ERISA to which the Borrower is a
party, has

                                       20
<PAGE>

engaged in a transaction prohibited under Sections 406 or 407 of ERISA or under
Section 4975 of the Internal Revenue Code of 1986, as amended.

          7.11  Environmental Protection.  The Borrower (a) has no actual
                ------------------------
knowledge of the permanent placement, burial or disposal of any Hazardous
Substances (as hereinafter defined) on any real property owned, leased, or used
by the Borrower including, but not limited to, the Project Site (the
"Premises"), of any spills, releases, discharges, leaks, or disposal of
Hazardous Substances that have occurred or are presently occurring on, under, or
onto the Premises, or of any spills, releases, discharges, leaks or disposal of
Hazardous Substances that have occurred or are occurring off the Premises as a
result of the Borrower's improvement, operation, or use of the Premises which
would result in non-compliance with any of the Environmental Laws (as
hereinafter defined); (b) is and has been in compliance with all applicable
Environmental Laws; (c) knows of no pending or threatened environmental civil,
criminal or administrative proceedings against the Borrower relating to
Hazardous Substances; (d) knows of no facts or circumstances that would give
rise to any future civil, criminal or administrative proceeding against the
Borrower relating to Hazardous Substances; and (e) will not permit any of its
employees, agents, contractors, subcontractors, or any other person occupying or
present on the Premises to generate, manufacture, store, dispose or release on,
about or under the Premises any Hazardous Substances which would result in the
Premises not complying with the Environmental Laws.

     As used herein, "Hazardous Substances" shall mean and include all hazardous
and toxic substances, wastes, materials, compounds, pollutants and contaminants
(including, without limitation, asbestos, polychlorinated biphenyls, and
petroleum products) which are included under or regulated by the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
(S)9601, et seq., the Toxic Substances Control Act, as amended, 15 U.S.C.
         -------
(S)2601, et seq., the Resource Conservation and Recovery Act, as amended, 42
         -------
U.S.C. (S)6901, et seq., the Water Quality Act of 1987, as amended, 33 U.S.C.
                -------
(S)1251, et seq., and the Clean Air Act, as amended, 42 U.S.C. (S)7401, et seq.,
         -------                                                        -------
and any other federal, state or local statute, ordinance, law, code, rule,
regulation or order regulating or imposing liability (including strict
liability) or standards of conduct regarding Hazardous Substances (hereinafter
the "Environmental Laws"), but does not include such substances as are
permanently incorporated into a structure or any part thereof in such a way as
to preclude their subsequent release into the environment, or the permanent or
temporary storage or disposal of household hazardous substances, and which are
thereby exempt from or do not give rise to any violation of the Environmental
Laws.

     The Borrower hereby indemnifies the Bank and holds the Bank harmless from
and against any loss, damage, cost, expense or liability (including strict
liability) directly or indirectly arising out of, or attributable to, the
generation, storage, release, threatened release, discharge, disposal or
presence of Hazardous Substances on, under or about the Premises (whether by the
Borrower, or any employees, agents, contractors or subcontractors of the
Borrower, or any predecessor in title or any third persons occupying or present
on the Premises), or the breach of any of the representations and warranties
regarding the Premises, including, without limitation: (a) those damages or
expenses arising under the Environmental Laws; (b) the costs of any repair,
cleanup or detoxification of the Premises, including the soil and ground water
thereof, and the

                                       21
<PAGE>

preparation and implementation of any closure, remedial or other required plans;
(c) damage to any natural resources; and (d) all reasonable costs and expenses
incurred by the Bank in connection with clauses (a), (b) and (c) including, but
not limited to, reasonable attorneys' fees.

     The indemnification provided for herein shall not apply to any losses,
liabilities, damages, injuries, expenses or costs which:  (i) arise from the
gross negligence or willful misconduct of the Bank, or (ii) relate to Hazardous
Substances placed or disposed of on the Premises after the Bank acquires title
to the Premises through foreclosure or otherwise.

          7.12  Year 2000 Compliance.  (1) Borrower has (a) undertaken a
                --------------------
detailed inventory, review, and assessment of all areas within and affecting its
business and operations that could be adversely affected by its failure to be
Year 2000 Compliant (as hereinafter defined) on a timely basis; (b) developed a
plan and time line for becoming Year 2000 Compliant on a timely basis; and (c)
to date, implemented that plan in accordance with the specified timetable in all
material respects;

          (2)   The Borrower reasonably anticipates that it will be Year 2000
Compliant on a timely basis; and

          (3)   Borrower shall deliver to the Bank: (a) immediately upon
becoming aware of the existence of any condition or event which constitutes or
will constitute, but for the passage of time or giving of notice or both, the
failure of the Borrower to be Year 2000 Compliant, a written notice specifying
the nature and period of existence thereof and what action the Borrower is
taking or proposes to take with respect thereto; and (b) at the request of Bank,
such information, documentation and materials as Bank may from time to time
reasonably require including, but not limited to, (i) the Borrower's Year 2000
plan and time line, (ii) any management or other letters from the Borrower's
accountants addressing or mentioning the Borrower's Year 2000 Compliance, and
(iii) such other information, documentation and materials as Bank may reasonably
request from time to time in order to confirm that the Borrower is Year 2000
Compliant and the method(s) used by the Borrower to become Year 2000 Compliant.

          As used herein, "Year 2000 Compliant" shall mean that all software,
embedded microchips and other processing capabilities utilized by the Borrower
or its key suppliers, vendors and customers will correctly process, sequence,
and calculate, without interruption, all date and date related data for all
dates to, through and after January 1, 2000, including leap year calculations,
and shall recognize, store and transmit date data in a format which clearly
indicates the correct century.

     8.   Affirmative Covenants of the Borrower.  For so long as any obligation
          -------------------------------------
of the Borrower in connection with the Bond Documents, this Agreement or any of
the other Letter of Credit Documents remains outstanding, the Borrower shall,
unless the Bank otherwise consents in writing:

          8.1   Protection of Lien on Project Facilities.    Maintain the lien
                ----------------------------------------
created by the Mortgage as a first lien, subject only to Permitted Encumbrances,
upon the Project Facilities, and

                                       22
<PAGE>

take such actions and execute and deliver to the Bank such instruments and
documents as the Bank may reasonably require from time to time in connection
therewith.

          8.2  Protection of Security Interest in Personal Property.    Maintain
               ----------------------------------------------------
the liens created by the Mortgage and the Security Agreement as first liens upon
the personal property comprising a portion of the Project Facilities and upon
all other tangible and tangible personal property of the Borrower, and take such
actions and execute and deliver to the Bank such instruments and documents as
the Bank may reasonably require from time to time in connection therewith,
including without limitation any form UCC-1 or UCC-2 financing statements,
continuation statements or other instruments and documents extending or
perfecting the security interest of the Bank in and to such personal property as
it may exist from time to time.

          8.3  Payment of Taxes, Assessments and Charges. Pay all taxes,
               -----------------------------------------
assessments, charges and levies imposed by any public authority which are or may
become a lien affecting the Project Facilities or any part thereof, provided,
however, that the Borrower shall not be required to pay and discharge any such
tax, assessment, charge or levy so long as (a) the legality thereof shall be
promptly and actively contested in good faith and by appropriate proceedings and
(b) the Borrower maintains reserves adequate to pay any liabilities contested
pursuant to this Section 8.3.

          8.4  Undisbursed Bond Proceeds. If at any time it shall reasonably
               -------------------------
appear to the Bank that the undisbursed portion of the Bond Proceeds and the
Borrower's equity funding are insufficient to pay for all work done or to be
done and all other expenses for the completion of the Project and to satisfy all
of the Borrower's obligations under this Agreement, the other Letter of Credit
Documents and the Bond Documents with respect thereto (including without
limitation all carrying costs of the Project and the payment of all lien claims
or rights to a claim for past work, supplies or materials), the Borrower shall,
within ten days following notice from the Bank to the Borrower of such
insufficiency, deposit with the Trustee in cash, or instruments satisfactory to
the Trustee and the Bank, the amount the Bank deems to be such insufficiency, or
otherwise demonstrate to the satisfaction of the Bank the availability of such
amount at times sufficient to meet all of such obligations of the Borrower, and
the Bank shall not be required to approve any further Disbursements unless and
until such deposit is made.  Any amounts so deposited shall be placed in the
Project Fund and held and disbursed in accordance with the provisions of the
Trust Indenture for the disbursement of monies deposited therein.

          8.5  Insurance. Keep the Project Facilities insured in accordance
               ---------
with and comply with the insurance provisions of the Mortgage.

          8.6  Escrow for Taxes, Assessments and Insurance. The Borrower shall
               -------------------------------------------
deposit monthly with the Bank an amount equal to one-twelfth (1/12) of the
annual real estate taxes and assessments, and insurance premiums on the Project
Facilities, provided, however, that the deposit of such sums shall be waived as
long as the Borrower provides the Bank with satisfactory evidence of timely
payment of such taxes and insurance and no Event of Default has occurred and is
continuing.

                                       23
<PAGE>

          8.7  Governmental Approvals.  Deliver to the Bank, from time to time
               ----------------------
at the Bank's request, in form and substance satisfactory to the Bank, evidence
that the Borrower has complied in all material respects with all applicable
laws, ordinances, regulations and other requirements relating to the Project
Facilities, and that all necessary consents or approvals of any court or
governmental department, public body, authority, commission, board, bureau,
agency or instrumentality have been regularly and finally received with respect
to the Project Facilities, including without limitation each of the following as
applicable:

               (a)  all zoning, land use and planning requirements;

               (b)  all subdivision and/or parcel map requirements;

               (c)  all environmental statutes, rules, regulations and
requirements;

               (d)  all requirements imposed by any public utility in connection
with the use of the Project Facilities or the supply of utilities thereto; and

               (e)  all requirements imposed in connection with any use permit,
occupancy permit, building permit or other permit or approval required by any
governmental authority in connection with the Project Facilities.

          8.8  Compliance with Requirements. Comply with the lessor's
               ----------------------------
obligations under any occupancy leases to tenants of the Project Facilities, or
any portion thereof, and all conditions, covenants, restrictions, easements,
reservations, rights, rights of way and all applicable laws, ordinances,
regulations, use permits, occupancy permits, building permits and other
requirements, including without limitation those affecting or relating to the
Project Site, the construction, installation , renovation and equipping of the
Project thereon or the Borrower's operations thereon of the Project Facilities.

          8.9  Books and Records. The Borrower shall each maintain full and
               -----------------
complete books of account and other records reflecting the results of its
operations (in conjunction with any other ventures as well as specifically with
respect to the Project Facilities) in accordance with generally accepted
accounting principles applied on a consistent basis, and provide to the Bank,
promptly after request by the Bank therefor, such financial statements and other
information pertaining to the Borrower and the assets and operations of the
Borrower as the Bank may from time to time request.  The Bank and its duly
authorized agents shall have the right to examine and make copies of all of the
books and records of the Borrower at reasonable times and at reasonable
intervals.

          8.10 Notice of Litigation.  Give notice to the Bank, within 10 days
               --------------------
of the Borrower's learning thereof, of any of the following:

               (a)  any litigation materially affecting or relating to the
Project Facilities;

                                       24
<PAGE>

               (b)  any dispute between the Borrower and any municipal or other
governmental authority relating to the Project Facilities; and

               (c)  any threat or commencement of proceedings in condemnation or
eminent domain relating to the Project Facilities.

          8.11 Notice of Certain Events.  The Borrower shall promptly notify
               ------------------------
the Bank if (a) the Borrower learns of the occurrence of any event which
constitutes, or will, with the passage of time or the giving of notice or both,
constitute an Event of Default or a default under this Agreement or any of the
other Letter of Credit Documents or any of the Bond Documents, together with a
detailed statement by the Borrower specifying the nature thereof and what action
the Borrower is taking or proposes to take with respect thereto, or (b) the
Borrower receives any notice from, or the taking of any other action by, the
holder of any promissory note, debenture or other evidence of indebtedness of
the Borrower or of any security (as defined in the Securities Act of 1933, as
amended) of the Borrower with respect to a claimed default, together with a
detailed statement by the Borrower specifying the notice given or other action
taken by such holder and the nature of the claimed default and what action the
Borrower is taking or proposes to take with respect thereto, or (c) the Borrower
learns of the existence of any legal, judicial or regulatory proceedings
affecting the Borrower or any of its properties or assets in which the amount
involved is material and is not covered by insurance or which, if adversely
determined, would cause a material, adverse change in the business, prospects,
profits, properties, assets or condition (financial or otherwise) of the
Borrower, or (d) there shall occur or exist any other event or condition causing
a material, adverse change in the business, prospects, profits, properties,
assets or condition (financial or otherwise) of the Borrower.

          8.12 Opinions and Notices.  The Borrower shall deliver to the Bank,
               --------------------
concurrently with the delivery thereof to the Trustee, a copy of each opinion of
counsel and notice given pursuant to the Bond Documents, addressed to the Bank.

          8.13 Defaults of Others.  Use its best efforts to cure or cause to
               ------------------
be cured all defaults of the Issuer or the Trustee under the Bond Documents, if
economically practical and/or required in order to avoid an Event of Default
under the Bonds.

          8.14 Security of Project Facilities.  The Borrower shall take such
               ------------------------------
measures to protect the physical security of the Project Facilities as the Bank
may reasonably deem advisable.

          8.15 ERISA.  With respect to each of the Borrower's pension plans,
               -----
if any, the Borrower shall:  (a) at all times make prompt payment of
contributions required to meet the minimum funding standards set forth in
Section 302 through 305 of ERISA with respect to any such plan, (b) promptly,
after the filing thereof, furnish to the Bank copies of each annual report
required to be filed pursuant to Section 103 of ERISA in connection with any
such plan for the plan year, including any certified financial statements or
actuarial statements required pursuant to said Section 103, (c) notify the Bank
immediately of any fact, including, but not limited to, any "Reportable Event",
as that term is defined in Section 4043 of ERISA, arising in connection with the
plan which might constitute grounds for termination thereof by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United
States District Court of a

                                       25
<PAGE>

trustee to administer the plan, (d) notify the Bank of any "Prohibited
Transaction" as that term is defined in Section 406 of ERISA, (e) not engage in
any such Prohibited Transaction and (f) not terminate any such plan in a manner
which could result in the imposition of a lien on the property of the Borrower
pursuant to Section 4068 of ERISA.

          8.16  Payment of Taxes and Claims. The Borrower will pay before they
                ---------------------------
become delinquent (a) all taxes, assessments and governmental charges or levies
imposed upon it or its property; and (b) all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords, bailees and other like persons
which, if unpaid, might result in the creation of a lien or encumbrance upon its
property, provided that items of the foregoing description need not be paid
          --------
while being contested in good faith and by appropriate proceedings and provided
                                                                       --------
further that adequate book reserves have been established with respect thereto
and provided further that the Borrower's title to, and its right to use, its
    --------
property is not affected thereby.

          8.17  Maintenance of Property and Existence.  The Borrower shall (a)
                -------------------------------------
maintain its property in good condition and make all renewals, replacements,
additions, betterments and improvements thereto which are deemed necessary by
the Borrower; (b) maintain, with financially sound and reputable insurers,
insurance with respect to its property and business against such casualties and
contingencies, of such types (including but not limited to fire and casualty,
public liability, products liability, larceny, embezzlement or other criminal
misappropriation insurance); (c) keep true books of records and accounts in
which full and correct entries will be made of all its business transactions,
and reflect in its financial statements adequate accruals and appropriations to
reserves; (d) do or cause to be done all things necessary (i) to preserve and
keep in full force and effect the Borrower's existence, rights and franchises,
and (ii) except as provided in Section 8.18 hereof, maintain the Borrower's
status as a corporation duly organized, validly existing and in good standing
under the laws of the state of its organization; (e) not acquire, incur or
assume directly or indirectly, any material contingent liability in connection
with the release of any toxic or hazardous waste or substance into the
environment, or dispose of, or allow to be disposed of, or otherwise release
hazardous or toxic substances or solid wastes on or into any of the real
property of the Borrower, and (f) not be in material violation of any laws,
ordinances, or governmental rules and regulations or fail to obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its property or to the conduct of its business, which violation
or failure to obtain might materially and adversely affect the business,
prospects, profits, properties or condition (financial or otherwise) of the
Borrower.

          8.18  Sale of Assets, Merger, Subsidiaries and Tradenames. The
                ---------------------------------------------------
Borrower will not, without the prior written consent of the Bank, sell, lease,
transfer or otherwise dispose of, all, or substantially all, of its assets. The
Borrower will not, without the prior written consent of the Bank, consolidate
with or merge into any other entity, or permit any other entity to consolidate
with or merge into it. The Borrower has no subsidiaries and will not create or
acquire any subsidiaries or conduct business under any tradename, without the
prior written consent of the Bank, which consent shall not be unreasonably
withheld.

          8.19  Other Borrowings and Contingent Liabilities.  Except for the
                -------------------------------------------
obligations of the Borrower under the Bond Documents, the Letter of Credit
Documents, other indebtedness

                                       26
<PAGE>

to the Bank, and purchase money financing transactions secured by the item or
items being purchased, the Borrower will not (a) create or incur extensions of
credit or indebtedness, including without limitation, any indebtedness for
borrowed money or advances, letters of credit, or capitalized lease agreements
except in the ordinary course of business, or (b) guarantee, indorse or
otherwise become surety for or upon the obligations of others, except by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business.

          8.20  Ownership and Management.  The Borrower shall not permit any
                ------------------------
material change in its ownership or management.

          8.21  Financial Statements. Deliver, or cause to be delivered, to the
                --------------------
Bank the following:

                (a)  Promptly and in any event within 90 days after the end of
each Fiscal Year, consolidated and consolidating financial statements for the
Borrower for such Fiscal Year, audited and certified by an independent
accounting firm acceptable to the Bank, along with any management letters
written by such firm;

                (b)  Copies of all such regular or periodic financial statements
or financial reports as the Borrower shall send to its shareholders;

                (c)  Copies of all such regular or periodic reports which are
available for public inspection which the Borrower may be required to file with
any Federal or state department, bureau, commission or agency, including without
limitation tax returns, as may from time to time be requested by the Bank; and

                (d)  Promptly and in any event within 90 days after the end of
each Fiscal Year, a certification of the chief executive officer or chief
financial officer of the Borrower that to the officer's actual knowledge, no
Event of Default or an event which, with the passage of time or giving of
notice, or both, would be an Event of Default has occurred and the Borrower is
in compliance with all covenants and agreements made by the Borrower and
contained in this Agreement or any of the Letter of Credit Documents or Bond
Documents.

          8.22  Interim Financial Statements. Deliver to the Bank within 30
                ----------------------------
days after the end of each fiscal quarter:

                (a)  financial statements, including a balance sheet and
statements of income and surplus, and cash flow certified by the chief executive
officer or chief financial officer of the Borrower, as fairly representing the
Borrower's financial condition as of the end of such period, and

                (b)  such further information as the Bank may reasonably
require.

          8.23  List of Personal Property. Deliver to the Bank, from time to
                -------------------------
time, within thirty (30) days of the Bank's request therefor, a list of all of
the personal property securing repayment of the Borrower's obligations under the
Letter of Credit Documents, or if such a list

                                       27
<PAGE>

has been delivered, deletions and additions since the immediate prior delivered
list, but such list shall not be required to be delivered more frequently than
annually.

          8.24  Tax Appeals.  Bring, maintain and diligently prosecute any and
                -----------
all actions, appeals and proceedings which are reasonably available to the
Borrower in order to challenge, reverse or set aside a Determination of
Taxability (as defined in the Trust Indenture).

          8.25  Copies of Leases.  Give written notice to the Bank of the
                ----------------
entry by the Borrower into any lease or other agreement pursuant to which any
Person is given any right to occupy or use any portion of the Project
Facilities, together with true and correct copies of each such lease or other
agreement.  Each such lease or other agreement shall be subject to approval by
the Bank, which approval shall not be unreasonably withheld, and each such lease
or other agreement shall be assigned to the Bank as additional security for the
obligations of the Borrower.  At the Bank's option, all such leases and other
agreements shall be subordinated to the Mortgage.

          8.26  Maintenance and Furnishing of Project Facilities; Substitutions
                ---------------------------------------------------------------
and Removals. Maintain its properties, including without limitation the Project
------------
Facilities, and each portion thereof (including without limitation equipment,
machinery and fixed assets) in good condition and repair, said condition and
repair to be in line with that of comparable facilities; and not permit any
waste with respect thereto; provided, however, that if the Borrower, in its
reasonable discretion, determines that any item of personal property
constituting a part of the Project Facilities shall have become inadequate,
obsolete, worn-out, unsuitable, undesirable or unnecessary or should be
replaced, the Borrower may remove such items providing that the Borrower shall:

                (a)  substitute and install as part of the Project Facilities
property of equal or greater utility and value (but not necessarily fulfilling
the same function in the operation of the Project Facilities) as the removed
property, which such substituted property shall be free from all liens and
encumbrances (other than Permitted Encumbrances) and shall become part of the
Project Facilities; or

                (b)  in the case of removal of property without substitution,
promptly pay, if the aggregate of all such removals during any calendar year
exceeds $25,000 as hereinafter provided, to the Trustee for deposit in the Bond
Fund (as defined in the Trust Indenture), or if the Bonds have been paid in full
(or deemed to be paid and discharged pursuant to the provisions of Article IX of
the Trust Indenture) but amounts remain due under this Agreement to the Bank, an
amount equal to (i) if the removed property is sold or scrapped, the proceeds of
such sale or the scrap value thereof, or (ii) if the removed property is used as
a trade-in for property not to be installed as part of the Project Facilities,
the trade-in credit received by the Borrower.

