Document:

<PAGE>
                                                                     Exhibit 4.2

                        AMENDED AND RESTATED DECLARATION

                                    OF TRUST

                       PUGET SOUND ENERGY CAPITAL TRUST II

                            Dated as of May 18, 2001
<PAGE>

                                    CONTENTS
<TABLE>
<S>                                                                                        <C>
CROSS-REFERENCE TABLE..................................................................     v
ARTICLE I    INTERPRETATION AND DEFINITIONS............................................     1
    SECTION 1.1    Definitions.........................................................     1
ARTICLE II   TRUST INDENTURE ACT.......................................................     8
    SECTION 2.1    Trust Indenture Act; Application....................................     8
    SECTION 2.2    Lists of Holders of Securities......................................     8
    SECTION 2.3    Reports by the Property Trustee.....................................     9
    SECTION 2.4    Periodic Reports to Property Trustee................................     9
    SECTION 2.5    Evidence of Compliance with Conditions Precedent....................     9
    SECTION 2.6    Events of Default; Waiver...........................................     9
    SECTION 2.7    Event of Default; Notice............................................    11
ARTICLE III  ORGANIZATION..............................................................    12
    SECTION 3.1    Name................................................................    12
    SECTION 3.2    Office..............................................................    12
    SECTION 3.3    Purpose.............................................................    12
    SECTION 3.4    Authority...........................................................    12
    SECTION 3.5    Title to Property of the Trust......................................    13
    SECTION 3.6    Powers and Duties of the Regular Trustees...........................    13
    SECTION 3.7    Prohibition of Actions by the Trust and the Trustees................    16
    SECTION 3.8    Powers and Duties of the Property Trustee...........................    17
</TABLE>

                                      -i-
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<TABLE>
<S>                                                                                        <C>
    SECTION 3.9    Duties and Responsibilities of the Property Trustee.................    19
    SECTION 3.10   Certain Rights of Property Trustee..................................    21
    SECTION 3.11   Delaware Trustee....................................................    23
    SECTION 3.12   Execution of Documents..............................................    23
    SECTION 3.13   Not Responsible for Recitals or Issuance of Securities..............    23
    SECTION 3.14   Duration of Trust...................................................    23
    SECTION 3.15   Mergers.............................................................    24
ARTICLE IV   SPONSOR...................................................................    25
    SECTION 4.1    Sponsor's Purchase of Common Securities.............................    25
    SECTION 4.2    Responsibilities of the Sponsor.....................................    26
ARTICLE V    TRUSTEES..................................................................    26
    SECTION 5.1    Number of Trustees..................................................    26
    SECTION 5.2    Delaware Trustee....................................................    27
    SECTION 5.3    Property Trustee; Eligibility.......................................    27
    SECTION 5.4    Qualifications of Regular Trustees and Delaware Trustee Generally...    28
    SECTION 5.5    Initial Trustees....................................................    28
    SECTION 5.6    Appointment, Removal and Resignation of Trustees....................    28
    SECTION 5.7    Vacancies among Trustees............................................    30
    SECTION 5.8    Effect of Vacancies.................................................    30
    SECTION 5.9    Meetings............................................................    30
    SECTION 5.10   Delegation of Power.................................................    31
</TABLE>

                                      -ii-
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<TABLE>
<S>                                                                                        <C>
    SECTION 5.11   Merger, Conversion, Consolidation or Succession to Business.........    31
ARTICLE VI   DISTRIBUTIONS.............................................................    32
    SECTION 6.1    Distributions.......................................................    32
ARTICLE VII  ISSUANCE OF SECURITIES....................................................    32
    SECTION 7.1    General Provisions Regarding Securities.............................    32
ARTICLE VIII TERMINATION OF TRUST......................................................    33
    SECTION 8.1    Dissolution and Termination of Trust................................    33
ARTICLE IX   TRANSFER OF INTERESTS.....................................................    34
    SECTION 9.1    Transfer of Securities..............................................    34
    SECTION 9.2    Transfer of Certificates............................................    35
    SECTION 9.3    Deemed Security Holders.............................................    35
    SECTION 9.4    Book Entry Interests................................................    35
    SECTION 9.5    Notices to Clearing Agency..........................................    36
    SECTION 9.6    Appointment of Successor Clearing Agency............................    36
    SECTION 9.7    Definitive Preferred Security Certificates..........................    37
    SECTION 9.8    Mutilated, Destroyed, Lost or Stolen Certificates...................    37
ARTICLE X    LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS......    38
    SECTION 10.1   Liability...........................................................    38
    SECTION 10.2   Exculpation.........................................................    38
    SECTION 10.3   Fiduciary Duty......................................................    39
    SECTION 10.4   Indemnification.....................................................    40
</TABLE>

                                     -iii-
<PAGE>

<TABLE>
<S>                                                                                        <C>
    SECTION 10.5   Businesses..........................................................    43
ARTICLE XI   ACCOUNTING................................................................    44
    SECTION 11.1   Fiscal Year.........................................................    44
    SECTION 11.2   Certain Accounting Matters..........................................    44
    SECTION 11.3   Banking.............................................................    44
    SECTION 11.4   Withholding.........................................................    45
ARTICLE XII  AMENDMENTS AND MEETINGS...................................................    45
    SECTION 12.1   Amendments..........................................................    45
    SECTION 12.2   Meetings of the Holders of Securities; Action by Written Consent....    47
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE..................    49
    SECTION 13.1   Representations and Warranties of Property Trustee..................    49
    SECTION 13.2   Representation and Warranties of Delaware Trustee...................    49
ARTICLE XIV  MISCELLANEOUS.............................................................    50
    SECTION 14.1   Notices.............................................................    50
    SECTION 14.2   Governing Law.......................................................    51
    SECTION 14.3   Intention of the Parties............................................    52
    SECTION 14.4   Headings............................................................    52
    SECTION 14.5   Successors and Assigns..............................................    52
    SECTION 14.6   Partial Enforceability..............................................    52
    SECTION 14.7   Counterparts........................................................    52
    SECTION 14.8   Recitals............................................................    52
</TABLE>

                                      -iv-
<PAGE>

Annex
-----
      Annex I - - Terms of 8.40% Trust Originated Preferred and
        Common Securities................................................   A-1

Exhibits
--------
      Exhibit A-1 - - Form of Preferred Security Certificate.............  A1-1
      Exhibit A-2 - - Form of Common Security Certificate................   A-2
      Exhibit B..........................................................   B-1
      Exhibit C..........................................................   C-1

                                      -v-
<PAGE>

                             CROSS-REFERENCE TABLE*

Section of Trust Indenture Act
of 1939, as amended                                       Section of Declaration
-------------------                                       ----------------------
310(a)................................................................... 5.3(a)
310(c)............................................................. Inapplicable
311(c)............................................................. Inapplicable
312(a)................................................................... 2.2(a)
312(b)................................................................... 2.2(b)
313......................................................................... 2.3
314(a)...................................................................... 2.4
314(b)............................................................. Inapplicable
314(c)...................................................................... 2.5
314(d)............................................................. Inapplicable
314(f)............................................................. Inapplicable
315(a)................................................................... 3.9(b)
315(c)................................................................... 3.9(a)
315(d)................................................................... 3.9(a)
316(a).................................................................. Annex I
316(c)................................................................... 3.6(e)

_____________________
     *This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.

                                     -vi-
<PAGE>

                             AMENDED AND RESTATED
                             DECLARATION OF TRUST
                                      OF
                      PUGET SOUND ENERGY CAPITAL TRUST II

                                 May 18, 2001

     AMENDED AND RESTATED DECLARATION OF TRUST of Puget Sound Energy Capital
Trust II (this "Declaration") dated as of May 18, 2001, by the Trustees (as
defined herein), the Sponsor (as defined herein) and by the holders, from time
to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to this Declaration;

     WHEREAS, the Regular Trustees, the Delaware Trustee and the Sponsor created
Puget Sound Energy Capital Trust II (the "Trust"), a statutory business trust
under the Business Trust Act (as defined herein) pursuant to a Declaration of
Trust dated as of October 3, 2000 (the "Original Declaration"), and a
Certificate of Trust filed with the Secretary of State of the State of Delaware
on October 3, 2000 (the "Certificate of Trust"), for the sole purpose of issuing
and selling certain securities representing undivided beneficial interests in
the assets of the Trust and investing the proceeds thereof in certain Debentures
of the Debenture Issuer;

     WHEREAS, as of the date hereof, no interests in the Trust have been issued;
and

     WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration.

     NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.

                   ARTICLE I INTERPRETATION AND DEFINITIONS

SECTION 1.1    Definitions

     Unless the context otherwise requires:
<PAGE>

     (a)  Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;

     (b)  a term defined anywhere in this Declaration has the same meaning
throughout;

     (c)  all references to "the Declaration" or "this Declaration" are to this
Declaration as modified, supplemented or amended from time to time;

     (d)  all references in this Declaration to Articles, Sections, Annexes and
Exhibits are to Articles and Sections of and Annexes and Exhibits to this
Declaration unless otherwise specified, and all references in this Declaration
to the "terms of the Securities" are to the terms of the Securities as set forth
in Annex I hereto;

     (e)  a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and

     (f)  a reference to the singular includes the plural and vice versa.

     "Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.

     "Authorized Officer" of a Person means any Person that is authorized to
bind such Person.

     "Book Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.

     "Business Day" means any day other than a day on which banking institutions
in New York, New York or Chicago, Illinois are authorized or required by law to
close.

     "Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. C. ' 3801, et seq., as it may be amended from time to time, or any
successor legislation.

     "Certificate" means a Common Security Certificate or a Preferred Security
Certificate.

     "Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the

                                      -2-
<PAGE>

Preferred Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Preferred Securities.

     "Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.

     "Closing Date" means May 24, 2001.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.

     "Commission" means the Securities and Exchange Commission.

     "Common Securities Guarantee" means the guarantee agreement to be dated as
of May 18, 2001 of the Sponsor in respect of the Common Securities.

     "Common Security" has the meaning specified in Section 7.1.

     "Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.

     "Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.

     "Corporate Trust Office" means the office of the Property Trustee at which
the corporate trust business of the Preferred Guarantee Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 1 Bank One Plaza, Suite IL1-0126,
Chicago, IL 60670-0126

     "Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.

     "Debenture Issuer" means Puget Sound Energy, Inc. in its capacity as issuer
of the series of Debentures to be acquired by the Trust.

                                      -3-
<PAGE>

     "Debenture Trustee" means Bank One Trust Company, N.A., as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.

     "Debentures" means the series of Debentures to be issued by the Debenture
Issuer under the Indenture to be held by the Property Trustee, a specimen
certificate for such series of Debentures being Exhibit B.

     "Definitive Preferred Security Certificates" has the meaning set forth in
Section 9.4.

     "Delaware Trustee" has the meaning set forth in Section 5.2.

     "Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.

     "DTC" means The Depository Trust Company, the initial Clearing Agency.

     "Event of Default" in respect of the Securities means an Event of Default
(as defined in the Indenture) has occurred and is continuing in respect of the
Debentures.

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

     "Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).

     "Global Certificate" has the meaning set forth in Section 9.4.

     "Holder" means a Person in whose name a Certificate representing a Security
is registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.

     "Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.

     "Indenture" means the Indenture dated as of May 18, 2001, between the
Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.

     "Investment Company" means an investment company as defined in the
Investment Company Act.

                                      -4-
<PAGE>

     "Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.

     "Investment Company Event" has the meaning set forth in Section 4(c) of
Annex I hereto.

     "Legal Action" has the meaning set forth in Section 3.6(g).

     "Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Securities or by the Trust Indenture Act, Holder(s)
of outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all outstanding Securities of the relevant class.

     "Ministerial Action" has the meaning set forth in Section 4(c) of Annex I.

     "Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person.  Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:

     (a)  a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;

     (b)  a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;

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

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

     "Paying Agent" has the meaning specified in Section 3.8(i).

                                      -5-
<PAGE>

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

     "Preferred Guarantee Trustee" means Bank One Trust Company, N.A., as
trustee under the Preferred Securities Guarantee until a successor is appointed
thereunder, and thereafter means such successor trustee.

     "Preferred Securities Guarantee" means the guarantee agreement to be dated
as of May 18, 2001 of the Sponsor in respect of the Preferred Securities.

     "Preferred Security" has the meaning specified in Section 7.1.

     "Preferred Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).

     "Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-l.

     "Pricing Agreement" means the pricing agreement between the Trust, the
Debenture Issuer, and the underwriters designated by the Regular Trustees with
respect to the offer and sale of the Preferred Securities.

     "Property Trustee" means the Trustee meeting the eligibility requirements
set forth in Section 5.3.

     "Property Trustee Account" has the meaning set forth in Section 3.8(c).

     "Quorum" means a majority of the Regular Trustees or, if there are only two
Regular Trustees, both of them, or if there is only one Regular Trustee, such
Regular Trustee.

     "Regular Trustee" means any Trustee other than the Property Trustee and the
Delaware Trustee.

                                      -6-
<PAGE>

     "Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.

     "Responsible Officer" means, with respect to the Property Trustee, any
officer assigned to administer corporate trust matters and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.

     "Rule 3a-5" means Rule 3a-5 under the Investment Company Act.

     "Securities" means the Common Securities and the Preferred Securities.

     "Securities Act" means the Securities Act of 1933, as amended from time to
time or any successor legislation.

     "Special Event" has the meaning set forth in Section 4(c) of Annex I.

     "Sponsor" means Puget Sound Energy, Inc., a Washington corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.

     "Successor Property Trustee" has the meaning set forth in Section 5.6(b).

     "Super Majority" has the meaning set forth in Section 2.6(a)(ii).

     "Tax Event" has the meaning set forth in Section 4(c) of Annex I.

     "10% in liquidation amount of the Securities" means, except as provided in
the terms of the Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Preferred Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.

     "Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

                                      -7-
<PAGE>

     "Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.

     "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.

     "Underwriting Agreement" means the Underwriting Agreement for the offering
and sale of Preferred Securities in the form of Exhibit C including any Pricing
Agreement as contemplated therein.

                        ARTICLE II TRUST INDENTURE ACT

SECTION 2.1    Trust Indenture Act; Application

     (a)  This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration and shall, to the extent
applicable, be governed by such provisions.

     (b)  The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.

     (c)  If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

     (d)  The application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.

SECTION 2.2    Lists of Holders of Securities

     (a)  Each of the Sponsor and the Regular Trustees, on behalf of the Trust,
shall provide the Property Trustee (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders of the Securities
("List of Holders") as of such record date, provided that neither the Sponsor
nor the Regular Trustees, on behalf of the Trust, shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given

                                      -8-
<PAGE>

to the Property Trustee by the Sponsor and the Regular Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Property Trustee. The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.

     (b)  The Property Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.

SECTION 2.3    Reports by the Property Trustee

     Within 60 days after May 1 of each year, the Property Trustee shall provide
to the Holders of the Preferred Securities such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Property Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.

SECTION 2.4    Periodic Reports to Property Trustee

     Each of the Sponsor and the Regular Trustees, on behalf of the Trust, shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.

SECTION 2.5    Evidence of Compliance with Conditions Precedent

     Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Declaration that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act.  Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.

SECTION 2.6    Events of Default; Waiver

     (a)  The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any

                                      -9-
<PAGE>

past Event of Default in respect of the Preferred Securities and its
consequences, provided that, if the underlying Event of Default under the
Indenture:

          (i)  is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or

          (ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super Majority") to be
waived under the Indenture, the Event of Default under the Declaration may only
be waived by the vote of the Holders of at least the proportion in liquidation
amount of the Preferred Securities that the relevant Super Majority represents
of the aggregate principal amount of the Debentures outstanding.

     The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.  Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon.  Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.

     (b)  The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:

          (i)  is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default under the
Declaration as provided below in this Section 2.6(b), the Event of Default under
the Declaration shall also not be waivable; or

          (ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this Section 2.6(b),
the Event of Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the Common
Securities that the

                                      -10-
<PAGE>

relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding;

provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Preferred Securities and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee in accordance with the terms of
the Securities.  The foregoing provisions of this Section 2.6(b) shall be in
lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and
such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are
hereby expressly excluded from this Declaration and the Securities, as permitted
by the Trust Indenture Act.  Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Event of Default with respect
to the Common Securities or impair any right consequent thereon.

