Document:

<PAGE>   1
                                                                     EXHIBIT 4.3

                               KMART CORPORATION,
                                     Issuer

                                       and

                              THE BANK OF NEW YORK,
                                     Trustee

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                          SECOND SUPPLEMENTAL INDENTURE

                          Dated as of January 30, 2001

                                       to

                                    INDENTURE

                          Dated as of December 13, 1999

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                              9.375% Notes Due 2006

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                                TABLE OF CONTENTS

                                                                       Page
                                                                       ----

                                    ARTICLE 1
                                   DEFINITIONS

SECTION 1.01.  Definitions...............................................1

                                    ARTICLE 2
                                 TERMS OF NOTES

SECTION 2.01.  Designation of Notes; Aggregate Principal Amount..........3
SECTION 2.02.  Form of Notes.............................................3
SECTION 2.03.  Certain Terms of the Notes................................3
SECTION 2.04.  Global Form...............................................3
SECTION 2.05.  Defeasance................................................3
SECTION 2.06.  Covenants.................................................3
SECTION 2.07.  Additional Notes..........................................3

                                    ARTICLE 3
                        COVENANTS APPLICABLE TO THE NOTES

SECTION 3.01.  Restrictions on Liens.....................................4
SECTION 3.02.  Limitations on Sale and Leaseback Transactions............6

                                    ARTICLE 4
                              SUCCESSOR CORPORATION

SECTION 4.01.  Consolidation, Merger and Sale of Assets..................6

                                    ARTICLE 5
                       DEFEASANCE AND COVENANT DEFEASANCE

SECTION 5.01.  Indenture Satisfaction and Discharge Provisions...........7
SECTION 5.02.  Company's Option to Effect Defeasance or Covenant
                 Defeasance..............................................7
SECTION 5.03.  Defeasance and Discharge..................................7
SECTION 5.04.  Covenant Defeasance.......................................7
SECTION 5.05.  Conditions to Defeasance and Discharge or Covenant
                 Defeasance..............................................8

                                    ARTICLE 6
                                  MISCELLANEOUS

SECTION 6.01.  Ratification and Confirmation.............................9
SECTION 6.02.  Recitals, Validity and Sufficiency........................9
SECTION 6.03.  Counterparts..............................................9
SECTION 6.04.  Governing Law.............................................9

EXHIBIT A:  Form of Note...............................................A-1

                                      (i)

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     SECOND SUPPLEMENTAL INDENTURE dated as of January 30, 2001 (the "SECOND
SUPPLEMENTAL INDENTURE") between Kmart Corporation, a corporation duly organized
and existing under the laws of the State of Michigan (the "COMPANY") and The
Bank of New York, a New York banking corporation, as trustee (the "TRUSTEE").

     WHEREAS, the Company has executed and delivered to the Trustee an Indenture
dated as of December 13, 1999 (the "INDENTURE") providing for the issuance from
time to time of one or more series of the Company's debt securities;

     WHEREAS, Section 2.01 of the Indenture provides that the Company and the
Trustee may enter into an indenture supplemental to the Indenture to establish
the form or terms of Securities of any series as permitted by Section 2.01 and
Section 9.01 of the Indenture; and

     WHEREAS, the Company is entering into this Second Supplemental Indenture to
establish the form and terms of its 9.375% Notes Due 2006 (the "NOTES").

     NOW THEREFORE, in consideration of the premises and the purchase of the
Notes by the holders thereof, the Company and the Trustee mutually covenant and
agree for the equal and ratable benefit of the holders of Notes as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     SECTION 1.01. Definitions. Unless otherwise specifically defined herein,
each term used herein which is defined in the Indenture has the meaning assigned
to such term in the Indenture. The following terms, as used herein, have the
following meanings:

     "ATTRIBUTABLE DEBT" means, with respect to a Sale and Leaseback
Transaction, at the time of determination, the present value of the obligation
of the lessee for net rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction (including any period for which
such lease has been extended or may, at the option of the lessor, be extended),
using a discount rate equal to the average interest rate per annum used to
calculate the present value of operating lease payments for the most recent year
in the Company's most recent Annual Report to Stockholders. The term "net rental
payments" under any lease for any period shall mean the sum of the rental and
other payments required to be paid in such period by the lessee thereunder, not
including, however, any amounts required to be paid by such lessee (whether or
not designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments, water rates or similar charges required
to be paid by such lessee thereunder or any amounts required to be paid by such
lessee thereunder contingent upon the amount of sales, maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges.

     "CONSOLIDATED NET TANGIBLE ASSETS" means the total of all the assets
appearing on the consolidated balance sheet of the Company and its Subsidiaries,
less the following:

     (1)  current liabilities, including liabilities for Debt maturing more than
          12 months from the date of the original creation thereof but maturing
          within 12 months from the date of determination;

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     (2)  reserves for depreciation and other asset valuation reserves;

     (3)  intangible assets, including, without limitation, such items as
          goodwill, trademarks, tradenames, patents, unamortized debt discount
          and expense and other similar intangibles carried as an asset on said
          balance sheet; and

     (4)  appropriate adjustments on account of minority interests of other
          Persons holding stock in any Subsidiary of the Company.

     Consolidated Net Tangible Assets shall be determined in accordance with
generally accepted accounting principles and practices applicable to the type of
business in which the Company and its Subsidiaries are engaged and that are
approved by the independent accountants regularly retained by the Company, and
may be determined as of a date not more than 60 days prior to the happening of
the event for which such determination is being made.

     "DEBT" means, all obligations of a Person for borrowed money, including
obligations secured by Liens on property owned by the Person whether or not the
Person is directly liable for the obligations.

     "FUNDED DEBT" means Debt which matures more than one year from the date of
computation, or which is extendable or renewable at the sole option of the
obligor so that it may become payable more than one year from such date.

     "LIEN" means any mortgage, deed of trust, security interest, pledge, lien
or other encumbrance.

     "OPERATING PROPERTY" means (a) all real property and improvements thereon
owned by the Company or a Subsidiary constituting, without limitation, any
store, warehouse, service center or distribution center wherever located,
provided that such term shall not include any store, warehouse, service center
or distribution center which the Company's Board of Directors declares by
resolution, together with all other stores, warehouses, service centers or
distribution centers similarly not included in such term, not to be of material
importance to the business of the Company and its Subsidiaries taken as a whole,
and (b) all equipment (including all transportation and warehousing equipment
but excluding office equipment and data processing equipment) owned by the
Company or a Subsidiary.

     "SALE AND LEASEBACK TRANSACTION" means any arrangement with any Person
providing for the leasing to the Company or any Subsidiary of any Operating
Property, which Operating Property has been or is to be sold or transferred by
the Company or such Subsidiary to such Person.

     "SUBSIDIARY" means (1) a corporation more than 50% of the outstanding
Voting Stock of which is owned, directly or indirectly, by the Company, by one
or more other Subsidiaries, or by the Company and one or more other Subsidiaries
or (2) any other Person in which the Company, or one or more Subsidiaries, or
the Company and one or more Subsidiaries, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and affairs of
such Person.

                                       2
<PAGE>   5

                                    ARTICLE 2
                                 TERMS OF NOTES

     SECTION 2.01. Designation of Notes; Aggregate Principal Amount. Subject to
and in accordance with Section 2.01 of the Indenture, the Company hereby
establishes a series of securities to be issued under the Indenture with the
title "9.375% Notes Due 2006." The aggregate principal amount of the Notes that
may be authenticated and delivered under the Indenture shall be $400,000,000
(except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes and except as set forth in
Section 2.07 in this Second Supplemental Indenture).

     SECTION 2.02. Form of Notes. The form of the Notes and the form of the
Certificate of Authentication for the Notes shall be substantially in the form
of Exhibit A hereto.

     SECTION 2.03. Certain Terms of the Notes. Set forth in the form of the
Notes attached hereto as Exhibit A are:

          (i)   the date on which the principal of the Notes is payable;

          (ii)  the rate at which the Notes shall bear interest;

          (iii) the place where payments with respect to the Notes shall be
     payable; and

          (iv)  the date from which interest on the Notes will accrue, the
     Interest Payment Dates and the record dates for the determination of
     holders to whom interest is payable on Interest Payment Dates.

     SECTION 2.04. Global Form. The Notes will be issued initially as a Global
Security in accordance with Section 2.11 of the Indenture. The Depositary for
the Notes shall be The Depository Trust Company, a New York corporation.

     SECTION 2.05. Defeasance. The Notes shall be subject to defeasance as set
forth in Article XI of the Indenture as amended and supplemented by Article 5 of
this Second Supplemental Indenture.

     SECTION 2.06. Covenants. Holders of the Notes shall have the benefit of the
additional restrictive covenants set forth in Article 3 and 4 of this Second
Supplemental Indenture.

     SECTION 2.07. Additional Notes. Notwithstanding Section 2.01 of this Second
Supplemental Indenture, the Company may, without the consent of the holders of
Notes, issue additional notes having the same ranking and the same interest
rate, maturity and other terms as the Notes. Any additional notes having such
similar terms, together with the Notes, will constitute a single series of Notes
under the Indenture, and will be issued in compliance with Section 2.01 of the
Indenture.