     If, prior to any such removal, the Borrower shall have acquired and
installed personal property with its own funds which have become a part of the
Project Facilities, the Borrower may credit the amount so spent against the
requirement that it either substitute other property or make payment under this
Section on account of such removal, provided that such previously

                                       28
<PAGE>

acquired and installed property meets the requirements for substituted property
under subsection (a) of this Section.

     The Borrower shall promptly report to the Bank and the Trustee each such
removal, substitution, sale or other disposition having an annual aggregate
value in excess of $25,000 and shall pay to the Trustee or to the Bank, if
applicable, such amounts as are required by the provisions of the preceding
subsection (b) of this Section promptly after the sale, trade-in or other
disposition requiring such payment; provided, however, that no such payment need
be made until the amount to be paid to the Trustee or to the Bank, if the Bonds
have been paid in full (or are deemed to have been paid and discharged under
Article IX of the Trust Indenture) but amounts remain due under this Agreement,
on account of all such sales, trade-ins or other dispositions not previously
paid aggregates in any calendar year at least $25,000.

     At the request of the Bank, the Borrower shall deliver to the Bank such
instruments, including financing statements and amendments thereto, as are
necessary or advisable to perfect the Bank's lien upon and security interest in
any personal property installed in substitution for any property removed
pursuant to this Section.  Upon the request of the Borrower and compliance by
the Borrower with the terms of this Section, the Bank shall execute and deliver
to the Borrower appropriate instruments releasing any property removed pursuant
to this Section from the liens and security interests created by the Security
Documents.

          8.27  Deposit Accounts. The Borrower shall maintain its primary
                ----------------
deposit accounts with the Bank.

          8.28. Optional Redemption of Bonds and Other Payments. (a) The
                ------------------------------------------------
Borrower shall cause the Series 2001A Bonds to be optionally redeemed in
accordance with the provisions of Section 4.01(c) of the Trust Indenture, on the
first Business Day of August in the following principal amounts in the years
specified below:

<TABLE>
<CAPTION>
     Year of Redemption on
       the First Business                              Principal Amount
          Day of August                                 to be Redeemed
     ---------------------                             ----------------
     <S>                                               <C>
     2017                                                   $180,000
     2018                                                    420,000
     2019                                                    450,000
     2020                                                    460,000
     2021 (Final Maturity)                                   490,000
</TABLE>

     (b)  The Borrower shall cause the Series 2001B Bonds to be optionally
redeemed in accordance with the provisions of Section 4.01(c) of the Trust
Indenture, on the first Business Day of August in the following principal
amounts in the years specified below:

                                       29
<PAGE>

<TABLE>
<CAPTION>
     Year of Redemption on
      the First Business            Principal Amount
        Day of August                to be Redeemed
     ---------------------          ----------------
     <S>                            <C>
     2002                             $210,000
     2003                              210,000
     2004                              220,000
     2005                              230,000
     2006                              240,000
     2007                              250,000
     2008                              270,000
     2009                              280,000
     2010                              290,000
     2011                              310,000
     2012                              320,000
     2013                              330,000
     2014                              350,000
     2015                              370,000
     2016                              390,000
     2017 (Final Maturity)             230,000
</TABLE>

          The Borrower shall make a payment on or before the last Business Day
of each month commencing with the last Business Day of August, 2001 (each, a
"Principal Payment Date"), to the Trustee for deposit in the Bond Fund
maintained by the Trustee pursuant to the Trust Indenture in an amount equal to
one-twelfth of the principal amount of Bonds to be so optionally redeemed on the
next following first Business Day of August.  The final payment due on the
Principal Payment Date immediately prior to the maturity date of the Bonds shall
be an amount equal to the principal amount of Bonds outstanding less the amount
then on deposit in the Bond Fund and available to reimburse the Bank for any
drawings under the Letters of Credit.

     9.   Negative Covenants of the Borrower. For so long as any obligation of
          ----------------------------------
the Borrower in connection with this Agreement or any of the other Letter of
Credit Documents remains outstanding, the Borrower shall not, unless the Bank
otherwise consents in writing, which consent shall not be unreasonably withheld:

          9.1  Liens on Project Facilities.  Create or cause or suffer to become
               ---------------------------
effective any mortgage, deed of trust or like lien or encumbrance affecting the
Project Facilities or any portion of the same, except for the lien of the
Mortgage, Permitted Encumbrances, and taxes and assessments not delinquent.

          9.2  Liens on Personal Property. Install in, or otherwise use in
               --------------------------
connection with, the Project Facilities any personal property comprising a
portion of the Project Facilities under any security agreements, installment
purchase agreements or similar agreements however denominated (other than the
Security Documents) whereby the right is reserved or accrues to anyone to remove
or repossess any such items or whereby any Person other than the Bank reserves
or acquires a lien upon such items, except for purchase money security interests
arising

                                       30
<PAGE>

in connection with the purchase by the Borrower of personal property, which
security interests are not outstanding for more than 60 days.

          9.3  Transfers of Project Facilities or Bond Document Obligations.
               ------------------------------------------------------------
Assign or delegate any of the Borrower's obligations under the Bonds, this
Agreement or any of the other Letter of Credit Documents or Bond Documents, or,
except as otherwise expressly provided in the Mortgage, sell, lease, exchange,
convey, mortgage, assign, pledge, encumber or otherwise transfer the Project
Site, the Project Facilities, or any interest therein (except for (a)
dispositions of personal property permitted pursuant to Section 8.26 hereof, (b)
encumbrances permitted by the Mortgage, (c) leases permitted pursuant to Section
9.4 hereof and (d) easements, licenses, rights of way or title restrictions
granted pursuant to Section 9.5 hereof).

          9.4  Leases. Enter into any leases or other agreements pursuant to
               ------
which any Person is given any right to occupy any portion of the Project
Facilities except in compliance with the applicable provisions of the Mortgage.

          9.5  Easements. Grant, convey or cause to be effective any easement,
               ---------
license, right of way, or title restriction or limitation affecting the Project
Facilities or any portion of the same without the express prior written consent
of the Bank (which consent shall not be unreasonably withheld); provided,
however, that the Borrower may grant routine easements which are reasonably
necessary and required by governmental or quasi-governmental entities or utility
companies for the furnishing of utilities or services to the Project Facilities
without the requirement of such consent by the Bank, so long as such easements
shall not materially weaken, diminish or impair the security of the Mortgage or
interfere with the intended use of the Project Facilities.

          9.6  Amendments to Documents. Enter into or agree to any amendment,
               -----------------------
change or modification of, or any waiver of any provision of, or grant any
consent in respect of, the Trust Indenture, the Bonds or any of the Letter of
Credit Documents or Bond Documents.

          9.7  Nature of Business.  Change its principal business from the
               ------------------
business of the manufacture of products for the telecommuncations industry.

     10.  [Reserved]

     11.  Events of Default and Remedies Upon Default.
          -------------------------------------------

          11.1 Events of Default. The occurrence of any one or more of the
               -----------------
following, whatever the reason therefor, shall constitute an Event of Default
hereunder:

               (a)  The Borrower shall fail to pay any amount of principal,
purchase price or interest or any other sum owing under this Agreement or any
other Letter of Credit Document on the due date thereof; or

               (b)  The Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to be
performed or observed

                                       31
<PAGE>

(other than those terms, covenants or agreements contained in Sections 8.3 or
8.5 hereof) and such failure shall continue for a period of thirty (30) days
after written notice of such failure by the Bank to the Borrower, or the
Borrower shall fail to perform or observe any term, covenant or agreement
contained in any other Letter of Credit Document on its part to be performed or
observed (other than those terms, covenants or agreements contained in Sections
4 or 5 of the Mortgage) and the continuance thereof through the expiration of
any applicable grace period provided in such Letter of Credit Document.

               (c)  The Borrower shall fail to perform or observe any term,
covenant or agreement contained in (i) Sections 8.3 or 8.5 of this Agreement, or
(ii) Sections 4 or 5 of the Mortgage; or

               (d)  The Borrower shall fail to cause the optional redemption of
Notes as provided in Section 8.28 hereof; or

               (e)  The occurrence of an Event of Default (as that term is
defined in the Trust Indenture) under the Trust Indenture, except for an Event
of Default described in Section 7.01(g) or (h) of the Trust Indenture, or the
occurrence of an event of default under the terms of any other Bond Document or
any Letter of Credit Document, or the obligation to make payment on the Bonds is
accelerated for any reason other than the occurrence of an Event of Default
described in Section 7.01(g) or (h) of the Trust Indenture; or

               (f)  The Borrower shall fail to perform or observe any term,
covenant or agreement contained in any of the Bond Documents on its part to be
performed or observed and the continuance thereof through the expiration of any
applicable grace period provided in the Bond Documents; or

               (g)  Any covenant, representation or warranty in any of the
Letter of Credit Documents or Bond Documents or in any certificate, agreement,
instrument or other document made or delivered pursuant to or in connection with
any of the Letter of Credit Documents or Bond Documents proves to have been
incorrect in any material respect when made; or

               (h)  The Borrower shall fail to pay any indebtedness owing to any
person other than the Bank totaling in the aggregate in excess of $50,000, for
borrowed money owing by the Borrower or any interest or premium thereon, for a
period of thirty (30) consecutive days after such indebtedness, interest or
premium is due, whether such indebtedness shall become due by scheduled
maturity, by required prepayment, by acceleration, by demand or otherwise, or
the Borrower shall fail to perform for a period of thirty (30) consecutive days
beyond any period of grace with respect thereto any term, covenant or agreement
on the Borrower's part to be performed under any agreement or instrument
evidencing or securing or relating to such indebtedness owing by the Borrower
when required to be performed, if, in each case, the effect of such failure is
to accelerate, or to permit the holder or holders of such indebtedness or the
trustee or trustees under any such agreement or instrument to accelerate, the
maturity of such indebtedness, unless such failure to perform shall be waived in
writing by the holder or holders of such indebtedness or such trustee or
trustees; or

                                       32
<PAGE>

               (i)  Final judgment for the payment of money to any Person other
than the Bank shall be rendered against the Borrower, in excess of $50,000, net
of any reimbursement to which the Borrower may be entitled, and the same shall
remain undischarged for a period of thirty (30) consecutive days during which
execution shall not be effectively stayed; or

               (j)  The Borrower shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian, (ii) admit in
writing the Borrower's inability to pay the Borrower's debts generally as they
become due, (iii) make a general assignment for the benefit of creditors, (iv)
be adjudicated bankrupt or insolvent, (v) commence a voluntary case under the
federal bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors or an
order for relief or seek to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against the
Borrower in any bankruptcy, reorganization or insolvency proceeding; or action
shall be taken by the Borrower for the purpose of effecting any of the
foregoing, or (vi) if without the application, approval or consent of the
Borrower, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or the like of the Borrower, or of all or any
substantial part of the assets of the Borrower, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such proceeding is being
contested by the Borrower in good faith, the same shall (A) result in the entry
of an order for relief or any such adjudication or appointment or (B) continue
undismissed, pending and unstayed, for any period of 60 consecutive days; or

               (k)  The Project Facilities suffer a loss by fire or other
casualty in excess of $50,000 and such loss is not fully insured and any
deficiency in the amount of insurance proceeds paid with respect to such loss is
not deposited with the Bank within ten (10) days of the determination of such
deficiency; or

               (l)  The Project Facilities, or any material portion thereof, are
subject to a material condemnation proceeding; or

               (m)  The Borrower defaults under the terms and provisions of any
other obligation owed to the Bank by the Borrower, or the occurrence of a
default under any document or instrument evidencing or securing such obligation
and the continuance thereof through the expiration of any applicable grace
period provided in such document or instrument; or

               (n)  The Bank reasonably believes that the ability of the
Borrower to make its payments and perform its obligations under this Agreement
or the other Letter of Credit Documents has been materially, adversely impaired.

         11.2  Remedies Upon Default.  Upon the occurrence of any Event of
               ---------------------
Default, the Bank may, at its option, do any or all of the following:

                                       33
<PAGE>

               (a)  Declare the principal of all amounts owing under this
Agreement and the other Letter of Credit Documents (including all obligations
secured by the Security Documents) and all other indebtedness of the Borrower to
the Bank, together with interest thereon, to be forthwith due and payable,
regardless of any other specified maturity or due date, without notice of
default, presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind or character, and without the
necessity of prior recourse to any security;

               (b)  Implement any remedies available to the Bank under or in
connection with the Bond Documents, including without limitation instructing the
Trustee, in the Bank's sole discretion, to accelerate the maturity of the Bonds
and causing and paying a full or partial drawing under each of the Letters of
Credit (whether or not any amounts have previously been paid under such Letter
of Credit) and exercising all of the rights and remedies available to the Bank
in connection therewith;

               (c)  If the Event of Default may be cured by the Bank by taking
actions or making payments of money, the Bank shall have the right (but not the
obligation) to take such actions (including without limitation the retention of
attorneys and the commencement or prosecution of actions on its own behalf or on
behalf of the Borrower), make such payments and pay for the costs of such
actions (including without limitation attorneys' fees and court costs) from its
own funds; provided, that the taking of such actions at the Bank's expense or
the making of such payments by the Bank out of the Bank's own funds shall not be
deemed to cure such Event of Default, and the same shall not be so cured unless
and until the Borrower shall have reimbursed the Bank for such payment, together
with interest at the Prime Rate plus two percent (2%), from the date of such
payment until the date of reimbursement. If the Bank advances its own funds for
such purposes, such funds shall be secured by the Security Documents,
notwithstanding that such advances may cause the total amount advanced hereunder
to exceed the amount committed to be advanced pursuant to this Agreement, and
the Borrower shall immediately upon demand reimburse the Bank therefore with
interest at the Prime Rate plus two percent (2%), from the date of such advance
until the date of reimbursement; and

               (d)  Exercise any and all of its rights under the Letter of
Credit Documents or the Bond Documents, or otherwise as a secured creditor,
including, without limitation, foreclosing on any security, and exercising any
other rights with respect to security whether under the Security Documents or
any other agreement or as provided by law, all in such order and in such manner
as the Bank in its sole discretion may determine.

         11.3  Cumulative Remedies; No Waiver.  All remedies of the Bank
               ------------------------------
provided for herein are cumulative and shall be in addition to any and all other
rights and remedies provided in the Letters of Credit, the Security Documents,
the Bond Documents or any of the Letter of Credit Documents, or provided by law
from time to time.  The exercise of any right or remedy by the Bank hereunder
shall not in any way constitute a cure or waiver of default hereunder or under
the Letters of Credit, the Security Documents, the Bond Documents, or any of the
Letter of Credit Documents, nor invalidate any notice of default or any act done
pursuant to any such notice, nor prejudice the Bank in the exercise of any
rights hereunder or under the Letter of Credit, the Security Documents, the Bond
Documents or the Letter of Credit Documents, unless

                                       34
<PAGE>

in the exercise of said right, the Bank realizes all amounts owed to it under
the Letters of Credit, this Agreement, the Security Documents, the Bond
Documents and the Letters of Credit Documents and all Events of Default are
cured. No waiver by the Bank of any default or breach by the Borrower hereunder
shall be implied from any omission by the Bank to take action on account of such
default if such default persists or is other than the default expressly made the
subject of the waiver. Any such express waiver shall be operative only for the
time and to the extent therein stated. Any waiver of any covenant, term or
condition contained herein shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or approval by the
Bank to or of any act by the Borrower shall not be deemed to waive or render
unnecessary consent or approval to or of any subsequent act.

     12.  Miscellaneous.
          -------------

          12.1  Actions. The Bank shall have the right to commence, appear in
                -------
and defend any action or proceeding affecting the rights or duties of the
Borrower hereunder or the payment of any funds, and in connection therewith the
Bank may pay necessary expenses, employ counsel and pay reasonable attorneys'
fees.  The Borrower agrees to pay to the Bank, on demand, all costs and expenses
incurred by the Bank in connection therewith, including without limitation
reasonable attorneys' fees, together with interest from the date of expenditure
at the Prime Rate plus two percent (2%) (computed on the basis of a year of 360
days but calculated on the actual number of days outstanding).  The Borrower's
obligation to repay such expenses shall be secured by the Security Documents.

          12.2  Nonliability of the Bank. The Borrower acknowledges and agrees
                ------------------------
that:

                (a)  The Bank shall not be responsible or liable to the Borrower
for the use which may be made of the Letters of Credit or for any acts or
omissions of the Trustee or any beneficiary or transferee in connection
therewith;

                (b)  The Bank shall not be responsible or liable to the Borrower
for the validity, sufficiency or genuineness of documents (except as to the
Bank's signatures thereon), or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged (except to the extent acceptance
or reliance upon such documents is a result of the Bank's gross negligence or
willful misconduct); and

                (c)  The Bank shall not be responsible or liable to the Borrower
as a result of any circumstances in any way related to the making or failure to
make payment under the Letters of Credit, other than as a result of the gross
negligence or willful misconduct of the Bank.

          12.3  No Representations by the Bank. By accepting or approving
                ------------------------------
anything required to be observed, performed or fulfilled, or to be given to the
Bank pursuant to this Agreement or any of the other Letter of Credit Documents
or Bond Documents, including any certificate, financial statement, survey,
appraisal or insurance policy, the Bank shall not be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of

                                       35
<PAGE>

the same, or of any term, provision or condition thereof, and such acceptance or
approval thereof shall not be or constitute any warranty or representation to
anyone with respect thereto by the Bank. The Bank may accept documents in
connection with a drawing under a Letter of Credit which appear on their face to
be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary and may accept documents in connection
with any of the other Letter of Credit Documents or Bond Documents which appear
on their face to be in order, without responsibility for further investigation.

          12.4  No Third Parties Benefited. This Agreement is made for the
                --------------------------
purpose of defining and setting forth certain obligations, rights and duties of
the Borrower and Bank in connection with the Letters of Credit.  It is made for
the sole protection of the Borrower and the Bank, and the Bank's successors and
assigns.  No other Person shall have any rights of any nature hereunder or by
reason hereof, except to the extent that the Trustee is expressly granted rights
hereunder, or Participants are granted rights hereunder pursuant to
participation agreements with the Bank.

          12.5  Indemnity by the Borrower.  The Borrower hereby indemnifies and
                -------------------------
holds harmless the Bank and the Participants and their respective directors,
officers, agents and employees (collectively the "indemnitees") from and
against:

                (a)  any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person if the claim, demand,
action or cause of action directly or indirectly relates to a claim, demand,
action or cause of action that the Person has or asserts against the Issuer or
the Borrower, whether in connection with the Letters of Credit, the Bonds, any
of the Bond Documents, any of the Letter of Credit Documents or this Agreement,
or otherwise;

                (b)  any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person and arising from or in
connection with (i) any statement or omission, actual or alleged, in the Bond
Documents, or (ii) any breach or default, actual or alleged, of the
representations, warranties, covenants, conditions or agreements contained in
this Agreement or any of the other Letter of Credit Documents or in any of the
Bond Documents; and

                (c)  any and all liabilities, losses, costs or expenses
(including court costs and attorneys' fees) that any indemnitee suffers or
incurs as a result of the assertion of any claim, demand, action or cause of
action specified in Section 12.5(a) or Section 12.5(b) of this Agreement.

          Any obligation or liability of the Borrower to any indemnitee as
provided in this Section 12.5 shall be secured by the Security Documents. The
indemnity contained in this Section 12.5 shall not extend to any claims,
demands, actions, causes of action, liabilities, losses, costs or expenses which
result solely from the gross negligence or willful misconduct of the Bank or to
the information set forth in Appendix A to the Official Statement.

                                       36
<PAGE>

          12.6   Commissions. The Borrower hereby indemnifies and holds the Bank
                 -----------
harmless from any responsibility, cost and/or liability, including any
attorneys' fees incurred, in connection with any claim by any Person for the
payment of any commission, charge or brokerage fee in connection with the Bonds
or any of the other transactions contemplated in connection with this Agreement
arising from any action taken, directly or indirectly, by or on behalf of the
Borrower.

          12.7   Binding Effect. This Agreement shall be binding upon and inure
                 --------------
to the benefit of the Borrower and its successors and assigns and the Bank and
its successors and assigns, subject to the provisions of Sections 8.18 of this
Agreement. The Bank is authorized in its sole discretion to participate
interests in the Letter of Credit and security therefor to Participants.

          12.8   Execution in Counterparts. This Agreement and any other Letter
                 -------------------------
of Credit Document may be executed in any number of counterparts and any party
hereto or thereto may execute any counterpart, each of which when executed and
delivered will be deemed to be an original and all of which counterparts of this
Agreement or any other Letter of Credit Document, as the case may be, taken
together will be deemed to be but one and the same instrument. The execution of
this Agreement or any other Letter of Credit Document by any party hereto or
thereto will not become effective until counterparts hereof or thereof, as the
case may be, have been executed by all the parties hereto or thereto.