     (c)  A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities constitutes
a waiver of the corresponding Event of Default under this Declaration.  The
foregoing provisions of this Section 2.6(c) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.

SECTION 2.7    Event of Default; Notice

     (a)  The Property Trustee shall, within 90 days after the occurrence of an
event of Default actually known to a Responsible Officer of the Property
Trustee, transmit by mail, first class postage prepaid, to the Holders of the
Securities, notices of all such defaults with respect to the Securities, unless
such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Debentures or in the payment of any
sinking fund installment established for the Debentures, the

                                      -11-
<PAGE>

Property Trustee shall be protected in withholding such notice if and so long as
a Responsible Officer of the Property Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Securities.
Such notice shall state that such Event of Default also constitutes a
Declaration event of default.

     (b)  The Property Trustee shall not be deemed to have knowledge of any
default except:

          (i)  a default under Sections 5.1(a) and 5.1(b) of the Indenture; or

          (ii) any default as to which the Property Trustee shall have received
written notice or of which a Responsible Officer of the Property Trustee charged
with the administration of the Declaration shall have actual knowledge.

                          ARTICLE III   ORGANIZATION

SECTION 3.1    Name

     The Trust is named "Puget Sound Energy Capital Trust II," as such name may
be modified from time to time by the Regular Trustees following written notice
to the Holders of Securities.  The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.

SECTION 3.2    Office

     The address of the principal office of the Trust is c/o Puget Sound Energy,
Inc. 411 108/th/ Avenue N.E., Bellevue, Washington 98004-5515.  On ten Business
Days' prior written notice to the Holders of Securities, the Regular Trustees
may designate another principal office.

SECTION 3.3    Purpose

     The exclusive purposes and functions of the Trust are (a) to issue and sell
Securities and use the proceeds from such sale to acquire the Debentures, and
(b) except as otherwise limited herein, to engage in only those other activities
necessary, appropriate, convenient or incidental thereto.  The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.

                                      -12-
<PAGE>

SECTION 3.4    Authority

     Subject to the limitations provided in this Declaration and to the specific
duties of the Property Trustee, the Regular Trustees shall have exclusive and
complete authority to carry out the purposes of the Trust.  An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee on
behalf of the Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust.  In dealing with the Trustees acting on behalf of
the Trust, no person shall be required to inquire into the authority of the
Trustees to bind the Trust.  Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.

SECTION 3.5    Title to Property of the Trust

     Legal title to all assets of the Trust shall be vested in the Property
Trustee (acting in such capacity) and shall be administered by the Property
Trustee for the Trust and for the benefit of the Trust and the Holders in
accordance with this Declaration.  The Holders shall not have legal title to any
part of the assets of the Trust, but shall have an undivided beneficial interest
in the assets of the Trust.

SECTION 3.6    Powers and Duties of the Regular Trustees

     The Regular Trustees shall have the exclusive power, duty and authority to
cause the Trust to engage in the following activities:

     (a)  to issue and sell the Preferred Securities and the Common Securities
in accordance with this Declaration; provided, however, that the Trust may issue
no more than one series of Preferred Securities and no more than one series of
Common Securities, and, provided further, that there shall be no interests in
the Trust other than the Securities, and the issuance of Securities shall be
limited to a one-time, simultaneous issuance of both the Preferred Securities
and Common Securities on the Closing Date;

     (b)  in connection with the issue and sale of the Preferred Securities to:

          (i)    execute and file with the Commission the registration statement
on Form S-3 prepared by the Sponsor, including any amendments thereto,
pertaining to, among other securities, the Preferred Securities;

          (ii)   execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary, appropriate, convenient
or advisable in order to qualify or register all or part of the Preferred
Securities in any State in which the Sponsor has determined to qualify or
register such Preferred Securities for sale;

                                      -13-
<PAGE>

          (iii)  execute and file an application, prepared by the Sponsor, to
the New York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred Securities;

          (iv)   execute and file with the Commission a registration statement
on Form 8-A, including any amendments thereto, prepared by the Sponsor, relating
to the registration of the Preferred Securities under Section 12(b) of the
Exchange Act; and

          (v)    execute and enter into the Underwriting Agreement providing for
the sale of the Preferred Securities;

     (c)  to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of the Common Securities;

     (d)  to give the Sponsor and the Property Trustee prompt written notice of
the occurrence of a Special Event; provided that the Regular Trustees shall
consult with the Sponsor and the Property Trustee before taking or refraining
from taking any Ministerial Action in relation to a Special Event;

     (e)  to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;

     (f)  to take all actions and perform such duties as may be required of the
Regular Trustees pursuant to the terms of the Securities;

     (g)  to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(f), the Property Trustee has
the exclusive power to bring such Legal Action;

                                      -14-
<PAGE>

     (h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;

     (i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;

     (j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;

     (k) to incur expenses that are necessary, appropriate, convenient or
incidental to carry out any of the purposes of the Trust;

     (l) to act as, or appoint another Person to act as, registrar and transfer
agent for the Securities;

     (m) to give prompt written notice to the Holders of the Securities of any
notice received from the Debenture Issuer of its election to defer payments of
interest on the Debentures by extending the interest payment period under the
Indenture;

     (n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;

     (o) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their discretion to be
necessary, desirable, convenient or incidental in carrying out the activities of
the Trust as set out in this Section 3.6, including, but not limited to:

         (i)   causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;

         (ii)  causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and

         (iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for United
States

                                      -15-
<PAGE>

federal income tax purposes, provided that such action does not materially
adversely affect the interests of Holders;

     (p) to take all action necessary to cause all applicable tax returns and
tax information reports that are required to be filed with respect to the Trust
to be duly prepared and filed by the Regular Trustees, on behalf of the Trust;
and

     (q) to execute all documents or instruments, perform all duties and powers,
and do all things for and on behalf of the Trust in all matters necessary or
incidental to the foregoing.

     The Regular Trustees must exercise the powers set forth in this Section 3.6
in a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3, and the Regular Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set forth in Section
3.3.

     Subject to this Section 3.6, the Regular Trustees shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.

     Any expenses incurred by the Regular Trustees pursuant to this Section 3.6
shall be paid by the Debenture Issuer.

SECTION 3.7    Prohibition of Actions by the Trust and the Trustees

     The Trust shall not, and the Trustees (including the Property Trustee)
shall cause the Trust not to, engage in any activity other than as required or
authorized by this Declaration.  In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall cause the Trust not to:

     (a) invest any proceeds received by the Trust from holding the Debentures,
but shall distribute all such proceeds to Holders of Securities pursuant to the
terms of this Declaration and of the Securities;

     (b) acquire any assets other than as expressly provided herein;

     (c) possess Trust property for other than a Trust purpose;

     (d) make any loans or incur any indebtedness other than loans represented
by the Debentures;

     (e) possess any power or otherwise act in such a way as to vary the Trust
assets or the terms of the Securities in any way whatsoever;

                                      -16-
<PAGE>

     (f) issue any securities or other evidences of beneficial ownership of, or
beneficial interest in, the Trust other than the Securities: or

     (g) other than as provided in this Declaration or Annex I, (A) direct the
time, method and place of exercising any trust or power conferred upon the
Debenture Trustee with respect to the Debentures, (B) waive any past default
that is waivable under the Indenture, (C) exercise any right to rescind or annul
any declaration that the principal of all the Debentures shall be due and
payable, or (D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless the
Trust shall have received an opinion of counsel to the effect that such
modification will not cause more than an insubstantial risk that for United
States federal income tax purposes the Trust will not be classified as a grantor
trust.

SECTION 3.8    Powers and Duties of the Property Trustee

     (a) The legal title to the Debentures shall be owned by and held of record
in the name of the Property Trustee (acting in such capacity) in trust for the
benefit of the Trust and the Holders of the Securities.  The right, title and
interest of the Property Trustee to the Debentures shall vest automatically in
each Person who may hereafter be appointed as Property Trustee in accordance
with Section 5.6.  Such vesting and cessation of title shall be effective
whether or not conveyancing documents with regard to the Debentures have been
executed and delivered.

     (b) The Property Trustee shall not transfer its right, title and interest
in the Debentures to the Regular Trustees or to the Delaware Trustee (if the
Property Trustee does not also act as Delaware Trustee).

     (c) The Property Trustee shall:

         (i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the Securities and,
upon the receipt of payments of funds made in respect of the Debentures held by
the Property Trustee, deposit such funds into the Property Trustee Account and
make payments to the Holders of the Preferred Securities and Holders of the
Common Securities from the Property Trustee Account in accordance with Section
6.1.  Funds in the Property Trustee Account shall be held uninvested until
disbursed in accordance with this Declaration.  The Property Trustee Account
shall be an account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness is at least equal to the rating assigned
to the Preferred Securities by a

                                      -17-
<PAGE>

"nationally recognized statistical rating organization," as that term is defined
for purposes of Rule 436(g)(2) under the Securities Act;

          (ii)   engage in such ministerial activities as shall be necessary,
appropriate, convenient or incidental to effect the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are redeemed
or mature; and

          (iii)  upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of Securities upon the occurrence of
certain special events (as may be defined in the terms of the Securities)
arising from a change in law or a change in legal interpretation or other
specified circumstances pursuant to the terms of the Securities.

     (d)  The Property Trustee shall take all actions and perform such duties as
may be specifically required of the Property Trustee pursuant to the terms of
the Securities.

     (e)  The Property Trustee shall hold the Preferred Securities Guarantee and
the Common Securities Guarantee, for the benefit of the Holders of the Preferred
Securities and the Common Securities, respectively.

     (f)  The Property Trustee shall take any Legal Action which arises out of
or in connection with an Event of Default of which a Responsible Officer of the
Property Trustee has actual knowledge or the Property Trustee's duties and
obligations under this Declaration or the Trust Indenture Act.

     (g)  The Property Trustee shall continue to serve as a Trustee until
either:

          (i)    the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or

          (ii)   a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.

     (h)  The Property Trustee shall have the legal power to exercise all of the
rights, powers and privileges of a holder of Debentures under the Indenture and,
if an Event of Default actually known to a Responsible Officer of the Property
Trustee occurs and is continuing, the Property Trustee shall, for the benefit of
Holders of the

                                      -18-
<PAGE>

Securities, enforce its rights as holder of the Debentures subject to the rights
of the Holders pursuant to the terms of such Securities.

     (i)  The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities, and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.

     (j)  Subject to this Section 3.8, the Property Trustee shall have none of
the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.

     The Property Trustee must exercise the powers set forth in this Section 3.8
in a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3, and the Property Trustee shall not take any action that is
inconsistent with the purposes and functions of the Trust set out in Section 3.3

SECTION 3.9    Duties and Responsibilities of the Property Trustee

     (a)  The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and no implied covenants shall be read into this Declaration against
the Property Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6) of which a Responsible Officer of
the Property Trustee has actual knowledge, the Property Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs;

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

          (i)  prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:

               (A)  the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration and the Property
Trustee shall not be liable except for the performance of such duties and
obligations as

                                      -19-
<PAGE>

are specifically set forth in this Declaration, and no implied covenants or
obligations shall be read into this Declaration against the Property Trustee;
and

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

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

     (iii)  the Property Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of
the Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Declaration;

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

     (v)    the Property Trustee's sole duty with respect to the custody, safe
keeping and physical preservation of the Debentures and the Property Trustee
Account shall be to deal with such property in a similar manner as the Property
Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act;

     (vi)   the Property Trustee shall have no duty or liability for or with
respect to the value, genuineness, existence or sufficiency of the Debentures or
the payment of any taxes or assessments levied thereon or in connection
therewith;

                                      -20-
<PAGE>

          (vii)  the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the Sponsor.
Money held by the Property Trustee need not be segregated from other funds held
by it except in relation to the Property Trustee Account maintained by the
Property Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and

          (viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with their respective
duties under this Declaration, nor shall the Property Trustee be liable for any
default or misconduct of the Regular Trustees or the Sponsor.

SECTION 3.10   Certain Rights of Property Trustee

     (a)  Subject to the provisions of Section 3.9:

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

          (ii)   any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;

          (iii)  whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Regular Trustees;

          (iv)   the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;

          (v)    the Property Trustee may consult with counsel of its choice or
other experts and the advice or opinion of such counsel and experts with respect
to legal matters or advice within the scope of such experts' area of expertise
shall be full and complete authorization and protection in respect of any action
taken, suffered or

                                      -21-
<PAGE>

omitted by it hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its Affiliates,
and may include any of its employees. The Property Trustee shall have the right
at any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;

          (vi)   the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request or
direction of any Holder, unless such Holder shall have provided to the Property
Trustee security and indemnity, reasonably satisfactory to the Property Trustee,
against the costs, expenses (including reasonable attorneys' fees and expenses
and the expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Property Trustee provided, that, nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Declaration;

          (vii)  the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolutions certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;

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

          (ix)   any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third party shall be required to
inquire as to the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action;

          (x)    whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any

                                      -22-
<PAGE>

remedy or right or taking any other action hereunder, the Property Trustee (i)
may request instructions from the Holders of the Securities which instructions
may only be given by the Holders of the same proportion in liquidation amount of
the Securities as would be entitled to direct the Property Trustee under the
terms of the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other action until
such instructions are received, and (iii) shall be protected in conclusively
relying on or acting in or accordance with such instructions; and

          (xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Declaration.

     (b)  No provision of this Declaration shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation.  No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.

SECTION 3.11   Delaware Trustee

     Notwithstanding any other provision of this Declaration other than Section
5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Trustees  described in this Declaration.  Except as set forth in Section 5.2,
the Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807(a) of the Business Trust Act.

SECTION 3.12   Execution of Documents

     Except as otherwise required by the Business Trust Act, any Regular Trustee
is authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.

SECTION 3.13   Not Responsible for Recitals or Issuance of Securities

     The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for

                                      -23-
<PAGE>

their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration or the
Securities.

SECTION 3.14   Duration of Trust

     The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall have existence until May 18, 2056.

SECTION 3.15   Mergers

     (a)  The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convert to, or convey, transfer or lease its properties and
assets substantially as an entirety to any business trust or other business
entity (as defined in the Business Trust Act), except as described in Section
3.15(b) and (c).

     (b)  The Trust may, with the consent of the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees and without the consent of
the Holders of the Securities, the Delaware Trustee or the Property Trustee,
consolidate, amalgamate, merge with or into, be replaced by or convey, transfer
or lease its properties and assets as an entirety or substantially as an
entirety to a trust organized as such under the laws of any State; provided
that:

          (i)    such successor entity (the "Successor Entity") either:

                 (A) expressly assumes all of the obligations of the Trust under
the Securities; or

                 (B) substitutes for the Securities other securities having
substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments upon liquidation,
redemption and otherwise;

          (ii)   the Debenture Issuer expressly acknowledges a trustee of the
Successor Entity that possesses the same powers and duties as the Property
Trustee as the Holder of the Debentures;

          (iii)  the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with any other organization on
which the Preferred Securities are then listed or quoted;

                                      -24-
<PAGE>

          (iv)   such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;

          (v)    such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the material rights,
preferences and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of such Holders' interests in the Preferred Securities as a result of
such merger, consolidation, amalgamation or replacement);

          (vi)   such Successor Entity has a purpose substantially identical to
that of the Trust;

          (vii)  prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust experienced in such
matters to the effect that:

                 (A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the material rights,
preferences and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the Holders' interest in the new entity); and

                 (B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be required to
register as an Investment Company; and

                 (C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be classified
as a grantor trust for United States federal income tax purposes; and

          (viii) the Sponsor guarantees the obligations of such Successor Entity
under the Successor Securities at least to the extent provided by the Preferred
Securities Guarantee.

     (c)  Notwithstanding Section 3.15(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities, consolidate,
amalgamate, merge with or into, convert to, be replaced by, or convey, transfer
or lease its properties and assets as an entirety or substantially as an
entirety to any other

                                      -25-
<PAGE>

entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, conversion or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.

                              ARTICLE IV SPONSOR

SECTION 4.1    Sponsor's Purchase of Common Securities

     On the Closing Date the Sponsor will purchase all of the Common Securities
issued by the Trust, in an amount at least equal to 3% of the capital of the
Trust, at the same time as the Preferred Securities are sold.