                                       3
<PAGE>   6
                                    ARTICLE 3
                        COVENANTS APPLICABLE TO THE NOTES

     For the sole benefit of the holders of the Notes, the Company agrees:

     SECTION 3.01. Restrictions on Liens. (a) The Company will not, nor will it
permit any Subsidiary to, issue, assume or guarantee any Debt secured by any
Lien upon any Operating Property or upon any shares of stock or Debt of any
Subsidiary (whether such Operating Property, shares of stock or Debt is now or
hereafter acquired) without in any such case effectively securing, concurrently
with the issuance, assumption or guaranty of any such Debt, the Notes (together
with, if the Company shall so determine, any other Debt of or guaranteed by the
Company or such Subsidiary ranking equally with such Notes and then existing or
thereafter created) equally and ratably with such Debt; provided that the
foregoing restrictions shall not apply to:

          (i)   Liens on any Operating Property acquired, constructed or
                improved by the Company or any Subsidiary after the date of the
                Indenture to secure Debt issued, assumed or guaranteed within
                360 days after such acquisition or completion of construction or
                improvement to provide for the payment of the purchase price of,
                or the cost of constructing or improving, such Operating
                Property;

          (ii)  Liens existing on any Operating Property at the time of its
                acquisition by the Company or one of its Subsidiaries, or Liens
                on any shares of stock or Debt of any Subsidiary existing at the
                time it becomes a Subsidiary;

          (iii) Liens existing on any property acquired from a Person that is
                merged with or into the Company or a Subsidiary;

          (iv)  Liens to secure Debt of a Subsidiary to the Company or to
                another Subsidiary;

          (v)   Liens in existence on any Operating Property or any shares of
                stock or Debt of any Subsidiary on the date of the Indenture;

          (vi)  Liens in favor of the United States of America or any state
                thereof, or any department, agency or instrumentality or
                political subdivision of the United States of America or any
                state thereof to secure partial progress, advance or other
                payments pursuant to any contract or statute or to secure any
                Debt incurred for the purpose of financing all or any part of
                the purchase price or the cost of constructing or improving the
                property subject to such Liens;

                                       4
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               (vii)  Liens imposed by law, such as carriers', warehousemen's,
                      mechanics', landlord's, materialmen's, repairmen's or
                      other like Liens;

               (viii) Pledges or deposits in connection with workers'
                      compensation, unemployment insurance and similar
                      legislation and deposits securing liability to insurance
                      carriers under insurance or self-insurance arrangements;

               (ix)   Liens in favor of customs and revenue authorities arising
                      as a matter of law to secure payment of customs duties in
                      connection with the importation of goods;

               (x)    Liens for taxes, assessments, governmental charges or
                      levies not yet due or which are being contested in good
                      faith;

               (xi)   Any Lien incurred or assumed in connection with the
                      issuance by a state or political subdivision of a state of
                      any securities the interest on which is exempt from
                      Federal income taxes by virtue of Section 103 of the
                      Internal Revenue Code of 1986, as amended, or any other
                      laws and regulations in effect at the time of such
                      issuance; or

               (xii)  Liens securing Debt incurred to extend, renew or replace
                      in whole or in part Debt secured by any Lien, provided
                      that (a) the principal amount of Debt secured thereby
                      shall not exceed the principal amount of Debt so secured
                      at the time of such extension, renewal or replacement, and
                      (b) such extension, renewal or replacement shall be
                      limited to all or a part of the property that secured the
                      Debt so extended, renewed or replaced plus improvements on
                      such property.

     (b)  In addition to the foregoing, the Company and its Subsidiaries may
issue, assume or guarantee Debt secured by a Lien upon any Operating Property or
shares of stock or Debt of any Subsidiary or enter into a Sale and Leaseback
Transaction involving any Operating Property without equally and ratably
securing the Notes if the sum of (1) the amount of the Debt secured by Liens
otherwise prohibited by Section 3.01(a) and (2) the Attributable Debt of all
Sale and Leaseback Transactions otherwise prohibited by Section 3.02 does not
exceed at the time 10% of Consolidated Net Tangible Assets.

     (c)  If at any time the Company or any Subsidiary shall issue, assume or
guarantee any Debt secured by any Lien upon any Operating Property or shares of
stock or Debt of any Subsidiary and if Section 3.01(a) requires that the Notes
be secured equally and ratably with such Debt, the Company will promptly
execute, at its expense, any instruments necessary to so equally and ratably
secure such Notes and deliver the same to the Trustee together with:

               (i)  an Officers' Certificate stating that the covenant of the
          Company contained in Section 3.01(a) has been complied with; and

               (ii) an Opinion of Counsel to the effect that such covenant has
          been complied with, and that any instruments executed by the Company
          in the performance of such covenant comply with the requirements of
          such covenant.

                                       5
<PAGE>   8
     (d)  If the Company shall hereafter secure the Notes equally and ratably
with any other Debt pursuant to the provisions of this Section 3.01, the Trustee
is hereby authorized to enter into an indenture or supplemental indenture and to
take such action, if any, as it may deem advisable to enable it to enforce
effectively the rights of the holders of the Notes so secured, equally and
ratably with such other Debt.

     SECTION 3.02. Limitations on Sale and Leaseback Transactions. The Company
will not, nor will it permit any Subsidiary to, enter into any Sale and
Leaseback Transaction involving any Operating Property, unless within 360 days
of the effective date of such Sale and Leaseback Transaction, the Company or
such Subsidiary applies or causes to be applied an amount equal to the greater
of (i) the fair market value of the Operating Property so sold and leased back
at the time of entering into such Sale and Leaseback Transaction (as determined
by the Company's Board of Directors) and (ii) the net proceeds of the sale of
the Operating Property sold and leased back pursuant to such Sale and Leaseback
Transaction, to:

     (a)  the prepayment or retirement (other than mandatory prepayment or
retirement) of Funded Debt of the Company or any Subsidiary, or

     (b)  the purchase of other property that will constitute Operating
Property.

The foregoing restriction shall not apply to a Sale and Leaseback Transaction,
if:

          (i)   the Company or such Subsidiary would be entitled to issue,
                assume or guarantee Debt in an amount equal to the Attributable
                Debt of the Sale and Leaseback Transaction secured by the
                Operating Property without being required to equally and ratably
                secure the Notes pursuant to Section 3.01(a),

          (ii)  such Sale and Leaseback Transaction is between the Company and a
                Subsidiary or between Subsidiaries, or

          (iii) such Sale and Leaseback Transaction involves taking back a
                lease for a period of three years or less (including renewals).

                                    ARTICLE 4
                              SUCCESSOR CORPORATION

     SECTION 4.01. Consolidation, Merger and Sale of Assets. The Company will
not consolidate with or merge into any other Person or convey, transfer or lease
all or substantially all of its properties and assets to any Person, unless:

          (i)   the Person (if other than the Company) formed by such
                consolidation or into which the Company is merged or the Person
                which acquires by conveyance or transfer, or which leases all or
                substantially all of the properties and assets of the Company
                shall be a corporation organized and existing under the laws of
                the United States of America, any state or the District of
                Columbia and shall expressly assume, by an indenture
                supplemental hereto, executed and delivered to the Trustee, in
                form satisfactory to the Trustee, the due and punctual payment
                of the principal of (and premium, if any) and interest on all
                the Notes and the performance of every covenant of the Indenture
                as supplemented by the Second Supplemental Indenture on the part
                of the Company to be performed or observed;

                                       6
<PAGE>   9

          (ii)  immediately after giving effect to such transaction, no Event of
                Default and no Default shall have happened and be continuing.

     The Trustee may require that the Company deliver an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture complies with this
Section 4.01 and that all conditions precedent herein provided for relating to
such transaction have been complied with.

                                    ARTICLE 5
                       DEFEASANCE AND COVENANT DEFEASANCE

     SECTION 5.01. Indenture Satisfaction and Discharge Provisions. Section
11.02 of the Indenture shall not apply to the Notes. Section 11.03 and 11.04
shall apply to all moneys and Governmental Obligations deposited with the
Trustee or held by any paying agent under this Article 5.

     SECTION 5.02. Company's Option to Effect Defeasance or Covenant Defeasance.
In addition to discharge of the Indenture pursuant to Section 11.01 of the
Indenture, the Company may at its option elect at any time either (a) to effect
a defeasance and discharge of the Notes under Section 5.03 hereof or (b) to
effect a covenant defeasance of the Notes under Section 5.04 hereof, in each
case upon compliance with the applicable conditions set forth in Section 5.05
hereof.

     SECTION 5.03. Defeasance and Discharge. Upon election by Company to effect
a defeasance and discharge of the Notes under this Section 5.03 and satisfaction
of the conditions precedent set forth in Section 5.05, the Company shall be
deemed to have paid and discharged the Notes and the Company shall be deemed to
have satisfied all its other obligations under the Notes and all its other
obligations relating to the Notes under the Indenture, as supplemented by the
Second Supplemental Indenture, except for Sections 2.03, 2.05, 2.07, 4.01, 4.02,
4.03, 7.06, 7.10 and 11.05 of the Indenture that shall survive until the Notes
mature and be paid. Thereafter, Sections 7.06 and 11.05 of the Indenture shall
survive.

     SECTION 5.04. Covenant Defeasance. Upon election by the Company to effect a
covenant defeasance of the Notes under this Section 5.04, the Company shall be
released from its obligations under Sections 3.01 and 3.02 of this Second
Supplemental Indenture on or after the date the conditions precedent set forth
in Section 5.05 are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that the Issuer may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in Section 3.01 or 3.02 of this Second Supplemental Indenture.