          12.9   Prior Agreements; Amendments; Consents. This Agreement contains
                 --------------------------------------
the entire agreement between the Bank and Borrower with respect to the subject
matter hereof, and all prior negotiations, understandings and agreements with
respect thereto are superseded by this Agreement. No amendment, modification,
supplement, termination or waiver of any provision of this Agreement or any of
the Letter of Credit Documents, and no consent to any departure by the Borrower
therefrom, may in any event be effective unless in writing signed by the Bank,
and then only in the specific instance and for the specific purpose given.

          12.10  Cumulative Remedies; No Waiver. The rights, powers and
                 ------------------------------
remedies of the Bank under the Letter of Credit Documents are cumulative and not
exclusive of any right, power or remedy provided by law or equity or otherwise.
No failure or delay on the part of the Bank in exercising any right, power or
remedy may be, or may be deemed to be, a waiver thereof; nor may any single or
partial exercise of any right, power or remedy preclude any other or further
exercise of any other right, power or remedy.

          12.11  Inclusion of Expenditures in Indebtedness. All sums paid or
                 -----------------------------------------
expended by the Bank under the terms of this Agreement shall bear interest at
the Prime Rate plus two percent (2%) (calculated on the basis of a year of 360
days but calculated on the actual number of days outstanding), except as
otherwise provided herein, from the date such sums are paid or expended, shall
be secured by the Security Documents and shall be immediately due and payable by
the Borrower upon demand.

          12.12  Survival of Representations and Warranties. All representations
                 ------------------------------------------
and warranties of the Borrower contained herein or in any other Letter of Credit
Document will

                                       37
<PAGE>

survive the delivery of the Letters of Credit, and are material and have been or
will be relied upon by the Bank, notwithstanding any investigation made by or on
behalf of the Bank. For the purpose of the foregoing, all statements contained
in any certificate, agreement or other writing delivered by or on behalf of the
Borrower pursuant hereto or pursuant to any other Letter of Credit Document or
in connection with the transactions contemplated hereby or thereby shall be
deemed to be covenants, representations and warranties of the Borrower contained
herein or in the other Letter of Credit Documents, as the case may be.

          12.13  Notices. Unless otherwise expressly provided hereunder, all
                 -------
notices, requests, demands, directions and other communications provided for in
this Agreement and under any of the other Letter of Credit Documents must be in
writing and must be mailed, telecopied, telegraphed, delivered or sent by Telex
or cable to the appropriate party at its address as follows:

                 If to the Borrower:

                 PECO II, Inc.
                 1376 State Route 598
                 P.O. Box 910
                 Galion, Ohio 44833
                 Attention:  Mr John Maag, Chief Financial Officer
                 Telecopier: (419) 468-9164

                 If to the Bank:

                 The Huntington National Bank
                 2313 Village Park Court
                 Mansfield, Ohio 44906
                 Attention:  Mr. Glenn McClelland
                 Telecopier: (419) 747-7108

                 With a copy to:

                 The Huntington National Bank
                 7 Easton Oval - EA4E63
                 Columbus, Ohio  43219
                 Attention:  International Division,
                             Letter of Credit Department
                 Telecopier: (614) 331-5862

Addresses for purposes of notice may be changed from time to time by written
notice sent to the other party and the Trustee in accordance with this Section
12.13.  Any notice, request, demand, direction or other communication given by
telegram, telecopy, Telex or cable must be confirmed within 24 hours by letter
mailed or delivered to the appropriate party at such party's respective address.
If any notice, request, demand, direction or other communication is given by
mail it will be effective upon the earlier of (a) 48 hours after deposit in the
U.S. Mail, certified or

                                       38
<PAGE>

registered mail, return receipt requested, postage prepaid or (b) if given by
telegraph, telecopy, cable or Telex, when delivered.

          12.14  Further Assurances.  The Borrower shall, at its expense and
                 ------------------
without expense to the Bank, do, execute and deliver such further acts and
documents as the Bank from time to time reasonably requires for the purpose of
assuring and confirming unto the Bank the rights hereby created or intended now
or hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Letter of Credit Document, or for assuring the
validity of any security interest or lien under any Security Document.

          12.15  Governing Law. This Agreement shall be governed by, and
                 -------------
construed and enforced in accordance with, the laws of the State of Ohio.

          12.16  Severability of Provisions.  Any provision in any Letter of
                 --------------------------
Credit Document that is held to be inoperative, unenforceable or invalid shall
be inoperative, unenforceable or invalid without affecting the remaining
provisions, and to this end the provisions of all Letter of Credit Documents are
declared to be severable.

          12.17  Headings. Article and section headings in this Agreement are
                 --------
included for convenience of reference only and are not part of this Agreement
for any other purpose.

          12.18  Time of the Essence.  Time is of the essence for all purposes
                 -------------------
under this Agreement and the other Letter of Credit Documents.

          12.19  Waiver of Jury Trial.  THE BANK AND THE BORROWER, AFTER
                 --------------------
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF EITHER OF THEM WITH RESPECT THERETO.  THIS WAIVER SHALL
NOT IN ANY WAY EFFECT THE BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY
WARRANT OF ATTORNEY OR COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY RELATED
INSTRUMENT OR AGREEMENT.  NEITHER THE BORROWER NOR THE BANK SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS
BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY
RESPECT OR RELINQUISHED BY EITHER THE BORROWER OR THE BANK EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY BOTH OF THEM.

          12.20  Warrant of Attorney.  The Borrower authorizes any attorney-
                 -------------------
at-law to appear in any Court of Record in the State of Ohio or in any other
state or territory of the United States after the above indebtedness becomes
due, whether by acceleration or otherwise, to waive

                                       39
<PAGE>

the issuing and service of process, and to confess judgment against the Borrower
in favor of the Bank for the amount then appearing due, together with costs of
suit, and thereupon to waive all error and all rights of appeal and stays of
execution. The attorney-at-law authorized hereby to appear for the Borrower may
be an attorney-at-law representing the Bank, and the Borrower hereby expressly
waives any conflict of interest that may exist by virtue of such representation.
The Borrower also agrees that the attorney-at-law acting for the Borrower as set
forth in this Section may be compensated by the Bank for such services.

     IN WITNESS WHEREOF, the Borrower and the Bank have each caused this
Agreement to be executed on its behalf of its duly authorized officer as of the
date first above written.

WARNING--BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL.  IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE.

PECO II, INC.

By_____________________________

Title__________________________

THE HUNTINGTON NATIONAL BANK

By_____________________________

Title__________________________

                                       40Exhibit 4-4

Exhibit 4-4

                                                                                                 

ENERGY EAST CORPORATION

and

THE CHASE MANHATTAN BANK

Trustee

 

INDENTURE

Dated as of July 24, 2001

JUNIOR SUBORDINATED DEBT SECURITIES

                                                                                                 

 

 

TABLE OF CONTENTS

	
	
ARTICLE I DEFINITIONS
	
1

	
1.1
	
Certain Terms Defined
	
1

	 	
ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION OF TRANSFER AND EXCHANGE OF SECURITIES
	

9

	
2.1
	
Amount, Series and Delivery of Securities
	
9

	
2.2
	
Form Of Securities And Trustee's Certificate
	
13

	
2.3
	
Denominations Of And Payment Of Interest On Securities
	
14

	
2.4
	
Execution Of Securities
	
15

	
2.5
	
Registration, Transfer And Exchange Of Securities
	
16

	
2.6
	
Temporary Securities
	
18

	
2.7
	
Mutilated, Destroyed, Lost Or Stolen Securities
	
18

	
2.8
	
Cancellation And Destruction Of Surrendered Securities
	
19

	
2.9
	
Authenticating Agents
	
20

	
2.10
	
Deferrals Of Interest Payment Dates
	
21

	
2.11
	
Right Of Set-Off
	
22

	
2.12
	
Shortening Or Extension Of Stated Maturity
	
22

	
2.13
	
Agreed Tax Treatment
	
22

	
2.14
	
CUSIP Numbers
	
23

	
	
ARTICLE III REDEMPTION OF SECURITIES
	
23

	
3.1
	
Applicability Of Article
	
23

	
3.2
	
Mailing Of Notice Of Redemption
	
23

	
3.3
	
When Securities Called For Redemption Become Due And Payable
	
24

	
	
ARTICLE IV PARTICULAR COVENANTS OF THE COMPANY
	
25

	
4.1
	
Payment Of Principal Of and Interest On Securities
	
25

	
4.2
	
Maintenance Of Offices Or Agencies For Registration Of Transfer, Exchange And Payment Of Securities
	
26

	
4.3
	
Appointment To Fill A Vacancy In The Office Of Trustee
	
26

	
4.4
	
Duties of Paying Agent
	
26

	
4.5
	
Further Assurances
	
27

	
4.6
	
Officers' Certificate As To Defaults; Notices Of Certain Defaults
	
27

	
4.7
	
Waiver Of Covenants
	
28

	
4.8
	
Additional Tax Sums
	
28

	
4.9
	
Additional Covenants
	
28

	
4.10
	
Calculation Of Original Issue Discount
	
29

	 	
ARTICLE V SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
	

29

	
5.1
	
Company To Furnish Trustee Information As To The Names And Addresses Of Securityholders
	

29

	
5.2
	
Trustee To Preserve Information As To Names And Addresses Of

Securityholders Received By It
	

30

	
5.3
	
Annual And Other Reports To Be Filed By Company With Trustee
	
30

	
5.4
	
Trustee To Transmit Annual Report To Securityholders
	
31

	 	
ARTICLE VI REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
	

32

	
6.1
	
Events Of Default Defined
	
32

	
6.2
	
Covenant Of Company To Pay To Trustee Whole Amount Due On Securities On Default In Payment Of Interest Or Principal
	

35

	
6.3
	
Application of Moneys Collected By Trustee
	
37

	
6.4
	
Limitation On Suits By Holders Of Securities
	
37

	
6.5
	
On Default Trustee May Take Appropriate Action; Direct Action
	
38

	
6.6
	
Rights Of Holders Of Majority In Principal Amount Of Securities To 

Direct Trustee And To Waive Default
	

39

	
6.7
	
Trustee To Give Notice Of Defaults Known To It, But May Withhold

In Certain Circumstances
	

39

	
6.8
	
Requirement Of An Undertaking To Pay Costs In Certain Suits Under 

The Indenture Or Against The Trustee
	

40

	
	
ARTICLE VII CONCERNING THE TRUSTEE
	
40

	
7.1
	
Upon Event Of Default Occurring And Continuing, Trustee Shall

Exercise Powers Vested In It, And Use Same Degree Of Care And

Skill In Their Exercise, As A Prudent Man Would Use
	

40

	
7.2
	
Reliance On Documents, Opinions, Etc
	
41

	
7.3
	
Trustee Not Liable For Recitals In Indenture Or In Securities
	
43

	
7.4
	
May Hold Securities
	
43

	
7.5
	
Moneys Received By Trustee To Be Held In Trust Without Interest
	
43

	
7.6
	
Trustee Entitled To Compensation, Reimbursement and Indemnity
	
43

	
7.7
	
Right Of Trustee To Rely On Officers' Certificate Where No Other

Evidence Specifically Prescribed
	

44

	
7.8
	
Disqualification; Conflicting Interests
	
44

	
7.9
	
Requirements For Eligibility Of Trustee
	
44

	
7.10
	
Resignation And Removal Of Trustee
	
45

	
7.11
	
Acceptance By Successor Trustee
	
46

	
7.12
	
Successor To Trustee By Merger, Consolidation Or Succession

To Business
	

47

	
7.13
	
Limitations on Preferential Collection Of Claims By The Trustee
	
48

	
	
ARTICLE VIII CONCERNING THE SECURITYHOLDERS
	
48

	
8.1
	
Evidence Of Action By Securityholders
	
48

	
8.2
	
Proof Of Execution Of Instruments And Of Holding Of Securities
	
48

	
8.3
	
Who May Be Deemed Owners Of Securities
	
49

	
8.4
	
Securities Owned By Company Or Controlled Or Controlling Persons

Disregarded For Certain Purposes
	

49

	
8.5
	
Instruments Executed By Securityholders Bind Future Holders
	
50

	
	
ARTICLE IX SECURITYHOLDERS' MEETINGS
	
50

	
9.1
	
Purposes For Which Meetings May Be Called
	
50

	
9.2
	
Manner Of Calling Meetings
	
50

	
9.3
	
Call Of Meeting By Company Or Securityholders
	
51

	
9.4
	
Who May Attend And Vote At Meetings
	
51

	
9.5
	
Regulations May Be Made By Trustee
	
51

	
9.6
	
Manner Of Voting At Meetings And Record To Be Kept
	
52

	
9.7
	
Exercise Of Rights Of Trustee, Securityholders and Holders Of 

Preferred Securities Not To Be Hindered Or Delayed
	

52

	
	
ARTICLE X SUPPLEMENTAL INDENTURES
	
53

	
10.1
	
Purposes For Which Supplemental Indentures May Be Entered Into

Without Consent Of Securityholders
	

53

	
10.2
	
Modification Of Indenture With Consent Of Holders Of A Majority

In Principle Amount Of Securities
	

54

	
10.3
	
Effect Of Supplemental Indentures
	
56

	
10.4
	
Securities May Bear Notation Of Changes By Supplemental Indentures
	
56

	
10.5
	
Revocation And Effect Of Consents
	
56

	
10.6
	
Conformity With Trust Indenture Act
	
57

	 	
ARTICLE XI CONSOLIDATION, MERGER, 

SALE OR CONVEYANCE
	

57

	
11.1
	
Company May Consolidate, Etc., On Certain Terms
	
57

	
11.2
	
Successor Corporation Substituted
	
57

	
11.3
	
Opinion Of Counsel To Trustee
	
58

	 	
ARTICLE XII SATISFACTION AND DISCHARGE OF INDENTURE, UNCLAIMED MONEYS
	

58

	
12.1
	
Satisfaction And Discharge Of Indenture
	
58

	
12.2
	
Application By The Trustee Of Funds Deposited For Payment

Of Securities
	

59

	
12.3
	
Repayment Of Moneys Held By Paying Agent
	
59

	
12.4
	
Repayment Of Moneys Held By Trustee
	
59

	 	
ARTICLE XIII IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
	

59

	
13.1
	
Incorporators, Stockholders, Officers, Directors And Employees

Of Company Exempt From Individual Liability
	

59

	
	
ARTICLE XIV SUBORDINATION OF SECURITIES
	
60

	
14.1
	
Agreement To Subordinate
	
60

	
14.2
	
Obligation Of The Company Unconditional
	
62

	
14.3
	
Limitations On Duties To Holders Of Senior Indebtedness Of The Company
	

62

	
14.4
	
Notice To Trustee Of Facts Prohibiting Payment
	
62

	
14.5
	
Application By Trustee Of Moneys Deposited With It
	
63

	
14.6
	
Subrogation
	
63

	
14.7
	
Subordination Rights Not Impaired By Acts Or Omissions Of Company Or Holders Of Senior Indebtedness Of The Company
	

63

	
14.8
	
Authorization Of Trustee To Effectuate Subordination Of Securities
	
64

	
14.9
	
No Payment When Senior Indebtedness In Default
	
64

	
14.10
	
Right Of Trustee To Hold Senior Indebtedness Of The Company
	
64

	
14.11
	
Article Fourteen Not To Prevent Defaults
	
65

	
	
ARTICLE XV MISCELLANEOUS PROVISIONS
	
65

	
15.1
	
Successors And Assigns Of Company Bound By Indenture
	
65

	
15.2
	
Acts Of Board, Committee Or Officer Of Successor Corporation Valid
	
65

	
15.3
	
Required Notices Or Demands May Be Served By Mail
	
65

	
15.4
	
Officers' Certificate And Opinion Of Counsel To Be Furnished Upon Applications Or Demands By The Company
	

65

	
15.5
	
Payments Due On Saturdays, Sundays, And Holidays
	
66

	
15.6
	
Provisions Required By Trust Indenture Act To Control
	
66

	
15.7
	
Indenture And Securities To Be Construed In Accordance With The

Laws Of The State Of New York
	

67

	
15.8
	
Provisions Of The Indenture And Securities For The Sole Benefit Of

The Parties And The Securityholders
	

67

	
15.9
	
Indenture May Be Executed In Counterparts
	
67

	
15.10
	
Securities In Foreign Currencies
	
67

	
15.11
	
Table Of Contents, Headings, Etc
	
67

 

THIS INDENTURE, dated as of the 24Th day of July, 2001 between ENERGY EAST CORPORATION, a corporation duly organized and existing under the laws of the State of New York (hereinafter sometimes referred to as the "Company"), party of the first part, and THE CHASE MANHATTAN BANK, a New York banking corporation (hereinafter sometimes referred to as the "Trustee"), party of the second part.

WITNESSETH:

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance from time to time of its unsecured junior subordinated debt securities or other evidences of indebtedness (hereinafter referred to as the "Securities"), without limit as to principal amount, issuable in one or more series, the amount and terms of each such series to be determined as hereinafter provided, including, without limitation, Securities issued to evidence loans made to the Company of the proceeds from the issuance from time to time by one or more business trusts (each an "Energy East Trust," and collectively, the "Energy East Trusts") of preferred interests in such Trusts, having the rights provided for in such Trusts (the "Preferred Securities" which may also be referred to, without limitation, as the "Capital Securities") and common interests in such Trusts, having the rights provided for in such Trusts (the "Common Securities," and collectively with the Preferred Securities, the "Trust Securities"); to be authenticated by the Trustee; and, to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Indenture; and

WHEREAS, all acts and things necessary to make the Securities when executed by the Company and authenticated and delivered by the Trustee as in this Indenture provided, the valid, binding and legal obligations of the Company, and to constitute these presents a valid indenture and agreement according to its terms, have been done and performed and the execution of this Indenture and the issue hereunder of the Securities have in all respects been duly authorized, and the Company, in the exercise of the legal rights and power vested in it, executes this Indenture and proposes to make, execute, issue and deliver the Securities; 

NOW, THEREFORE, in order to declare the terms and conditions upon which the Securities are authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Securities by the holders thereof, the Company covenants and agrees with the Trustee, for the equal and proportionate benefit of the respective holders from time to time of the Securities or of series thereof, as follows: 

ARTICLE I

DEFINITIONS

1.1   Certain Terms Defined.  For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

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

(b)   All other terms used herein which are defined in the Trust Indenture Act (as defined herein), whether directly or by reference therein, have the meanings assigned to them therein (except as otherwise expressly provided); 

(c)   All accounting terms used herein and not expressly defined herein shall have the meanings assigned to them in accordance with generally accepted accounting principles in the United States of America, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America at the date of such computation; provided, that when two or more principles are so generally accepted, it shall mean that set of principles consistent with those in use by the Company; and

(d)   The terms "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. 

The term "Additional Interest" means the interest, if any, that shall accrue on any interest on the Securities of any series the payment of which has not been made on the applicable interest payment date and which shall accrue at the rate per annum specified or determined as specified in such Security.  

The term "Additional Tax Sums" has the meaning specified in Section 4.8.

The term "Administrative Trustee" means, in respect of any Energy East Trust, each Person identified as an "Administrative Trustee" in the related Trust Agreement, solely in such Person's capacity as Administrative Trustee of such Energy East Trust under such Trust Agreement and not in such Person's individual capacity, or any successor administrative trustee appointed as therein provided. 

The term "Authenticating Agent" means any Authenticating Agent appointed by the Trustee pursuant to Section 2.9.

The term "Authorized Newspaper" means a newspaper in an official language of the place of publication, customarily published at least once a day for at least five days in each calendar week and of general circulation in each place in connection with which the term is used or in the financial community of each such place.  Whenever successive publications are required to be made in an Authorized Newspaper, the successive publications may be made in the same or in a different newspaper meeting the foregoing requirements and in each case on any day of the week.  If it is impossible or, in the opinion of the Trustee, impracticable to publish any notice in the manner herein provided, then such publication in lieu thereof as shall be made with the approval of the Trustee shall constitute a sufficient publication of such notice.

The term "Board of Directors," when used with reference to the Company, means the Board of Directors of the Company or the executive committee or any other committee of or created by the Board of Directors of the Company duly authorized to act hereunder. 

The term "Business Day" means any day which is not a Saturday or Sunday or a day on which banking institutions in The City of New York are authorized or required by law, regulation or executive order to close or a day on which the principal corporate trust office of the Trustee or the applicable Property Trustee is closed for business. 

The term "Capital Securities" has the meaning specified in the recitals to this Indenture.

The term "Capital Stock" means shares of capital stock of any class of any corporation whether now or hereafter authorized regardless of whether such capital stock shall be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends and in the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up.

The term "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.

The term "Common Securities" has the meaning specified in the recitals to this Indenture.

The term "Common Stock" means the common stock, par value $0.01 per share, of the Company.

The term "Company" means Energy East Corporation, a corporation duly organized and existing under the laws of the State of New York and, subject to the provisions of Article XI, shall also include its successors and assigns. 

The term "Depositary" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more global Securities, the person designated as Depositary by the Company pursuant to Section 2.1 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter the term "Depositary" shall mean or include each person who                                          is then a Depositary hereunder and if at any time there is more than one such person, the term "Depositary" as used with respect to the Securities of any series shall mean the Depositary with respect to the Securities of such series. 

The term "Direct Action" has the meaning specified in Section 6.5.

The term "Distributions," with respect to the Trust Securities issued by an Energy East Trust, means amounts payable in respect of such Trust Securities as provided in the related Trust Agreement and referred to therein as "Distributions." 