SECTION 4.2    Responsibilities of the Sponsor

     In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:

     (a) to prepare for filing by the Trust with the Commission a registration
statement on Form S-3 in relation to, among other securities, the Preferred
Securities, including any amendments thereto;

     (b) to determine the States in which to take appropriate action to qualify
or register for sale all or part of the Preferred Securities and to do any and
all such acts, other than actions which must be taken by the Trust, and advise
the Trust of actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems necessary
or advisable in order to comply with the applicable laws of any such States;

     (c) to prepare for filing by the Trust an application to the New York Stock
Exchange or any other national stock exchange or the Nasdaq National Market for
listing upon notice of issuance of any Preferred Securities;

     (d) to prepare for filing by the Trust with the Commission a registration
statement on Form 8-A relating to the registration of the Preferred Securities
under Section 12(b) of the Exchange Act, including any amendments thereto; and

     (e) to negotiate the terms of the Underwriting Agreement and Pricing
Agreement providing for the sale of the Preferred Securities.

                                      -26-
<PAGE>

                              ARTICLE V TRUSTEES

SECTION 5.1    Number of Trustees

     The number of Trustees initially shall be four (4), and:

     (a)  at any time before the issuance of any Securities, the Sponsor may, by
written instrument, increase or decrease the number of Trustees; and

     (b)  after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities.

provided that, in any case, the number of Trustees shall at least be four (4)
unless the Trustee that acts as the Property Trustee also acts as Delaware
Trustee pursuant to Section 5.2, in which case the number of Trustees, shall be
at least three (3).

SECTION 5.2    Delaware Trustee

     If required by the Business Trust Act, one Trustee (the "Delaware Trustee")
shall be:

     (a)  a natural person who is a resident of the State of Delaware; or

     (b)  if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law,

provided that, if the Property Trustee has a principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, then
the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall
have no application.

SECTION 5.3    Property Trustee; Eligibility

     (a)  There shall at all times be one Trustee which shall act as Property
Trustee which shall:

          (i)  not be an Affiliate of the Sponsor; and

          (ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or other Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to

                                      -27-
<PAGE>

exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia authority. If
such corporation or other Person publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section 5.3(a)(ii),
the combined capital and surplus of such corporation or other Person shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.

     (b)  If at any time the Property Trustee shall cease to be eligible to so
act under Section 5.3(a), the Property Trustee shall immediately resign in the
manner and with the effect set forth in Section 5.6(c).

     (c)  If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

     (d)  The Preferred Securities Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first provision
contained in Section 310(b) of the Trust Indenture Act.

SECTION 5.4    Qualifications of Regular Trustees and Delaware Trustee Generally

     Each Regular Trustee and the Delaware Trustee (unless the Property Trustee
also acts as Delaware Trustee) shall be either a natural person who is at least
21 years of age or a legal entity that shall act through one or more Authorized
Officers.

SECTION 5.5    Initial Trustees

     The initial Regular Trustees shall be:

          Richard L. Hawley                         Donald E. Gaines
          411 108/th/ Ave. N.E.                     411 108/th/ Ave. N.E.
          Bellevue, WA 98004-5515                   Bellevue, WA 980045515

     The initial Delaware Trustee shall be:

          Bank One Delaware, Inc.
          Three Christiana Center

                                      -28-
<PAGE>

            201 Walnut Street
            Wilmington, DE 19801

     The initial Property Trustee shall be:

            Bank One Trust Company, N.A.
            1 Bank One Plaza
            Suite IL1-0126
            Chicago, IL 60670-0126

SECTION 5.6    Appointment, Removal and Resignation of Trustees

     (a)    Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:

            (i)  until the issuance of any Securities, by written instrument
executed by the Sponsor; and

            (ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities.

     (b)(i) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.3 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor; and (ii) the Trustee that acts as Delaware
Trustee shall not be removed in accordance with this Section 5.6(a) until a
successor Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such Successor
Delaware Trustee and delivered to the Regular Trustees and the Sponsor.

     (c)    A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation.  Any
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing signed by the Trustee and delivered to the Sponsor
and the Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:

                                      -29-
<PAGE>

          (i)  No such resignation of the Trustee that acts as the Property
Trustee shall be effective:

               (A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor Property
Trustee and delivered to the Trust, the Sponsor and the resigning Property
Trustee; or

               (B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the Holders of the Securities; and

          (ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been appointed
and has accepted such appointment by instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee.

     (d)  The Holders of the Common Securities shall use their best efforts to
promptly appoint a Successor Delaware Trustee or Successor Property Trustee as
the case may be if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.6.

     (e)  If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and shall have accepted such appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Property Trustee or Delaware Trustee,
as applicable, may petition any court of competent jurisdiction for appointment
of a Successor Property Trustee or Successor Delaware Trustee.  Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Property Trustee or Successor Delaware Trustee, as the case may be.

     (f)  No Property Trustee or Delaware Trustee shall be liable for the acts
or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.

SECTION 5.7    Vacancies among Trustees

     If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur.  A resolution
certifying the existence of such vacancy by the Regular Trustee, if there is
one, or by each of the Regular Trustees, if there are two or, if there are more
than two, a majority of the Regular Trustees, shall be conclusive evidence of
the existence of such vacancy.  The vacancy shall be filled with a Trustee
appointed in accordance with Section 5.6.

                                      -30-
<PAGE>

SECTION 5.8    Effect of Vacancies

     The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust.  Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.

SECTION 5.9    Meetings

     If there is more than one Regular Trustee, meetings of the Regular Trustees
shall be held from time to time upon the call of any Regular Trustee.  Regular
meetings of the Regular Trustees may be held at a time and place fixed by
resolution of the Regular Trustees.  Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting.  Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting.  Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened.  Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting, by the
unanimous written consent of the Regular Trustees.  In the event there is only
one Regular Trustee, any and all action of such Regular Trustee shall be
evidenced by a written consent of such Regular Trustee.

SECTION 5.10   Delegation of Power

     (a)  Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to another natural person over the age of 21 his or her
power for the purpose of executing any documents contemplated in Section 3.6,
including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and

                                      -31-
<PAGE>

     (b)  the Regular Trustees shall have power to delegate from time to time to
such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.

SECTION 5.11   Merger, Conversion, Consolidation or Succession to Business

     Any Person into which the Property Trustee or the Delaware Trustee, as the
case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of the Property Trustee or the Delaware Trustee, as
the case may be, shall be the successor of the Property Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the Parties hereto.

                           ARTICLE VI DISTRIBUTIONS

SECTION 6.1    Distributions

     Holders shall receive Distributions in accordance with the applicable terms
of the relevant Holder's Securities.  Distributions shall be made on the
Preferred Securities and the Common Securities in accordance with the
preferences set forth in their respective terms.  If and to the extent that the
Debenture issuer makes a payment of interest (including Compounded Interest (as
defined in the Indenture) and Additional Interest (as defined in the
Indenture)), premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distribution") of the Payment Amount to
Holders.

                      ARTICLE VII ISSUANCE OF SECURITIES

SECTION 7.1    General Provisions Regarding Securities

     (a)  The Regular Trustees shall, on behalf of the Trust, issue one class of
preferred securities representing undivided beneficial interests in the assets
of the

                                      -32-
<PAGE>

Trust having such terms as are set forth in Annex I (the "Preferred
Securities"), which terms are incorporated by reference in, and made a part of,
this Declaration as if specifically set forth herein, and one class of common
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "Common Securities"),
which terms are incorporated by reference in, and made a part of, this
Declaration as if specifically set forth herein. The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.

     (b)  The Certificates shall be signed on behalf of the Trust by a Regular
Trustee. Any such signature shall be the manual signature of any present or any
future Regular Trustee. In case any Regular Trustee of the Trust who shall have
signed any of the Securities shall cease to be such Regular Trustee before the
Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Regular Trustee; and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Certificate, shall be the Regular Trustees of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such a
Regular Trustees. Certificates shall be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to the Regular
Trustees, or any one of them, as evidenced by their execution thereof, and may
have such letters, numbers or other marks of identification or designation and
such legends or endorsements as the Regular Trustees, or any one of them, may
deem appropriate, or as may be required to comply with any law or with any rule
or regulation of any stock exchange on which the Securities may be listed, or to
conform to usage.

     (c)  The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.

     (d)  Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and non-
assessable subject to Section 10.1(b) with respect to the Common Securities.

     (e)  Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration, the Preferred Securities Guarantee and the
Indenture.

                                      -33-
<PAGE>

                       ARTICLE VIII TERMINATION OF TRUST

SECTION 8.1    Dissolution and Termination of Trust

     (a)  The Trust shall dissolve:

          (i)    upon the bankruptcy of the Holder of the Common Securities or
the Sponsor;

          (ii)   upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the Sponsor or
the revocation of the charter of the Holder of the Common Securities, or the
Sponsor's charter and the expiration of 90 days after the date of revocation
without a reinstatement thereof;

          (iii)  upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;

          (iv)   when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been paid
to the Holders in accordance with the terms of the Securities;

          (v)    upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance with the
terms of the Securities and all of the Debentures endorsed thereon shall have
been distributed to the Holders of Securities in exchange for all of the
Securities;

          (vi)   before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor; or

          (vii)  upon the expiration of the term of the Trust as set forth in
Section 3.14.

     (b)  After the occurrence of an event referred to in Section 8.1(a) and
upon the completion of winding-up of the Trust and its termination, the Trustees
shall file a certificate of cancellation with the Secretary of State of the
State of Delaware.

     (c)  The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.

                                      -34-
<PAGE>

                       ARTICLE IX TRANSFER OF INTERESTS

SECTION 9.1    Transfer of Securities

     (a)  Securities may only be transferred, in whole or in part, in accordance
with the terms and conditions set forth in this Declaration and in the terms of
the Securities.  Any transfer or purported transfer of any Security not made in
accordance with this Declaration, and the terms of the Securities shall be null
and void.

     (b)  Subject to this Article IX, Preferred Securities shall be freely
transferable.

     (c)  Subject to this Article IX, the Sponsor and any Related Party may only
transfer Common Securities to the Sponsor or a Related Party of the Sponsor;
provided that, any such transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:

          (i)   the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and

          (ii)  the Trust would be an Investment Company or the transferee would
become an Investment Company.

SECTION 9.2    Transfer of Certificates

     The Regular Trustees shall provide for the registration of Certificates and
of transfers of Certificates, which will be effected without charge but only
upon payment (with such indemnity as the Regular Trustees may require) in
respect of any tax or other governmental charges that may be imposed in relation
to it.  Upon surrender for registration of transfer of any Certificate, the
Regular Trustees shall cause one or more new Certificates to be issued in the
name of the designated transferee or transferees.  Every Certificate surrendered
for registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing.  Each Certificate
surrendered for registration of transfer shall be canceled by the Regular
Trustees.  A transferee of a Certificate shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Certificate.  By acceptance of a Certificate, each transferee
shall be deemed to have agreed to be bound by this Declaration.  In the event
that the Preferred Securities do not remain in book-entry only form, the
Property Trustee will act as paying agent and may designate an additional or
substitute paying agent at any time.

                                      -35-
<PAGE>

SECTION 9.3    Deemed Security Holders

     The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

SECTION 9.4    Book Entry Interests

     Unless otherwise specified in the terms of the Preferred Securities, the
Preferred Securities Certificates, on original issuance, will be issued in the
form of one or more, fully registered, global Preferred Security Certificates
(each a "Global Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust.  Such Global Certificate(s) shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificate(s), except as
provided in Section 9.7.  Unless and until definitive, fully registered
Preferred Security Certificates (the "Definitive Preferred Security
Certificates") have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.7:

     (a)  the provisions of this Section 9.4 shall be in full force and effect;

     (b)  the Trust and the Trustees shall be entitled to deal with the Clearing
Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificate(s) and receiving approvals, votes or
consents hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Certificate(s) and shall have no notice obligation to the
Preferred Security Beneficial Owners;

     (c)  to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Declaration, the provisions of this Section 9.4
shall control; and

     (d)  the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants.  DTC
will make book entry transfers

                                      -36-
<PAGE>

among the Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency Participants.

SECTION 9.5    Notices to Clearing Agency

     Whenever a notice or other communication to the Preferred Security Holders
is required under this Declaration, unless and until Definitive Preferred
Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.

SECTION 9.6    Appointment of Successor Clearing Agency

     If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities, the Regular Trustees may,
in their sole discretion, appoint a successor Clearing Agency with respect to
such Preferred Securities.

SECTION 9.7    Definitive Preferred Security Certificates

     If:

     (a)  a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 9.6; or

     (b)  the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with respect to the
Preferred Securities,

     then:

          (i)    Definitive Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to such Preferred
Securities; and

          (ii)   upon surrender of the Global Certificate(s) by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees shall
cause Definitive Preferred Security Certificates to be delivered to Preferred
Security Beneficial Owners in accordance with the instructions of the Clearing
Agency.  Neither the Trustees nor the Trust shall be liable for any delay in
delivery of such instructions and each of them may conclusively rely on and
shall be protected in

                                      -37-
<PAGE>

relying on, said instructions of the Clearing Agency. The Definitive Preferred
Security Certificates shall be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof, and may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as may be required
to comply with any law or with any Rule or regulation made pursuant thereto or
with any Rule or regulation of any stock exchange on which Preferred Securities
may be listed, or to conform to usage.

SECTION 9.8    Mutilated, Destroyed, Lost or Stolen Certificates

     If:

     (a)  any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and

     (b)  there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them harmless, then, in the
absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination.  In connection with the
issuance of any new Certificate under this Section 9.8, the Regular Trustees may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.  Any duplicate Certificate
issued pursuant to this Section 9.8 shall constitute conclusive evidence of an
ownership interest in the relevant Securities, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.

         ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
                              TRUSTEES OR OTHERS

SECTION 10.1   Liability

     (a)  Except as expressly set forth in this Declaration, the Preferred
Securities Guarantee, the Common Securities Guarantee and the terms of the
Securities, the Sponsor shall not be:

          (i)   personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities which
shall be made solely from assets of the Trust; and

                                      -38-
<PAGE>

          (ii)  required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.

     (b)  The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.

     (c)  Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.

SECTION 10.2   Exculpation

     (a)  No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.

     (b)  An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.

SECTION 10.3   Fiduciary Duty

     (a)  To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration.  The provisions
of this Declaration, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust

                                      -39-
<PAGE>

Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.

     (b)  Unless otherwise expressly provided herein:

          (i)   whenever a conflict of interest exists or arises between any
Covered Persons; or

          (ii)  whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner that
is, or provide terms that are, fair and reasonable to the Trust or any Holder of
Securities,

the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles.  In the absence of bad faith by the indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.

     (c)  Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:

          (i)  in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors as
it desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Trust or any
other Person; or

          (ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or by
applicable law.

SECTION 10.4   Indemnification

     (a)(i) The Debenture Issuer shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid

                                      -40-
<PAGE>

in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Company Indemnified Person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.

          (ii)  The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem proper.

          (iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a), or in defense of any claim, issue or matter therein, he
shall be indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.

          (iv)  Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of

                                      -41-
<PAGE>

such Regular Trustees who were not parties to such action, suit or proceeding,
(2) if such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.

          (v)   To the fullest extent permitted by applicable law, expenses
(including attorneys' fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall
be paid by the Debenture Issuer in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Debenture Issuer as
authorized in this Section 10.4(a).  Notwithstanding the foregoing, no advance
shall be made by the Debenture Issuer if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Regular Trustees,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his conduct was
unlawful.  In no event shall any advance be made in instances where the Regular
Trustees, independent legal counsel or Common Security Holder reasonably
determine that such person deliberately breached his duty to the Trust or its
Common or Preferred Security Holders.

          (vi)  The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Preferred
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.  All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company Indemnified
Person who serves in such capacity at any time while this Section 10.4(a) is in
effect.  Any repeal or modification of this Section 10.4(a) shall not affect any
rights or obligations then existing.

                                      -42-
<PAGE>

          (vii)  The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified Person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Debenture
Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).

          (viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.