                                       7
<PAGE>   10
     SECTION 5.05. Conditions to Defeasance and Discharge or Covenant
Defeasance. The following shall be conditions precedent to the application of
either Section 5.03 or 5.04:

          (i)   the Company shall have deposited or cause to be deposited
                irrevocably with the Trustee, as trust funds in trust for the
                purpose of making the following payments, specifically pledged
                as security for and dedicated solely to the benefit of the
                holders of Notes, of cash in U.S. dollars (or such other money
                or currencies as shall then be legal tender in the United
                States) and/or Government Obligations, which through the payment
                of interest and principal in respect thereof, in accordance with
                their terms, will provide (and without reinvestment and assuming
                no tax liability will be imposed on the Trustee), not later than
                the due date of any payment of money, an amount in cash,
                sufficient, in the opinion of a nationally recognized firm of
                independent certified public accountants expressed in a written
                certification thereof delivered to the Trustee, to discharge
                principal (including premium, if any) under the Notes, and each
                installment of principal (including premium, if any) and
                interest on the Outstanding Notes on the stated maturity of such
                principal or installment of principal or interest on the dates
                on which such installments of principal and interest are due, in
                accordance with the terms of the Indenture, as supplemented by
                this Second Supplemental Indenture, and the Notes;

          (ii)  the Company shall have delivered to the Trustee an Opinion of
                Counsel to the effect that holders of the Notes will not, or
                there has been published by the Internal Revenue Service a
                ruling to the effect that holders of the Notes will not,
                recognize income, gain or loss for Federal income tax purposes
                as a result of the Company's exercise of its option under
                Section 5.03 or 5.04, as the case may be, and will be subject to
                Federal income tax on the same amounts and in the same manner
                and at the same times, as would have been the case if such
                defeasance or covenant defeasance had not occurred;

          (iii) no Event of Default or Default shall have occurred and be
                continuing on the date of such deposit, and no Event of Default
                under Sections 6.01(a)(5) or (6) or event which with the giving
                of notice or lapse of time, or both, would become an Event of
                Default under Sections 6.01(a)(5) or (6) shall have occurred and
                be continuing on the 91st day after such date;

          (iv)  such deposit will not result in a breach or violation of, or
                constitute a default under, the Indenture or this Second
                Supplemental Indenture or any other agreement or instrument to
                which the Company is a party or by which it is bound;

                                       8
<PAGE>   11
          (v)   the Company has delivered to the Trustee an Officers'
                Certificate and an Opinion of Counsel, each stating that all
                conditions precedent provided for relating to either the
                defeasance and discharge under Section 5.03 or the covenant
                defeasance under Section 5.04 (as the case may be) shall have
                been complied with;

          (vi)  such defeasance and discharge or covenant defeasance will not
                result in the trust arising from such deposit to constitute an
                investment company under the Investment Company Act of 1940 or
                such trust shall be qualified under such act or exempt from
                regulation thereunder; and

          (vii) the Company has paid or caused to be paid all other sums payable
                with respect to the Outstanding Notes.

                                    ARTICLE 6
                                  MISCELLANEOUS

     SECTION 6.01. Ratification and Confirmation. The Indenture, as supplemented
by this Second Supplemental Indenture, is in all respects ratified and
confirmed. This Second Supplemental Indenture shall be deemed part of the
Indenture in the manner and to the extent herein and therein provided.

     SECTION 6.02. Recitals, Validity and Sufficiency. The recitals herein
contained are made by the Company and not by the Trustee, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee makes no
representation as to the validity or sufficiency of this Second Supplemental
Indenture.

     SECTION 6.03. Counterparts. This Second Supplemental 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.

     SECTION 6.04. Governing Law. This Second Supplemental Indenture and the
Notes shall be governed by, and construed in accordance with, the laws of the
State of New York without regard to conflict of law provisions thereof.

     IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed as of the date first above written.

                                        KMART CORPORATION

                                        By: /s/ John T. McDonald Jr.
                                            ------------------------------
                                            Name
                                            Title: Vice President and Treasurer

                                        THE BANK OF NEW YORK,
                                          as Trustee

                                        By: /s/ Stephen J. Giurlando
                                            ------------------------------
                                            Name
                                            Title: Vice President

                                       9
<PAGE>   12
                                                                       EXHIBIT A

     [So long as the Notes are Global Securities with The Depository Trust
Company as Depositary, include the following legends:

     Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

     Except as provided in Section 2.11 of the Indenture, this Note may be
transferred, in whole but not in part, by the Depositary only to another nominee
of the Depositary or to a successor Depositary or to a nominee of such successor
Depositary.]

                                      A-1
<PAGE>   13
                                KMART CORPORATION

                              9.375% NOTE DUE 2006

          No.

          $                                                     CUSIP: 482584BB4

     Kmart Corporation, a corporation duly organized and existing under the laws
of the State of Michigan (the "ISSUER"), for value received, hereby promises to
pay to Cede & Co. or registered assigns, the principal sum of $400,000,000 on
February 1, 2006, at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay semi-annually on February 1 and August 1 of
each year (each, an "INTEREST PAYMENT DATE"), commencing August 1, 2001, the
amount of interest on said principal sum at said office or agency, in like coin
or currency, at the rate per annum specified in the title of this Note, from
January 30, 2001 or from the most recent Interest payment Date to which interest
has been paid or duly provided for until said principal sum has been paid or
duly provided for. Interest shall be computed on the basis of a 360-year
consisting of twelve 30-day months.

     The interest payable on any Interest Payment Date which is punctually paid
or duly provided for on such Interest Payment Date will be paid to the Person in
whose name this Note is registered at the close of business on January 15 or
July 15 (in each case, whether or not a Business Day), as the case may be (each,
"REGULAR RECORD DATE"), immediately preceding such Interest Payment Date.
Interest payable on this Note which is not punctually paid or duly provided for
on any Interest Payment Date therefore shall forthwith cease to be payable to
the Person in whose name this Note is registered at the close of business on the
Regular Record Date immediately preceding such Interest Payment Date, and such
interest may either (i) be paid to the Person in whose name this Note is
registered at the close of business on a special record date to be established
for such payment by the Trustee or (ii) be paid in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, all as more fully provided in the Indenture referred to on the
reverse hereof. At the option of the Issuer, interest on the Notes may be paid
(i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the register of holders of the Notes or (ii) at the
expense of the Issuer, by wire transfer to an account maintained by the Person
entitled thereto as specified in writing to the Trustee by such Person by the
applicable record date of the Notes.

                                      A-2
<PAGE>   14
     Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.

     This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Trustee under
the Indenture referred to on the reverse hereof.

     IN WITNESS WHEREOF, KMART CORPORATION has caused this instrument to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto or imprinted hereon.

Dated:

                                        KMART CORPORATION

                                        By: ____________________________
                                        Name:
                                        Title:

                                        By: ____________________________
                                        Name:
                                        Title:

Attest:_____________________________
       Name:
       Title:

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.

Dated:

                                        THE BANK OF NEW YORK,
                                        as Trustee

                                        By:______________________________
                                           Authorized Signatory

                                      A-3
<PAGE>   15
                                 REVERSE OF NOTE

                                KMART CORPORATION

                              9.375% NOTE DUE 2006

     1.   Indenture. (a) This Note is one of a duly authorized issue of senior
debt securities of the Issuer hereinafter called the "NOTES") of a series
designated as the 9.375 % Notes Due 2006 of the Issuer, initially limited in
aggregate principal amount to $400,000,000, all issued or to be issued under and
pursuant to the Indenture, dated as of December 13, 1999, as supplemented by the
Second Supplemental Indenture, dated as of January 30, 2001 (as so amended and
supplemented, the "INDENTURE"), between the Issuer and The Bank of New York, as
Trustee (herein called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Issuer, the Trustee and the holders of the Notes.

     (b)  Other debentures, notes, bonds or other evidences of indebtedness
(together with the Notes, hereinafter called the "SECURITIES") may be issued
under the Indenture in one or more series, which different series may vary from
the Notes and each other, as in the Indenture provided.

     (c)  All capitalized terms used in this Note which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.

         2. Amendments and Waivers. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Issuer and the rights of the holders of the
Securities of each series to be affected under the Indenture at any time by the
Issuer and the Trustee with the consent of the holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the holders of a
majority in principal amount of the Securities of each series at the time
Outstanding, on behalf of the holder of all Securities of such series, to waive
compliance by the Issuer with certain provisions of

                                      A-4
<PAGE>   16

the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and upon all future holders of this Note
and of any issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Note.

     3.   Obligation to Pay Principal, Premium, if Any, and Interest. No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Issuer or any other
obligor on the Notes, which is absolute and unconditional, to pay the principal
of, premium, if any, and interest on this Note in the manner, at the respective
times, at the rate, at the place and in the coin or currency herein prescribed.

     4.   Certain Covenants. The Indenture restricts the ability of the Issuer
and its Subsidiaries to incur certain secured indebtedness and enter into
certain sale and leaseback transactions. These covenants are subject to the
covenant defeasance procedures outlined in the Indenture.

     5.   Effect of Event of Default. If an Event of Default shall have occurred
and be continuing under the Indenture, the principal hereof may be declared, and
upon such declaration shall become, due and payable in the manner, with the
effect and subject to the conditions provided in the Indenture.

     6.   Defeasance. The Indenture contains provisions for defeasance and
covenant defeasance at any time of the indebtedness on this Note upon compliance
by the Issuer with certain conditions set forth therein.

     7.   Denominations; Exchanges. (a) The Notes are issuable in registered
form without coupons in denominations of $1,000 and any multiple of $1,000 at
the office or agency of the Issuer in the Borough of Manhattan, The City of New
York, and in the manner and subject to the limitations provided in the
Indenture, Notes may be exchanged for a like aggregate principal amount of Notes
of other authorized denomination.

     8.   Holder as Owner. The Issuer, the Trustee and any authorized agent of
the Issuer or the Trustee may deem and treat the registered holder hereof as the
absolute owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment of, or on account of, the principal hereof and,
subject to the

                                      A-5
<PAGE>   17

provisions on the face hereof, interest hereon, and for all other purposes, and
none of the issuer or the Trustee nor any authorized agent of the Issuer or the
Trustee shall be affected by any notice to the contrary.