The term "Energy East Guarantee" means the guarantee by the Company of distributions on the Preferred Securities of an Energy East Trust to the extent provided in the Guarantee (as defined in the related Trust Agreement).

The terms "Energy East Trust" and "Energy East Trusts" each have the meaning specified in the recitals to this Indenture.

The term "Event of Default" with respect to Securities of any series shall mean any event specified as such in Section 6.1 and any other event as may be established with respect to the Securities of such series as contemplated by Section 2.1.

The term "Exchange Act" has the meaning specified in Section 2.2.

The term "Extension Period" has the meaning specified in Section 2.10.

The term "Indenture" means this instrument as originally executed, or, if amended or supplemented as herein provided, then as so amended or supplemented, and shall include the form and terms of particular series of Securities established as contemplated by Sections 2.1 and 2.2.

The term "Maturity" when used with respect to any Security means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. 

The term "Notice of Default" has the meaning specified in Section 6.1.

The term "Officers' Certificate" shall mean a certificate signed by the Chairman, the Chief Executive Officer, the President, or any Vice President of the Company (whether or not designated by a number or a word or words added before or after the title Vice President) and by the Treasurer, the Controller or the Corporate Secretary of the Company and delivered to the Trustee.  Each such certificate shall include the statements provided for in Section 15.4, if and to the extent required by the provisions thereof and will comply with Section 314 of the Trust Indenture Act. 

The term "Opinion of Counsel" shall mean a written opinion of counsel, who shall be reasonably satisfactory to the Trustee, and who may be an employee of, or counsel to, the Company.  Each such opinion shall include the statements provided for in Section 15.4, if and to the extent required by the provisions thereof and will comply with Section 314 of the Trust Indenture Act. 

The term "Original Issue Date" means the first date of issuance of each Security. 

The term "Original Issue Discount Security" shall mean any Security which provides for an amount less than the principal amount thereof to be due and payable upon declaration pursuant to Section 6.1. 

The term "outstanding," when used with reference to Securities and subject to the provisions of Section 8.4, means as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except 

(a)  Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(b)  Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent), provided that such Securities shall have reached their Stated Maturity or, if such Securities are to be redeemed prior to the Stated Maturity thereof, notice of such redemption shall have been given as in Article III provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and 

(c)  Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered or which have been paid pursuant to the terms of Section 2.7 unless proof satisfactory to the Trustee is presented that any such Securities are held by a bona fide purchaser in whose hands any of such Securities is a valid, binding and legal obligation of the Company.

In determining whether the holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.1. 

The term "Paying Agent" means the Trustee or any Person or Persons authorized by the Company to pay the principal or interest on any Securities on behalf of the Company.

The term "Person" or "person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association or government or any agency or political subdivision thereof, or any other entity of whatever nature. 

The term "Preferred Securities" has the meaning specified in the recitals to this Indenture.

The term "principal," whenever used with reference to the Securities or any Security or any portion thereof, shall be deemed to include "and premium, if any."

The term "Property Trustee" means, in respect of any Energy East Trust, the commercial bank or trust company identified as the "Property Trustee" in the related Trust Agreement, solely in its capacity as Property Trustee of such Energy East Trust under such Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as therein provided. 

The term "ranking junior to the Securities" when used with respect to any obligation of the Company means any other obligation of the Company which (a) ranks junior to and not equally with or prior to the Securities (or any other obligations of the Company ranking on a parity with the Securities) in right of payment upon the happening of any event of the kind specified in the first sentence of the second paragraph of Section 14.1, or (b) is specifically designated as ranking junior to the Securities by express provision in the instrument creating or evidencing such obligation. 

The securing of any obligations of the Company, otherwise ranking junior to the Securities, shall be deemed to prevent such obligations from constituting obligations ranking junior to the Securities.

The term "ranking on a parity with the Securities" when used with respect to any obligation of the Company means any obligation of the Company which (a) ranks equally with and not prior to the Securities in right of payment upon the happening of any event of the kind specified in the first sentence of the second paragraph of Section 14.1, (b) any Energy East Guarantee of Preferred Securities of any Energy East Trust or other entity affiliated with the Company that is a financing entity of the Company, or (c) is specifically designated as ranking on a parity with the Securities by express provision in the instrument creating or evidencing such obligation. 

The securing of any obligations of the Company, otherwise ranking on a parity with the Securities, shall not be deemed to prevent such obligations from constituting obligations ranking on a parity with the Securities. 

The term "record date" has the meaning specified in Section 2.3.

The terms "redemption," "redeem" and "redeemable" when used with respect to any Security, shall include, without limitation, any prepayment or repayment provisions applicable to such Security.

The term "Register" has the meaning specified in Section 2.5.

The term "Resolution of the Company" means a resolution of the Company, in the form of a resolution of the Board of Directors, or in the form of a resolution of a duly constituted committee of the Board of Directors, authorizing, ratifying, setting forth or otherwise validating agreements, execution and delivery of documents, the issuance, form and terms of Securities, or any other actions or proceedings pursuant or with respect to this Indenture. 

The term "Responsible Officer," when used with respect to the Trustee, means the chairman and vice chairman of the board of directors, the president, the chairman and vice chairman of the executive committee of the board of directors, every vice president or officer senior thereto, every assistant vice president, the secretary, every assistant secretary, the treasurer, every assistant treasurer, every corporate trust officer, every assistant corporate trust officer, and every other officer and assistant officer of the Trustee customarily performing 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 his knowledge of, and familiarity with, a particular subject. 

The term "Rights Plan" means a plan of the Company providing for the issuance by the Company to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase shares of Common Stock or any class or series of preferred stock, which rights (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case until the occurrence of a specified event or events. 

The term "Security" or "Securities" means any security or securities of the Company, as the case may be, without regard to series, authenticated and delivered under this Indenture.

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

The terms "Securityholder," "holder of Securities," "registered holder" or other similar term, mean any person who shall at the time be the registered holder of any Security or Securities on the Register kept for that purpose in accordance with the provisions of this Indenture. 

The term "Senior Indebtedness of the Company" means (i) any indebtedness of the Company for borrowed or purchased money, whether or not evidenced by bonds, debentures, notes or other written instruments, (ii) obligations of the Company for reimbursement under letters of credit, banker's acceptances, security purchase facilities or similar facilities issued for the account of the Company, (iii) any indebtedness or other obligations of the Company with respect to commodity contracts (including but not limited to contracts in the spot, forward and futures markets, options, and contracts for differences), interest rate commodity and currency swap agreements, cap, floor and collar agreements, currency spot and forward contracts, and other similar agreements or arrangements designed to protect against fluctuations in commodity prices, currency exchange or interest rates, and (iv) any guarantees, endorsements (other than by endorsement of negotiable instruments for collection in the ordinary course of business) or other similar contingent obligations in respect of obligations of others of a type described in (i), (ii) or (iii) above, whether or not such obligation is classified as a liability on a balance sheet prepared in accordance with generally accepted accounting principles, in each case listed in (i), (ii), (iii) and (iv) above whether outstanding on the date of execution of this Indenture or thereafter incurred, other than obligations ranking on a parity with the Securities or ranking junior to the Securities; provided, however, that "Senior Indebtedness of the Company" does not include (a) obligations to trade creditors or (b) any indebtedness of the Company to any of its Subsidiaries. 

The term "Stated Maturity" when used with respect to any Security or any installment of principal thereof or interest thereon means the date specified pursuant to the terms of such Security as the date on which the principal of such Security or such installment of interest is due and payable, in the case of such principal, as such date may be shortened or extended as provided pursuant to the terms of such Security and this Indenture. 

The term "Subsidiary" means any corporation (or the equivalent type of entity in other jurisdictions) more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries.  For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. 

The term "Tax Event" means the receipt by the Company and an Energy East Trust of a Tax Event Opinion (as defined in the relevant Trust Agreement) to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative written decision, pronouncement or action, or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which proposed change, pronouncement, decision or action is announced on or after the date of issuance of the Preferred Securities of such Energy East Trust, there is more than an insubstantial risk that (i) the Energy East Trust is, or will be within 90 days after the date of such Tax Event Opinion, subject to United States federal income tax with respect to income received or accrued on the corresponding series of Securities issued by the Company to such Energy East Trust, (ii) interest payable to the Energy East Trust by the Company on such corresponding series of Securities is not, or within 90 days of the date of such Tax Event Opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) the Energy East Trust is, or will be within 90 days after the date of such Tax Event Opinion, subject to a material amount of other taxes, duties or other governmental charges. 

The term "Trust Agreement" means the Trust Agreement, as amended from time to time, governing any Energy East Trust, whether now existing or created in the future, which purchased the Securities of any series. 

The term "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument 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, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.   The term "principal office" of the Trustee shall mean the principal corporate trust office of the Trustee in The City of New York, State of New York, at which the corporate trust business of the Trustee shall, at any particular time, be principally administered.  The present address of the office at which the corporate trust business of the Trustee is administered is 450 West 33rd Street, New York, New York 10001 (Attention: Institutional Trust Services). 

Except as herein otherwise expressly provided or unless the context requires otherwise, the term "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, as in force at the date as of which this Indenture was originally executed; provided, however, that, in the event that the Trust Indenture Act is amended after such date, then "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act as so amended. 

The term "Trust Securities" has the meaning specified in the recitals to this Indenture.

ARTICLE II

ISSUE, DESCRIPTION, EXECUTION, REGISTRATION OF TRANSFER

AND EXCHANGE OF SECURITIES

2.1   Amount, Series And Delivery Of Securities.  The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series.  The terms of each series (which terms shall not be inconsistent with the provisions of this Indenture), shall either be established in or pursuant to a Resolution of the Company and set forth in an Officers' Certificate, or set forth in one or more indentures supplemental hereto, prior to the issuance of Securities of any series and shall specify: 

(a)   The designation of the Securities of such series (which shall distinguish the Securities of the series from all other Securities and which shall include the word "subordinated" or a word of like meaning);

(b)   Any limit upon the aggregate principal amount of the Securities of  such series which may be executed, authenticated and delivered under this Indenture; provided, however, that nothing contained in this Section or elsewhere in this Indenture or in such Securities or in a Resolution of the Company and related Officers' Certificate or supplemental indenture is intended to or shall limit execution by the Company or authentication and delivery by the Trustee of Securities under the circumstances contemplated by Sections 2.5, 2.6, 2.7, 3.2, 3.3 and 10.4;

(c)   The date or dates (if any) on which the principal of the Securities of such series is payable;

(d)   The rate or rates at which the Securities of such series shall bear interest, if any, the rate or rates and extent to which Additional Interest or other interest, if any, shall be payable, the date or dates from which such interest shall accrue, the dates on which such interest shall be payable, the record date for the interest payable on any interest payment date and the right of the Company to defer or extend an interest payment date;

(e)   The place or places where Securities of such series may be presented for payment and for the other purposes provided in Section 4.2;

(f)   Any price or prices at which, any period or periods within which, and any terms and conditions upon which, Securities of such series may be redeemed or prepaid, in whole or in part, at the option of the Company;

(g)   If other than denominations of $1,000 and any whole multiple thereof, the denominations in which Securities of such series shall be issuable;

(h)   If other than the principal amount thereof, the portion of the principal amount of Securities of such series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 6.1;

(i)   If other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency (which may be a composite currency) in which payment of the principal of and interest, if any, on the Securities of such series shall be payable; 

(j)   If the principal of or interest, if any, on the Securities of such series are to be payable, at the election of the Company or a holder thereof, in a coin or currency (including composite currency) other than that in which the Securities of such series are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made;

(k)   If the amounts of payments of principal of or interest, if any, on the Securities of such series may be determined with reference to an index based on a coin or currency (including composite currency) other than that in which the Securities of such series are stated to be payable, the manner in which such amounts shall be determined;

(l)   If the Securities of such series are payable at Maturity or upon earlier redemption in securities of the Company or other property, the terms and conditions upon which such payment shall be made;

(m)   The person or persons who shall be registrar for the Securities of such series, and the place or places where the Register of Securities of the series shall be kept;

(n)   Any Events of Default with respect to the Securities of such series, if not set forth herein;

(o)   Any addition to or change in the covenants set forth in Article IV which applies to Securities of such series;

(p)   Whether any Securities of such series are to be issuable in global form with or without coupons, and, if so, the Depositary for such global Securities and whether beneficial owners of interests in any such global Security may exchange such interests for definitive Securities of such series and of like tenor of any authorized form and denomination and the circumstances under which, and the place or places where, any such exchanges may occur, if other than in the manner provided in Section 2.5;

(q)   The form of the related Trust Agreement and Energy East Guarantee, if applicable;

(r)   Whether any Securities of such series are subject to any securities law or other restrictions on transfer; and 

(s)   Any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture);

or in any case, the method for determining such terms, the persons authorized to determine such terms and the limits, if any, within which any such determination of such terms is to be made.

The Securities of all series shall be subordinate to Senior Indebtedness of the Company as provided in Article XIV.  The applicable Resolution of the Company and Officers' Certificate or supplemental indenture may provide that Securities of any particular series may be issued at various times, with different dates on which the principal or any installment of principal is payable, with different rates of interest, if any, or different methods by which interest may be determined, with different dates from which such interest shall accrue, with different dates on which such interest may be payable or with any different terms other than Events of Default but all such Securities of a particular series shall for all purposes under this Indenture including, but not limited to, voting and Events of Default, be treated as Securities of a single series. 

If any of the terms of any series of Securities are established by action taken pursuant to a Resolution of the Company, a copy of an appropriate record of such action shall be certified by the Corporate Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate or supplemental indenture setting forth the terms of the series. 

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication by it, and the Trustee shall thereupon authenticate and deliver such Securities to or upon the written order of the Company, signed by its Chairman, or its Chief Executive Officer, or its President, or any Vice President of the Company (whether or not designated by a number or a word or words added before or after the title Vice President), and by its Treasurer or its Controller or its Corporate Secretary, without any further corporate action by the Company.  If the form or terms of the Securities of the series have been established in or pursuant to a Resolution of the Company and set forth in an Officers' Certificate, or set forth in one or more supplemental indentures hereto, as permitted by this Section and Section 2.2, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in relying upon: 

(a)  an Opinion of Counsel to the effect that:
(i) the form or forms and terms, or if all Securities of such series are not to be issued at one time, the manner of determining the terms of such Securities, have been established in conformity with the provisions of this Indenture;

(ii) all conditions precedent provided for in this Indenture to the authentication and delivery of such Securities have been complied with and that such Securities when completed by appropriate insertions, executed under the Company's corporate seal and attested by duly authorized officers of the Company, delivered by duly authorized officers of the Company to the Trustee for authentication pursuant to this Indenture, and authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforcement thereof may be subject to or limited by bankruptcy, insolvency, reorganization, moratorium, arrangement, fraudulent conveyance, fraudulent transfer or other similar laws relating to or affecting creditors' rights generally, and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); and

(iii) if the Securities of such series have been registered under the Securities Act, that this Indenture has been qualified under the Trust Indenture Act; 

and

(b)  an Officers' Certificate stating that, to the best knowledge of the Persons executing such certificate, no event which is, or after notice or lapse of time would become, an Event of Default with respect to any of the Securities shall have occurred and be continuing.

The Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. 

If all the Securities of any series are not to be issued at one time, it shall not be necessary to deliver either an Opinion of Counsel or an Officers' Certificate at the time of issuance of each Security, provided that such Opinion of Counsel and Officers' Certificate, with appropriate modifications, are instead delivered at or prior to the time of issuance of the first Security of such series. 

Each Security shall be dated the date of its authentication.

2.2   Form Of Securities And Trustee's Certificate.  The Securities of each series shall be substantially of the tenor and terms as shall be authorized in or pursuant to a Resolution of the Company and set forth in an Officers' Certificate, or set forth in an indenture or indentures supplemental hereto in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or automated quotation system on which the Securities may be listed, or to conform to usage.  If the form of Securities of any series is authorized by action taken pursuant to a Resolution of the Company, a copy of an appropriate record of such action shall be certified by the Corporate Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate contemplated by Section 2.1 setting forth the terms of the series. 

The Securities may be printed, lithographed or fully or partly engraved.

The Trustee's certificate of authentication shall be in substantially the following form:

"This is one of the Securities, of the series designated therein, referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as

Trustee

 

By:_____________________________

Authorized Officer"

If Securities of a series are issuable in global form, as specified pursuant to Section 2.1, then, notwithstanding clause (g) of Section 2.1 and the provisions of Section 2.3, such Security shall represent such amount of the outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of outstanding Securities of such series from time to time endorsed thereon and that the aggregate amount of outstanding Securities of such series represented thereby may from time to time be increased or reduced to reflect exchanges or transfers (in any event, not to exceed the aggregate principal amount authorized from time to time pursuant to Section 2.1).  Any endorsement of a Security in global form to reflect the amount, or any increase or decrease in the amount, of outstanding Securities represented thereby shall be made by the Trustee in such manner and upon instructions given by such person or persons as shall be specified in such Security or by the Company.  Subject to the provisions of Section 2.4 and, if applicable, Section 2.6, the Trustee shall deliver and redeliver any Security in global form in the manner and upon written instructions given by the person or persons specified in such Security or by the Company.  Any instructions by the Company with respect to endorsement or delivery or redelivery of a Security in global form after the original issuance of the Securities of such series shall be in writing, and shall not be objected to in writing by the Depositary, but need not comply with Section 15.4 and need not be accompanied by an Opinion of Counsel. 

Unless otherwise specified pursuant to Section 2.1, payment of principal of and any premium and any interest on any Security in global form shall be made to the person or persons specified therein.

The owners of beneficial interests in any global Security shall have no rights under this Indenture with respect to any global Security held on their behalf by a Depositary, and such Depositary may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the sole holder and owner of such global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary, or impair, as between a Depositary and its participants in any global Security, the operation of customary practices governing the exercise of the rights of a holder of a Security of any series, including, without limitation, the granting of proxies or other authorization of participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other action that a holder is entitled to give or take under this Indenture. 

Neither the Company, the Trustee nor any Authenticating Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. 

Each Depositary designated pursuant to Section 2.1 for a global Security must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other applicable statute or regulation.

2.3   Denominations Of And Payment Of Interest On Securities.  The Securities of each series shall be issuable as fully registered Securities without coupons in such denominations as shall be specified as contemplated by Section 2.1 (except as provided in Section 2.2 and Section 2.6).  In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and integral multiples of $1,000 in excess thereof.

If the Securities of any series shall bear interest, each Security of such series shall bear interest from the applicable date at the rate or rates per annum, and such interest shall be payable on the dates, specified on, or determined in the manner provided in, the Security.  The person in whose name any Security is registered at the close of business on any record date (as defined below) for the Security with respect to any interest payment date for such Security shall be entitled to receive the interest payable thereon on such interest payment date notwithstanding the cancellation of such Security upon any registration of transfer or exchange thereof subsequent to such record date and prior to such interest payment date, unless such Security shall have been called for redemption on a date fixed for redemption subsequent to such record date and prior to such interest payment date or unless the Company shall default in the payment of interest due on such interest payment date on such Security, in which case such defaulted interest shall be paid to the person in whose name such Security (or any Security or Securities issued upon registration of transfer or exchange thereof) is registered at the close of business on the record date for the payment of such defaulted interest, or except as otherwise specified as contemplated by Section 2.1.  The term "record date" as used in this Section with respect to any regular interest payment date for any Security shall mean such day or days as shall be specified as contemplated by Section 2.1; provided, however, that in the absence of any such provisions with respect to any Security, such term shall mean: (1) if such interest payment date is the first day of a calendar month, the fifteenth day of the calendar month next preceding such interest payment date; or (2) if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month; provided, further, that (except as otherwise specified as contemplated by Section 2.1) if the day which would be the record date as provided herein is not a Business Day, then it shall mean the Business Day next preceding such day.  Such term, as used in this Section, with respect to the payment of any defaulted interest on any Security shall mean (except as otherwise specified as contemplated by Section 2.1) the fifth day next preceding the date fixed by the Company for the payment of defaulted interest, established by notice given by first class mail by or on behalf of the Company to the holder of such Security not less than 10 days preceding such record date, or, if such fifth day is not a Business Day, the Business Day next preceding such fifth day. 

2.4   Execution Of Securities.  The Securities shall be signed on behalf of the Company, manually or in facsimile, by its Chairman, or its Chief Executive Officer, or its President, or any Vice President of the Company (whether or not designated by a number or a word or words added before or after the title Vice President), under its corporate seal and attested by its Treasurer or its Controller or its Corporate Secretary which may be affixed thereto or printed, engraved or otherwise reproduced thereon, by facsimile or otherwise.  Only such Securities as shall bear thereon a certificate of authentication substantially in the form recited herein, executed by or on behalf of the Trustee manually by an authorized officer, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose.  Such certificate of authentication by the Trustee upon any Security executed by the Company shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture.  Typographical or other errors or defects in the seal or facsimile signature on any Security or in the text thereof shall not affect the validity or enforceability of such Security if it has been duly authenticated and delivered by the Trustee. 

In case any officer of the Company who shall have signed any of the Securities, manually or in facsimile, shall cease to be such officer before the Securities so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Securities nevertheless may be authenticated and delivered or disposed of as though the person who signed such Securities had not ceased to be such officer of the Company; and any Security may be signed on behalf of the Company, manually or in facsimile, by such persons as, at the actual date of the execution of such Security, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such officer. 