          (ix)   The indemnification and advancement of expenses provided by, or
granted pursuant to this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.

     (b)  The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without gross negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The provisions of this Section 10.4(b) shall survive the satisfaction
and discharge of this Declaration or the resignation or removal of any Trustee.

                                      -43-
<PAGE>

SECTION 10.5   Businesses

     Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Securities shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper.  No Covered Person, the Sponsor, the Delaware Trustee, or the
Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity.  Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.

                            ARTICLE XI   ACCOUNTING

SECTION 11.1   Fiscal Year

     The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or
such other year as is required by the Code.

SECTION 11.2   Certain Accounting Matters

     (a)  At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books of account, records and supporting
documents, which shall reflect in reasonable detail, each transaction of the
Trust.  The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied.  The Trust shall use the accrual method of accounting for
United States federal income tax purposes.  The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.

     (b)  The Regular Trustees shall cause to be prepared and delivered to each
of the Holders of Securities, within 90 days after the end of each Fiscal Year
of the

                                      -44-
<PAGE>

Trust, annual financial statements of the Trust, including a balance sheet of
the Trust as of the end of such Fiscal Year, and the related statements of
income or loss.

     (c)  The Regular Trustees shall cause to be duly prepared and delivered to
each of the Holders of Securities, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations.  Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.

     (d)  The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.

SECTION 11.3   Banking

     The Trust shall maintain one or more bank accounts in the name and for the
sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account.  The sole signatories for such accounts shall
be designated by the Regular Trustees; provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee Account.

SECTION 11.4   Withholding

     The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law.  The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations.  The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions.  To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder.  In the event of
any claimed over withholding, Holders shall be limited to an action against the
applicable

                                      -45-
<PAGE>

jurisdiction. If the amount required to be withheld was not withheld from actual
Distributions made, the Trust may reduce subsequent Distributions by the amount
of such withholding.

                     ARTICLE XII   AMENDMENTS AND MEETINGS

SECTION 12.1   Amendments

          (a)  Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by the Regular Trustees (or, if there
are more than two Regular Trustees a majority of the Regular Trustees); and

          (i)  if the amendment affects the rights, powers, duties, obligations
or immunities of the Property Trustee, also by the Property Trustee; and

          (ii) if the amendment affects the rights, powers, duties, obligations
or immunities of the Delaware Trustee, also by the Delaware Trustee.

     (b)  No amendment shall be made, and any such purported amendment shall be
void and ineffective:

          (i)    unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);

          (ii)   unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee or the
Delaware Trustee, the Property Trustee or the Delaware Trustee as the case may
be, shall have first received:

                 (A)  an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); and

                 (B)  an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to, the terms of
this Declaration (including the terms of the Securities); and

          (iii)  to the extent the result of such amendment would be to:

                                      -46-
<PAGE>

                 (A)  cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;

                 (B)  reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or

                 (C)  cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;

     (c)  At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities;

     (d)  Section 9.1(c) and this Section 12.1 shall not be amended without the
consent of all of the Holders of the Securities;

     (e)  Article IV shall not be amended without the consent of the Holders of
a Majority in liquidation amount of the Common Securities;

     (f)  The rights of the holders of the Common Securities under Article V to
increase or decrease the number of, and appoint and remove, Trustees shall not
be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities; and

     (g)  Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:

          (i)    cure any ambiguity;

          (ii)   correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this Declaration;

          (iii)  add to the covenants, restrictions or obligations of the
Sponsor; or

          (iv)   to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the rights, preferences or privileges of the Holders
of the Preferred Securities.

                                      -47-
<PAGE>

SECTION 12.2   Meetings of the Holders of Securities; Action by Written Consent

     (a)  Meetings of the Holders of any class of Securities may be called at
any time by the Regular Trustees (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Preferred Securities
are listed or admitted for trading. The Regular Trustees shall call a meeting of
the Holders of such class if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in writing stating that the
signing Holders of Securities wish to call a meeting and indicating the general
or specific purpose for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of Securities exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.

     (b)  Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:

          (i)  notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more than 60
days before the date of such meeting.  Whenever a vote, consent or approval of
the Holders of Securities is permitted or required under this Declaration or the
rules of any stock exchange on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given at a meeting
of the Holders of Securities.  Any action that may be taken at a meeting of the
Holders of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of Securities owning
not less than the minimum amount of Securities in liquidation amount that would
be necessary to authorize or take such action at a meeting at which all Holders
of Securities having a right to vote thereon were present and voting.  Prompt
notice of the taking of action without a meeting shall be given to the Holders
of Securities entitled to vote who have not consented in writing.  The Regular
Trustees may specify that any written ballot submitted to the Security Holder
for the purpose of taking any action without a meeting shall be returned to the
Trust within the time specified by the Regular Trustees;

          (ii) each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting.  No

                                      -48-
<PAGE>

proxy shall be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the Holder of Securities executing it. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders of the Securities were stockholders of a
Delaware corporation;

          (iii)  each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and

          (iv)   unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Preferred Securities are then listed or trading, otherwise
provides, the Regular Trustees, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities, including notice
of the time, place or purpose of any meeting at which any matter is to be voted
on by any Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the exercise of
any such right to vote.

                   ARTICLE XIII REPRESENTATIONS OF PROPERTY
                         TRUSTEE AND DELAWARE TRUSTEE

SECTION 13.1   Representations and Warranties of Property Trustee

     The Trustee that acts as initial Property Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
Successor Property Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:

     (a)  the Property Trustee is a national banking association with trust
powers, duly organized, validly existing and in good standing under the laws of
the United States, with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the Declaration;

     (b)  the execution, delivery and performance by the Property Trustee of the
Declaration has been duly authorized by all necessary corporate action on the
part of the Property Trustee.  The Declaration has been duly executed and
delivered by the Property Trustee, and it constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to

                                      -49-
<PAGE>

applicable bankruptcy, reorganization, moratorium, insolvency, and other similar
laws affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);

     (c)  the execution, delivery and performance of the Declaration by the
Property Trustee does not conflict with or constitute a breach of the Articles
of Organization or By-laws of the Property Trustee; and

     (d)  no consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the execution,
delivery or performance by the Property Trustee, of the Declaration.

SECTION 13.2   Representation and Warranties of Delaware Trustee

     The Trustee that acts as initial Delaware Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:

     (a)  the Delaware Trustee is a Delaware corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
corporatepower and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration.

     (b)  the Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and the Declaration.  The Declaration under
Delaware law constitutes a legal, valid and binding obligation of the Delaware
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other similar
laws affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).

     (c)  no consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee, of the Declaration.

     (d)  the Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.

                                      -50-
<PAGE>

                          ARTICLE XIV   MISCELLANEOUS

SECTION 14.1   Notices

     All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:

     (a)  if given to the Trust, in care of the Regular Trustees at the Trust's
mailing address set forth below (or such other address as the Trust may give
notice of to the Holders of the Securities):

          Puget Sound Energy Capital Trust II
          c/o Puget Sound Energy, Inc.
          411 108/th/ Ave. N.E.
          Bellevue, WA 98004-5515
          Attention:  Donald E. Gaines,
               Vice President and Treasurer
          Facsimile (425) 462-3300

     (b)  if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders of the Securities):

          Bank One Delaware, Inc.
          Three Christiana Center
          201 Walnut St.
          Wilmington, DE 19801

     (c)  if given to the Property Trustee, at its Corporate Trust Office to the
attention of the Administrator (or such other address as the Property Trustee
may give notice of to the Holders of the Securities):

          Bank One Trust Company, N.A.
          1 Bank One Plaza, Suite IL1-0126
          Chicago, IL 60670-0126
          Facsimile (312) 336-9436

     (d)  if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):

                                      -51-
<PAGE>

          Puget Sound Energy, Inc.
          411 108/th/ Ave. N.E.
          Bellevue, WA 98004-5515
          Attention:  Donald E. Gaines,
               Vice President and Treasurer
          Facsimile (425) 462-3300

     (e)  if given to any other Holder, at the address set forth on the books
and records of the Trust.

     All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

SECTION 14.2   Governing Law

     This Declaration and the rights of the parties hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.

SECTION 14.3   Intention of the Parties

     It is the intention of the parties hereto that the Trust be classified for
United States federal income tax purposes as a grantor trust.  The provisions of
this Declaration shall be interpreted to further this intention of the parties.

SECTION 14.4   Headings

     Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.

SECTION 14.5   Successors and Assigns

     Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall

                                      -52-
<PAGE>

bind and inure to the benefit of their respective successors and assigns,
whether so expressed.

SECTION 14.6   Partial Enforceability

     If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.

SECTION 14.7   Counterparts

     This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each party hereto to one of such counterpart signature pages.  All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.

SECTION 14.8   Recitals

     The recitals contained herein and in the Securities shall be taken as the
statements of the Sponsor and Trust, and the Trustees assume no responsibility
for their correctness.  The Trustees make no representations as to the validity
or sufficiency of this Declaration or of the Securities.

                                      -53-
<PAGE>

     IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.

                               /s/ Richard L. Hawley
                              -----------------------------------------------
                              Richard L. Hawley, as Regular Trustee

                               /s/ Donald E. Gaines
                              -----------------------------------------------
                              Donald E. Gaines, as Regular Trustee

                              Bank One Delaware, Inc., as Delaware Trustee

                              By: /s/ Steven M. Wagner
                                 --------------------------------------------
                                 Name:  Steven M. Wagner
                                 Title: First Vice President

                              Bank One Trust Company, N.A., as Property Trustee

                              By: /s/ Janice Ott Rotunno
                                 --------------------------------------------
                                 Name:  Janice Ott Rotunno
                                 Title: Vice President

                              Puget Sound Energy, Inc., as Sponsor and
                              Debenture Issuer

                              By: /s/ Donald E. Gaines
                                 --------------------------------------------
                                 Donald E. Gaines
                                 Vice President and Treasurer

                                      -54-
<PAGE>

                                    ANNEX I

                                   TERMS OF
                  8.40% TRUST ORIGINATED PREFERRED SECURITIES
                   8.40% TRUST ORIGINATED COMMON SECURITIES

     Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust,
dated as of May 18, 2001 (as amended from time to time, the "Declaration"), the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in
the Prospectus referred to below:

1.   Designation and Number

     (a)  Preferred Securities.  Preferred Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Two
Hundred Million dollars ($200,000,000) and a liquidation amount with respect to
the assets of the Trust of $25 per preferred security, are hereby designated,
for the purposes of identification only, as "8.40 % Trust Originated Preferred
Securities (SM) `TOPrS(SM)')" (the "Preferred Securities").  The Preferred
Security Certificates evidencing the Preferred Securities shall be substantially
in the form of Exhibit A-l to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice or to conform to the rules of any stock exchange on which the Preferred
Securities are listed.

     (b)  Common Securities.  Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of Six Million One
Hundred Eighty-six Thousand dollars ($6,186,000) and a liquidation amount with
respect to the assets of the Trust of $25 per common security, are hereby
designated, for the purposes of identification only, as "8.40 % Trust Originated
Common Securities" (the "Common Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially in the form of Exhibit
A-2 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.

2.   Distributions

     (a)  Distributions payable on each Security will be fixed at a rate per
annum of 8.40 % (the "Coupon Rate") of the stated liquidation amount of $25 per
Security,

                                      A-1
<PAGE>

such rate being the rate of interest payable on the Debentures to be held by the
Property Trustee. Distributions in arrears for more than one quarter will bear
interest thereon compounded quarterly at the Coupon Rate (to the extent
permitted by applicable law). The term "Distributions" as used herein includes
such cash distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full quarterly Distribution period for which Distributions are computed.
Distributions will be computed on the basis of the actual number of days elapsed
per 90-day quarter.

     (b)  Distributions on the Securities will be cumulative, will accrue from
May 24, 2001 and will be payable quarterly in arrears, on March 30, June 30,
September 30 and December 30 of each year, commencing on September 30, 2001,
except as otherwise described below.  The Debenture Issuer has the right under
the Indenture to defer payments of interest by extending the interest payment
period from time to time on the Debentures for a period not exceeding 20
consecutive quarters (each an "Extension Period"), during which Extension Period
no interest shall be due and payable on the Debentures, provided that no
Extension Period shall last beyond the date of maturity of the Debentures.  As a
consequence of such deferral, Distributions will also be deferred.  Despite such
deferral, quarterly Distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at the Coupon Rate compounded
quarterly during any such Extension Period.  Prior to the termination of any
such Extension Period, the Debenture Issuer may further extend such Extension
Period; provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters.  Payments of
accrued Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the Extension
Period.  Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.

     (c)  Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust on the relevant record
dates.  While the Preferred Securities remain in book-entry only form, the
relevant record dates shall be one Business Day prior to the relevant payment
dates which payment dates correspond to the interest payment dates on the
Debentures.  Subject to any applicable laws and regulations and the provisions
of the Declaration, each such payment in respect of the Preferred Securities
will be made as described under the heading

                                      A-2
<PAGE>

"Description of the Preferred Securities -- Book-Entry Only Issuance -- DTC" in
the Prospectus dated May 18, 2001 (the "Prospectus"), of the Trust included in
the Registration Statement on Form S-3 of the Sponsor and the Trust. The
relevant record dates for the Common Securities shall be the same record date as
for the Preferred Securities. If the Preferred Securities shall not continue to
remain in book-entry only form, the relevant record dates for the Preferred
Securities shall conform to the rules of any securities exchange on which the
securities are listed and, if none, shall be selected by the Regular Trustees,
which dates shall be at least one Business Day but less than 60 Business Days
before the relevant payment dates, which payment dates correspond to the
interest payment dates on the Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution 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 date.

     (d)  In the event that there is any money or other property held by or for
the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.

3.   Liquidation Distribution Upon Dissolution

     In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities, after satisfaction of liabilities to creditors of the Trust, an
amount equal to the aggregate of the stated liquidation amount of $25 per
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, after satisfaction of liabilities
to creditors of the Trust, Debentures in an aggregate principal amount equal to
the aggregate stated liquidation amount of such Securities, with an interest
rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount

                                      A-3
<PAGE>

equal to the accrued and unpaid Distributions on, such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities.

     If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Securities shall be paid on a Pro Rata basis.

4.   Redemption and Distribution

     (a)  Upon the repayment of the Debentures in whole or in part, whether at
maturity or upon redemption (either at the option of the Debenture Issuer or
pursuant to a Special Event as described below), the proceeds from such
repayment or payment shall be simultaneously applied to redeem Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid or redeemed at a redemption price of $25 per Security plus
an amount equal to accrued and unpaid Distributions thereon at the date of the
redemption, payable in cash (the "Redemption Price"). Holders will be given not
less than 30 nor more than 60 days notice of such redemption, except in the case
of payments upon maturity.

     (b)  If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Preferred Securities will be redeemed Pro Rata and
the Preferred Securities to be redeemed will be as described in Section 4(f)(ii)
below.

     (c)  If a Tax Event or an Investment Company Event (each as defined below,
and each a "Special Event") shall occur and be continuing the Regular Trustees
shall, except in the case of a redemption described in this Section 4(c),
dissolve the Trust and, after satisfaction of creditors, cause Debentures held
by the Property Trustee, having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as the Securities,
to be distributed to the Holders of the Securities in liquidation of such
Holders' interests in the Trust on a Pro Rata basis, within 90 days following
the occurrence of such Special Event (the "90 Day Period"); provided, however,
that in the case of the occurrence of a Tax Event, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the Holders
of the Securities will not recognize any gain or loss for United States federal
income tax purposes as a result of the dissolution of the Trust and the
distribution of Debentures, and provided, further, that, if at the time there is
available to the Trust the opportunity to eliminate, within

                                      A-4
<PAGE>

the 90 Day Period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, the Debenture Issuer, the
Sponsor or the Holders of the Securities ("Ministerial Action"), the Trust will
pursue such Ministerial Action in lieu of dissolution.