     9.   No Liability of Certain Persons. No recourse under or upon any
obligation, covenant or agreement of the Issuer in the Indenture or any
indenture supplement thereto or in any Note, or because of the creation of any
indebtedness represented thereby, shall be had against any past, present or
future incorporator, shareholder, officer or director, as such, of the Issuer or
of any successor corporation of either of them, either directly or through the
Issuer, or any successor corporation, under any constitution, statute or rule of
law or by the enforcement of any assessment or otherwise, all such liability
being expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.

     10.  Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to conflict of
law provisions thereof.

                                      A-6

<PAGE>   18
          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto:

          PLEASE INSERT TAXPAYER
          IDENTIFICATION NUMBER OF ASSIGNEE

          ___________________________

          ___________________________

          ___________________________

          PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

The within Note of Kmart Corporation and all rights thereunder and hereby
irrevocably constitutes and appoints such person attorney to transfer such Note
on the books of Kmart Corporation, with full power of substitution in the
premises.

Dated:

                                              _____________________________
                                                        Signature

NOTICE: THE SIGNATURE OF THIS AGREEMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
        UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT
        ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. THE SIGNATURE SHOULD
        BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY, A MEMBER
        ORGANIZATION OF A NATIONAL STOCK EXCHANGE OR BY SUCH OTHER ENTITY WHOSE
        SIGNATURE IS ON FILE WITH AND ACCEPTABLE TO THE TRANSFER AGENT.

Signature Guarantee:

                                      A-7<PAGE>   1
                                                                     EXHIBIT 4.1

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

                          FIRST SUPPLEMENTAL INDENTURE

                        DATED AS OF               , 2001
                                    --------------

                                     BETWEEN

                                NRG ENERGY, INC.

                                    AS ISSUER

                                       AND

                        [------------------------------]

                                   AS TRUSTEE

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

<PAGE>   2

                                Table of Contents

<TABLE>
<CAPTION>
                                                                                                 Page

<S>                                                                                            <C>
ARTICLE I DEFINITIONS...............................................................................1

         Section 1.1 Definition of Terms............................................................1

ARTICLE II GENERAL TERMS AND CONDITIONS OF THE DEBENTURES...........................................4

         Section 2.1 Designation and Principal Amount...............................................4
         Section 2.2 Maturity.......................................................................4
         Section 2.3 Form, Payment and Appointment..................................................4
         Section 2.4 Global Debentures..............................................................5
         Section 2.5 Interest.......................................................................6

ARTICLE III REDEMPTION OF THE DEBENTURES............................................................7

         Section 3.1 Tax Event Redemption...........................................................7
         Section 3.2 Redemption Procedures for Debentures...........................................8
         Section 3.3 No Sinking Fund................................................................8
         Section 3.4 Option to Put Debentures upon Failed Secondary Remarketing.....................8
         Section 3.5 Repurchase Procedure for Debentures............................................9

ARTICLE IV EXPENSES.................................................................................9

         Section 4.1 Payment of Expenses............................................................9

ARTICLE V NOTICE...................................................................................10

         Section 5.1 Notice by the Company.........................................................10

ARTICLE VI FORM OF DEBENTURE.......................................................................10

         Section 6.1 Form of Debenture.............................................................10

ARTICLE VII ORIGINAL ISSUE OF DEBENTURES...........................................................21

         Section 7.1 Original Issue of Debentures..................................................21
</TABLE>

                                        i
<PAGE>   3

<TABLE>
<S>                                                                                            <C>
ARTICLE VIII MISCELLANEOUS.........................................................................21

         Section 8.1 Ratification of Indenture.....................................................21
         Section 8.2 Trustee Not Responsible for Recitals..........................................21
         Section 8.3 New York Law to Govern........................................................22
         Section 8.4 Separability..................................................................22
         Section 8.5 Counterparts..................................................................22
         Section 8.6 Provisions of Base Indenture Not Applicable...................................22

ARTICLE IX REMARKETING.............................................................................22

         Section 9.1 Initial Remarketing Procedures................................................22
         Section 9.2 Secondary Remarketing Procedures..............................................26

</TABLE>

                                       ii

<PAGE>   4

         FIRST SUPPLEMENTAL INDENTURE, dated as of _______________, 2001 (the
"First Supplemental Indenture"), between NRG Energy, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and [_______________________], as trustee (the "Trustee").

         WHEREAS, the Company executed and delivered the Indenture dated as of
_____________, 2001 (the "Base Indenture") to the Trustee to provide for the
issuance of the Company's debentures, notes, bonds or other evidence of
indebtedness (the "Securities"), to be issued from time to time in one or more
series as might be determined by the Company under the Base Indenture; and

         WHEREAS, pursuant to the terms of the Base Indenture, the Company
desires to provide for the establishment of a new series of its Securities to be
known as its _____% Senior Debentures due 2006 (the "Debentures"), the form and
terms of such Debentures and the terms, provisions and conditions thereof to be
set forth as provided in the Base Indenture and this First Supplemental
Indenture (together, the "Indenture"); and

         WHEREAS, the Company has requested that the Trustee execute and deliver
this First Supplemental Indenture and all requirements necessary to make this
First Supplemental Indenture a valid, binding and enforceable instrument in
accordance with its terms, and to make the Debentures, when executed,
authenticated and delivered by the Company, the valid, binding and enforceable
obligations of the Company, have been done and performed, and the execution and
delivery of this First Supplemental Indenture has been duly authorized in all
respects.

         NOW THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Base Indenture, the form and terms of the Debentures, the
Company covenants and agrees with the Company as follows:

                                   ARTICLE I
                                   DEFINITIONS

                 Section 1.1       Definition of Terms

         Unless the context otherwise requires:

             (a) a term defined in the Base Indenture has the same meaning when
         used in this First Supplemental Indenture;

                                       1
<PAGE>   5

             (b) a term defined anywhere in this First Supplemental Indenture
         has the same meaning throughout;

             (c) the singular includes the plural and vice versa;

             (d) headings are for convenience of reference only and do not
         affect interpretation;

             (e) the following terms have the meanings given to them in the
         Purchase Contract Agreement (i) Applicable Principal Amount, (ii)
         Authorized Newspaper; (iii) Cash Settlement; (iv) Clearing Agency; (v)
         Clearing Agency Participant; (vi) Corporate Units; (vii) Initial
         Remarketing; (viii) Initial Remarketing Date; (ix) Purchase Contract
         Agent (x) Quotation Agent; (xi) Redemption Price; (xii) Reset Agent;
         (xiii) Reset Announcement Date; (xiv) Reset Rate; (xv) Reset Spread;
         (xvi) Secondary Remarketing; (xvii) Secondary Remarketing Date; (xviii)
         Tax Event; (xix) Treasury Portfolio; (xx) Treasury Portfolio Purchase
         Price; (xxi) Treasury Units; (xxii) Two-Year Benchmark Treasury;
         (xxiii) Two and One-Quarter Year Benchmark Treasury; and (xxiv)
         Underwriting Agreement;

             (f) the following terms have the meanings given to them in this
         Section 1.1(f):

         "Coupon Rate" shall have the meaning set forth in Section 2.5.

         "Custodial Agent" shall have the meaning set forth in the Pledge
Agreement.

         "Debentures" shall have the meaning specified in Section 2.1.

         "Debenture Repayment Price'" shall have the meaning set forth in
Section 3.4.

         "Failed Initial Remarketing" shall have the meaning set forth in
Section 9.1(g).

         "Failed Secondary Remarketing" shall have the meaning set forth in
Section 9.2(h).

         "Global Debentures" shall have the meaning set forth in Section 2.4.

                                       2
<PAGE>   6

         "Maturity Date" shall have the meaning specified in Section 2.2.

         "Pledge Agreement" means the Pledge Agreement dated as of ____________,
2001 among the Company, __________________________, as collateral agent (the
"Collateral Agent"), custodial agent and securities intermediary and
______________________________, as purchase contract agent and attorney-in-fact.

         "Purchase Contract" shall have the meaning set forth in the Purchase
Contract Agreement.

         "Purchase Contract Agreement" means the Purchase Contract Agreement
dated as of ________________, 2001, among the Company and ______________, as
purchase contract agent.

         "Purchase Contract Settlement Date" means _________________, 2004.

         "Put-Option" shall have the meaning set forth in Section 3.4.

         "Put-Option Exercise Date" shall have the meaning set forth in Section
3.4.

         "Regular Record Date" means, with respect to any Interest Payment Date
for the Debentures, the close of business on the first day of the month in which
such Interest Payment Date falls.

         "Remarketing Agent" means ______________________________________ or any
successor thereto or replacement Remarketing Agent under the Remarketing
Agreement.

         "Remarketing Agreement" means the Remarketing Agreement, dated as of
__________, 2001, among the Company, __________________________as remarketing
agent and _____________________, as purchase contract agent and
attorney-in-fact.

         "Reset Effective Date" means (i) ________, 2003 in case the interest
rate is reset on the Initial Remarketing Date, or (ii) the Purchase Contract
Settlement Date, in case the interest rate is reset on the Secondary Remarketing
Date.

                                       3
<PAGE>   7

         The terms "First Supplemental Indenture," "Base Indenture," and
"Debentures" shall have the respective meanings set forth in the recitals to
this First Supplemental Indenture and the paragraph preceding such recitals.

                                   ARTICLE II
                 GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

                 Section 2.1       Designation and Principal Amount.