2.5   Registration, Transfer And Exchange Of Securities.  Securities of any series (other than a global Security, except as set forth below) may be exchanged for a like aggregate principal amount of Securities of the same series of the same tenor and terms of other authorized denominations.  Securities to be exchanged shall be surrendered at the offices or agencies to be maintained by the Company in accordance with the provisions of Section 4.2 and the Company shall execute and the Trustee shall authenticate and deliver, or cause to be authenticated and delivered, in exchange therefor the Security or Securities which the Securityholder making the exchange shall be entitled to receive.  

The Company shall keep, at one of the offices or agencies to be maintained by the Company in accordance with the provisions of Section 4.2 with respect to the Securities of each series, a Register (the "Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Securities of such series and the transfer of Securities of such series as in this Article provided.  Such Register shall be in written form or in any other form capable of being converted into written form within a reasonable time.  At all reasonable times the Register shall be open for inspection by the Trustee and any registrar of the Securities of such series other than the Trustee.  Upon due presentment for registration of transfer of any Security of any series at the offices or agencies of the Company to be maintained by the Company in accordance with Section 4.2 with respect to the Securities of such series, the Company shall execute and register and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Security or Securities of the same series of like tenor and terms for a like aggregate principal amount of authorized denominations.

Every Security issued upon registration of transfer or exchange of Securities pursuant to this Section shall be the valid obligation of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Security or Securities surrendered upon registration of such transfer or exchange. 

All Securities of any series presented or surrendered for exchange, registration of transfer, redemption or payment shall, if so required by the Company or any registrar of the Securities of such series, be accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company and such registrar, duly executed by the registered holder or by his attorney duly authorized in writing. 

No service charge shall be made for any exchange or registration of transfer of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. 

Neither the Company nor the Trustee shall be required to exchange or register the transfer of (a) any Securities of any series during a period beginning at the opening of business fifteen days before the day of the mailing of a notice of redemption of outstanding Securities of such series and ending at the close of business on the relevant redemption date, or (b) any Securities or portions thereof called or selected for redemption, except, in the case of Securities called for redemption in part, the portion thereof not so called for redemption. 

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

Notwithstanding the foregoing, except as otherwise specified pursuant to Section 2.1, any global Security shall be exchangeable pursuant to this Section only as provided in this paragraph.  If at any time the Depositary for the Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Securities of such series, or if at any time the Depositary for the Securities of such series shall cease to be a "clearing agency" registered under the Exchange Act, the Company shall appoint a successor Depositary with respect to the Securities of such series.  If (a) a successor Depositary for the Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility (thereby automatically making the Company's election pursuant to Section 2.1 no longer effective with respect to the Securities of such series), (b) the beneficial owners of interests in a global Security are entitled to exchange such interests for definitive Securities of such series and of the same tenor and terms, as specified pursuant to Section 2.1, (c) there shall have occurred and be continuing an Event of Default with respect to the Securities of such series, or (d) the Company in its sole discretion determines that the Securities of any series issued in the form of one or more global Securities shall no longer be represented by such global Security or Securities, then without unnecessary delay, but, if appropriate, in any event not later than the earliest date on which such interest may be so exchanged, the Company shall deliver to the Trustee definitive Securities in aggregate principal amount equal to the principal amount of such global Security, executed by the Company and authenticated by the Trustee.  On or after the earliest date on which such interests are or may be so exchanged, such global Security shall be surrendered by the Depositary to the Trustee, as the Company's agent for such purpose, to be exchanged, in whole or from time to time in part, for definitive Securities upon payment by the beneficial owners of such interest, at the option of the Company, of a service charge for such exchange and of a proportionate share of the cost of printing such definitive Securities, and the Trustee shall authenticate and deliver, (a) to each person specified by the Depositary in exchange for each portion of such global Security, an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of the same tenor and terms as the portion of such global Security to be exchanged, and (b) to such Depositary a global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered global security and the aggregate principal amount of definitive Securities delivered to holders thereof; provided, however, that no such exchanges may occur during a period beginning at the opening of business 15 days before any selection of Securities of that series to be redeemed and ending on the relevant redemption date.  If a Security is issued in exchange for any portion of a global Security after the close of business at the office or agency where such exchange occurs on (i) any record date and before the opening of business at such office or agency on the relevant interest payment date, or (ii) any record date for the payment of defaulted interest and before the opening of business at such office or agency on the related proposed date for payment of defaulted interest, then interest or defaulted interest, as the case may be, will not be payable on such interest payment date or proposed date for payment of defaulted interest, as the case may be, in respect of such Security, but will be payable on such interest payment date or proposed date for payment of defaulted interest, as the case may be, only to the person to whom interest in respect of such portion of such global Security is payable in accordance with the provisions of this Indenture and such global Security. 

2.6   Temporary Securities.  Pending the preparation of definitive Securities of any series, the Company may execute and the Trustee shall, upon the written order of the Company, authenticate and deliver temporary Securities of such series (printed or lithographed) of any denomination and substantially in the form of the definitive Securities of such series, but with or without a recital of specific redemption prices and with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company.  Temporary Securities may contain such reference to any provisions of this Indenture as may be appropriate.  Every such temporary Security shall be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Securities.  Without unreasonable delay the Company will execute and deliver to the Trustee definitive Securities of such series and thereupon any or all temporary Securities of such series may be surrendered in exchange therefor, at the offices or agencies to be maintained by the Company as provided in Section 4.2 with respect to the Securities of such series, and the Trustee shall, upon the written order of the Company, authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series.  Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered hereunder. 

2.7   Mutilated, Destroyed, Lost Or Stolen Securities.  In case any temporary or definitive Security shall become mutilated or be destroyed, lost or stolen, the Company, in the case of any mutilated Security shall, and in the case of any destroyed, lost or stolen Security in its discretion may, execute, and upon its request the Trustee shall authenticate and deliver, or cause to be authenticated and delivered, a new Security of the same series of like tenor and terms in exchange and substitution for the mutilated Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen.  In case any such Security shall have matured or shall be about to mature, instead of issuing a substituted Security, the Company may pay or authorize payment of the same (without surrender thereof, except in the case of a mutilated Security).  In every case the applicant for a substituted Security or for such payment shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.  The Trustee may authenticate any such substituted Security and deliver the same, or the Trustee or any Paying Agent of the Company may make any such payment, upon the written request or authorization of any officer of the Company.  Upon the issue of any substituted Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses connected therewith (including the fees and expenses of the Trustee). 

To the extent permitted by mandatory provisions of law, every substituted Security issued pursuant to the provisions of this Section in substitution for any destroyed, lost or stolen Security shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder. 

To the full extent legally enforceable, all Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute now existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. 

2.8   Cancellation And Destruction Of Surrendered Securities.  All Securities surrendered for the purpose of payment, redemption, exchange, substitution or registration of transfer, shall, if surrendered to the Company or any agent of the Company or of the Trustee, be delivered to the Trustee, and the same, together with Securities surrendered to the Trustee for cancellation, shall be canceled by it, and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture.  The Trustee shall dispose of canceled Securities in accordance with its customary procedures and deliver a certificate of disposition thereof to the Company unless by an Officers' Certificate, the Company shall direct that canceled Securities be returned to it.  If the Company shall purchase or otherwise acquire any of the Securities, however, such purchase or acquisition shall not operate as a payment, redemption or satisfaction of the indebtedness represented by such Securities unless and until the Company, at its option, shall deliver or surrender the same to the Trustee for cancellation. 

2.9   Authenticating Agents.  The Trustee may from time to time appoint one or more Authenticating Agents with respect to one or more series of Securities, which shall be authorized to act on behalf of the Trustee and subject to its direction in authenticating and delivering Securities of such series pursuant hereto in connection with exchanges, registrations of transfer or redemptions, as fully to all intents and purposes as though any such Authenticating Agent had been expressly authorized to authenticate and deliver Securities of such series, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as though authenticated by the Trustee.  Wherever reference is made in this Indenture to the authentication or delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication or delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent shall at all times be a corporation (including a banking association) organized and doing business under the laws of the United States or any State or territory thereof or of the District of Columbia, having a combined capital and surplus of at least fifty million dollars ($50,000,000) authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal, state, territorial, or District of Columbia authorities.  If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect herein specified in this Section. 

Any corporation succeeding to the corporate agency business of an Authenticating Agent shall continue to be an Authenticating Agent, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent or such successor corporation.

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

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

Any Authenticating Agent by the acceptance of its appointment shall be deemed to have agreed with the Trustee that:  it will perform and carry out the duties of an Authenticating Agent as herein set forth, including among other things the duties to authenticate and deliver Securities of any series for which it has been appointed an Authenticating Agent when presented to it in connection with exchanges, registrations of transfer or any redemptions thereof; it will furnish from time to time as requested by the Trustee appropriate records of all transactions carried out by it as Authenticating Agent and will furnish the Trustee such other information and reports as the Trustee may reasonably require; it is eligible for appointment as Authenticating Agent under this Section and will notify the Trustee promptly if it shall cease to be so qualified; and it will indemnify the Trustee against any loss, liability or expense incurred by the Trustee and will defend any claim asserted against the Trustee by reason of any acts or failures to act of the Authenticating Agent but it shall have no liability for any action taken by it at the specific written direction of the Trustee. 

2.10   Deferrals Of Interest Payment Dates.  If specified as contemplated by Section 2.1 or Section 2.2 with respect to the Securities of a particular series, so long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of such series, from time to time to defer the payment of interest on such Securities for such period or periods as may be specified as contemplated by Section 2.1 (each, an "Extension Period") during which Extension Periods the Company shall have the right to make partial payments of interest on any interest payment date.  No Extension Period shall end on a date other than an interest payment date or extend beyond the Stated Maturity.  At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Securities (together with Additional Interest or other interest thereon, if any, at the rate specified for the Securities of such series to the extent permitted by applicable law); provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities of such series; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company's Capital Stock (which includes Common Stock and preferred stock), or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu with or junior in interest to the Securities of such series or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company that by their terms rank pari passu with or junior in interest to the Securities of such series (other than (a) dividends or distributions in Common Stock; (b) any declaration of a dividend in connection with the implementation of a Rights Plan, or the issuance of Capital Stock of the Company under any Rights Plan, or the redemption or repurchase of any rights distributed pursuant to a Rights Plan; (c) payments under any Energy East Guarantee; and (d) purchases of Common Stock related to the issuance of Common Stock or rights under the Company's dividend reinvestment plan or under any of the Company's benefit plans for its directors, officers, employees, consultants or advisors).  Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that no Extension Period shall exceed the period or periods specified in such Securities or extend beyond the Stated Maturity of the principal of such Securities. Upon termination of any Extension Period and upon the payment of all accrued and unpaid interest and any Additional Tax Sums and Additional Interest then due on any interest payment date, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period, except at the end thereof. The Company shall give the holders of the Securities of such series and the Trustee notice of its election to begin or extend any such Extension Period at least five Business Days prior to the next succeeding interest payment date on which interest on Securities of such series would be payable but for such deferral or, with respect to the Securities of a series issued to an Energy East Trust so long as such Securities are held by such Energy East Trust prior to the earlier of (i) the next succeeding date on which Distributions on the Preferred Securities of such Energy East Trust would be payable but for such deferral, or (ii) the date the Property Trustee of such Energy East Trust is required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or the date such Distributions are payable, but in any event not less than five Business Days prior to such record date.

The Trustee shall promptly give notice of the Company's election to begin any such Extension Period to the holders of the outstanding Securities of such series.

2.11   Right Of Set-Off.  With respect to the Securities of a series issued to an Energy East Trust, notwithstanding anything to the contrary in this Indenture (but subject to the last paragraph of Section 6.5), the Company shall have the right to set off any payment it is otherwise required to make thereunder in respect of any such Security to the extent the Company has theretofore made, or is concurrently on the date of such payment making, such payment under the Energy East Guarantee relating to such Security or under Section 6.5 of this Indenture.

2.12   Shortening Or Extension Of Stated Maturity.  If specified as contemplated by Section 2.1 or Section 2.2 with respect to the Securities of a particular series, the Company shall have the right to (i) shorten the Stated Maturity of the principal of the Securities of such series at any time to any date not earlier than the first date on which the Company has the right, if any, to redeem the Securities of such series, and (ii) extend the Stated Maturity of the principal of the Securities of such series at any time at its election for one or more periods, but in no event to a date later than the 49th anniversary of the first interest payment date following the Original Issue Date of the Securities of such series; provided that, if the Company elects to exercise its right to extend the Stated Maturity of the principal of the Securities of such series pursuant to this clause (ii), at the time such election is made and at the time of extension (A) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (B) the Company is not in default in the payment of any interest or principal on such Securities, (C) in the case of any series of Securities issued to an Energy East Trust, such Energy East Trust is not in arrears on payments of Distributions on the Preferred Securities issued by such Energy East Trust and no deferred Distributions are accumulated, and (D) such Securities are rated not less than BBB- by Standard & Poor's Ratings Services or Baa3 by Moody's Investors Service, Inc.  or the equivalent by any other nationally recognized statistical rating organization.  In the event the Company elects to shorten or extend the Stated Maturity of the Securities of a particular series, it shall give notice to the Trustee (not less than 45 days prior to the effectiveness thereof), and the Trustee shall give notice of such shortening or extension to the holders not less than 30 nor more than 60 days prior to the effectiveness thereof. 

2.13   Agreed Tax Treatment.  Each Security issued hereunder shall provide that the Company and, by its acceptance of a Security or a beneficial interest therein, the holder of, and any Person that acquires a beneficial interest in, such Security agree that for United States federal, state and local tax purposes it is intended that such Security constitute indebtedness. 

2.14   CUSIP Numbers.  The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to holders of Securities; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee of any change in the CUSIP numbers. 

ARTICLE III

REDEMPTION OF SECURITIES

3.1   Applicability Of Article.  Securities of any series which are redeemable prior to Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 2.1 for Securities of any series) in accordance with this Article. 

3.2   Mailing Of Notice Of Redemption.  In case the Company shall desire to exercise any right to redeem all or, as the case may be, any part of the Securities of any series pursuant to this Indenture, it shall give notice of such redemption to holders of the Securities to be redeemed as hereinafter in this Section provided.

The Company covenants that it will pay to the Trustee or one or more Paying Agents, by 11:00 a.m., New York City time, on the date of such redemption, a sum in cash sufficient to redeem on the redemption date all the Securities so called for redemption at the applicable redemption price, together with any accrued interest on the Securities to be redeemed to but excluding the date fixed for redemption. 

Notice of redemption shall be given to the holders of Securities to be redeemed as a whole or in part by mailing by first class mail, postage prepaid, a notice of such redemption not less than 20 nor more than 60 days prior to the date fixed for redemption to their last addresses as they shall appear upon the Register, but failure to give such notice by mailing in the manner herein provided to the holder of any Security designated for redemption as a whole or in part, or any defect therein, shall not affect the validity of the proceedings for the redemption of any other Security. 

Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives the notice.

Each such notice of redemption shall identify the Securities to be redeemed (including CUSIP numbers) and specify the date fixed for redemption and the redemption price at which Securities are to be redeemed (or if the redemption price cannot be calculated prior to the time the notice is required to be given, the manner of calculation thereof), and shall state that payment of the redemption price of the Securities or portions thereof to be redeemed will be made at any of the offices or agencies to be maintained by the Company in accordance with the provisions of Section 4.2 with respect to the Securities to be redeemed, upon presentation and surrender of such Securities or portions thereof, and that, if applicable, interest accrued to the date fixed for redemption will be paid as specified in said notice and on and after said date interest thereon will cease to accrue.  

If less than all the Securities of any series are to be redeemed, the notice of redemption to each holder shall specify such holder's Securities of such series to be redeemed as a whole or in part.  In case any Security is to be redeemed in part only, the notice which relates to such Security shall state the portion of the principal amount thereof to be redeemed (which shall be equal to an authorized denomination for Securities of such series), and shall state that on and after the redemption date, upon surrender of such Security, the holder will receive the redemption price in respect to the principal amount thereof called for redemption and, without charge, a new Security or Securities of the same series of authorized denominations for the principal amount thereof remaining unredeemed. 

In the case of any redemption at the election of the Company, the Company shall, at least 45 days prior to the date fixed for redemption (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such redemption date, the basis for such redemption and of the principal amount of Securities of the applicable series to be redeemed.  In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or that is subject to compliance with conditions provided in the terms of such Securities, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction or conditions.  

If less than all the Securities of such series are to be redeemed, thereupon the Trustee shall select, by lot, or in any manner it shall deem fair, the Securities of such series to be redeemed as a whole or in part and shall thereafter promptly notify the Company in writing of the particular Securities of such series or portions thereof to be redeemed.  If the Securities of any series to be redeemed consist of Securities having different dates on which the principal or any installment of principal is payable or different rates of interest, if any, or different methods by which interest may be determined or have any other different tenor or terms, then the Company may, by written notice to the Trustee, direct that Securities of such series to be redeemed shall be selected from among groups of such Securities having specified tenor or terms and the Trustee shall thereafter select the particular Securities to be redeemed in the manner set forth in the preceding sentence from among the group of such Securities so specified. 

3.3   When Securities Called For Redemption Become Due And Payable.  If the giving of notice of redemption shall have been completed as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place or places stated in such notice at the applicable redemption price, together, if applicable, with any interest accrued (including any Additional Interest or other interest) to but excluding the date fixed for redemption, and on and after such date fixed for redemption (unless the Company shall default in the payment of such Securities at the applicable redemption price, together with any interest accrued to the date fixed for redemption) any interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and, except as provided in Sections 7.5 and 12.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and any unpaid interest accrued to but excluding the date fixed for redemption.  On presentation and surrender of such Securities at said place of payment in said notice specified, such Securities or portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with any interest accrued to but excluding the date fixed for redemption; provided, however, that, except as otherwise specified as contemplated by Section 2.1, any regular payment of interest becoming due on the date fixed for redemption shall be payable to the holders of the Securities registered as such on the relevant record date as provided in Article II hereof.  Upon surrender of any Security which is redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver at the expense of the Company a new Security of the same series of like tenor and terms of authorized denomination in principal amount equal to the unredeemed portion of the Security so surrendered; except that if a global Security is so surrendered, the Company shall execute, and the Trustee shall authenticate and deliver to the Depositary for such global Security, without service charge, a global Security in a denomination equal to and in exchange for the unredeemed portion of the principal of the global Security so surrendered.  If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the date fixed for redemption at the rate borne by or prescribed therefor in the Security, or, in the case of a Security which does not bear interest, at the rate of interest set forth therefor in the Security to the extent permitted by law.

ARTICLE IV

PARTICULAR COVENANTS OF THE COMPANY

The Company covenants as follows:

4.1   Payment Of Principal Of and Interest On Securities.  The Company will duly and punctually pay or cause to be paid the principal of and interest (including any Additional Interest and/or Additional Tax Sums due thereon), if any, on each of the Securities at the time and places and in the manner provided herein and in the Securities.  Except as otherwise specified as contemplated by Section 2.1, if the Securities of any series bear interest, each installment of interest on the Securities of such series may at the option of the Company be paid (i) by mailing a check or checks for such interest payable to the Person entitled thereto pursuant to Section 2.3 to the address of such person as it appears on the Register of the Securities of such series or (ii) by transfer to an account maintained by the Person entitled thereto as specified in the Register of Securities, provided that proper transfer instructions have been received by the record date. 

4.2   Maintenance Of Offices Or Agencies For Registration Of Transfer, Exchange And Payment Of Securities.  So long as any of the Securities shall remain outstanding, the Company will maintain an office or agency where the Securities may be presented for registration, exchange and registration of transfer as in this Indenture provided, and where notices and demands to or upon the Company in respect of the Securities or of this Indenture may be served, and where the Securities may be presented for payment.  In case the Company shall designate and maintain some office or agency other than the previously designated office or agency, it shall give the Trustee prompt written notice thereof.  In case the Company shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof to the Trustee, presentations and demands may be made and notices may be served at the principal office of the Trustee. 

In addition to such office or agency, the Company may from time to time constitute and appoint one or more other offices or agencies for such purposes with respect to Securities of any series, and one or more paying agents for the payment of Securities of any series, in such cities or in one or more other cities, and may from time to time rescind such appointments, as the Company may deem desirable or expedient, and as to which the Company has notified the Trustee. 

4.3   Appointment To Fill A Vacancy In The Office Of Trustee.  The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder. 

4.4   Duties of Paying Agent.

(a)   If the Company shall appoint a Paying Agent other than the Trustee with respect to Securities of any series, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section and Section 12.3,
(i)   that it will hold all sums held by it as such agent for the payment of the principal of or interest, if any, on the Securities of such series (whether such sums have been paid to it by the Company or by any other obligor on the Securities of such series) in trust for the benefit of the holders of the Securities of such series entitled to such principal or interest and will notify the Trustee of the receipt of sums to be so held,

(ii)   that it will give the Trustee notice of any failure by the      Company (or by any other obligor on the Securities of such series) to make      any payment of the principal of or interest on the Securities of such series when the same shall be due and payable, and

(iii)   that it will at any time during the continuance of any      Event of Default, upon the written request of the Trustee, deliver to the Trustee all sums so held in trust by it.