     If (a) a Tax Event has occurred and is continuing, and (i) the Debenture
Issuer has received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that the Debenture
Issuer would be precluded from deducting the interest on the Debentures for
United States federal income tax purposes even if the Debentures were
distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), or (ii) the Regular
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, or (b) if an Investment Company Event
has occurred and is continuing, then the Debenture Issuer shall have the right
at any time, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash within 90 days following the occurrence
of such Tax Event, or Investment Company Event, as the case may be and,
following such redemption, Securities with an aggregate liquidation amount equal
to the aggregate principal amount of the Debentures so redeemed shall be
redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided,
however, that, if at the time there is available to the Trust the opportunity to
eliminate, within such 90 day period, such Special Event by taking some
Ministerial Action, the Trust or the Debenture Issuer will pursue such
Ministerial Action in lieu of redemption.

     "Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
to the effect that on or after the date of the Prospectus, as a result of (a)
any amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority therefor or therein, or (b) any amendment to, or
change in, an interpretation or application of any such laws or regulations by
any legislative body, court, governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after the date of the Prospectus, there is more than an
insubstantial risk that (i) the Trust is or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to interest
accrued or received on the Debentures, (ii) the Trust is, or will be within 90
days of the date thereof, subject to more than a de minimis amount of taxes,
duties or other governmental charges, or (iii) interest payable by the Debenture
Issuer

                                      A-5
<PAGE>

to the Trust on the Debentures is not, or within 90 days of the date thereof
will not be, deductible, in whole or in part, by the Debenture Issuer for United
States federal income tax purposes.

     "Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practice under the Investment Company Act (an "Investment Company Event
Opinion") that, as a result of the occurrence of a change in law or regulation
or a written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), there is a more than an insubstantial risk that the Trust is
or will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of the Prospectus.

     On and from the date fixed by the Regular Trustees for any distribution of
Debentures and dissolution of the Trust:  (i) the Securities will no longer be
deemed to be outstanding, (ii) The Depository Trust Company (the "Depository")
or its nominee (or any successor Clearing Agency or its nominee), as the record
Holder of the Preferred Securities, will receive a registered global certificate
or certificates representing the Debentures to be delivered upon such
distribution and (iii) any certificates representing Securities, except for
certificates representing Preferred Securities held by the Depository or its
nominee (or any successor Clearing Agency or its nominee), will be deemed to
represent beneficial interests in the Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on such Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissue.

     (d)  The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all quarterly Distribution periods terminating on or before the date of
redemption.

     (e)  If the Debentures are distributed to holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.

     (f)  "Redemption or Distribution Procedures."

                                      A-6
<PAGE>

          (i)    Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures.  For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(f)(i), a Redemption/Distribution Notice shall be
deemed to be given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of Securities.  Each Redemption/Distribution Notice
shall be addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust.  No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.

          (ii)   In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from
each Holder of Preferred Securities, it being understood that, in respect of
Preferred Securities registered in the name of and held of record by the
Depository or its nominee (or any successor Clearing Agency or its nominee) or
any nominee, the distribution of the proceeds of such redemption will be made to
each Clearing Agency Participant (or Person on whose behalf such nominee holds
such securities) in accordance with the procedures applied by such agency or
nominee.

          (iii)  If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) while the Preferred Securities are in book-entry only
form, with respect to the Preferred Securities, by 12:00 noon, New York City
time, on the redemption date, provided that the Debenture Issuer has paid the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property Trustee will deposit
irrevocably with the Depository or its nominee (or successor Clearing Agency or
its nominee) funds sufficient to pay the applicable Redemption Price with
respect to the Preferred Securities and will give the Depository irrevocable
instructions and authority to pay the Redemption Price to the Holders of the
Preferred Securities, and (B) with respect to Preferred Securities issued in
definitive form and Common Securities, provided that the Debenture Issuer has
paid the Property Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders of such Securities by check mailed
to the address of the relevant Holder appearing on the books and records of the
Trust on the redemption

                                      A-7
<PAGE>

date. If a Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the close of
business on the date of such deposit, or on the redemption date, as applicable,
distributions will cease to accrue on the Securities so called for redemption
and all rights of Holders of such Securities so called for redemption will
cease, except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is not a Business
Day, then payment of the Redemption Price 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
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price in respect
of any Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Securities Guarantee, Distributions on such Securities will continue to accrue
from the original redemption date to the actual date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.

          (iv)   Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred Securities,
the Depository or its nominee (or any successor Clearing Agency or its nominee)
if the Global Certificate(s) have been issued or, if Definitive Preferred
Security Certificates have been issued, to the Holder thereof, and (B) in
respect of the Common Securities to the Holder thereof.

          (v)    Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), provided the acquirer is not
the Holder of the Common Securities or the obligor under the Indenture, the
Sponsor or any of its subsidiaries may at any time and from time to time
purchase outstanding Preferred Securities by tender, in the open market or by
private agreement.

5.   Voting Rights - Preferred Securities

     (a)  Except as provided under Sections 5(b) and 7 and as otherwise required
by law and the Declaration, the Holders of the Preferred Securities will have no
voting rights.

     (b)  Subject to the requirements set forth in this paragraph, the Holders
of a Majority in liquidation amount of the Preferred Securities, voting
separately as a class

                                      A-8
<PAGE>

may direct the time, method, and place of conducting any proceeding for any
remedy available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under Section 5.10 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable. The Property
Trustee shall not revoke any action previously authorized or approved by a vote
of the Holders of the Preferred Securities. Other than with respect to directing
the time, method and place of conducting any remedy available to the Property
Trustee or the Debenture Trustee as set forth above, the Property Trustee shall
not take any action in accordance with the directions of the Holders of the
Preferred Securities under this paragraph unless the Property Trustee has
obtained an opinion of tax counsel, at the reasonable expense of the Trust, to
the effect that for the purposes of United States federal income tax the Trust
will not be classified as other than a grantor trust on account of such action.
In addition, a Holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such Holder directly of the principal
of or interest on Subordinated Notes having a principal amount equal to the
aggregate liquidation preference amount of the Preferred Securities of such
Holder on or after the respective due dates specified in the Subordinated Notes.
With respect to the Property Trustee's rights other than its rights to receive
payment on the Debentures as holder of the Debentures, if the Property Trustee
fails to enforce its rights under the Declaration, to the fullest extent
permitted by law, any Holder of Preferred Securities may, institute a legal
proceeding directly against any Person to enforce the Property Trustee's rights
under the Declaration without first instituting a legal proceeding against the
Property Trustee or any other Person.

     Any approval or direction of Holders of Preferred Securities may be given
at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities.  Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.

                                      A-9
<PAGE>

     No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.

     Notwithstanding that Holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes or such vote or
consent, be treated as if they were not outstanding.

6.   Voting Rights - Common Securities

     (a) Except as provided under Sections 6(b), (c) and 7 and as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.

     (b) The Holders of the Common Securities are entitled, in accordance with
Article V of the Declaration, to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees.

     (c) Subject to Section 2.6 of the Declaration and only after the Event of
Default with respect to the Preferred Securities has been cured, waived, or
otherwise eliminated and subject to the requirements of the second to last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the Property
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with respect
to the Debentures, (ii) waive any past default and its consequences that is
waivable under Section 5.10 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and payable, provided that, where a consent or action under the Indenture
would require the consent or act of the Holders of greater than a majority in
principal amount of Debentures affected thereby (a "Super Majority"), the
Property Trustee may only give such consent or take such action at the written
direction of the Holders of at least the proportion in liquidation amount of the
Common Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.  Pursuant to this Section 6(c),
the Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities.  Other than with
respect to directing the time, method and place of conducting any remedy
available to the Property Trustee or the Debenture Trustee

                                     A-10
<PAGE>

as set forth above, the Property Trustee shall not take any action in accordance
with the directions of the Holders of the Common Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel, at the
reasonable expense of the Trust, to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action. In addition, a Holder of Common
Securities may directly institute a proceeding for enforcement of payment to
such Holder directly of the principal of or interest on Debentures having a
principal amount equal to the aggregate liquidation preference amount of the
Common Securities of such Holder on or after the respective due dates specified
in the Debentures. With respect to the Property Trustee's rights other than its
rights to receive payment on the Debentures as holder of the Debentures, if the
Property Trustee fails to enforce its rights under the Declaration, to the
fullest extent permitted by applicable law, any Holder of Common Securities may
institute a legal proceeding directly against any Person to enforce the Property
Trustee's rights under the Declaration, without first instituting a legal
proceeding against the Property Trustee or any other Person.

     Any approval or direction of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust or pursuant to written
consent.  The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Common Securities.  Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.

     No vote or consent of the Holders of the Common Securities will be required
for the Trust to redeem and cancel Common Securities or to distribute the
Debentures in accordance with the Declaration and the terms of the Securities.

7.   Amendments to Declaration and Indenture

     (a)  In addition to any requirements under Section 12.1 of the Declaration,
if any proposed amendment to the Declaration provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Securities, whether by way of
amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up
or termination of the Trust, other than as described in Section 8.1 of the
Declaration, then the Holders of

                                     A-11
<PAGE>

outstanding Securities as a class will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the Holders of at
least a Majority in liquidation amount of the Securities, voting together as a
single class; provided, however, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or only
the Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities; and provided further, that no such amendment or proposal which would
reduce the principal amount or the distribution rate or change the payment dates
or maturity of the Preferred Securities shall be permitted without the consent
of each holder of Preferred Securities.

     (b)  In the event the consent of the Property Trustee as the holder of the
Debentures is required under the Indenture with respect to any amendment,
modification or termination on the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a Majority
in liquidation amount of the Preferred Securities, and if no Event of Default
has occurred and is continuing, a majority in liquidation amount of the Common
Securities voting together as a single class; provided, however, that where a
consent under the Indenture would require the consent of the holders of greater
than a majority in aggregate principal amount of the Debentures (a "Super
Majority"), the Property Trustee may only give such consent at the direction of
the Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding; provided, further, that the Property Trustee
shall not take any action in accordance with the directions of the Holders of
the Securities under this Section 7(b) unless the Property Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action.

8.   Pro Rata

     A reference in these terms of the Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder of
Securities according to the aggregate liquidation amount of the Securities held
by the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment

                                     A-12
<PAGE>

shall be paid first to each Holder of the Preferred Securities pro rata
according to the aggregate liquidation amount of Preferred Securities held by
the relevant Holder relative to the aggregate liquidation amount of all
Preferred Securities outstanding, and only after satisfaction of all amounts
owed to the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding.

9.   Ranking

     The Preferred Securities rank pari passu and payment thereon shall be made
Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Debentures held
by the Property Trustee, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Preferred Securities.

10.  Listing

     The Regular Trustees shall use their best efforts to cause the Preferred
Securities to be listed for quotation on the New York Stock Exchange.

11.  Acceptance of Securities Guarantee and Indenture

     Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture,
including the subordination provisions therein.

12.  No Preemptive Rights

     The Holders of the Securities shall have no preemptive rights to subscribe
for any additional securities.

13.  Miscellaneous

     These terms constitute a part of the Declaration.

     The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.

                                     A-13
<PAGE>

                                  EXHIBIT A-1
                    FORM OF PREFERRED SECURITY CERTIFICATE

     [IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT -- THIS
PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY.  THIS PREFERRED
SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED
SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.

     UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE 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 THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

                                     A1-1
<PAGE>

Certificate Number -01-                 Number of Preferred Securities 8,000,000

                                                       CUSIP NO. 74531W

                  Certificate Evidencing Preferred Securities

                                      of

                      Puget Sound Energy Capital Trust II

                8.40% Trust Originated Preferred Securities(SM)
         ("TOPrS"(SM)) (liquidation amount $25 per Preferred Security)

     Puget Sound Energy Capital Trust II, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Bank One Trust Company, N.A., not in its individual capacity,, but solely as
Property Trustee of Puget Sound Energy Capital Trust II (the "Holder") is the
registered owner of preferred securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the 8.40% Trust
Originated Preferred Securities(SM) (liquidation amount $25 per Preferred
Security) (the "Preferred Securities").  The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer.  The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of May 18, 2001, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration.  Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Preferred Securities Guarantee to
the extent provided therein.  The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.

     Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.

     By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Preferred Securities as
evidence of indirect beneficial ownership in the Debentures.

                                     A1-2
<PAGE>

     IN WITNESS WHEREOF, the Trust has executed this certificate this 24th day
of May, 2001.

                                          ______________________________________
                                          Richard L. Hawley, as Regular Trustee

                                          ______________________________________
                                          Donald E. Gaines as Regular Trustee

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

                                  ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:

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

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
                   (Insert address and zip code of assignee)

and irrevocably appoints

________________________________________________________________________________
________________________________________________________________________________

agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date:______________________________

Signature:_________________________

(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)

                                     A1-3
<PAGE>

                                  EXHIBIT A-2
                      FORM OF COMMON SECURITY CERTIFICATE

Certificate Number                           Number of Common Securities 247,440

                   Certificate Evidencing Common Securities

                                      of

                      Puget Sound Energy Capital Trust II

                   8.40% Trust Originated Common Securities
                 (liquidation amount $25 per Common Security)

     Puget Sound Energy Capital Trust II, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Puget Sound Energy, Inc, (the "Holder"), is the registered owner of common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the 8.40 % Trust Originated Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities").  The
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer.  The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of May 18, 2001, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration.  Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration.  The Holder is
entitled to the benefits of the Common Securities Guarantee to the extent
provided therein.  The Sponsor will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.

     Upon receipt of this certificate, the Sponsor is bound by the Declaration
and is entitled to the benefits thereunder.

     By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.

                                     A2-1
<PAGE>

     IN WITNESS WHEREOF, the Trust has executed this certificate this 24th day
of May, 2001.

                                          ______________________________________
                                          Richard L. Hawley, as Regular Trustee

                                          ______________________________________
                                          Donald E. Gaines, as Regular Trustee

               PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Common Securities referred to in the within-mentioned
Declaration.

     Dated: May 24, 2001

                                          BANK ONE TRUST COMPANY, N.A., as
                                          Property Trustee

                                          By:___________________________________
                                             Name:
                                             Title:

                                     A2-2
<PAGE>

                                   EXHIBIT B
                             SPECIMEN OF DEBENTURE

No.
$206,186,000
CUSIP NO. 745332 BR 6

                            PUGET SOUND ENERGY, INC.
               8.40 % SUBORDINATED DEFERRABLE INTEREST DEBENTURES
                                DUE JUNE 30,2041

     Puget Sound Energy, Inc., a Washington corporation (the "Issuer", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to Bank One Trust Company, N.A.,
not in its individual capacity, but solely as Property Trustee (the "Property
Trustee") of Puget Sound Energy Capital Trust II (the "Trust"), or registered
assigns, the principal sum of Two Hundred Six Million One Hundred Eighty Six
Thousand Dollars ($206,186,000) on June 30, 2041, and to pay interest on said
principal sum from May 24, 2001, quarterly (subject to deferral as set forth
herein) in arrears on March 30, June 30, September 30 and December 30 of each
year (each such date, an "Interest Payment Date"), commencing September 30, 2001
at the rate of 8.40% per annum until the principal hereof shall have become due
and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum compounded quarterly. The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months. 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 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, as defined in said Indenture) 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 15th day of the month
in which such Interest Payment Date occurs. If and to the extent the Issuer
shall default in the payment of the interest due on such Interest Payment Date,
interest shall be paid to the person in whose name this Debenture is registered
at the close of business on a subsequent record date (which shall not be less
than five Business Days prior to the date of payment of such defaulted interest)
established by notice given by mail by or on behalf of the Issuer to the Holder
of this Debenture not less than 15 days preceding such subsequent Record

                                      B-1
<PAGE>

Date. The principal of (and premium, if any) and the interest on this Debenture
shall be payable at the office or agency of the Property Trustee maintained for
that purpose in any coin or currency of the United States of America that at the
time is legal tender for payment of public and private debts; provided, however,
that payment of interest may be made at the option of the Issuer by check mailed
to the registered Holder at such address as shall appear in the Security
Register or by wire transfer to an account maintained by the Holder.
Notwithstanding the foregoing, so long as the Holder of this Debenture is the
Property Trustee, the payment of the principal of (and premium, if any) and
interest on this Debenture will be made at such place and to such account as may
be designated by the Property Trustee.

     The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto.  Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Property Trustee on his or her behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Property Trustee
as his or her attorney-in-fact for any and all such purposes.  Each Holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.

     This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon 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.

                                      B-2
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be executed
this 24th day of May, 2001.