         There is hereby authorized a series of Securities designated the ___%
Senior Debentures due 2006, (the "Debentures") limited (except as otherwise
provided in Article II of the Indenture) in aggregate principal amount to
$200,000,000 (or, $230,000,000, if the Underwriters' over-allotment option is
exercised in full). The Debentures may be issued from time to time upon written
order of the Company for the authentication and delivery of Debentures pursuant
to Section 2.2 of the Base Indenture.

                 Section 2.2       Maturity.

         The date upon which the Debentures shall become due and payable at
final maturity, together with any accrued and unpaid interest, is ___________,
2006 (the "Maturity Date").

                 Section 2.3       Form, Payment and Appointment

         Except as provided in Section 2.4, the Debentures shall be issued in
fully registered certificated form without interest coupons, bearing identical
terms. Principal of and premium, if any, and interest on the Debentures will be
payable, the transfer of such Debentures will be registrable and such Debentures
will be exchangeable for Debentures bearing identical terms and provisions at
the office or agency of the Company maintained for such purpose as described
below; provided, however, that payment of interest may be made at the option of
the Company by check mailed to the Holder at such address as shall appear in the
Securities Register or by wire transfer to an account appropriately designated
by the Holder entitled to payment.

         The Company hereby designates the Borough of Manhattan, The City of New
York as the place of payment ("Place of Payment") for the Debentures, and the
office or agency maintained by the Company in such Place of Payment for the
purposes

                                       4
<PAGE>   8

contemplated by this Section 2.3 shall initially be the Corporate Trust
Office of the Trustee in c/o _____________________________________________.

         The Security Registrar, transfer agent and Paying Agent for the
Debentures shall be ____________________________.

         The Debentures shall be issuable in denominations of $25 and integral
multiples of $25 in excess thereof.

         The Debentures may be issued, in whole or in part, in permanent global
form and, if issued in permanent global form, the U.S. Depositary shall be The
Depository Trust Company or such other depositary as any officer of the Company
may from time to time designate.

                 Section 2.4       Global Debentures.

             (a) Unless and until it is exchanged for the Debentures in
         registered form, one or more global Debentures in principal amount
         equal to the aggregate principal amount of all outstanding Debentures
         ("Global Debentures") may be transferred, in whole but not in part,
         only to the Clearing Agency or a nominee of the Clearing Agency, or to
         a successor Clearing Agency selected or approved by the Company or to a
         nominee of such successor Clearing Agency.

             (b) If at any (i) time the Clearing Agency notifies the Company
         that it is unwilling or unable to continue as a Clearing Agency for the
         Global Debentures and no successor Clearing Agency shall have been
         appointed within 90 days after such notification, (ii) the Clearing
         Agency at any time ceases to be a clearing agency registered under the
         Securities Exchange Act of 1934 at any time the Clearing Agency is
         required to be so registered to act as such Clearing Agency and no
         successor Clearing Agency shall have been appointed within 90 days
         after the Company becoming aware of the Clearing Agency's ceasing to be
         so registered, (iii) the Company, in its sole discretion, determines
         that the Global Debentures shall be so exchangeable or (iv) there shall
         have occurred and be continuing an Event of Default, the Company will
         execute, and subject to Article II of the Base Indenture, the Trustee,
         upon written notice from the Company, will authenticate and deliver the
         Debentures in definitive registered form without coupons, in authorized
         denominations, and in an aggregate principal amount equal to the
         principal amount of the Global Debenture in exchange for such Global
         Debenture.

                                       5
<PAGE>   9

         Upon exchange of the Global Debenture for such Debentures in definitive
         registered form without coupons, in authorized denominations, the
         Global Debenture shall be cancelled by the Trustee. Such Debentures in
         definitive registered form issued in exchange for the Global Debenture
         shall be registered in such names and in such authorized denominations
         as the Clearing Agency, pursuant to instructions from its direct or
         indirect participants or otherwise, shall instruct the Trustee. The
         Trustee shall deliver such Securities to the Clearing Agency for
         delivery to the Persons in whose names such Securities are so
         registered.

                Section 2.5        Interest.

             (a) Each Debenture will bear interest initially at the rate of ___%
         per annum (the "Coupon Rate") from the original date of issuance
         through and including the day immediately preceding the Reset Effective
         Date and at the Reset Rate thereafter until the principal thereof is
         paid or duly made available for payment and shall bear interest, to the
         extent permitted by law, compounded quarterly, on any overdue principal
         and premium, if any, and on any overdue installment of interest at the
         Coupon Rate through and including the day immediately preceding the
         Reset Effective Date and at the Reset Rate thereafter, payable
         quarterly in arrears on __________, __________, ___________ and
         _____________ of each year (each, an "Interest Payment Date")
         commencing on _____________, 2001, to the Person in whose name such
         Debenture, or any predecessor Debenture, is registered at the close of
         business on the Regular Record Date for such interest installment.

             (b) The interest rate on the Debentures will be reset on the
         Initial Remarketing Date to the applicable Reset Rate (which Reset Rate
         will be effective on and after _________, 2003) except in the event of
         a Failed Initial Remarketing. In the event of a Failed Initial
         Remarketing, the interest rate on the Debentures will be reset on the
         Secondary Remarketing Date to the applicable Reset Rate (which Reset
         Rate will be effective on and after the Purchase Contract Settlement
         Date). On the applicable Reset Announcement Date, the applicable Reset
         Spread and the Two-Year Benchmark Treasury or Two and One-Quarter Year
         Benchmark Treasury, as applicable, will be announced by the Company. On
         the Business Day immediately following such Reset Announcement Date,
         the Holders of Debentures will be notified of such Reset Spread and
         Two-Year Benchmark Treasury or Two and One-Quarter Year Benchmark
         Treasury, as applicable, by the Company. Such

                                       6
<PAGE>   10

         notice shall be sufficiently given to such Holders of Debentures if
         published in an Authorized Newspaper.

             (c) Not later than seven calendar days nor more than 15 calendar
         days immediately preceding the applicable Reset Announcement Date, the
         Company will request that the Clearing Agency or its nominee (or any
         successor Clearing Agency or its nominee) notify the Holders of
         Debentures of such Reset Announcement Date and, in the case of a
         Secondary Remarketing, the procedures to be followed by such holders of
         Debentures wishing to settle the related Purchase Contracts with
         separate cash on the Business Day immediately preceding the Purchase
         Contract Settlement Date.

             (d) The amount of interest payable for any period will be computed
         on the basis of a 360-day year consisting of twelve 30-day months.
         Except as provided in the following sentence, the amount of interest
         payable for any period other than a full quarterly period for which
         interest is computed, will be computed on the basis of the actual
         number of days elapsed in such a 90-day period. In the event that any
         date on which interest is payable on the Debentures is not a Business
         Day, then payment of interest payable on such date will be made on the
         next succeeding day which is a Business Day (and without any interest
         or other payment in respect of any such delay), 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 date.

                                  ARTICLE III
                          REDEMPTION OF THE DEBENTURES

                 Section 3.1       Tax Event Redemption.

         If a Tax Event shall occur and be continuing, the Company may, at its
option, redeem the Debentures in whole (but not in part) at any time at a price
per Debenture equal to the Redemption Price. Installments of interest on
Debentures which are due and payable on or prior to the date of redemption (the
"Tax Event Redemption Date") will be payable to the Holders of the Debentures
registered as such at the close of business on the Regular Record Date. If,
following the occurrence of a Tax Event prior to the Purchase Contract
Settlement Date, the Company exercises its option to redeem the Debentures, the
Company shall appoint the Quotation Agent to assemble the Treasury Portfolio in
consultation with the Company. Notice of any redemption will be mailed at least
30 days but not more than 60 days before the Tax

                                       7
<PAGE>   11

Event Redemption Date to each registered Holder of the Debentures to be repaid
at its registered address. Unless the Company defaults in payment of the
Redemption Price, on and after the Tax Event Redemption Date interest shall
cease to accrue on the Debentures.

                 Section 3.2       Redemption Procedures for Debentures.

         Payment of the Redemption Price to each Holder of Debentures shall be
made by the Company, no later than 12:00 noon, New York City time, on the Tax
Event Redemption Date, by check or wire transfer in immediately available funds
at such place and to such account as may be designated by each such Holder of
Debentures, including the Trustee or the Collateral Agent, as the case maybe. If
the Trustee holds immediately available funds sufficient to pay the Redemption
Price of the Debentures, then, on such Tax Event Redemption Date, such
Debentures will cease to be outstanding and interest thereon will cease to
accrue, whether or not such Debentures have been received by the Company, and
all other rights of the Holder in respect of the Debentures shall terminate and
lapse (other than the right to receive the Redemption Price upon delivery of
such Debentures but without interest on such Redemption Price).

                 Section 3.3       No Sinking Fund.

         The Debentures are not entitled to the benefit of any sinking fund.

                 Section 3.4       Option to Put Debentures upon Failed
Secondary Remarketing.

         If a Failed Secondary Remarketing (as described in Section 5.4(b) of
the Purchase Contract Agreement and incorporated herein by reference) has
occurred, each holder of Debentures who holds such Debentures on the day
immediately following the Purchase Contract Settlement Date shall have the right
(the "Put Option") on the Business Day immediately following the Purchase
Contract Settlement Date, to put such Debentures to the Company on _______, 2004
(the "Put Option Exercise Date"), upon at least three Business Days prior
notice, at a repayment price equal to the principal amount of such Debentures
plus an amount equal to the accrued and unpaid interest thereon to the date of
payment (the "Debenture Repayment Price").

                                       8
<PAGE>   12

                 Section 3.5       Repurchase Procedure for Debentures.