(b)   Whenever the Company shall have one or more Paying Agents with respect to the Securities of any series, it will, prior to each due date of the principal of or any interest on a Security of such series (except as provided in Section 3.2), deposit with a Paying Agent of such series a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the holders of Securities of such series entitled to such principal or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.

(c)   If the Company shall act as its own Paying Agent with respect to the Securities of any series, it will, on or before each due date of the principal of or any interest on a Security of such series, set aside, segregate and hold in trust for the benefit of the holder of such Security, a sum sufficient to pay such principal or interest so becoming due and will notify the Trustee of such action, or any failure by it or any other obligor on the Securities of such series to take such action and will at any time during the continuance of any Event of Default, upon the written request of the Trustee, deliver to the Trustee all sums so held in trust by it.

(d)   Anything in this Section to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for such series by it, or any Paying Agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trust herein contained.

(e)   Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 12.3 and 12.4.

4.5   Further Assurances.  From time to time whenever reasonably demanded by the Trustee, the Company will make, execute and deliver or cause to be made, executed and delivered any and all such further and other instruments and assurances and take all such further action as may be reasonably necessary or proper to carry out the intention of or to facilitate the performance of the terms of this Indenture or to secure the rights and remedies hereunder of the holders of the Securities of any series.       

4.6   Officers' Certificate As To Defaults; Notices Of Certain Defaults.  The Company will, so long as any of the Securities are outstanding, deliver to the Trustee no later than 120 days after the end of each calendar year, beginning with the year 2001, a certificate signed by the Company's principal executive officer, principal financial officer or principal accounting officer stating that a review has been made under his or her supervision of the activities of the Company during such year and of the performance under this Indenture and, to the best of his or her knowledge, the Company has complied with all conditions and covenants under this Indenture throughout such calendar year, or if there has been a default in the fulfillment of any such obligation, specifying each such default known and the nature and status thereof.  For purposes of this Section, such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture.  In addition, the Company shall give the notice to the Trustee as and when required by the fourth paragraph of Section 14.1.

4.7   Waiver Of Covenants.  The Company may omit in any particular instance to comply with any covenant or condition specifically contained in this Indenture for the benefit of one or more series of Securities, if before the time for such compliance the holders of a majority in principal amount of the Securities of all series affected (all series voting as one class) at the time outstanding (determined as provided in Section 8.4) shall waive such compliance in such instance, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect.

4.8   Additional Tax Sums.  In the case of the Securities of a series issued to an Energy East Trust, so long as no Event of Default has occurred and is continuing and except as otherwise specified as contemplated by Section 2.1 or Section 2.2, in the event that (i) an Energy East Trust is the holder of all of the Outstanding Securities of such series, (ii) a Tax Event in respect of such Energy East Trust shall have occurred and be continuing and (iii) the Company shall not have (a) redeemed the Securities of such series or (b) terminated such Energy East Trust pursuant to the termination provisions of the related Trust Agreement, the Company shall pay to such Energy East Trust (and any permitted successor or assign under the related Trust Agreement) for so long as such Energy East Trust (or its permitted successor or assignee) is the registered holder of any Securities of such series, such additional amounts as may be necessary in order that the amount of Distributions then due and payable by such Energy East Trust on the related Preferred Securities and Common Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any additional taxes, duties and other governmental charges to which such Energy East Trust has become subject as a result of such Tax Event (but not including withholding taxes imposed on holders of such Preferred Securities and Common Securities) (the "Additional Tax Sums").  Whenever in this Indenture or the Securities there is a reference in any context to the payment of principal of or interest on the Securities, such reference shall be deemed to include payment of the Additional Tax Sums provided for in this paragraph to the extent that, in such context, Additional Tax Sums are, were or would be payable in respect thereof pursuant to the provisions of this Section and express reference to the payment of Additional Tax Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Tax Sums in those provisions hereof where such express reference is not made; provided, however, that the deferral of the payment of interest pursuant to Section 2.10 on the Securities shall not defer the payment of any Additional Tax Sums that may be then due and payable.

4.9   Additional Covenants.  The Company covenants and agrees with each holder of Securities of a series issued to an Energy East Trust that it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any shares of the Company's Capital Stock (which includes Common Stock and preferred stock), or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank on a parity with or junior to the Securities of such series or make any guarantee payments with respect to any guarantee by the Company of debt securities of any Subsidiary that by its terms ranks on a parity with or junior to the Securities of such series (other than (a) dividends or distributions in Common Stock; (b) any declaration of a dividend in connection with the implementation of a Rights Plan, the issuance of any Capital Stock of the Company under any Rights Plan or the redemption or repurchase of any rights distributed pursuant to a Rights Plan; (c) payments under any Energy East Guarantee; and (d) purchases of Common Stock related to the issuance of Common Stock or rights under the Company's dividend reinvestment plan, or under any of the Company's benefit plans for its directors, officers, employees, consultants or advisors) if at such time (i) there shall have occurred any event of which the Company has actual knowledge that (a) with the giving of notice or the lapse of time or both, would constitute an Event of Default hereunder and (b) in respect of which the Company shall not have taken reasonable steps to cure, (ii) the Company shall be in default with respect to its payment of any obligations under the related Energy East Guarantee or (iii) the Company shall have given notice of its election to begin an Extension Period as provided in Section 2.10 and shall not have rescinded such notice, or such Extension Period, or any extension thereof, shall be continuing.

The Company also covenants with each holder of Securities of a series issued to an Energy East Trust (i) to maintain directly or indirectly 100% ownership of the Common Securities of such Energy East Trust; provided, however, that any permitted successor or assignee of the Company hereunder may succeed to the Company's ownership of such Common Securities, (ii) not to voluntarily terminate, wind up or liquidate such Energy East Trust, except (a) in connection with a prepayment in full of the Securities or a distribution of the Securities of such series to the holders of Preferred Securities in liquidation of such Energy East Trust or (b) in connection with certain mergers, consolidations or amalgamations permitted by the relevant Trust Agreement and (iii) to use its reasonable efforts, consistent with the terms and provisions of such Trust Agreement, to cause such Energy East Trust to remain classified as a grantor trust and not an association taxable as a corporation for United States federal income tax purposes.

4.10   Calculation Of Original Issue Discount.  The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on outstanding Securities as of the end of such year and (ii) such other specific information relating to such original issue discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time. 

ARTICLE V

SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY

AND THE TRUSTEE

5.1   Company To Furnish Trustee Information As To The Names And Addresses Of Securityholders.  The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee, semiannually not more than 5 days after each record date for payment of interest, and at such other times as the Trustee may request in writing within 30 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all information in the possession or control of the Company, or any Paying Agent or any registrar of the Securities of each series, other than the Trustee, as to the names and addresses of the holders of Securities of such series obtained (in the case of each list other than the first list) since the date as of which the next previous list was furnished; provided, however, that if the Trustee shall be the registrar of the Securities of such series, no such list need be furnished; and provided further that the Company shall not be obligated to provide such a list of Securityholders at any time the list of Securityholders does not differ from the most recent list of Securityholders given to the Trustee by the Company.  Any such list may be dated as of a date not more than fifteen days prior to the time such information is furnished or caused to be furnished, and need not include information received after such date. 

5.2   Trustee To Preserve Information As To The Names And Addresses Of Securityholders Received By It.  The Trustee shall comply with the obligations imposed upon it pursuant to Section 312 of the Trust Indenture Act.

Each and every holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent nor any registrar shall be held accountable by reason of the disclosure of any information as to the names and addresses of the holders of Securities in accordance with Section 312(b) of the Trust Indenture Act, 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 Section 312(b) of the Trust Indenture Act.

5.3   Annual And Other Reports To Be Filed By Company With Trustee.

(a)   The Company covenants and agrees to file with the Trustee within fifteen days after the Company 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 Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such Sections, then it will 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 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.

(b)   The Company covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations.         

(c)   The Company covenants and agrees to transmit to the holders of Securities within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in subsection (c) of Section 5.4 with respect to reports pursuant to subsection (a) of said Section 5.4, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.

(d)   Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates).       

5.4   Trustee To Transmit Annual Report To Securityholders.

(a)   Within 60 days after the first May 15 which occurs not less than 60 days following the first date of issuance of Securities of any series under this Indenture and within 60 days after May 15 in every year thereafter, so long as any Securities are outstanding hereunder, the Trustee shall transmit to the Securityholders as hereinafter in this Section provided, a brief report dated as of such May 15 with respect to any of the following events which may have occurred within the previous twelve (12) months (but if no such event has occurred within such period no report need be transmitted): 
(i)   Any change to its eligibility under Section 7.9, and its qualifications under Section 7.8; 

(ii)   The creation of or any material change to a relationship which, with the occurrence of an Event of Default, would create a conflicting interest within the meaning of the Trust Indenture Act;                 

(iii)   The character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities of any series on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than one-half of one percent of the principal amount of the Securities of all series outstanding as of the date of such report; 

(iv)   Any change to the amount, interest rate, and maturity date of all other indebtedness owing by the Company (or by any other obligor on the Securities) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except indebtedness based upon a creditor relationship arising in any manner described in paragraph (2), (3), (4), or (6) of subsection (b) of Section 311 of the Trust Indenture Act;                 

(v)   Any change to the property and funds, if any, physically      in the possession of the Trustee (as such) on the date of such report; 

(vi)   Any additional issue of Securities which the Trustee has      not previously reported to Securityholders; and 

(vii)   Any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported to  Securityholders and which in its opinion materially affects the Securities of any series, except action in respect of a default, notice of which has been or is to be withheld by it in accordance with the provisions of Section 6.7. 

(b)   The Trustee shall transmit to the Securityholders, as hereinafter provided, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to the provisions of subsection (a) of this Section (or if such report has not yet been so transmitted, since the date of execution of this Indenture), for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities of any series on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this subsection, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 10 percent of the principal amount of Securities of all series outstanding as of the date of such report, such report to be transmitted within 90 days after such time. 

(c)   Reports pursuant to this Section shall be transmitted by mail to all holders of Securities of any series, as the names and addresses of such holders shall appear upon the Register of the Securities of such series. 

(d)   A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with each stock exchange upon which the Securities of any series are listed and also with the Commission.  The Company will promptly notify the Trustee when and as the Securities of any series become listed on any stock exchange. 

ARTICLE VI

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON

EVENT OF DEFAULT

6.1   Events Of Default Defined.  The term "Event of Default" whenever used herein with respect to Securities of any series shall mean any one of the following events:

(a)   default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days (subject to the deferral of any due date in the case of an Extension Period); or 

(b)   default in the payment of all or any part of the principal of any of the Securities of such series as and when the same shall become due and payable whether upon Maturity, upon any redemption, by declaration or otherwise; or 

(c)   failure on the part of the Company duly to observe or perform any other covenant or agreement (other than covenants to pay interest, principal and premium, which are subject to subsections (a) and (b) above of this Section) on the part of the Company in the Securities or in this Indenture (including any supplemental indenture or pursuant to any Officers' Certificate as contemplated by Section 2.1) which are for the benefit of the Securities of such series, for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by the holders of not less than 25% in principal amount of the Securities of such series and all other series so benefited (all series voting as one class) at the time outstanding under this Indenture a written notice specifying such failure and stating that such notice is a "Notice of Default" hereunder, unless the Trustee, or the Trustee and the Holders of a principal amount of Securities of such series not less than the principal amount of Securities the Holders of which gave such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Trustee or the Trustee and the Holders of such principal amount of Securities of such series, as the case may be, shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Company within such period and is being diligently pursued; or 

(d)   the commencement by the Company of a voluntary case under Chapter 7 or Chapter 11 of the federal Bankruptcy Code or any other similar state or federal law now or hereafter in effect, or the consent by the Company to the entry of a decree or order for relief in an involuntary case under any such law, or the consent by the Company to the appointment of or the taking possession by a liquidating agent or committee, conservator or receiver for the Company or any substantial part of its property, or the general assignment by the Company for the benefit of its creditors, or the admission by the Company in writing of its inability to pay its debts as they become due; or

(e)   the entry of a decree or order for relief by a court having jurisdiction in the premises in respect of the Company in an involuntary case under Chapter 7 or Chapter 11 of the federal Bankruptcy Code or any other similar state or federal law now or hereafter in effect, and the continuance of any such decree or order unstayed and in effect for a period of 60 days, or the appointment of or the taking possession by a liquidating agent or committee, conservator or receiver for the Company or any substantial part of its property, and the continuance of any such appointment unstayed and in effect for a period of 60 days.

If an Event of Default shall have occurred and be continuing, unless the principal of all the Securities shall have already become due and payable, either the Trustee or (i) the holders of not less than 25% in principal amount of all the then outstanding Securities of the series as to which such Event of Default under clauses 6.1(a), 6.1(b) or 6.1(c) has occurred (each such series voting as a separate class in the case of an Event of Default under clauses 6.1(a) or 6.1(b), and all such series voting as one class in the case of an Event of Default under clauses 6.1(c)), or (ii) the holders of not less than 25% in principal amount of all of the outstanding Securities in the case of an Event of Default under clauses 6.1(d) or 6.1(e), by notice in writing to the Company (and to the Trustee if given by Securityholders) may declare the principal amount (or if Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all the Securities of such series in the case of an Event of Default under clauses 6.1(a), 6.1(b) or 6.1(c) or of all the outstanding Securities in the case of an Event of Default under clauses 6.1(d) or 6.1(e), in each case together with any accrued interest, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable; provided, however, that in the case of the Securities of a series issued to an Energy East Trust, if upon an Event of Default, the Trustee or the holders of at least 25% in principal amount of the outstanding Securities of such series fail to declare the principal of all the Securities of that series to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the corresponding series of Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee. 

The foregoing provisions, however, are subject to the condition that if, at any time after the principal amount (or specified portion thereof) of the Securities of any one or more series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of such series (or upon all the Securities, as the case may be) and the principal of any and all Securities of such series (or of any and all the Securities, as the case may be) which shall have become due otherwise than by declaration (with interest on overdue installments of interest to the extent permitted by law and on such principal at the rate or rates of interest borne by, or prescribed therefor in, the Securities of each such series to the date of such payment or deposit) and the amounts payable to the Trustee under Section 7.6, and any and all defaults under the Indenture with respect to Securities of such series (or all Securities, as the case may be), other than the nonpayment of principal of and any accrued interest on Securities of such series (or any Securities, as the case may be) which shall have become due by declaration, shall have been cured, remedied or waived as provided in Section 6.6, then and in every such case the holders of a majority in principal amount of the Securities of such series (or of all the Securities, as the case may be) then outstanding and as to which such Event of Default has occurred (such series or all series voting as one class, if more than one series are so entitled) by written notice to the Company and to the Trustee, may rescind and annul such declaration and its consequences.  In the case of Securities issued to an Energy East Trust, should the holders of such Securities fail to annul such declaration and waive such default, the holders of a majority in aggregate liquidation preference of related Preferred Securities shall have such right; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. 

In case the Trustee, any holder of Securities or any holder of Preferred Securities shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, such holder of Securities or such holder of Preferred Securities then and in every such case the Company, the Trustee, the holders of the Securities of such series (or of all the Securities, as the case may be) and the holders of Preferred Securities shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee, the holders of the Securities of such series (or of all the Securities, as the case may be) and the holders of Preferred Securities shall continue as though no such proceedings had been taken.

6.2   Covenant Of Company To Pay To Trustee Whole Amount Due On Securities On Default In Payment Of Interest Or Principal.  The Company covenants that (1) in case default shall be made in the payment of any installment of interest on any of the Securities of any series as and when the same shall become due and payable, and such default shall have continued for a period of 30 days (subject to the deferral of any due date in the case of an Extension Period), or (2) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any series as and when the same shall become due and payable, whether upon Maturity, upon any redemption, by declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Securities of such series, the whole amount that then shall have become due and payable on all such Securities of such series for principal or interest, or both, as the case may be, with interest upon the overdue principal and installments of interest (to the extent permitted by law) at the rate or rates of interest borne by or prescribed therefor in the Securities of such series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee, its agents and counsel, and any expenses or disbursements reasonably incurred, and all reasonable advances made hereunder by the Trustee, its agents, attorneys and counsel, except as a result of its negligence or bad faith. 

In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or any other obligor upon such Securities, and collect in the manner provided by law out of the property of the Company or any other obligor upon such Securities wherever situated the moneys adjudged or decreed to be payable. 

The Trustee shall be entitled and empowered, either in its own name or as trustee of an express trust, or as attorney-in-fact for the holders of the Securities of any series, or in any one or more of such capacities (irrespective of whether the principal of the Securities of such series shall then be due and payable, whether upon Maturity, upon any redemption, by declaration or otherwise, and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section) to file and prove a claim or claims for the whole amount of principal (or, if the Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) and interest owing and unpaid in respect of the Securities of such series and to file such other documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation of the Trustee, its agents and counsel, and for reimbursement of all expenses and disbursements reasonably incurred, and all reasonable advances made hereunder by the Trustee, its agents and counsel, except as a result of its negligence or bad faith) and of the holders of the Securities of such series allowed in any equity receivership, insolvency, bankruptcy, liquidation, arrangement, readjustment, reorganization or any other judicial proceedings relative to the Company or any other obligor on the Securities of such series or their creditors, or their property.  The Trustee is hereby irrevocably appointed (and the successive respective holders of the Securities of each series by taking and holding the same shall be conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective holders of the Securities of such series, with authority to make and file in the respective names of the holders of the Securities of such series, or on behalf of the holders of the Securities of such series as a class, any proof of debt, amendment of proof of debt, claim, petition or other document in any such proceeding and to receive payment of any sums becoming distributable on account thereof, and to execute any such other papers and documents and to do and perform any and all such acts and things for and on behalf of such holders of the Securities of such series, as may be necessary or advisable in the opinion of the Trustee in order to have the respective claims of the Trustee and of the holders of the Securities of such series allowed in any such proceeding, and to receive payment of or on account of such claims and to distribute the same, and any 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 to it under Section 7.6; provided, however, that nothing herein shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of such series or the rights of any holder thereof, or to authorize the Trustee to vote in respect of the claim of any holder of Securities of such series in any such proceeding.

All rights of action and of asserting claims under this Indenture, or under any of the Securities of any series, may be enforced by the Trustee without the possession of any of the Securities of such series, or the production thereof on any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee, shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of such Trustee, its agents and counsel, for the ratable benefit of the holders of the Securities of such series.

6.3   Application Of Moneys Collected By Trustee.  Any moneys collected by the Trustee pursuant to Section 6.2 shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Securities in respect of which moneys have been collected, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid:
First:  To the payment of reasonable costs and expenses of collection, and of all amounts payable to the Trustee under Section 7.6;

Second: In case the principal of the outstanding Securities in respect of which moneys have been collected shall not have become due and be unpaid, to the payment of any unpaid interest on such Securities, in the order of the maturity of the installments of such interest, with interest upon the overdue installments of interest (so far as permitted by law and to the extent that such interest has been collected by the Trustee) at the rate or rates of interest borne by, or prescribed therefor in, such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference;

Third: In case the principal of the outstanding Securities in respect of which such moneys have been collected shall have become due and be unpaid, whether upon Maturity, upon any redemption, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon such Securities for principal and interest, if any, with interest on the overdue principal and any installments of interest (so far as permitted by law and to the extent that such interest has been collected by the Trustee) at the rate or rates of interest borne by, or prescribed therefor in, such Securities; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon such Securities, then to the payment of such principal and interest, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Security over any other Security, ratably to the aggregate of such unpaid principal and interest; and

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

6.4   Limitation On Suits By Holders Of Securities.  No holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as hereinbefore provided, and unless also the holders of not less than a majority in principal amount of all the Securities at the time outstanding (considered as one class) shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee, for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 6.6; it being understood and intended, and being expressly covenanted by the taker and holder of every Security with every other taker and holder and the Trustee, that no one or more holders of Securities shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other of such Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities.  For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

Notwithstanding any other provisions in this Indenture, the right of any holder of any Security to receive payment of the principal of and interest on such Security, on or after the respective due dates expressed in such Security (or, in the case of redemption on or after the date fixed for redemption), or to institute 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.

6.5   On Default Trustee May Take Appropriate Action; Direct Action.  In case of an Event of Default hereunder the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.  Except as provided in the last paragraph of Section 2.7, all powers and remedies given by this Article to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the holders of the Securities, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee, of any holder of any of the Securities or any holder of Preferred Securities to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 8.4, every power and remedy given by this Article or by law to the Trustee, to the Securityholders or the holders of Preferred Securities may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee, by the Securityholders or by the holders of Preferred Securities, as the case may be.

In the case of Securities of a series issued to an Energy East Trust, any holder of the corresponding series of Preferred Securities issued by such Energy East Trust shall have the right, upon the occurrence of an Event of Default described in Section 6.1(a) or (b) above, to institute a suit directly against the Company (a "Direct Action") for enforcement of payment to such holder of principal of (including premium, if any) and interest (including any Additional Interest) on the Securities having a principal amount equal to the aggregate liquidation amount of such Preferred Securities of the corresponding series held by such holder.  Notwithstanding any payments made to a holder of such Preferred Securities by the Company pursuant to a Direct Action initiated by such holder, the Company shall remain obligated to pay the principal of or interest due on the Securities, and the Company shall be subrogated to the rights of the holder of such Preferred Securities with respect to payments on the Preferred Securities to the extent of any payments made by the Company to such holder in any Direct Action.