                                            Puget Sound Energy, Inc.

                                            By:
                                               ---------------------------------
                                               Donald E. Gaines
                                               Vice President and Treasurer

Attest:

By:
   ---------------------------
   James W. Eldredge
   Corporate Secretary

                         CERTIFICATE OF AUTHENTICATION

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

Dated: May 24, 2001                         Bank One Trust Company, N.A.,
                                              as Trustee

                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                      B-3
<PAGE>

                            (REVERSE OF DEBENTURE)

     This Debenture is one of a duly authorized series of Securities of the
Issuer (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of May 18, 2001, duly executed and delivered between
the Issuer and Bank One Trust Company, N.A., a national banking association, as
Debenture Trustee (the "Debenture Turstee"), as supplemented by the First
Supplemental Indenture dated as of May 18, 2001, between the Issuer and the
Debenture Trustee (the Indenture as so supplemented, the "Indenture"), to which
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Debenture
Trustee, the Issuer and the Holders of the Debentures.  By the terms of the
Indenture, the Debentures 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 Debentures is limited in aggregate principal amount
as specified in said First Supplemental Indenture.

     The Issuer shall have the right to redeem this Debenture at the option of
the Issuer, without premium or penalty, in whole or in part at any time on or
after June 30, 2006, or at any time in certain circumstances upon the occurrence
of a Special Event, at a redemption price equal to 100% of the principal amount
plus any accrued but unpaid interest, to the date of such redemption.  Any
redemption pursuant to this paragraph will be made upon not less than 30 days'
nor more than 60 days' notice.  If the Debentures are only partially redeemed by
the Issuer pursuant to an Optional Redemption, the Debentures will be redeemed
pro rata.

     In the event of redemption of this Debenture in part only, a new Debenture
or Debentures of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.

     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, in the
manner, with the effect and subject to the conditions provided in the Indenture.

     The Indenture contains provisions permitting the Issuer and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Debentures and other Indenture securities of each series
affected at the time Outstanding and affected (voting as one class), as defined
in the Indenture, to execute supplemental indentures for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any

                                      B-4
<PAGE>

supplemental indenture or of modifying in any manner the rights of the Holders
of the Debentures; provided, however, that the Company and the Debenture Trustee
may not, without the consent of the Holder of each Debenture then Outstanding
and affected thereby: (a) change the time of payment of the principal (or any
installment) of any Debenture, or reduce the principal amount thereof, or reduce
the rate or change the time of payment of interest thereon, or impair the right
to institute suit for the enforcement of any payment on any Debenture when due
or (b) reduce the percentage in principal amount of the Debentures, the consent
of whose Holders is required for any such modification or for any waiver
provided for in the Indenture. The Indenture also contains provisions providing
that prior to the acceleration of the maturity of any Debenture or other
securities outstanding under the Indenture, the Holders of a majority in
aggregate principal amount of Debentures of and other Securities Outstanding
under the Indenture with respect to which a default or/an Event of Default shall
have occurred and be continuing (voting as one class) may on behalf of the
Holders of all such affected Securities (including the Debentures) waive any
past default and its consequences, except a default or an Event of Default in
respect of a covenant or provision of the Indenture or of any Debenture or other
Security which cannot be modified or amended without the consent of the Holder
of each Debenture or other Security 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 and owners of this Debenture and of any Debenture issued in exchange
herefor 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.

     No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Issuer, 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.

     The Issuer shall have the right at any time during the term of the
Debentures and from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarters (an "Extended Interest Payment
Period"), at the end of which period the Issuer shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Debentures to the extent that payment of such interest is enforceable under
applicable law).  Before the termination of any such Extended Interest Payment
Period, the Issuer may further extend such Extended Interest Payment Period,
provided that such Extended Interest Payment Period together with all such
further extensions thereof shall not exceed 20 consecutive quarters.  At the
termination of any such Extended Interest Payment Period and upon

                                      B-5
<PAGE>

the payment of all accrued and unpaid interest and any additional amounts then
due, the Issuer may commence a new Extended Interest Payment Period.

     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 Issuer, upon surrender of this Debenture for
registration of transfer at the office or agency of the Property Trustee
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Issuer or the Propety 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 and series will be issued to the designated
transferee or transferees.  No service charge will be made for any such
transfer, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in relation thereto.

     Prior to due presentment for registration of transfer of this Debenture,
the Issuer, the Property 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 Issuer nor the Property 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, stockholder, officer or director, past, present or future, as
such, of the Issuer 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.

     Debentures of this series so issued 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 herein and therein
set forth, Debentures of this series so issued are exchangeable for a like
aggregate principal amount of Debentures of this series in authorized
denominations, as requested by the Holder surrendering the same.

                                      B-6
<PAGE>

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

                                      B-7
<PAGE>

                                   EXHIBIT C
                            UNDERWRITING AGREEMENT

                           See Form 8-K Exhibit 1.1

                                      C-1
<PAGE>

                                   EXHIBIT D
                              FORM OF TAX OPINION

Based solely upon the foregoing, we are of the opinion that under current United
States federal income tax law:

     (1)  The Trust will be classified as a grantor trust and not as an
          association taxable as a corporation. Accordingly, for United States
          federal income tax purposes, each holder of [the Securities] will
          generally be considered the owner of an undivided interest in the
          Subordinated Debentures, and each holder will be required to include
          in its gross income any original issue discount accrued with respect
          to its allocable share of those Subordinated Debentures.

     (2)  The Subordinated Debentures will be classified for United States
          federal income tax purposes as indebtedness of the Company.

     (3)  Although the discussion set forth in the Prospectus Supplement under
          the heading "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES"
          does not purport to discuss all possible United States federal income
          tax consequences of the purchase, ownership and disposition of [the
          Securities], in our opinion such discussion constitutes, in all
          material respects, a fair and accurate summary of the United States
          federal income tax consequences of the purchase, ownership and
          disposition of [the Securities] under current law.

                                      D-1<PAGE>
                                                                     Exhibit 4.3

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

                           PUGET SOUND ENERGY, INC.,
                                    Issuer

                                      and

                         BANK ONE TRUST COMPANY, N.A.,
                                    Trustee

                               _________________

                                   INDENTURE

                           Dated as of May 18, 2001

                               _________________

                         SUBORDINATED DEBT SECURITIES

--------------------------------------------------------------------------------
<PAGE>

                            CROSS REFERENCE SHEET*

     This Cross Reference Sheet shows the location in this Indenture of the
provisions inserted pursuant to the Trust Indenture Act of 1939, as amended.

<TABLE>
<CAPTION>
                Trust Indenture Act                          Sections of Indenture
---------------------------------------------------  --------------------------------------
<S>                                                  <C>
310 (a)(1) and (2).................................  6.9
310 (a)(3) and (4).................................  Inapplicable
310 (b)............................................  6.8 and 6.10 (a), (b) and (d)
310 (c)............................................  Inapplicable
311 (a)............................................  6.13 (a) and (c)(1) and (2)
311 (b)............................................  6.13 (b)
311 (c)............................................  Inapplicable
312 (a)............................................  4.1 and 4.2 (a)
312 (b)............................................  4.2 (a) and (b)(i) and (ii)
312 (c)............................................  4.2 (c)
313 (a)............................................  4.4 (a)
313 (b)(1).........................................  Inapplicable
313 (b)(2).........................................  4.4 (b)
313 (c)............................................  4.4 (c)
313 (d)............................................  4.4 (d)
314 (a)............................................  4.3
314 (b)............................................  Inapplicable
314 (c)(1) and (2).................................  13.5
314 (d)............................................  Inapplicable
314 (e)............................................  13.5
314 (f)............................................  Inapplicable
315 (a), (c) and (d)...............................  6.1
315 (b)............................................  5.11
315 (e)............................................  5.12
316 (a)(1).........................................  5.9
316 (a)(2).........................................  Not required
316 (a) (last sentence)............................  7.4
316 (b)............................................  5.7
316 (c)............................................  Not required
317 (a)............................................  5.2
317 (b)............................................  3.4 (a) and (b)
318 (a)............................................  13.7
</TABLE>
_________________________
*    This Cross Reference Sheet is not part of the Indenture.
<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>            <C>                                                                                                       <C>
ARTICLE I.     DEFINITIONS.............................................................................................   1

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

ARTICLE II.    SECURITIES..............................................................................................   6

     2.1       Forms Generally.........................................................................................   6

     2.2       Form of Trustee's Certificate of Authentication.........................................................   7

     2.3       Amount Unlimited; Issuable in Series....................................................................   7

     2.4       Authentication and Delivery of Securities...............................................................  10

     2.5       Execution of Securities.................................................................................  12

     2.6       Certificate of Authentication...........................................................................  12

     2.7       Denomination of Securities; Payments of Interest........................................................  13

     2.8       Registration, Transfer and Exchange.....................................................................  13

     2.9       Mutilated, Defaced, Destroyed, Lost and Stolen Securities...............................................  16

     2.10      Cancellation of Securities; Destruction Thereof.........................................................  17

     2.11      Temporary Securities....................................................................................  17

     2.12      Computation of Interest.................................................................................  18

ARTICLE III.   COVENANTS OF THE ISSUER.................................................................................  18

     3.1       Payment of Principal and Interest.......................................................................  18

     3.2       Offices for Payments, etc...............................................................................  18

     3.3       Appointment to Fill a Vacancy in Office of Trustee......................................................  19

     3.4       Paying Agents...........................................................................................  19

     3.5       Limitation on Dividends; Transactions with Affiliates...................................................  20

     3.6       Covenants as to PSE Trust...............................................................................  21
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<S>                                                                                                                             <C>
ARTICLE IV.    SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE..................................................  21

          4.1  Issuer to Furnish Trustee Names and Addresses of Securityholders.................................................  21

          4.2  Preservation and Disclosure of Securityholders Lists.............................................................  21

          4.3  Reports by the Issuer............................................................................................  23

          4.4  Reports by the Trustee...........................................................................................  23

ARTICLE V.     REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT..................................................  24

          5.1  Event of Default Defined; Acceleration of Maturity; Waiver of Default............................................  24

          5.2  Collection of Indebtedness by Trustee; Trustee May Prove Debt....................................................  26

          5.3  Application of Proceeds..........................................................................................  28

          5.4  Suits for Enforcement............................................................................................  29

          5.5  Restoration of Rights on Abandonment of Proceedings..............................................................  29

          5.6  Limitations on Suits by Securityholders..........................................................................  30

          5.7  Unconditional Right of Securityholders to Receive Principal and Interest and to Institute Certain Suits..........  30

          5.8  Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default..........................................  30

          5.9  Control by Holders of Securities.................................................................................  31

         5.10  Waiver of Past Defaults..........................................................................................  31

         5.11  Trustee to Give Notice of Default, But May Withhold in Certain Circumstances.....................................  32

         5.12  Right of Court to Require Filing of Undertaking to Pay Costs.....................................................  32

ARTICLE VI.    CONCERNING THE TRUSTEE...........................................................................................  33

          6.1  Duties and Responsibilities of the Trustee; During Default; Prior to Default.....................................  33
</TABLE>

                                      -ii-
<PAGE>

<TABLE>
<S>                                                                                                                              <C>
          6.2  Certain Rights of the Trustee....................................................................................  34

          6.3  Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof...............  35

          6.4  Trustee and Agents May Hold Securities; Collections, etc.........................................................  35

          6.5  Moneys Held by Trustee...........................................................................................  35

          6.6  Compensation and Indemnification of Trustee and Its Prior Claim..................................................  36

          6.7  Right of Trustee to Rely on Officers' Certificate, etc...........................................................  36

          6.8  Qualification of Trustee; Conflicting Interests..................................................................  37

          6.9  Persons Eligible for Appointment as Trustee......................................................................  37

         6.10  Resignation and Removal; Appointment of Successor Trustee........................................................  37

         6.11  Acceptance of Appointment by Successor Trustee...................................................................  39

         6.12  Merger, Conversion, Consolidation or Succession to Business of Trustee...........................................  39

         6.13  Preferential Collection of Claims Against the Issuer.............................................................  40

         6.14  Appointment of Authenticating Agent..............................................................................  40

ARTICLE VII.   CONCERNING THE SECURITYHOLDERS...................................................................................  41

          7.1  Evidence of Action Taken by Securityholders......................................................................  41

          7.2  Proof of Execution of Instruments and of Holding of Securities...................................................  41

          7.3  Holders to Be Treated as Owners..................................................................................  42

          7.4  Securities Owned by Issuer Deemed Not Outstanding................................................................  42

          7.5  Right of Revocation of Action Taken..............................................................................  43

          7.6  Calculation of Original Issue Discount...........................................................................  43

ARTICLE VIII.  SUPPLEMENTAL INDENTURES..........................................................................................  43

          8.1  Supplemental Indentures Without Consent of Securityholders.......................................................  43
</TABLE>

                                     -iii-
<PAGE>

<TABLE>
<S>                                                                                                                              <C>
          8.2  Supplemental Indentures With Consent of Securityholders..........................................................  45

          8.3  Effect of Supplemental Indenture.................................................................................  46

          8.4  Documents to Be Given to Trustee.................................................................................  46

          8.5  Notation on Securities in Respect of Supplemental Indentures.....................................................  46

ARTICLE IX.    CONSOLIDATION, MERGER, SALE OR CONVEYANCE........................................................................  47

          9.1  Covenant of Issuer Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions............  47

          9.2  Successor Corporation Substituted for Issuer.....................................................................  47

          9.3  Documents to be Delivered to Trustee.............................................................................  48

ARTICLE X.     SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS........................................................  48

         10.1  Satisfaction and Discharge of Indenture..........................................................................  48

         10.2  Application by Trustee of Funds Deposited for Payment of Securities..............................................  51

         10.3  Repayment of Moneys Held by Paying Agent.........................................................................  51

         10.4  Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years......................................  51

         10.5  Indemnity for Government Obligations.............................................................................  51

ARTICLE XI.    REDEMPTION OF SECURITIES AND SINKING FUNDS.......................................................................  52

         11.1  Applicability of Article.........................................................................................  52

         11.2  Notice of Redemption; Partial Redemptions........................................................................  52

         11.3  Payment of Securities Called for Redemption......................................................................  53

         11.4  Exclusion of Certain Securities from Eligibility for Selection for Redemption....................................  54

         11.5  Mandatory and Optional Sinking Funds.............................................................................  54

ARTICLE XII.   SUBORDINATION....................................................................................................  56
</TABLE>

                                      -iv-
<PAGE>

<TABLE>
<S>                                                                                                                              <C>
         12.1  Applicability of Article; Securities Subordinated to Senior Indebtedness.........................................  56

         12.2  Issuer Not to Make Payments with Respect to Subordinated Securities in Certain Circumstances.....................  57

         12.3  Subordinated Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or
               Reorganization of Issuer.........................................................................................  58

         12.4  Holders of Subordinated Securities to be Subrogated to Right of Holders of Senior Indebtedness...................  60

         12.5  Obligation of the Issuer Unconditional...........................................................................  60

         12.6  Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice..........................................  61

         12.7  Application by Trustee of Monies or Government Obligations Deposited with It.....................................  61

         12.8  Subordination Rights Not Impaired by Acts or Omissions of Issuer or Holders of Senior Indebtedness...............  62

         12.9  Securityholders Authorize Trustee to Effectuate Subordination of Securities......................................  63

        12.10  Right of Trustee to Hold Senior Indebtedness.....................................................................  63

        12.11  Article XII Not to Prevent Events of Defaults....................................................................  63

ARTICLE XIII.  MISCELLANEOUS PROVISIONS.........................................................................................  64

         13.1  Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability...................  64

         13.2  Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities................................  64

         13.3  Successors and Assigns of Issuer Bound by Indenture..............................................................  64

         13.4  Notices and Demands on Issuer, Trustee and Holders of Securities.................................................  64

         13.5  Officers' Certificates and Opinions of Counsel; Statements to be Contained Therein...............................  65
</TABLE>

                                      -v-
<PAGE>

<TABLE>
<S>                                                                                                                              <C>
         13.6  Payments Due on Saturdays, Sundays and Holidays..................................................................  66

         13.7  Conflict of any Provision of Indenture with Trust Indenture Act of 1939..........................................  67

         13.8  Governing Law....................................................................................................  67

         13.9  Counterparts.....................................................................................................  67

        13.10  Effect of Headings and Table of Contents.........................................................................  67

        13.11  Separability Clause..............................................................................................  67

ARTICLE XIV.   SECURITYHOLDERS' MEETINGS........................................................................................  67

         14.1  Purposes of Meetings.............................................................................................  67

         14.2  Call of Meetings by Trustee......................................................................................  68

         14.3  Call of Meetings by the Issuer or Securityholders................................................................  68

         14.4  Qualifications for Voting........................................................................................  68

         14.5  Regulations......................................................................................................  68

         14.6  Voting...........................................................................................................  69
</TABLE>

                                      -vi-
<PAGE>

     THIS INDENTURE dated as of May 18, 2001 between Puget Sound Energy, Inc., a
Washington corporation (the "Issuer"), and Bank One Trust Company, N.A., a
national banking association, as trustee (the "Trustee").