             (a) In order for the Debentures to be repurchased on the Put Option
         Exercise Date, the Trustee must receive on or prior to 5:00 p.m. New
         York City time on the third Business Day immediately preceding the Put
         Option Exercise Date, at its Corporate Trust Office or at an office or
         agency maintained by the Company in the Borough of Manhattan, The City
         of New York as contemplated by Section 2.3 hereof, the Debentures to be
         repurchased with the form entitled "Option to Elect Repayment" on the
         reverse of or otherwise accompanying such Debentures duly completed.
         Any such notice received by the Trustee shall be irrevocable. All
         questions as to the validity, eligibility (including time of receipt)
         and acceptance of the Debentures for repayment shall be determined by
         the Company, whose determination shall be final and binding.

             (b) Payment of the Debenture Repayment Price shall be made through
         the Trustee, subject to the Trustee's receipt of payment from the
         Company in accordance with the terms of the Indenture, no later than
         12:00 noon, New York City time, on the Put Option Exercise Date, and to
         such account as may be designated. If the Trustee holds immediately
         available funds sufficient to pay the Debenture Repayment Price of
         Debentures presented for repayment, then, immediately prior to the
         close of business on the Put Option Exercise Date, such Debentures will
         cease to be outstanding and Interest thereon will cease to accrue,
         whether or not such Debentures have been received by the Company, and
         all other rights of the Holder in respect of the Debentures, including
         the Holder's right to require the Company to repay such Debentures,
         shall terminate and lapse (other than the right to receive the
         Debenture Repayment Price upon delivery of such Debentures but without
         interest on such Debenture Repayment Price). Neither the Trustee nor
         the Company will be required to register or cause to be registered the
         transfer of any Debenture for which repayment has been elected.

                                   ARTICLE IV
                                    EXPENSES

                 Section 4.1       Payment of Expenses.

         In connection with the offering, sale and issuance of the Debentures to
the Holders, the Company, in its capacity as borrower with respect to the
Debentures shall pay all costs and expenses relating to the offering, sale and
issuance of the

                                       9
<PAGE>   13

Debentures, including commissions to the underwriters payable pursuant to the
Underwriting Agreement and compensation of the Trustee under the Indenture in
accordance with the provisions of Section 5.6 of the Base Indenture.

                                   ARTICLE V
                                     NOTICE

                 Section 5.1       Notice by the Company.

         The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company that would prohibit the making
of any payment of monies to or by the Trustee in respect of the Debentures.
Notwithstanding any of the provisions of the Base Indenture and this First
Supplemental Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Debentures; provided, however, that if
the Trustee shall not have received the notice provided for in this Article V at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (or premium, if any) or interest on any Debenture),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within two Business Days prior
to such date.

                                   ARTICLE VI
                                FORM OF DEBENTURE

                 Section 6.1       Form of Debenture.

         The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms, with such
changes therein as the officers of the Company executing the Debentures (by
manual or facsimile signature) may approve, such approval to be conclusively
evidenced by their execution thereof:

                           (FORM OF FACE OF DEBENTURE)

IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - THIS DEBENTURE IS A
GLOBAL DEBENTURE WITHIN THE MEANING OF THE

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INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE CLEARING
AGENCY OR A NOMINEE OF THE CLEARING AGENCY. THIS DEBENTURE IS EXCHANGEABLE FOR
DEBENTURES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR
ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS DEBENTURE (OTHER THAN A TRANSFER OF THIS DEBENTURE AS A WHOLE
BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF
THE CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR) MAY
BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY DEBENTURE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF TIE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL SINCE TIE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.

CUSIP No.________________
$________________________

                                NRG ENERGY, INC.
                              ___% SENIOR DEBENTURE
                              DUE ___________, 2006

         NRG ENERGY, INC., a Delaware corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _________, as Trustee or
registered assigns, the principal sum of_________________ Dollars ($___________)
on __________, 2006 (such date is hereinafter referred to as the "Maturity
Date"), and to pay interest on said principal sum from ___________, 2001 or from
the next

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recent date to which interest has been paid or duly provided for, quarterly in
arrears on __________, __________, ___________ and ___________ of each year
(each such date, an "Interest Payment Date"), commencing on ___________, 2001
initially at the rate of ___% per annum through and including the day
immediately preceding the Reset Effective Date and at the Reset Rate thereafter
until the principal hereof shall have been paid or duly made available for
payment and, to the extent permitted by law, to pay interest, compounded
quarterly, on any overdue principal and premium, if any, and on any overdue
installment of interest at the rate per annum of ___% through and including the
day immediately preceding the Reset Effective Date and at the Reset Rate
thereafter. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
except as provided in the Indenture (as defined below), the amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed will be computed on the basis of the actual number of days elapsed
in such 90-day period. In the event that any date on which interest is payable
on this Debenture is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), 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 Interest Payment Date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture (or one or more predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
installment which shall be the close of business on the first day of the month
in which such Interest Payment Date falls. Any such interest installment not
punctually paid or duly provided for on any Interest Payment Date shall
forthwith cease to be payable to the registered Holders at the close of business
on such Regular Record Date and may be paid to the Person in whose name this
Debenture (or one or more predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered Holders
of this series of Debentures not less than 10 days prior to such special record
date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Debentures may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. The principal of (and premium, if any) and the
interest on this Debenture shall be payable at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, the City of New
York in any coin or currency of the United States of America that at the time of
payment is legal tender

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for payment of public and private debts; provided, however, that payment of
interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the Security Register or by
wire transfer to an account appropriately designated by the Holder entitled
thereto.

         The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, senior and unsecured and will rank in right of payment on
parity with all other senior unsecured obligations of the Company.

         This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to or be valid or obligatory for any purpose until the
Certificate of Authentication shall have been signed by or on behalf of the
Trustee.

         The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.

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         IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.

Dated:  _________, 2001

                                                     NRG ENERGY, INC., as Issuer

                                                     By:________________________
                                                        Name:
                                                        Title:

Attest:

By:____________________________
   Name:
   Title:

                          CERTIFICATE OF AUTHENTICATION

This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.

Dated _________________________________

[______________________________________],
as Trustee

By_____________________________________
           Authorized Signatory

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                         (FORM OF REVERSE OF DEBENTURE)

         This Debenture is one of a duly authorized series of Securities of the
Company (herein sometimes referred to as the "Debentures"), issued and to be
issued in one or more series under and pursuant to an Indenture dated as of
__________, 2001 (the "Base Indenture") between the Company and
_______________________, as Trustee (the "Trustee," which term includes any
successor trustee under the Indenture), as supplemented by a First Supplemental
Indenture, dated as of ________, 2001 (the "First Supplemental Indenture")
between the Company and the Trustee (the Base Indenture as so supplemented, the
"Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the Holders of the Debentures. By the terms of the Indenture, the Securities are
issuable in series that may vary as to amount, date of maturity, rate of
interest and in other respects as provided in the Indenture. This series of
Securities is limited in aggregate principal amount as specified in said First
Supplemental Indenture.

         If a Tax Event shall occur and be continuing, the Company may, at its
option, redeem the Debentures in whole (but not in part) at any time at a price
per Debenture equal to the Redemption Price. The Redemption Price shall be paid
to each Holder of the Debentures by the Company, no later than 12:00 noon, New
York City time, on the Tax Event Redemption Date, by check or wire transfer in
immediately available funds, at such place and to such account as may be
designated by each such Holder.

         The Debentures are not entitled to the benefit of any sinking fund.

         If a Failed Secondary Remarketing (as described in Section 5.4(b) of
the Purchase Contract Agreement and incorporated herein by reference) has
occurred, each holder of Debentures who holds such Debentures on the day
immediately following the Purchase Contract Settlement Date shall have the right
(the "Put Option") on the Business Day immediately following the Purchase
Contract Settlement Date, to put such Debentures to the Company, on
____________, 2004 (the "Put Option Exercise Date"), upon at least three
Business Days prior notice), at a repayment price equal to the principal amount
of this Debenture plus an amount equal to the accrued and unpaid interest
thereon to the date of payment (the "Debenture Repayment Price").

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         In order for the Debentures to be so repurchased, the Trustee must
receive, on or prior to 5:00 p.m. New York City Time on the third Business Day
immediately preceding the Put Option Exercise Date, at its Corporate Trust
Office, or at an office or agency maintained by the Company in the Borough of
Manhattan, The City of New York as contemplated by Section 2.3 of the First
Supplemental Indenture, the Debentures to be repurchased with the form entitled
"Option to Elect Repayment" on the reverse of or otherwise accompanying such
Debentures duly completed. Any such notice received by the Trustee shall be
irrevocable. All questions as to the validity, eligibility (including time of
receipt) and acceptance of the Debentures for repayment shall be determined by
the Company, whose determination shall be final and binding. The payment of the
Debenture Repayment Price in respect of such Debentures shall be made no later
than 12:00 noon, New York City time, on the Put Option Exercise Date.

         In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable (or, in
certain circumstances shall ipso facto become due and payable), in the manner,
with the effect and subject to the conditions provided in the Indenture.

         The Indenture contains provisions permitting, with certain exceptions
therein provided, the Company and the Trustee, with the consent of the Holders
of not less than a majority in aggregate principal amount of the Outstanding
Securities of each series affected to execute supplemental indentures for the
purpose of, among other things, adding any provisions to or changing or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying the rights of the Holders of the Securities. The
Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the Securities of any series at the time
Outstanding, on behalf of all of the Holders of all Securities of such series,
to waive a Default or Event of Default with respect to such series and its
consequences, except a Default or Event of Default in the payment of the
principal of or premium, if any, or interest on any of the Securities of such
series or in respect of a covenant or other provision which, under the terms of
the Indenture, cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected. Any such consent or waiver
by the registered Holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders of this Debenture and of any Debenture issued in exchange for or in
place hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.