6.6   Rights Of Holders Of Majority In Principal Amount Of Securities To Direct Trustee And To Waive Default.  The holders of at least a majority in principal amount of the Securities of any one or more series or of all the Securities, as the case may be (voting as one class), at the time outstanding (determined as provided in Section 8.4) shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee under this Indenture with respect to such one or more series; provided, however, that subject to Section 7.1, the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by Opinion of Counsel determines that the action so directed may not lawfully be taken, or if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceedings so directed would be illegal or involve it in personal liability or be unduly prejudicial to the rights of Securityholders of such one or more series not parties to such direction, and provided further that nothing in this Indenture shall impair the right of the Trustee to take any action deemed proper by the Trustee and which is not inconsistent with such direction by such Securityholders of such one or more series.  The holders of at least a majority in principal amount of the Securities of all series as to which an Event of Default hereunder has occurred (all series voting as one class) at the time outstanding (determined as provided in Section 8.4) and, in the case of any Preferred Securities of a series issued to an Energy East Trust, the holders of at least a majority in aggregate liquidation amount of the Preferred Securities issued by such Energy East Trust, may waive any past default hereunder with respect to such series and its consequences, except a default in the payment of the principal of or interest on any of such Securities or Preferred Securities or in respect of a covenant or provision hereof which under Article X cannot be modified or amended without the consent of the holder of each Security so affected.  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.  Any such waiver shall be deemed to be on behalf of the holders of all the Securities of such series or, in the case of a waiver by holders of Preferred Securities issued by such Energy East Trust, on behalf of all holders of Preferred Securities issued by such Energy East Trust.

6.7   Trustee To Give Notice Of Defaults Known To It, But May Withhold In Certain Circumstances.  The Trustee shall, within 90 days after the occurrence of any default hereunder with respect to the Securities of any series, give to the holders of the Securities of such series in the manner and to the extent provided in subsection (c) of Section 5.4 with respect to reports pursuant to subsection (a) of said Section 5.4, notice of such default actually known to the Trustee unless such default shall have been cured, remedied or waived before the giving of such notice (the term "default" for the purposes of this Section being hereby defined to be the events specified in clauses (c), (d) and (e) of Section 6.1 and default in the payment of the principal of or interest on Securities of any series, not including any periods of grace provided for therein, and irrespective of the giving of written notice specified therein); provided, however, that, except in the case of default in the payment of the principal of or interest on any of the Securities of such series, 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 and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the holders of the Securities of such series.

6.8   Requirement Of An Undertaking To Pay Costs In Certain Suits Under The Indenture Or Against The Trustee.  All parties to this Indenture agree, and each holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any holder of Securities of any series, or group of such Securityholders, holding in the aggregate more than 10 percent in principal amount of all the Securities (all series considered as one class) outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security, on or after the due date expressed in such Security (or in the case of any redemption, on or after the date fixed for redemption).

ARTICLE VII

CONCERNING THE TRUSTEE

7.1   Upon Event Of Default Occurring And Continuing, Trustee Shall Exercise Powers Vested In It, And Use Same Degree Of Care And Skill In Their Exercise, As A Prudent Man Would Use.  The Trustee, prior to the occurrence of an Event of Default and after the curing, remedying or waiving of all Events of Default which may have occurred, undertakes 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, remedied 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.

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; provided, however, that

(a)   Prior to the occurrence of an Event of Default and after the curing, remedying or waiving of all Events of Default which may have occurred:
(i)   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

(ii)   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 certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any 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;

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

(c)   The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of Securities pursuant to Section 6.6 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;

(d)   Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.1; and

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

7.2   Reliance On Documents, Opinions, Etc.  Except as otherwise provided in Section 7.1:

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

(b)   Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Resolution of the Company may be evidenced to the Trustee by a copy thereof certified by the Corporate Secretary of the Company;

(c)   The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder 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 at the request or direction of any of the Securityholders pursuant to this Indenture, unless such Securityholders shall have offered to the Trustee such adequate security or indemnity against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction;

(e)   The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

(f)   The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, debenture, note, other evidence of indebtedness or other paper or document, unless requested in writing to do so by the holders of Securities pursuant to Section 6.6, but the Trustee may make such further inquiry or investigation into such facts or matters as it may see fit; provided, however, 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 adequate indemnity against such costs, expenses or liabilities as a condition to so proceeding; and provided further, that nothing in this subsection (f) shall require the Trustee to give the Securityholders any notice other than that required by Section 6.7.  The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand;

(g)   The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it hereunder; provided, however, that the Trustee shall be responsible for its own negligence or recklessness with respect to the selection of any such agent or attorney;

(h)   The Trustee shall be under no responsibility for the approval by it in good faith of any expert for any of the purposes expressed in this Indenture; and

(i)   The Trustee shall not be deemed to have notice of any Event of Default unless a Responsible Officer of the Trustee in its principal office 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 principal office of the Trustee from the Company or any Securityholder, and such notice references the Securities and this Indenture.

7.3   Trustee Not Liable For Recitals In Indenture Or In Securities.  The recitals contained herein and in the Securities (other than the certificate of authentication on the Securities) shall be taken as the statements of the Company, and the Trustee does not assume any responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities.  The Trustee shall not be accountable for the use or application by the Company of the proceeds of the Securities of any series.

7.4   May Hold Securities.  The Trustee or any agent of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Section 7.8, with the same rights it would have if it were not Trustee or such agent.

7.5   Moneys Received By Trustee To Be Held In Trust Without Interest.  Subject to the provisions of Section 12.4, 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.  The Trustee shall be under no liability for interest on any moneys received by it hereunder.

7.6   Trustee Entitled To Compensation, Reimbursement And Indemnity.  The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as shall be agreed to in writing between the Company and the Trustee (which shall not be limited by any provision of law in regard to the compensation of a trustee of any express trust), and, the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in connection with the acceptance or administration of its trust under this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith.  The Company also covenants and agrees to indemnify each of the Trustee, any predecessor Trustee and their agents for, and to hold them harmless against, any loss, liability or expense incurred without negligence or bad faith on their part and arising out of or in connection with the acceptance or administration of this trust and performance of their duties hereunder, including the reasonable costs and expenses (including reasonable fees and disbursements of their counsel) of defending themselves against any claim or liability in connection with the exercise or performance of any of the powers or duties hereunder.  The obligations of the Company under this Section to compensate the Trustee, to pay or reimburse the Trustee for expenses, disbursements and advances and to indemnify and hold harmless the Trustee shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee. Such additional indebtedness shall be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of or interest, if any, on particular Securities.

Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.1(d) or Section 6.1(e), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law.

7.7   Right Of Trustee To Rely On Officers' Certificate Where No Other Evidence Specifically Prescribed.  Except as otherwise provided in Section 7.1, whenever in the administration of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting to take any action hereunder, the Trustee (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Company.

7.8   Disqualification; Conflicting Interests.  If the Trustee has or shall acquire any conflicting interest, within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such 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.

7.9   Requirements For Eligibility Of Trustee.  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, any state thereof or the District of Columbia, eligible under Sections 310(a)(1) and (5) of the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act and that has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000 subject to supervision or examination by federal or state authority.  If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

7.10   Resignation And Removal Of Trustee.

(a)   The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of such resignation to the Company and by giving to the holders of Securities of the applicable series notice thereof in the manner and to the extent provided in subsection (c) of Section 5.4 with respect to reports pursuant to subsection (a) of Section 5.4.  Upon receiving such notice of resignation and if the Company shall deem it appropriate evidence satisfactory to it of such mailing, the Company shall promptly appoint a successor Trustee with respect to the applicable series (it being understood that any successor Trustee may be appointed with respect to the Securities of one or more or all of such series and at any time there shall be only one Trustee with respect to the Securities of any particular series) by written instrument, in duplicate, executed pursuant to a Resolution of the Company, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor Trustee.  If no successor Trustee shall have been so appointed with respect to any series and have accepted appointment within 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 Securityholder who has been a bona fide holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 6.8, 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 and prescribe, appoint a successor Trustee.

(b)   In case at any time any of the following shall occur:
(i)   The Trustee shall fail to comply with Section 7.8 after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or Securities of the applicable series for at least six months, or

(ii)   The Trustee shall cease to be eligible in accordance with the provisions of Section 7.9 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or

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

then, in any such case, the Company may remove the Trustee with respect to the applicable series and appoint a successor Trustee with respect to the applicable series by written instrument, in duplicate, executed pursuant to a Resolution of the Company, 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 6.8, any Securityholder who has been a bona fide holder of a Security or Securities of the applicable series for at least six 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 with respect to the applicable series.  Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor Trustee.

(c)   The holders of a majority in principal amount of the Securities of any one series voting as a separate class or all series voting as one class at the time outstanding (determined as provided in Section 8.4) may at any time remove the Trustee with respect to the applicable series or all series, as the case may be, and appoint a successor Trustee with respect to the applicable series or all series, as the case may be, by written instrument or instruments signed by such holders or their attorneys-in-fact duly authorized, or by the affidavits of the permanent chairman and permanent secretary of a meeting of the Securityholders (as elected in accordance with Section 9.5) evidencing the vote upon a resolution or resolutions submitted thereto with respect to such removal and appointment (as provided in Article IX), and by delivery thereof to the Trustee so removed, to the successor Trustee and to the Company.

(d)   Any resignation or removal of the Trustee and any appointment of a successor Trustee pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor Trustee as provided in Section 7.11.

7.11   Acceptance By Successor Trustee.  Any successor Trustee with respect to all series of Securities appointed as provided in Section 7.10 shall execute, acknowledge and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor Trustee with respect to all series 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 with respect to such series of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, on the written request of the Company or of the successor Trustee, the Trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 7.6, execute and deliver an instrument transferring to such successor Trustee all the rights and powers with respect to such series of the Trustee so ceasing to act.  Upon the request of any such successor Trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers.  Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such Trustee or any successor Trustee to secure any amounts then due it pursuant to the provisions of Section 7.6.

In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of such series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of such series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of such series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-Trustees of the same trust and that each such Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each 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 with respect to the Securities of such series to which the appointment of such successor Trustee relates; but, on written request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of such series to which the appointment of such successor Trustee relates.

No successor Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Trustee shall be qualified under the provisions of Section 7.8 and eligible under the provisions of Section 7.9.

Upon acceptance of appointment by a successor Trustee as provided in this Section, the successor Trustee shall at the expense of the Company transmit notice of the succession of such Trustee hereunder to the holders of Securities of any applicable series in the manner and to the extent provided in subsection (c) of Section 5.4 with respect to reports pursuant to subsection (a) of said Section 5.4.

7.12   Successor To Trustee By Merger, 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 of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be qualified under the provisions of Section 7.8 and eligible under the provisions of Section 7.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities 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 Securities or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

7.13   Limitations on Preferential Collection Of Claims By The Trustee.  The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act.  A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent included therein.

ARTICLE VIII

CONCERNING THE SECURITYHOLDERS

8.1   Evidence Of Action By Securityholders.  Whenever in this Indenture it is provided that the holders of a specified percentage in principal amount of the Securities of any or all series may take any action (including the making of any demand or request, the giving of any notice, consent, or waiver or the taking of any other action), the fact at the time of taking any such action the holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by such Securityholders in person or by agent or proxy appointed in writing, or (b) by the record of such holders of Securities voting in favor thereof at any meeting of such Securityholders duly called and held in accordance with the provisions of Article IX, or (c) by a combination of such instrument or instruments and any such record of such a meeting of such Securityholders.

If there shall be more than one Trustee acting hereunder with respect to separate series of Securities, such Trustees shall collaborate, if necessary, in acting under Article IX and in determining whether the holders of a specified percentage in principal amount of the Securities of any or all series have taken any such action.

8.2   Proof Of Execution Of Instruments And Of Holding Of Securities.  Subject to the provisions of Sections 7.1, 7.2 and 9.5, proof of the execution of any instrument by a Securityholder or his agent or proxy and proof of the holding by any person of any of the Securities shall be sufficient if made in the following manner:

The fact and date of the execution by any such person of any instrument may be proved in any reasonable manner acceptable to the Trustee.

The ownership of Securities of any series shall be proved by the Register of such Securities of such series, or by certificates of the Security registrar thereof.

The Trustee shall not be bound to recognize any person as a Securityholder unless and until title to the Securities held by him is proved in the manner in this Article VIII provided.

The record of any Securityholders' meeting shall be proved in the manner provided in Section 9.6.

The Trustee may accept such other proof or require such additional proof of any matter referred to in this Section as it shall deem reasonable.

8.3   Who May Be Deemed Owners Of Securities.  Prior to due presentment for registration of transfer of any Security, the Company, the Trustee and any agent of the Company or the Trustee may deem and treat the person in whose name such Security shall be registered upon the Register of Securities of the series of which such Security is a part as the absolute owner of such Security (whether or not payments in respect of such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or an account of the principal of and interest, subject to Section 2.3, on such Security and for all other purposes; and neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary.  All such payments so made to any such holder for the time being, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security.

8.4   Securities Owned By Company Or Controlled Or Controlling Persons Disregarded For Certain Purposes.  In determining whether the holders of the requisite principal amount of Securities have concurred in any demand, direction, request, notice, vote, consent, waiver or other action under this Indenture, Securities which are owned by the Company or any other obligor on the Securities or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities shall be disregarded and deemed not to be outstanding for the purpose of any such determination, provided that for the purposes of determining whether the Trustee shall be protected in relying on any such demand, direction, request, notice, vote, consent, waiver or other action, only Securities which a Responsible Officer of the Trustee assigned to its principal office actually knows are so owned shall be so disregarded.  Securities so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section, if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Securities and that the pledgee is not a person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor.  Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of the Company or any other obligor on the Securities or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities; and, subject to the provisions of Section 7.1, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are outstanding for the purpose of any such determination.

8.5   Instruments Executed By Securityholders Bind Future Holders.  At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.1, of the taking of any action by the holders of the percentage in principal amount of the Securities specified in this Indenture in connection with such action, any holder of a Security which is shown by the evidence to be included in the Securities the holders of which have consented to such action may, by filing written notice with the Trustee at its principal office and upon proof of holding as provided in Section 8.2, revoke such action so far as concerns such Security.  Except as aforesaid any such action taken by the holder of any Security and any direction, demand, request, notice, waiver, consent, vote or other action of the holder of any Security which by any provisions of this Indenture is required or permitted to be given shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, and of any Security issued in lieu thereof or upon registration of transfer thereof, irrespective of whether any notation in regard thereto is made upon such Security.  Any action taken by the holders of the percentage in principal amount of the Securities of any or all series specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the holders of all of the Securities of such series subject, however, to the provisions of Section 7.1.

ARTICLE IX

SECURITYHOLDERS' MEETINGS

9.1   Purposes For Which Meetings May Be Called.  A meeting of holders of Securities of any or all series may be called at any time and from time to time pursuant to the provisions of this Article for any of the following purposes:            

(a)   To give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by holders of Securities of any or all series, as the case may be, pursuant to any of the provisions of Article VI;

(b)   To remove the Trustee and appoint a successor Trustee pursuant to the provisions of Article VII;

(c)   To consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 10.2; or

(d)   To take any other action authorized to be taken by or on behalf of the holders of any specified principal amount of the Securities of any or all series, as the case may be, under any other provision of this Indenture or under applicable law.

9.2   Manner Of Calling Meetings.  The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 9.1, to be held at such time and at such place in the Borough of Manhattan, City of New York, as the Trustee shall determine.  Notice of every meeting of Securityholders setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed not less than 15 nor more than 90 days prior to the date fixed for the meeting.

9.3   Call Of Meeting By Company Or Securityholders.  In case at any time the Company, pursuant to a resolution of its Board of Directors, or the holders of not less than 10 percent in principal amount of the Securities of any or all series, as the case may be, then outstanding, shall have requested the Trustee to call a meeting of holders of Securities of any or all series, as the case may be, to take any action authorized in Section 9.1 by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed notice of such meeting within 20 days after receipt of such request, then the Company or such holders of Securities in the amount above specified may determine the time and place in the Borough of Manhattan, City of New York for such meeting and may call such meeting to take any action authorized in Section 9.1, by mailing notice thereof as provided in Section 9.2.

9.4   Who May Attend And Vote At Meetings.  To be entitled to vote at any meeting of Securityholders a person shall (a) be a holder of one or more Securities with respect to which the meeting is being held, or (b) be a person appointed by an instrument in writing as proxy by such holder of one or more Securities.  The only persons who shall be entitled to be present or to speak at any meeting of Securityholders 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 Company and its counsel.

9.5   Regulations May Be Made By Trustee.  Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Securities 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.  Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 8.2 and the appointment of any proxy shall be proved in the manner specified in said Section 8.2; provided, however, that such regulations may provide that written instruments appointing proxies regular on their face, may be presumed valid and genuine without the proof hereinabove or in said Section 8.2 specified.

The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 9.3, in which case the Company or the Securityholders 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 majority vote of the meeting.

Subject to the provisions of Section 8.4, at any meeting each Securityholder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities held or represented by him, provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not outstanding and ruled by the permanent chairman of the meeting to be not outstanding; provided, further, that each holder of Original Issue Discount Securities shall be entitled to one vote for each $1,000 amount which would be due upon acceleration of his Original Issue Discount Security on the date of the meeting.  Neither a temporary nor a permanent chairman of the meeting shall have a right to vote other than by virtue of Securities held by him or instruments in writing as aforesaid duly designating him as the person to vote on behalf of other Securityholders.  Any meeting of Securityholders duly called pursuant to the provisions of Section 9.2 or 9.3 may be adjourned from time to time, and the meeting may be held so adjourned without further notice.

At any meeting of Securityholders, the presence of persons holding or representing Securities in principal amount sufficient to take action on the business for the transaction of which such meeting was called shall constitute a quorum, but, if less than a quorum is present, the person or persons holding or representing a majority in principal amount of the Securities represented at the meeting may adjourn such meeting with the same effect for all intents and purposes, as though a quorum had been present.

9.6   Manner Of Voting At Meetings And Record To Be Kept.  The vote upon any resolution submitted to any meeting of Securityholders shall be by written ballots on which shall be subscribed the signatures of the holders of Securities or of their representatives by proxy and the principal amount or principal amounts of the Securities 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 permanent 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 Securityholders shall be prepared by the permanent 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 mailed as provided in Section 9.2.  The record shall show the principal amount or principal amounts of the Securities voting in favor of, against, or abstaining from voting on, any resolution.  The record shall be signed and verified by the affidavits of the permanent chairman and permanent secretary of the meeting and one of the duplicates shall be delivered to the Company 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.

9.7   Exercise Of Rights Of Trustee, Securityholders and Holders Of Preferred Securities Not To Be Hindered Or Delayed.  Nothing in this Article contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Securityholders or any rights expressly or impliedly conferred hereunder to make such call any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee, to the Securityholders or the holders of Preferred Securities under any of the provisions of this Indenture or of the Securities.

ARTICLE X

SUPPLEMENTAL INDENTURES

10.1   Purposes For Which Supplemental Indentures May Be Entered Into Without Consent Of Securityholders.  Without the consent of any Securityholders or any holders of Preferred Securities, the Company, when authorized by a Resolution of the Company, and the Trustee may from time to time, and at any time enter into an indenture or indentures supplemental hereto, in form satisfactory to such Trustee (which shall comply with the provisions of the Trust Indenture Act as then in effect), for one or more of the following purposes:            

(a)   To evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article XI hereof; 

(b)   To add to the covenants of the Company such further covenants, restrictions or conditions as the Company and the Trustee shall consider to be for the protection of the holders of all or any series of Securities (and if such covenants, restrictions or conditions are to be for the benefit of less than all series of Securities, stating that such covenants, restrictions or conditions are expressly being included solely for the benefit of such series), and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions or conditions a default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect to any such additional covenant, restriction or condition such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default;

(c)   To add or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons;

(d)   To change or eliminate any of the provisions of this Indenture; provided, however, that any such change or elimination shall become effective only when there is no Security of any series outstanding created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision;

(e)   To establish the form or terms of Securities of any series as permitted by Section 2.1 and 2.2;

(f)   To cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provisions contained herein or in any supplemental indenture, or to make such other provision in regard to matters or questions arising under this Indenture or any supplemental indenture; provided, however, that such action shall not adversely affect the interest of the holders of Securities of any series in any material respect or, in the case of the Securities of a series issued to an Energy East Trust and for so long as any of the corresponding series of Preferred Securities issued by such Energy East Trust shall remain outstanding, the holders of such Preferred Securities;

(g)   To mortgage or pledge to the Trustee as security for the Securities any property or assets which the Company may desire to mortgage or pledge as security for the Securities; and

(h)   To qualify, or maintain the qualification of, the Indenture under the Trust Indenture Act.

The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, mortgage, pledge or assignment of any property thereunder, but the Trustee 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.

Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 10.2.