                                    RECITALS

     A.   The Issuer has duly authorized the issue from time to time of its
debentures, notes, bonds or other evidences of indebtedness to be issued in one
or more series (the "Securities") up to such principal amount or amounts as may
from time to time be authorized in accordance with the terms of this Indenture;

     B.   The Issuer has duly authorized the execution and delivery of this
Indenture to provide, among other things, for the authentication, delivery and
administration of the Securities; and

     C.   All things necessary to make this Indenture a valid indenture and
agreement according to its terms have been done;

     NOW, THEREFORE:

     In consideration of the premises and the purchases of the Securities by the
holders thereof, the Issuer and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the respective holders from time to time of
the Securities as follows:

                            ARTICLE I. DEFINITIONS

1.1  Certain Terms Defined

     The following terms (except as otherwise expressly provided or unless the
context otherwise clearly requires) for all purposes of this Indenture and of
any indenture supplemental hereto shall have the respective meanings specified
in this Section.  All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, including terms defined therein by reference to the
Securities Act of 1933, as amended (except as herein otherwise expressly
provided or unless the context otherwise requires), shall have the meanings
assigned to such terms in said Trust Indenture Act and in said Securities Act as
in force at the date of this Indenture.  All accounting terms used herein and
not expressly defined shall have the meanings assigned to such terms in
accordance with generally accepted accounting principles, and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted in the United States of America at the time of any
computation.  References to any statute mean such statute as amended at the time
and includes any successor legislation.  The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.  The terms
defined in this Article include the plural as well as the singular.
<PAGE>

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

     "Board of Directors" means either the Board of Directors of the Issuer or
any committee of such Board duly authorized to act on its behalf.

     "Board Resolution" means a copy of one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer to have been duly adopted
or consented to by the Board of Directors and to be in full force and effect,
and delivered to the Trustee.

     "Business Day" means a day on which banking institutions in New York, New
York or Delaware are not authorized or required by law or regulation to close.

     "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution and delivery of this Indenture such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act of 1939, then the body performing such duties at such time.

     "Common Securities" means undivided beneficial interests in the assets of a
PSE Trust which rank pari passu with Preferred Securities issued by such trust;
provided, however, that upon the occurrence of an Event of Default, the rights
of holders of Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and maturity are subordinated to the
rights of holders of Preferred Securities.

     "Common Securities Guarantee" means any guarantee that the Issuer may enter
into that operates directly or indirectly for the benefit of holders of Common
Securities of PSE Trust.

     "PSE Trust" means a Delaware business trust formed by the Issuer for the
purpose of purchasing the Securities of the Issuer.

     "Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 1 Bank One Plaza, Suite IL1-0126, Chicago,
Illinois, 60670-0126.

     "Declaration" means, in respect of a PSE Trust, the amended and restated
declaration of trust of such PSE Trust or any other governing instrument of such
Trust.

                                      -2-
<PAGE>

     "Depository" means, with respect to the Securities of any series issuable
or issued in the form of one or more Global Securities, the Person designated as
Depository by the Issuer pursuant to Section 2.3, which must be a clearing
agency registered under the Securities Exchange Act of 1934, as amended, and any
other applicable statute or regulation, until a successor Depository shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depository" shall mean each Person who is then a Depository
hereunder; and if at any time there is more than one such Person, "Depository"
as used with respect to the Securities of any such series shall mean each
Depository with respect to the Global Securities of such series.

     "Event of Default" means any event or condition specified as such in
Section 5.1.

     "Global Security" means a Security evidencing all or a part of a series of
Securities issued to the Depository, or its nominee, for such series in
accordance with Section 2.4, and bearing the legend prescribed in Section 2.4.

     "Government Obligations" means direct obligations of the United States for
the payment of which its full faith and credit is pledged, or obligations of a
person controlled or supervised by and acting as an agency or instrumentality of
the United States and the payment of which is unconditionally guaranteed by the
United States, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of a holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the Government
Obligation evidenced by such depository receipt.

     "Holder", "Holder of Securities", "Securityholder" or other similar terms
mean the Person in whose name such Security is registered in the Security
Register kept by the Issuer for that purpose in accordance with the terms
hereof.

     "Indenture" means this instrument as originally executed and delivered or,
if amended or supplemented as herein provided, as so amended or supplemented or
both, and shall include the forms and terms of particular series of Securities
established as provided hereunder.

     "Interest Payment Date" means (a) the date or dates, if any, on which
interest is to be paid on any Security as established pursuant to Section
2.3(f), (b) the date of maturity or redemption of such Security, and (c) only
with respect to defaulted interest on such Security, the date established for
the payment of such defaulted interest pursuant to Section 2.7 hereof.

     "Issuer" means (except as otherwise provided in Article VI) Puget Sound
Energy, Inc., a Washington corporation, and, subject to Article IX, its
successors and assigns.

                                      -3-
<PAGE>

     "Issuer Order" means a written statement, request or order of the Issuer
signed in its name by one of the Chairman, the President, any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President"), the Treasurer or an Assistant
Treasurer of the Issuer.

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

     "Officers' Certificate" means a certificate signed by one of the Chairman,
the President, any Vice President (whether or not designated by a number or
numbers or a word or words added before or after the title "Vice President"),
the Treasurer or an Assistant Treasurer and by the Secretary or any Assistant
Secretary, of the Issuer and delivered to the Trustee.  Except as otherwise
provided herein, each such certificate shall include the statements provided for
in Section 13.5.

     "Opinion of Counsel" means an opinion in writing signed by the counsel of
the Issuer as designated by the Board of Directors or by such other legal
counsel who may be an employee of or regular counsel to the Issuer and who shall
be satisfactory to the Trustee.  Each such opinion shall include the statements
provided for in Section 13.5, if and to the extent required thereby.

     "Outstanding", when used with reference to Securities, shall, subject to
the provisions of Section 7.4, mean, as of any particular time, all Securities
theretofore authenticated and delivered by the Trustee under this Indenture,
except:

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

     (b) Securities, or portions thereof, for the payment or redemption of which
moneys or Government Obligations (as provided for in Section 10.1) in the
necessary amount shall have been theretofore deposited in trust with the Trustee
or with any paying agent (other than the Issuer) or shall have been set aside,
segregated and held in trust by the Issuer for the Holders of such Securities
(if the Issuer shall act as its own paying agent), provided that if such
Securities, or portions thereof, are to be redeemed prior to the Maturity
thereof, notice of such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for giving such
notice; and

     (c) Securities which shall have been paid or in substitution for which
other Securities shall have been authenticated and delivered pursuant to the
terms of Section 2.9 (except with respect to any such Security as to which proof
satisfactory to the Trustee is presented that such Security is held by a Person
in whose hands such Security is a legal, valid and binding obligation of the
Issuer).

                                      -4-
<PAGE>

     In determining whether the Holders of the requisite principal amount of
Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder Securities owned
by the Issuer or any other obligor upon the Securities of any Affiliate of the
Issuer or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded.  Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Issuer or any other obligor upon the Securities or
an Affiliate of the Issuer or of such other obligor.

     "Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

     "Preferred Securities"  means undivided beneficial interests in the assets
of a PSE Trust which rank pari passu with Common Securities issued by such
trust; provided however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.

     "Preferred Securities Guarantee" means any guarantee that the Issuer may
enter into that operates directly or indirectly for the benefit of holders of
Preferred Securities of a PSE Trust.

     "Principal" means the amount (including, without limitation, if and to the
extent applicable, any premium) that is payable with respect to a Security as of
any date and for any purpose (including, without limitation, in connection with
any sinking fund, upon any redemption at the option of the Issuer, upon any
purchase or exchange at the option of the Issuer or the Holder of such Security
and upon any acceleration of the Maturity of such Security).

     "Property Trustee" means the entity performing the functions of the
Property Trustee of a PSE Trust under the applicable Declaration of such PSE
Trust.

     "Record Date" shall have the meaning set forth in Section 2.7.

     "Responsible Officer," when used with respect to the Trustee, means any
officer assigned to administer corporate trust matters, or to whom any corporate
trust matter is referred because of his knowledge of and familiarity with the
particular subject.

     "Security" or "Securities" shall have the meaning stated in the first
recital of this Indenture and, more particularly, any Securities that have been
authenticated and delivered under this Indenture.

                                      -5-
<PAGE>

     "Security Register" and "Security Registrar" shall have the respective
meanings set forth in Section 2.8.

     "Senior Indebtedness" shall have the meaning set forth in Section 12.1(b).

     "Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Issuer or by one or more
other Subsidiaries.  For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

     "Stated Maturity" means, when used with respect to any Security or any
installment of principal thereof or interest thereon, the date specified in such
Security as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.

     "Trust Indenture Act of 1939" or "Trust Indenture Act" (except as otherwise
provided in Sections 8.1 and 8.2) means the Trust Indenture Act of 1939 as in
force at the date as of which this Indenture was originally executed.

     "Trust Securities" means Common Securities and Preferred Securities.

     "Trustee" means the Person identified as the "Trustee" in the first
paragraph hereof and, subject to the provisions of Article VI, shall also
include any successor trustee.  "Trustee" shall also mean or include each Person
who is then a trustee hereunder; and if at any time there is more than one such
Person, "Trustee" as used with respect to the Securities of any series shall
mean the trustee with respect to the Securities of such series.

                            ARTICLE II.  SECURITIES

2.1  Forms Generally

     The Securities of each series shall be substantially in such form (not
inconsistent with this Indenture) as shall be established by or pursuant to one
or more Board Resolutions (as set forth in a Board Resolution or, to the extent
established pursuant to rather than set forth in a Board Resolution, an
Officers' Certificate detailing such establishment) or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have imprinted or otherwise reproduced thereon such letters,
numbers or other marks of identification and such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities as
evidenced by their execution of such Securities.

                                      -6-
<PAGE>

     The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities as evidenced by their execution of
such Securities.

2.2  Form of Trustee's Certificate of Authentication

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

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

                                        BANK ONE TRUST COMPANY, N.A.,
                                        as Trustee

                                        By:_________________________________
                                           Authorized Signatory"

     If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Trustee's certificate of
authentication to be borne by the Securities of each such series shall be
substantially as follows:

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

                                                                      ,
                                ______________________________________
                                as Authenticating Agent

                                 By:__________________________________
                                   Authorized Officer"

2.3  Amount Unlimited; Issuable in Series

     (a) The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.

     (b) The Securities may be issued in one or more series and shall be direct
obligations of the Issuer.

     (c) Each Security shall be dated and issued as of the date of its
authentication by the Trustee.

                                      -7-
<PAGE>

     (d) Each Security shall bear interest from the later of its original date
of authentication or the most recent Interest Payment Date to which interest has
been paid or duly provided for with respect to such Security until the principal
of such Security is paid or made available for payment, and interest on each
Security shall be payable on each Interest Payment Date after the date of such
Security.

     (e) Each Security shall mature on a date specified in the Security and the
principal amount of each outstanding Security shall be payable on the Maturity
specified therein.

     (f) There shall be established in or pursuant to one or more Board
Resolutions (and, to the extent established pursuant to rather than set forth in
a Board Resolution, in an Officers' Certificate detailing such establishment) or
established in one or more indentures supplemental hereto, prior to the initial
issuance of Securities of any series:

          (1) the designation of the Securities of such series, which shall
distinguish the Securities of such series from the Securities of all other
series;

          (2) any limit upon the aggregate principal amount of the Securities of
such series that may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of such series pursuant to
Section 2.8, 2.9, 2.11, 8.5 or 11.3);

          (3) subject to Section 2.3(e), the date or dates (and whether fixed or
extendible) on which the principal of the Securities of such series is payable;

          (4) the date from which interest on the Securities of such series
shall begin to accrue, the rate or rates at which the Securities of such series
shall bear interest, if any, the Interest Payment Date or Dates for the
Securities of such series and the Record Date for interest payable on any
Interest Payment Date;

          (5) the place or places where the principal of and any interest on
Securities of such series shall be payable and where such Securities may be
registered or transferred (if in addition to, or other than, as provided in
Section 3.2);

          (6) the right, if any, of the Issuer to redeem or purchase Securities
of such series, in whole or in part, at its option and the period or periods
within which, the price or prices at which and any terms and conditions upon
which Securities of such series may be so redeemed;

          (7) the obligation, if any, of the Issuer to redeem, purchase or repay
Securities of such series pursuant to any mandatory redemption, sinking fund or
analogous provisions or at the option of a Holder thereof and the price or
prices at which and the period or periods within which and any terms and
conditions upon which Securities of such series shall be redeemed, purchased or
repaid, in whole or in part, pursuant to such obligation;

                                      -8-
<PAGE>

          (8)  if other than denominations of $25 and any integral multiple
thereof, the denominations in which Securities of such series shall be issuable;

          (9)  whether the Securities of such series will be subordinated to the
payment of Senior Indebtedness on the terms and conditions set forth in Article
XII  and whether such subordination shall be subject to any provisions in
addition to or in lieu of those set forth in Article XII;

          (10) whether the Securities of such series will be issuable as Global
Securities;

          (11) whether and under what circumstances the Issuer will pay
additional amounts on the Securities of such series held by a person who is not
a U.S. Person in respect of any tax, assessment or governmental charge withheld
or deducted and, if so, whether the Issuer will have the option to redeem such
Securities rather than pay such additional amounts;

          (12) if the Securities of such series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary Security of
such series) only upon receipt of certain certificates or other documents or
satisfaction of other conditions, and the form and terms of any such
certificates, documents or conditions;

          (13) any trustees, depositaries, authenticating or paying agents,
transfer agents, conversion agents or registrars or any other agents with
respect to the Securities of such series;

          (14) any events of default or covenants with respect to the Securities
of such series other than those specified herein;

          (15) the Person to whom any interest on a Security of such series
shall be payable, if other than the Person in whose name the Security (or one or
more predecessor Securities) is registered at the close of business on the
Record Date for such interest;

          (16) if the Securities of such series shall be issued in whole or in
part in the form of one or more Global Securities, whether beneficial owners of
interests in any such Global Security may exchange such interests for Securities
of such series of like tenor and of authorized form and denomination and the
circumstances under which any such changes may occur, if other than in the
manner provided in Section 2.8;

          (17) the right of the Issuer, if any, to defer any payment of
principal of or interest on the Securities of such series, and the maximum
length of any such deferral period;

          (18) whether any property will be pledged to secure the Securities;
and

                                      -9-
<PAGE>

          (19) any other terms of such series (which terms shall not be
inconsistent with the provisions of this Indenture).

     All Securities of any one series shall be substantially identical, except
as to denomination and except as may otherwise be provided by or pursuant to the
Board Resolution or Officers' Certificate referred to above or as set forth in
any indenture supplemental hereto referred to above.  All Securities of any one
series need not be issued at the same time and may be issued from time to time,
consistent with the terms of this Indenture, if so provided by or pursuant to
such Board Resolution, such Officers' Certificate or in any such indenture
supplemental hereto.