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         No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Company maintained for
such purpose in the Borough of Manhattan, The City of New York, accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Debentures of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
relation thereto.

         Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any Paying Agent and the Security Registrar
may deem and treat the registered Holder hereof as the absolute owner hereof
(whether or not this Debenture shall be overdue and notwithstanding any notice
of ownership or writing hereon made by anyone other than the Security Registrar)
for the purpose of receiving payment of or on account of the principal hereof
and premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any Paying Agent nor any Security
Registrar shall be affected by any notice to the contrary.

         No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.

         The Indenture imposes certain limitations on the ability of the Company
to, among other things, merge or consolidate with any other Person or sell,
assign,

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transfer or lease all or substantially all of its properties or assets, and
requires that the Company comply with certain further covenants. All such
covenants and limitations are subject to a number of important qualifications
and exceptions. The Company must report periodically to the Trustee on
compliance with the covenants in the Indenture.

         The Debentures of this series are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Debentures are exchangeable for a like aggregate principal amount of Debentures
of a different authorized denomination, as requested by the Holder surrendering
the same.

         All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

         The Debentures are subject to defeasance and covenant defeasance upon
the terms and subject to the conditions set forth in the Indenture.

         This Debenture shall be governed by and construed in accordance with
the internal laws of the State of New York.

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                            OPTION TO ELECT REPAYMENT

         The undersigned hereby irrevocably requests and instructs the Company
to repay $____ principal amount of the within Debenture, pursuant to its terms,
on the "Put Option Exercise Date," together with any interest thereon accrued
but unpaid to the date of repayment, to the undersigned at:

(Please print or type name and address of the undersigned)

and to issue to the undersigned, pursuant to the terms of the Indenture, a new
Debenture or Debentures representing the remaining aggregate principal amount of
this Debenture.

For this Option to Elect Repayment to be effective, this Debenture with the
Option to Elect Repayment duly completed must be received by the Trustee at c/o
___________________________________________, no later than 5:00 p.m. on the
third Business Day immediately preceding ___________, 2004.

Dated: _______________________      Signature:_________________________________

                                    Signature Guarantee:_______________________

Note: The signature to this Option to Elect Repayment must correspond with the
name as written upon the face of the within Debenture without alteration or
enlargement or any change whatsoever.

                               SIGNATURE GUARANTEE

         Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

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                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Debenture to:
_______________________________________________________________________________
_______________________________________________________________________________

(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

(Insert address and zip code of assignee)

and irrevocably appoints

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
agent to transfer this Debenture on the books of the Company. The agent may
substitute another to act for him or her.

Date: _____________________________________

                                      Signature:
                                      _________________________________Signature
                                      Guarantee:___________________________

(Sign exactly as your name appears on the other side of this Debenture)

                               SIGNATURE GUARANTEE

         Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such

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other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                                  ARTICLE VII
                          ORIGINAL ISSUE OF DEBENTURES

                 Section 7.1       Original Issue of Debentures.

         Debentures in the aggregate principal amount of $200,000,000 (or,
$230,000,000, if the Underwriters' over-allotment option is exercised in full)
may from time to time, upon execution of this First Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Debentures to or upon the
written order of the Company pursuant to Section 2.2 of the Base Indenture
without any further action by the Company.

         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
Debentures as of the end of the 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 VIII
                                  MISCELLANEOUS

                 Section 8.1       Ratification of Indenture.

         The Indenture as supplemented by this First Supplemental Indenture, is
in all respects ratified and confirmed, and this First Supplemental Indenture
shall be deemed part of the Indenture in the manner and to the extent herein and
therein provided.

                 Section 8.2       Trustee Not Responsible for Recitals.

         The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
First Supplemental Indenture.

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                 Section 8.3       New York Law to Govern.

         THIS FIRST SUPPLEMENTAL INDENTURE AND EACH DEBENTURE SHALL, PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BE GOVERNED BY THE LAW
OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS
THEREOF (OTHER THAN SUCH SECTION 5-1401).

                 Section 8.4       Separability.

         In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, then, to the extent permitted
by law, such invalidity, illegality or unenforceability shall not affect any
other provisions of this First Supplemental Indenture or of the Debentures, but
this First Supplemental Indenture and the Debentures shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.

                 Section 8.5       Counterparts.

         This First Supplemental 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.

                 Section 8.6       Provisions of Base Indenture Not Applicable.

         The provisions of Section 3.9 and Article XI of the Base Indenture
shall not apply to the Debentures.

                                   ARTICLE IX
                                   REMARKETING

                 Section 9.1       Initial Remarketing Procedures

             (a) The Company will request, not later than seven nor more than 15
         calendar days prior to the Initial Remarketing Date that the Clearing
         Agency notify the Holders of the Debentures and the Holders of
         Corporate Units and Treasury Units of the Initial Remarketing.

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             (b) Not later than 5:00 P.M., New York City time, on the second
         Business Day immediately preceding the Initial Remarketing Date, each
         Holder of the Debentures not constituting components of Corporate Units
         may elect to have Debentures held by such Holder remarketed. Holders of
         Debentures that are not a component of Corporate Units shall give
         notice of their election to have such Debentures remarketed to the
         Custodial Agent pursuant to the Pledge Agreement. Any such notice shall
         be irrevocable after 5:00 P.M., New York City time, on the second
         Business Day immediately preceding the Initial Remarketing Date and may
         not be conditioned upon the level at which the Reset Rate is
         established. Promptly after 5:30 P.M., New York City time, on such
         second Business Day, the Trustee, based on the notices received by it
         prior to such time (including notices from the Purchase Contract Agent
         as to Purchase Contracts for which Cash Settlement has been elected),
         shall notify the Company and the Remarketing Agent of the number of
         Debentures to be tendered for remarketing. Under Section 5.3 of the
         Purchase Contract Agreement, Debentures that constitute components of
         Corporate Units will be remarketed as provided therein and in this
         Section 9.1. The Debentures constituting components of Corporate Units
         shall be deemed tendered, notwithstanding any failure by the Holder of
         such Corporate Units to deliver or properly deliver such Debentures to
         the Remarketing Agent for purchase.

             (c) The right of each Holder to have Debentures tendered for
         purchase shall be limited to the extent that (i) the Remarketing Agent
         conducts a remarketing pursuant to the terms of the Remarketing
         Agreement, (ii) Debentures tendered have not been called for
         redemption, (iii) the Remarketing Agent is able to find a purchaser or
         purchasers for tendered Debentures at a price per Debenture such that
         the aggregate price for the Applicable Principal Amount of Debentures
         is not less than 100% of the Treasury Portfolio Purchase Price, and
         (iv) such purchaser or purchasers deliver the purchase price therefor
         to the Remarketing Agent as and when required.

             (d) On the Initial Remarketing Date, the Remarketing Agent shall
         use reasonable efforts to remarket, at a price per Debenture such that
         the aggregate price for the Applicable Principal Amount of Debentures
         is equal to approximately 100.5% of the Treasury Portfolio Purchase
         Price, Debentures tendered or deemed tendered for purchase.

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<PAGE>   27

             (e) If there are no Corporate Units outstanding and none of the
         Holders elect to have Debentures held by them remarketed, the Reset
         Rate shall be the rate determined by the Reset Agent, subject to the
         terms of the Remarketing Agreement, as the rate that would have been
         established had a remarketing been held on the Initial Remarketing
         Date.

             (f) If the Remarketing Agent has determined that it will be able to
         remarket all Debentures tendered or deemed tendered prior to 4:00 P.M.,
         New York City time, on the Initial Remarketing Date, the Reset Agent,
         subject to the terms of the Remarketing Agreement, shall determine the
         Reset Rate.

             (g) If, by 4:00 P.M., New York City time, on the Initial
         Remarketing Date, the Remarketing Agent is unable to remarket all
         Debentures tendered or deemed tendered for purchase or if the Initial
         Remarketing shall not have occurred because a condition precedent to
         the Remarketing shall not have been fulfilled, a failed remarketing
         ("Failed Initial Remarketing") shall be deemed to have occurred and the
         Remarketing Agent shall so advise by telephone the Collateral Agent,
         Company, Trustee, and Clearing Agency.

             (h) By approximately 4:30 P.M., New York City time, on the Initial
         Remarketing Date, provided that there has not been a Failed Initial
         Remarketing, the Remarketing Agent shall advise, by telephone (i) the
         Collateral Agent, the Company, Trustee, and Clearing Agency of the
         Reset Rate determined in the Initial Remarketing and the aggregate
         principal amount of Debentures sold in the Initial Remarketing, (ii)
         each purchaser (or the Clearing Agency Participant thereof) of the
         Reset Rate and the aggregate principal amount of Debentures such
         purchaser is to purchase and (iii) each purchaser to give instructions
         to its Clearing Agency Participant to pay the purchase price on
         ___________, 2003 in same day funds against delivery of the Debentures
         purchased through the facilities of the Clearing Agency.

             (i) In accordance with the Clearing Agency's normal procedures, on
         ________, 2003, the transactions described above with respect to each
         Debenture tendered for purchase and sold in the Initial Remarketing
         shall be executed through the Clearing Agency, and the accounts of the
         respective Clearing Agency Participants shall be debited and credited
         and such Debentures delivered by book entry as necessary to effect
         purchases and sales of such Debentures. The Clearing Agency shall make
         payment in accordance with its normal procedures.

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<PAGE>   28

             (j) If any Holder selling Debentures in the Initial Remarketing
         fails to deliver such Debentures, the Clearing Agency Participant of
         such selling Holder and of any other Person that was to have purchased
         Debentures in the Initial Remarketing may deliver to any such other
         Person an aggregate principal amount of Debentures that is less than
         the aggregate principal amount of Debentures that otherwise was to be
         purchased by such Person. In such event, the aggregate principal amount
         of Debentures to be so delivered shall be determined by such Clearing
         Agency Participant, and delivery of such lesser aggregate principal
         amount of Debentures shall constitute good delivery.