10.2   Modification Of Indenture With Consent Of Holders Of A Majority In Principal Amount Of Securities.  With the consent (evidenced as provided in Section 8.1) of the holders of not less than a majority in principal amount of the Securities of all series at the time outstanding (determined as provided in Section 8.4) affected by such supplemental indenture (voting as one class), the Company, when authorized by a Resolution of the Company, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall be in conformity with the provisions of the Trust Indenture Act as then in effect) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of the Securities of each such series; provided, however, that no such supplemental indenture shall (i) change the fixed Maturity of any Securities, or reduce the rate or extend the time of payment of any interest thereon or on any overdue principal amount or reduce the principal amount thereof, or change the provisions pursuant to which the rate of interest on any Security is determined if such change could reduce the rate of interest thereon, or reduce the minimum rate of interest thereon, or reduce any amount payable upon any redemption or the maturity thereof, or make the principal thereof or any interest thereon or on any overdue principal amount payable in any coin or currency other than that provided in the Security, or reduce the principal of an Original Issue Discount Security or any other Security which would be due and payable upon a declaration of acceleration of Maturity thereof pursuant to Section 6.1 without the consent of the holder of each Security so affected, (ii) reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture without the consent of the holders of all Securities then outstanding, (iii) modify any of the provisions of this Section, Section 4.7 or Section 6.6, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the holders of all Securities then outstanding or (iv) modify the provisions of Article XIV with respect to the subordination of outstanding Securities of any series in a manner adverse to the holders thereof without the consent of the holder of each Security so affected; provided, however, that, in the case of the Securities of a series issued to an Energy East Trust, so long as any of the corresponding series of Preferred Securities issued by such Energy East Trust remains outstanding, (i) no such amendment shall be made that adversely affects the holders of such Preferred Securities in any material respect, and no termination of this Indenture shall occur, and no waiver of any Event of Default with respect to such series or compliance with any covenant with respect to such series under this Indenture shall be effective, without the prior consent of the holders of at least a majority of the aggregate liquidation amount of such Preferred Securities then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and unpaid interest (including any Additional Interest) thereon have been paid in full; and (ii) no amendment shall be made to Section 6.5 of this Indenture that would impair the rights of the holders of such Preferred Securities provided therein or to this Indenture that requires the consent of each holder of the Securities of such series without the prior consent of each holder of such Preferred Securities then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and unpaid interest (including any Additional Interest) thereon have been paid in full.

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities or Preferred Securities, or which modifies the rights of holders of Securities or holders of Preferred Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the holders of Securities or holders of Preferred Securities of any other series.

Upon the request of the Company, accompanied by a copy of a Resolution of the Company certified by the Corporate Secretary of the Company authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture 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 supplemental indenture.

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

Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Company shall mail a notice to the holders of Securities of each series so affected, setting forth in general terms the substance of such supplemental indenture.  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 supplemental indenture.

10.3   Effect Of Supplemental Indentures.  Upon the execution of any supplemental indenture pursuant to the provisions of this Article, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Securities shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

The Trustee shall be entitled to receive, and subject to the provisions of Section 7.1 shall be entitled to rely upon, an Opinion of Counsel as conclusive evidence that any such supplemental indenture complies with the provisions of this Article.

10.4   Securities May Bear Notation Of Changes By Supplemental Indentures.  Securities authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article, or after any action taken at a Securityholders' meeting pursuant to Article IX, may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture or as to any action taken at any such meeting.  If the Company or the Trustee shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Securities then outstanding.

10.5   Revocation And Effect Of Consents.  Subject to Section 8.5, until an amendment, supplement, waiver or other action becomes effective, a consent to it by a Securityholder of a Security is a continuing consent conclusive and binding upon such Securityholder and every subsequent Securityholder of the same Security or portion thereof, and of any Security issued upon the registration of transfer thereof or in exchange therefor or in place thereof, even if notation of the consent is not made on any such Security.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to consent to any amendment, supplement or waiver.  If a record date is fixed, then, notwithstanding the preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only such Persons, shall be entitled to consent or revoke such consent to such amendment, supplement or waiver, whether or not such Persons continue to be Securityholders after such record date.  No such consent shall be valid or effective for more than 180 days after such record date.

After an amendment, supplement, waiver or other action becomes effective, it shall bind every Securityholder.

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

ARTICLE XI

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

11.1   Company May Consolidate, Etc., On Certain Terms.  The Company covenants that it will not merge or consolidate with any other corporation or sell or convey all or substantially all of its assets to any Person unless (i) either the Company shall be the continuing corporation, or the successor corporation (if other than the Company) shall be a corporation organized and existing under the laws of the United States of America or any state or the District of Columbia and such corporation shall expressly assume the due and punctual payment of the principal of and interest on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by the Company by supplemental indenture in form satisfactory to the Trustee, executed and delivered to the Trustee by such corporation, (ii) the Company or such successor corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition, and (iii) in the case of Securities of a series issued to an Energy East Trust, such consolidation, merger, sale or conveyance is permitted under the relevant Trust Agreement and Energy East Guarantee and does not give rise to any breach or violation of such Trust Agreement or Energy East Guarantee.

11.2   Successor Corporation Substituted.  In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the party of the first part.  Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder which theretofore shall not have been delivered to the Trustee; and upon the order of such successor corporation, instead of the Company, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Company to the Trustee, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee.  All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.

In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.

11.3   Opinion Of Counsel To Trustee.  The Trustee shall be entitled to receive, and subject to the provisions of Section 7.1 shall be entitled to rely upon, an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance and any such assumption, complies with the provisions of this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.

ARTICLE XII

SATISFACTION AND DISCHARGE OF INDENTURE, UNCLAIMED MONEYS

12.1   Satisfaction And Discharge Of Indenture.  If (a) the Company shall deliver to the Trustee for cancellation all Securities of any series theretofore authenticated (other than any Securities of such series which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.7 and Securities for whose payment money has theretofore been deposited in trust by the Company and thereafter repaid to the Company, as provided in Section 12.4) and not theretofore canceled, or (b) all the Securities of such series not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee as trust funds the entire amount sufficient to pay at Maturity or upon redemption all of such Securities not theretofore canceled or delivered to the Trustee for cancellation, including principal and any interest due or to become due to such date of Maturity or redemption date, as the case may be, and if in either case the Company shall also pay or cause to be paid all other sums payable hereunder by the Company with respect to Securities of such series, then this Indenture shall cease to be of further effect with respect to Securities of such series, (except as to (i) remaining rights of registration of transfer, substitution and exchange and the Company's right of optional redemption of Securities of such series, (ii) rights hereunder of holders to receive payments of principal of, and any interest on, the Securities of such series, and other rights, duties and obligations of the holders of Securities of such series as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee, and (iii) the rights, obligations and immunities of the Trustee hereunder), and the Trustee, on demand of the Company, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture.  The Company hereby agrees to compensate the Trustee for any services thereafter reasonably and properly rendered and to reimburse the Trustee for any costs or expenses theretofore and thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Securities of such series.

Notwithstanding the satisfaction and discharge of this Indenture with respect to the Securities of any or all series, the obligations of the Company to the Trustee under Section 7.6 shall survive.

12.2   Application By The Trustee Of Funds Deposited For Payment Of Securities.  Subject to Section 12.4, all moneys deposited with the Trustee pursuant to Section 12.1 shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the holders of the particular Securities of such series, for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest.

12.3   Repayment Of Moneys Held By Paying Agent.  In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys with respect to Securities of such series then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

12.4   Repayment Of Moneys Held By Trustee.  Any moneys deposited with the Trustee or any Paying Agent for the payment of the principal of or any interest on any Securities of any series and not applied but remaining unclaimed by the holders of Securities of such series for two years after the date upon which such payment shall have become due and payable, shall, at the request of the Company, be repaid to the Company by the Trustee or by such Paying Agent; and the holder of any of the Securities of such series entitled to receive such payment shall thereafter look only to the Company for the payment thereof; 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 a week for two successive weeks (in each case on any day of the week) in an Authorized Newspaper, or mailed to the registered holders thereof, a notice that said moneys have not been so applied and that after a date named therein any unclaimed balance of said money then remaining will be returned to the Company.

ARTICLE XIII

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, 

DIRECTORS AND EMPLOYEES

13.1   Incorporators, Stockholders, Officers, Directors And Employees Of Company Exempt From Individual Liability.  No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer, director or employee, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers, directors or employees, as such, of the Company or any successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against every such incorporator, stockholder, officer, director or employee, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom are hereby expressly waived and released as a condition of and as a consideration for, the execution of this Indenture and the issue of such Securities.

ARTICLE XIV

SUBORDINATION OF SECURITIES

14.1   Agreement To Subordinate.  The Company, for itself, its successors and assigns, covenants and agrees, and each holder of a Security of any series likewise covenants and agrees by his acceptance thereof, that the obligation of the Company to make any payment on account of the principal of and interest on each and all of the Securities of any series shall be subordinate and junior in right of payment to the Company's obligations to the holders of Senior Indebtedness of the Company.

In the case of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshaling of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to the Company as a whole, whether voluntary or involuntary, all obligations of the Company to holders of Senior Indebtedness of the Company shall be entitled to be paid in full before any payment shall be made on account of the principal of or interest on any of the Securities.  In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Indebtedness of the Company, the holders of the Securities of each series, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and interest on the Securities of any series before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities.  In addition, in the event of any such proceeding, if any payment or distribution of assets of the Company of any kind or character whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities of any series shall be received by the Trustee or the holders of the Securities of any series before all Senior Indebtedness of the Company is paid in full, such payment or distribution shall, except as provided in Section 14.4, be held in trust for the benefit of and shall be paid over to the holders of such Senior Indebtedness of the Company or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness of the Company may have been issued, ratably, for application to the payment of all Senior Indebtedness of the Company remaining unpaid until all such Senior Indebtedness of the Company shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness of the Company.  The obligations of the Company in respect of the Securities of all series shall rank on a parity with any obligations of the Company ranking on a parity with the Securities.  Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.6.

The subordination provisions of the foregoing paragraph and Section 14.9 shall not be applicable to amounts at the time due and owing on the Securities of any series on account of the unpaid principal of or interest on the Securities of such series for the payment of which funds have been deposited in trust with the Trustee or any Paying Agent or have been set aside by the Company in trust in accordance with the provisions of this Indenture; nor shall such provisions impair any rights, interests, or powers of any secured creditor of the Company in respect of any security the creation of which is not prohibited by the provisions of this Indenture.

The Company shall give written notice to the Trustee within 10 Business Days after the occurrence of (i) any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshaling of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to the Company as a whole, whether voluntary or involuntary, (ii) any Event of Default described in 6.1(d) or 6.1(e), or (iii) any event specified in Section 14.9.  The Trustee, subject to the provisions of Section 7.1, shall be entitled to assume that, and may act as if, no such event referred to in the preceding sentence has occurred unless a Responsible Officer of the Trustee assigned to the Trustee's corporate trust department has received at the principal office of the Trustee from the Company or any one or more holders of Senior Indebtedness of the Company or any trustee or representative therefor (who shall have been certified or otherwise established to the satisfaction of the Trustee to be such a holder or trustee or representative) written notice thereof.  Upon any distribution of assets of the Company referred to in this Article, the Trustee and holders of the Securities of each series shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which proceedings relating to any event specified in the first sentence of this paragraph are pending for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Article, and the Trustee, subject to the provisions of Article VII, and the holders of the Securities of each series shall be entitled to rely upon a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to the holders of the Securities of each series for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article.  In the absence of any such liquidating trustee, agent or other person, the Trustee shall be entitled to rely upon a written notice by a Person representing himself to be a holder of Senior Indebtedness of the Company (or a trustee or representative on behalf of such holder) as evidence that such Person is a holder of such Senior Indebtedness (or is such a trustee or representative).  In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person, as a holder of Senior Indebtedness of the Company, to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, as to the extent to which such Person is entitled to participation in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

14.2   Obligation Of The Company Unconditional.  Nothing contained in this Article or elsewhere in this Indenture is intended to or shall impair, as between the Company and the holders of the Securities of each series, the obligation of the Company, which is absolute and unconditional, to pay to such holders the principal of and interest on such Securities of each series when, where and as the same shall become due and payable, all in accordance with the terms of such Securities, or is intended to or shall affect the relative rights of such holders and creditors of the Company other than the holders of the Senior Indebtedness of the Company, nor shall anything herein or therein prevent the Trustee or the holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness of the Company in respect of cash, property, or securities of the Company received upon the exercise of any such remedy.

14.3   Limitations On Duties To Holders Of Senior Indebtedness Of the Company.  With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article, and no implied covenants or obligations with respect to the holders of Senior Indebtedness of the Company shall be read into this Indenture against the Trustee.  The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Company, except with respect to moneys held in trust pursuant to the second paragraph of Section 14.1.

14.4   Notice To Trustee Of Facts Prohibiting Payment.  Notwithstanding any of the provisions of this Article or any other provisions of this Indenture, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee unless and until a Responsible Officer of the Trustee assigned to its corporate trust department shall have received at the principal office of the Trustee written notice thereof from the Company or from one or more holders of Senior Indebtedness of the Company or from any trustee therefor or representative thereof who shall have been certified by the Company or otherwise established to the reasonable satisfaction of the Trustee to be such a holder or trustee or representative; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 7.1, shall be entitled in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 12.1 acknowledging satisfaction and discharge of this Indenture, then if prior to the second Business Day preceding the date of such execution, the Trustee shall not have received with respect to such moneys the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such moneys and/or apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date; provided, however, no such application shall affect the obligations under this Article of the Persons receiving such moneys from the Trustee.

14.5   Application By Trustee Of Moneys Deposited With It.  Anything in this Indenture to the contrary notwithstanding, any deposit of moneys by the Company with the Trustee or any agent (whether or not in trust) for any payment of the principal of or interest on any Securities shall, except as provided in Section 14.4, be subject to the provisions of Sections 14.1 and 14.9.

14.6   Subrogation.  Subject to the payment in full of all Senior Indebtedness of the Company, the holders of the Securities of each series shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of assets of the Company applicable to such Senior Indebtedness until the Securities shall be paid in full, and none of the payments or distributions to the holders of such Senior Indebtedness to which the holders of the Securities of any series or the Trustee would be entitled except for the provisions of this Article or of payments over pursuant to the provisions of this Article to the holders of such Senior Indebtedness by the holders of such Securities or the Trustee shall, as among the Company, its creditors other than the holders of such Senior Indebtedness, and the holders of such Securities, be deemed to be a payment by the Company to or on account of such Senior Indebtedness; it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the holders of such Securities, on the one hand, and the holders of the Senior Indebtedness of the Company, on the other hand.

14.7   Subordination Rights Not Impaired By Acts Or Omissions Of Company Or Holders Of Senior Indebtedness Of The Company.  No right of any present or future holders of any Senior Indebtedness of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof with which any such holder may have or be otherwise charged.  The holders of Senior Indebtedness of the Company may, at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any such Senior Indebtedness of the Company, or amend or supplement any instrument pursuant to which any such Senior Indebtedness of the Company is issued or by which it may be secured, or release any security therefor, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness of the Company including, without limitation, the waiver of default thereunder, all without notice to or assent from the holders of the Securities of each series or the Trustee and without affecting the obligations of the Company, the Trustee or the holders of such Securities under this Article.

14.8   Authorization Of Trustee To Effectuate Subordination Of Securities.  Each holder of a Security of any series, by his acceptance thereof, authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of such Securities and the holders of Senior Indebtedness of the Company, the subordination provided in this Article.  If, in the event of any proceeding or other action relating to the Company referred to in the second paragraph of Section 14.1, a proper claim or proof of debt in the form required in such proceeding or action is not filed by or on behalf of the holders of the Securities of any series prior to fifteen days before the expiration of the time to file such claim or claims, then the holder or holders of Senior Indebtedness of the Company shall have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the holders of such Securities.

14.9   No Payment When Senior Indebtedness In Default.  In the event and during the continuation of any default in the payment of principal of or interest on any Senior Indebtedness, or in the event that any event of default with respect to any Senior Indebtedness shall have occurred and be continuing and shall have resulted in such Senior Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, unless and until such event of default shall have been cured, waived or remedied or shall have ceased to exist and such acceleration shall have been rescinded or annulled or all amounts due on such Senior Indebtedness are paid in full in cash or other permitted consideration, or in the event any judicial proceeding shall be pending with respect to any such default in payment or such event or default (unless and until all amounts due on such Senior Indebtedness are paid in full in cash or other permitted consideration), then no payment or distribution of any kind or character, whether in cash, properties or securities shall be made by the Company on account of principal of (or premium, if any) or interest (including any Additional Interest) if any, on the Securities or on account of the purchase or other acquisition of Securities by the Company or any Subsidiary.

In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the holder of any Security prohibited by the foregoing provisions of this Section, and, except as provided in Section 14.4, if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or, as the case may be, such holder, then and in such event payment shall be paid over and delivered forthwith to the Company.

14.10   Right Of Trustee To Hold Senior Indebtedness Of The Company.  The Trustee shall be entitled to all of the rights set forth in this Article in respect of any Senior Indebtedness of the Company at any time held by it in its individual capacity to the same extent as any other holder of such Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder.

14.11   Article Fourteen Not To Prevent Defaults.  The failure of the Company to make a payment pursuant to the terms of Securities of any series by reason of any provision in this Article shall not be construed as preventing the occurrence of an Event of Default under this Indenture.

ARTICLE XV

MISCELLANEOUS PROVISIONS

15.1   Successors And Assigns Of Company Bound By Indenture.  All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Company shall bind its successors and assigns, whether so expressed or not.

15.2   Acts Of Board, Committee Or Officer Of Successor Corporation Valid.  Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer or officers of the Company shall and may be done and performed with like force and effect by the like board, committee or officer or officers of any corporation that shall at the time be the lawful sole successor of the Company.

15.3   Required Notices Or Demands May Be Served By Mail.  Any notice or demand which by any provisions of this Indenture is required or permitted to be given or served by the Trustee, by the holders of Securities or by the holders of Preferred Securities to or on the Company may be given or served by registered mail postage prepaid addressed (until another address is filed by the Company with the Trustee for such purpose), as follows: Energy East Corporation, P.O. Box 12904, Albany, New York 12212-2904, Attention: Treasurer.  Any notice, direction, request, demand, consent or waiver by the Company, by any Securityholder or by any holder of a Preferred Security to or upon the Trustee shall be deemed to have been sufficiently given, made or filed, for all purposes, if given, made or filed in writing at the principal corporate trust office of the Trustee, 450 West 33rd Street, New York, New York 10001, Attention: Institutional Trust Services.

15.4   Officers' Certificate And Opinion Of Counsel To Be Furnished Upon Applications Or Demands By The Company.  Except as otherwise expressly provided in this Indenture, upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents or any of them is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture, other than certificates provided pursuant to Section 4.6, shall 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 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; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate 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. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, upon the certificate, statement or opinion of or representations by an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, 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.

Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations 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. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent.

15.5   Payments Due On Saturday, Sundays, And Holidays.  In any case where the date of payment of interest on or principal of the Securities of any series or the date fixed for any redemption of any Security of any series shall not be a Business Day, then payment of interest or principal need not be made on such date, but shall be made on the next succeeding Business Day with the same force and effect as if made on the date fixed for the payment of interest on or principal of the Security or the date fixed for any redemption of any Security of such series, and no additional interest shall accrue for the period after such date and before payment; except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such payment date or redemption date.

15.6   Provisions Required By Trust Indenture Act To Control.  If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture which is required to be included in this Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of Section 318 thereof, such required provision shall control.  If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.  If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

15.7   Indenture And Securities To Be Construed In Accordance With The Laws Of The State Of New York.  This Indenture and each Security shall be governed by the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State (without regard to conflicts of laws principles thereof).

15.8   Provisions Of The Indenture And Securities For The Sole Benefit Of The Parties And The Securityholders.  Nothing in this Indenture or in the Securities, expressed or implied, shall give or be construed to give any person, firm or corporation, other than the parties hereto, their successors and assigns, the holders of the Securities, and the holders of any Senior Indebtedness of the Company, any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition and provision herein contained; all its covenants, conditions and provisions being for the sole benefit of the parties hereto and their successors and assigns and of the holders of the Securities and, to the extent expressly provided in Sections 4.9, 6.1, 6.5, 6.6, 9.7, 10.1 and 10.2, the holders of Preferred Securities.

15.9   Indenture May Be Executed In Counterparts.  This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

15.10   Securities In Foreign Currencies.  Whenever this Indenture provides for any action by, or any distribution to, holders of Securities denominated in United States dollars and in any other currency, in the absence of any provision to the contrary in the form of Security of any particular series, the relative amount in respect of any Security denominated in a currency other than United States dollars shall be treated for any such action or distribution as that amount of United States dollars that could be obtained for such amount on such reasonable basis of exchange and as of such date as the Company may specify in a written notice to the Trustee.

15.11   Table Of Contents, Headings, Etc.  The Table of Contents and the titles 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 hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

The Chase Manhattan Bank, the party of the second part, hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions, hereinabove set forth.

 

IN WITNESS WHEREOF, ENERGY EAST CORPORATION, the party of the first part, has caused this Indenture to be signed and acknowledged by its Vice President and Treasurer, and THE CHASE MANHATTAN BANK, the party of the second part, has caused this Indenture to be signed and acknowledged by one of its Assistant Vice Presidents, all as of the day and year first written above.
ENERGY EAST CORPORATION 

 

By:   /s/Robert D. Kump               

Name:  Robert D. Kump 

Title:    Vice President and Treasurer

 

THE CHASE MANHATTAN BANK, 

as trustee

 

By:  /s/Natalia Rodriguez              

Name:  Natalia Rodriguez

Title:    Assistant Vice President

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