             (k) The Remarketing Agent is not obligated to purchase any
         Debentures in the Initial Remarketing or otherwise. Neither the Trust,
         any Trustee, the Company nor the Remarketing Agent shall be obligated
         in any case to provide funds to make payment upon tender of Debentures
         for remarketing.

             (l) The tender and settlement procedures set in this Section 9.1,
         including provisions for payment by purchasers of Debentures in the
         Initial Remarketing, shall be subject to modification, notwithstanding
         any provision to the contrary set forth herein, to the extent required
         by the Clearing Agency or if the book-entry system is no longer
         available for the Debentures at the time of the Initial Remarketing, to
         facilitate the tendering and remarketing of Debentures in certificated
         form. In addition, the Remarketing Agent may, notwithstanding any
         provision to the contrary set forth herein, modify the settlement
         procedures set forth herein in order to facilitate the settlement
         process.

             (m) Anything herein to the contrary notwithstanding, the Reset Rate
         shall in no event exceed the maximum rate permitted by applicable law
         and, as provided in the Remarketing Agreement, neither the Remarketing
         Agent nor the Reset Agent shall have any obligation to determine
         whether there is any limitation under applicable law on the Reset Rate
         or, if there is any such limitation, the maximum permissible Reset Rate
         on the Debentures and they shall rely solely upon written notice from
         the Company (which the Company agrees to provide prior to the 10th
         Business Day before ________, 2003) as to whether or not there is any
         such limitation and, if so, the maximum permissible Reset Rate.

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<PAGE>   29

                 Section 9.2       Secondary Remarketing Procedures.

             (a) If a Failed Initial Remarketing has occurred, the Company will
         request, not later than seven nor more than 15 calendar days prior to
         the Secondary Remarketing Date that the Clearing Agency notify the
         Holders of the Debentures and the Holders of Corporate Units and
         Treasury Units of the Secondary Remarketing and of the procedures that
         must be followed if a Holder of Debentures wishes to exercise such
         Holder's rights with respect to the Put Option if there is a Failed
         Secondary Remarketing.

             (b) Not later than 5:00 P.M., New York City time, on the second
         Business Day immediately preceding the Secondary Remarketing Date, each
         Holder of the Debentures may elect to have Debentures held by such
         Holder remarketed. Under Section 5.4 of the Purchase Contract
         Agreement, Holders of Corporate Units that do not give notice of
         intention to make a Cash Settlement of their related Purchase Contracts
         shall be deemed to have consented to the disposition of the Debentures
         constituting a component of such Corporate Units. Holders of Debentures
         that are not a component of Corporate Units shall give notice of their
         election to have such Debentures remarketed to the Custodial Agent
         pursuant to the Pledge Agreement. Any such notice shall be irrevocable
         after 5:00 P.M., New York City time, on the second Business Day
         immediately preceding the Secondary Remarketing Date and may not be
         conditioned upon the level at which the Reset Rate is established.
         Promptly after 5:30 P.M., New York City time, on such second Business
         Day, the Trustee, based on the notices received by it prior to such
         time (including notices from the Purchase Contract Agent as to Purchase
         Contracts for which Cash Settlement has been elected), shall notify the
         Company and the Remarketing Agent of the number of Debentures to be
         tendered for remarketing.

             (c) If any Holder of Corporate Units does not give a notice of its
         intention to make a Cash Settlement or gives a notice of election to
         tender Debentures as described in Section 9.2(b), the Debentures of
         such Holder shall be deemed tendered, notwithstanding any failure by
         such Holder to deliver or properly deliver such Debentures to the
         Remarketing Agent for purchase.

             (d) The right of each Holder to have Debentures tendered for
         purchase shall be limited to the extent that (i) the Remarketing Agent
         conducts a remarketing pursuant to the terms of the Remarketing
         Agreement, (ii)

                                       26
<PAGE>   30

         Debentures tendered have not been called for redemption, (iii) the
         Remarketing Agent is able to find a purchaser or purchasers for
         tendered Debentures at a price of not less than 100% of the principal
         amount thereof, and (iv) such purchaser or purchasers deliver the
         purchase price therefor to the Remarketing Agent as and when required.

             (e) If a Failed Initial Remarketing has occurred, on the Secondary
         Remarketing Date, the Remarketing Agent shall use reasonable efforts to
         remarket, at a price equal to approximately 100.5% of the aggregate
         principal amount thereof, Debentures tendered or deemed tendered for
         purchase.

             (f) If none of the Holders elect or are deemed to have elected to
         have Debentures held by them remarketed, the Reset Rate shall be the
         rate determined by the Reset Agent, subject to the terms of the
         Remarketing Agreement, as the rate that would have been established had
         a remarketing been held on the Secondary Remarketing Date.

             (g) If the Remarketing Agent has determined that it will be able to
         remarket all Debentures tendered or deemed tendered prior to 4:00 P.M.,
         New York City time, on the Secondary Remarketing Date, the Reset Agent
         shall, subject to the terms of the Remarketing Agreement, determine the
         Reset Rate.

             (h) If, by 4:00 P.M., New York City time, on the Secondary
         Remarketing Date, the Remarketing Agent is unable to remarket all
         Debentures tendered or deemed tendered for purchase or if the Secondary
         Remarketing shall not have occurred because a condition precedent to
         the Secondary Remarketing shall not have been fulfilled, a failed
         remarketing ("Failed Secondary Remarketing") shall be deemed to have
         occurred and the Remarketing Agent shall so advise by telephone the
         Collateral Agent, Company, Trustee, and Clearing Agency.

             (i) By approximately 4:30 P.M., New York City time, on the
         Secondary Remarketing Date, provided that there has not been a Failed
         Secondary Remarketing, the Remarketing Agent shall advise, by telephone
         (i) the Collateral Agent, the Company, Trustee, and Clearing Agency of
         the Reset Rate determined in the Secondary Remarketing and the
         aggregate principal amount of Debentures sold in the Secondary
         Remarketing, (ii) each purchaser (or the Clearing Agency Participant
         thereof) of the Reset Rate and the aggregate principal amount of
         Debentures such purchaser is to purchase

                                       27
<PAGE>   31

         and (iii) each purchaser to give instructions to its Clearing Agency
         Participant to pay the purchase price on the Purchase Contract
         Settlement Date in same day funds against delivery of the Debentures
         purchased through the facilities of the Clearing Agency.

             (j) In accordance with the Clearing Agency's normal procedures, on
         the Purchase Contract Settlement Date, the transactions described above
         with respect to each Debenture tendered for purchase and sold in the
         Secondary Remarketing shall be executed through the Clearing Agency,
         and the accounts of the respective Clearing Agency Participants shall
         be debited and credited and such Debentures delivered by book entry as
         necessary to effect purchases and sales of such Debentures. The
         Clearing Agency shall make payment in accordance with its normal
         procedures.

             (k) If any Holder selling Debentures in the Secondary Remarketing
         fails to deliver such Debentures, the Clearing Agency Participant of
         such selling Holder and of any other Person that was to have purchased
         Debentures in the Secondary Remarketing may deliver to any such other
         Person an aggregate principal amount of Debentures that is less than
         the aggregate principal amount of Debentures that otherwise was to be
         purchased by such Person. In such event, the aggregate principal amount
         of Debentures to be so delivered shall be determined by such Clearing
         Agency Participant, and delivery of such lesser aggregate principal
         amount of Debentures shall constitute good delivery.

             (l) The Remarketing Agent is not obligated to purchase any
         Debentures in the Secondary Remarketing or otherwise. Neither the
         Trust, any Trustee, the Company nor the Remarketing Agent shall be
         obligated in any case to provide funds to make payment upon tender of
         Debentures for remarketing.

             (m) The tender and settlement procedures set in this Section 9.2,
         including provisions for payment by purchasers of Debentures in the
         Secondary Remarketing, shall be subject to modification,
         notwithstanding any provision to the contrary set forth herein, to the
         extent required by the Clearing Agency or if the book-entry system is
         no longer available for the Debentures at the time of the Secondary
         Remarketing, to facilitate the tendering and remarketing of Debentures
         in certificated form. In addition, the Remarketing Agent may,
         notwithstanding any provision to the contrary set forth herein, modify
         the settlement procedures set forth herein in order to facilitate the
         settlement process.

                                       28
<PAGE>   32

             (n) Anything herein to the contrary notwithstanding, the Reset Rate
         shall in no event exceed the maximum rate permitted by applicable law
         and, as provided in the Remarketing Agreement, neither the Remarketing
         Agent nor the Reset Agent shall have any obligation to determine
         whether there is any limitation under applicable law on the Reset Rate
         or, if there is any such limitation, the maximum permissible Reset Rate
         on the Debentures and they shall rely solely upon written notice from
         the Company (which the Company agrees to provide prior to the 10th
         Business Day before the Purchase Contract Settlement Date) as to
         whether or not there is any such limitation and, if so, the maximum
         permissible Reset Rate.

                                       29
<PAGE>   33

         IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed by their respective officers
thereunto duly authorized, on the date or dates indicated in the acknowledgments
and as of the day and year first above written.

                                      NRG ENERGY, INC., as Issuer

                                      By: __________________________
                                      Name:
                                      Title:

Attest:

By: ________________________
Name:
Title:

                                      _______________________________,
                                      as Trustee

                                      By: ____________________________
                                      Name:
                                      Title:

Attest:

By: ________________________
Name:
Title:

                                       30

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