2.4  Authentication and Delivery of Securities

     The Issuer may from time to time deliver Securities of any series, executed
by the Issuer to the Trustee for authentication, together with the applicable
documents referred to below in this Section, and the Trustee shall thereupon
authenticate and make available for delivery such Securities to or upon the
order of the Issuer (contained in the Issuer Order referred to below in this
Section) or pursuant to such procedures acceptable to the Trustee and to such
recipients as may be specified from time to time by an Issuer Order.  If so
provided in the Board Resolution, Officers' Certificate or supplemental
indenture establishing the Securities of any series, the maturity date, interest
accrual date, interest rate, Interest Payment Date or Dates and any other terms
of any or all of the Securities of such series may be determined by or pursuant
to such Issuer Order and procedures.  If provided for in such procedures, such
Issuer Order may authorize authentication and delivery pursuant to instructions
(from the Issuer or its duly authorized agent) in writing, by facsimile or any
other method mutually agreed upon by the Issuer and Trustee.  In authenticating
the Securities of a series and accepting the additional responsibilities under
this Indenture in relation to such Securities, the Trustee shall be entitled to
receive (but, in the case of subparagraphs (b), (c) and (d) below, only at or
before the time of the first request of the Issuer to the Trustee to
authenticate Securities of such series, however, any request after the first
shall be deemed to include the representation of the Issuer that the document
previously delivered pursuant to subparagraphs (b), (c) and (d) below are still
true and in effect) and (subject to Section 6.1) shall be fully protected in
relying upon, unless and until such documents have been superseded or revoked:

     (a) an Issuer Order requesting such authentication and setting forth
delivery instructions if the Securities are not to be delivered to the Issuer.

     (b) any Board Resolution, Officers' Certificate and/or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to
which the forms and terms of the Securities of such series were established;

     (c) an Officers' Certificate setting forth the form or forms and terms of
the Securities of such series stating (i) that such form or forms and terms have
been established pursuant to Sections 2.1 and 2.3 and comply with this
Indenture, (ii) the aggregate principal

                                      -10-
<PAGE>

amount of all of the Securities outstanding under this Indenture and (iii)
covering such other matters as the Trustee may reasonably request; and

     (d) at the option of the Issuer, either an Opinion of Counsel, or a letter
addressed to the Trustee permitting it to rely on an Opinion of Counsel,
substantially to the effect that:

          (1) the forms of the Securities of such series have been duly
authorized and established in conformity with the provisions of this Indenture;

          (2) the terms of the Securities of such series have been duly
authorized and established in conformity with the provisions of this Indenture;

          (3) when the Securities of such series have been executed by the
Issuer and authenticated by the Trustee in accordance with the provisions of
this Indenture and delivered to and duly paid for by the purchasers thereof,
they will have been duly issued under this Indenture and will be valid and
legally binding obligations of the Issuer, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting the enforcement of
creditors' rights and to general principles of equity, and will be entitled to
the benefits of this Indenture;

          (4) the Indenture has been duly authorized, executed and delivered by
the Issuer and constitutes a legal, valid and binding agreement of the Issuer,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
the enforcement of creditors' rights and to general principles of equity;

          (5) the issuance of the Securities will not result in any default
under this Indenture, or any other contract, indenture, loan agreement or other
instrument to which the Issuer is a party or by which it or any of its property
is bound; and

          (6) no consent, approval, authorization, order, registration or
qualification of or with any governmental agency or body having jurisdiction
over the Issuer is required for the execution and delivery of the Securities of
such series by the Issuer, except such as have been obtained (except that no
opinion need be expressed as to state securities or Blue Sky laws).

     The Trustee shall have the right to decline to authenticate and deliver any
Securities of any series under this Section (other than Securities the forms and
terms of which shall have been established by supplemental indenture) if the
Trustee, being advised by counsel, determines that such action may not lawfully
be taken by the Issuer or if the Trustee in good faith by its board of directors
or board of trustees, executive committee or a trust committee of directors,
trustees or Responsible Officers shall determine that such action would expose
the Trustee to personal liability to existing Holders or would affect the
Trustee's rights, duties or immunities under the Securities of any such series,
this Indenture or otherwise.

                                      -11-
<PAGE>

     If the Issuer shall establish pursuant to Section 2.3 that the Securities
of a series are to be issued in the form of one or more Global Securities, then
the Issuer shall execute and the Trustee shall, in accordance with this Section
and the Issuer Order with respect to such series, authenticate and make
available for delivery one or more Global Securities that (i) shall be in an
aggregate amount equal to the aggregate principal amount specified in such
Issuer Order, (ii) shall be registered in the name of the Depository therefor or
its nominee, (iii) shall be delivered by the Trustee to such Depository or
pursuant to such Depository's instructions and (iv) shall bear a legend
substantially to the following effect:

          "Unless and until it is exchanged in whole or in part for
          Securities in definitive registered form, this Security may
          not be transferred except as a whole by the Depository to
          the nominee of the Depository or by a nominee of the
          Depository to the Depository or another nominee of the
          Depository or by the Depository or any such nominee to a
          successor Depository or a nominee of such successor
          Depository."

2.5  Execution of Securities

     The Securities shall be signed on behalf of the Issuer by one of its
Chairman, its President, any Vice President (whether or not designated by a
number or numbers or a word or words added before or after the title "Vice
President"), the Treasurer or an Assistant Treasurer, and attested by the
Secretary or an Assistant Secretary of the Issuer.  Such signatures may be the
manual or facsimile signatures of such officers.  Typographical and other minor
errors or defects in any such signature shall not affect the validity or
enforceability of any Security that has been duly authenticated and delivered by
the Trustee.

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

2.6  Certificate of Authentication

     Only such Securities as shall bear thereon a certificate of authentication
substantially in the form hereinbefore recited, executed by the Trustee by the
manual signature of one of its authorized officers, shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose.  The
execution of such certificate by the Trustee upon any Security executed by the
Issuer shall be conclusive evidence that the Security so authenticated has been
duly authenticated and delivered hereunder and that the Holder is entitled to
the benefits of this Indenture.  Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold
by the Issuer, and the Issuer shall deliver such

                                      -12-
<PAGE>

Security to the Trustee for cancellation as provided in Section 2.10, together
with a written statement (which need not comply with Section 13.5 and need not
be accompanied by an Opinion of Counsel) stating that such Security has never
been issued and sold by the Issuer, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.

2.7  Denomination of Securities; Payments of Interest

     The Securities of each series shall be issuable in registered form in
denominations established as contemplated by Section 2.3.  The Securities of
each series shall be numbered, lettered or otherwise distinguished in such
manner or in accordance with such plan as the officers of the Issuer executing
the same may determine with the approval of the Trustee, as evidenced by the
execution and authentication thereof.

     The Securities of each series shall bear interest from the date, and such
interest shall be payable on the Interest Payment Dates, established as
contemplated by Section 2.3.

     The Person in whose name any Security of any series is registered at the
close of business on any Record Date applicable to such series with respect to
any Interest Payment Date for such series shall be entitled to receive the
interest, if any, payable on such Interest Payment Date notwithstanding any
transfer or exchange of such Security subsequent to the Record Date and prior to
such Interest Payment Date, except if and to the extent the Issuer shall default
in the payment of the interest due on such Interest Payment Date, in which case
such defaulted interest shall be paid to the Persons in whose names Outstanding
Securities of such series are registered at the close of business on a
subsequent Record Date (which shall be not less than five Business Days prior to
the date of payment of such defaulted interest) established by notice given by
mail by or on behalf of the Issuer to the Holders of Securities of such series
not less than 15 days preceding such subsequent Record Date.  The term "Record
Date," as used with respect to any Interest Payment Date (except a date for
payment of defaulted interest) for the Securities of any series, shall mean the
date specified as such in the terms of the Securities of such series established
as contemplated by Section 2.3.

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

2.8  Registration, Transfer and Exchange

     The Issuer will keep, or cause to be kept, at the Corporate Trust Office
and at each other office or agency to be maintained for the purpose as provided
in Section 3.2 for each series of Securities a register or registers
(collectively, the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, it will provide for the registration of
Securities of such series and the registration of transfer of Securities of such
series.  The

                                      -13-
<PAGE>

Security Register shall be in written form in the English language or in any
other form capable of being converted into such form within a reasonable time.
At all reasonable times such register or registers not maintained by the Trustee
shall be open for inspection by the Trustee. Unless and until otherwise
determined by the Issuer pursuant to Section 2.3, the Security Register with
respect to each series of Securities shall be kept solely at the Corporate Trust
Office and, for this purpose, the Trustee shall be designated the "Security
Registrar."

     Upon due presentation for registration of transfer of any Security of any
series at any such office or agency, the Issuer shall execute and the Trustee
shall authenticate and make available for delivery in the name of the transferee
or transferees a new Security or Securities of the same series, maturity date
and interest rate in authorized denominations for a like aggregate principal
amount.

     At the option of the Holder thereof, Securities of any series (other than a
Global Security, except as set forth below) may be exchanged for one or more
Securities of such series in authorized denominations for a like aggregate
principal amount, upon surrender of such Securities to be exchanged at the
office or agency to be maintained for such purpose in accordance with Section
3.2 and upon payment, if the Issuer shall so require, of the charges hereinafter
provided.  Whenever any Securities are so surrendered for exchange, the Issuer
shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled to
receive.  All Securities surrendered upon any exchange or transfer provided for
in this Indenture shall be promptly cancelled by the Trustee and the Trustee
will deliver a certificate of cancellation thereof to the Issuer.

     All Securities presented for registration of transfer, exchange, redemption
or payment shall (if so required by the Issuer or the Trustee) be duly endorsed
by, or be accompanied by a written instrument or instruments of transfer in form
satisfactory to the Issuer and the Trustee duly executed by, the Holder or his
attorney duly authorized in writing.

     The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities, other than exchanges pursuant to
Sections 2.11, 8.5 and 11.2 not involving any transfer.  No service charge shall
be made for any such transaction.

     The Issuer shall not be required to (a) issue, exchange or register a
transfer of any Securities of any series for a period of 15 days next preceding
the first mailing or publication of notice of redemption of Securities of such
series to be redeemed or (b) exchange or register the transfer of any Securities
selected, called or being called for redemption, in whole or in part, except, in
the case of any Security to be redeemed in part, the portion thereof not so to
be redeemed.

     Notwithstanding any other provision of this Section, unless and until it is
exchanged in whole or in part for Securities in definitive registered form, a
Global Security representing all or a portion of the Securities of a series may
not be transferred except as a whole by the

                                      -14-
<PAGE>

Depository for such Global Security to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository or by such Depository or any such nominee to a successor Depository
for such Global Security or a nominee of such successor Depository.

     If at any time a Depository for any Securities of a series represented by
one or more Global Securities notifies the Issuer that it is unwilling or unable
to continue as Depository for such Securities or if at any time any such
Depository shall no longer be eligible as a Depository, the Issuer shall appoint
a successor Depository with respect to the Securities held by such Depository.
If a successor Depository is not appointed by the Issuer within 90 days after
the Issuer receives such notice or becomes aware of such ineligibility, the
Securities of such series shall no longer be represented by one or more Global
Securities held by such Depository, and the Issuer shall execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery of
definitive Securities of such series, shall authenticate and make available for
delivery Securities of such series in definitive registered form without
coupons, in any authorized denominations and in an aggregate principal amount
equal to the principal amount of the Global Security or Securities held by such
Depository in exchange for such Global Security or Securities.

     The Issuer may at any time and in its sole discretion determine that the
Securities of a particular series shall no longer be represented by a Global
Security or Securities.  In such event, the Issuer shall execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery of
definitive Securities of such series, shall authenticate and deliver, Securities
of such series in definitive registered form in any authorized denominations and
in an aggregate principal amount equal to the principal amount of the Global
Security or Securities representing Securities of such series in exchange for
such Global Security or Securities.

     If so specified by the Issuer pursuant to Section 2.3 with respect to
Securities of a particular series represented by a Global Security, the
Depository for such Global Security may surrender such Global Security in
exchange in whole or in part for Securities of such series in definitive
registered form on such terms as are acceptable to the Issuer and such
Depository.  Thereupon, the Issuer shall execute, and the Trustee shall
authenticate and make available for delivery:

     (a) to each Person specified by such Depository a new Security or
Securities of such series, in any authorized denominations requested by such
Person, in an aggregate principal amount equal to, and in exchange for, such
Person's beneficial interest in the Global Security; and

     (b) to such Depository a new Global Security in a denomination equal to the
difference between the principal amount of the surrendered Global Security and
the aggregate principal amount of Securities authenticated and delivered
pursuant to clause (a) above.

                                      -15-
<PAGE>

      Upon the exchange of any Global Security for Securities in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Issuer or the Trustee.  Securities
in definitive registered form without coupons issued in exchange for a Global
Security pursuant to this Section shall be registered in such names and in such
authorized denominations as the Depository for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Issuer or the Trustee.  The Trustee or
such agent shall deliver such Securities to or as directed by the Persons in
whose names such Securities are so registered.

      All Securities issued upon any registration of transfer or exchange of
Securities shall be valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

2.9   Mutilated, Defaced, Destroyed, Lost and Stolen Securities

      In case any temporary or definitive Security shall become mutilated,
defaced or be destroyed, lost or stolen, the Issuer in its discretion may
execute, and upon receipt of an Issuer Order, the Trustee shall authenticate and
make available for delivery a new Security of the same series, maturity date and
interest rate, bearing a number or other distinguishing symbol not
contemporaneously outstanding, in exchange and substitution for the mutilated or
defaced Security, or in lieu of and in substitution for the Security so
destroyed, lost or stolen.  In every case the applicant for a substitute
Security shall furnish to the Issuer and to the Trustee or any agent of the
Issuer or the Trustee such security or indemnity as may be required by them to
indemnify and defend and to save each of them and any agent of either of them
harmless and, in every case of destruction, loss or theft, evidence to their
satisfaction of the destruction, loss or theft of such Security and of the
ownership thereof and, in the case of mutilation or defacement, shall surrender
the Security to the Trustee or such agent.

      Upon the issuance of any substitute Security the Issuer may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee or its agent) connected therewith.  In case any
Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Issuer may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated or defaced Security), if the applicant for such payment shall
furnish to the Issuer and to the Trustee or any agent of the Issuer or the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, evidence to
their satisfaction of the destruction, loss or theft of such Security and of the
ownership thereof.

      Every substitute Security of any series issued pursuant to the provisions
of this Section by virtue of the fact that any such Security is destroyed, lost
or stolen shall constitute an additional contractual obligation of the Issuer,
whether or not the destroyed, lost or stolen

                                      -16-
<PAGE>

Security shall be at any time enforceable by anyone and shall be entitled to all
the benefits of (but shall be subject to all the limitations of rights set forth
in) this Indenture equally and proportionately with any and all other Securities
of such series duly authenticated and delivered hereunder. All Securities shall
be held and owned upon the express condition that, to the extent permitted by
law, the foregoing provisions are exclusive with respect to the replacement or
payment of mutilated, defaced, destroyed, lost or stolen Securities and shall
preclude any and all other rights or remedies notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the replacement or
payment of negotiable instruments or other securities without their surrender.

2.10  Cancellation of Securities; Destruction Thereof

      All Securities surrendered for payment, redemption, registration of
transfer or exchange, or for credit against any payment in respect of a sinking
or analogous fund, if surrendered to the Issuer or any agent of the Issuer or
any agent of the Trustee, shall be delivered to the Trustee or its agent for
cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no
Securities shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Indenture.  The Trustee or its agent shall cancel
Securities held by it and deliver a certificate of cancellation to the Issuer.
If the Issuer or its agent shall acquire any of the Securities, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are delivered to the
Trustee or its agent for cancellation.

2.11  Temporary Securities

      Pending the preparation of definitive Securities for any series, the
Issuer may execute and the Trustee shall authenticate and make available for
delivery temporary Securities for such series (printed, lithographed,
typewritten or otherwise reproduced, in each case in form satisfactory to the
Trustee). Temporary Securities of any series shall be issuable as registered
Securities of any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by the
execution and authentication thereof. Temporary Securities may contain such
references to any provisions of this Indenture as may be appropriate. Every
temporary Security shall be executed by the Issuer and be authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Securities. Without unreasonable delay the Issuer
shall execute and shall furnish definitive Securities of such series and
thereupon temporary Securities of such series may be surrendered in exchange for
such definitive Securities in registered form without charge at each office or
agency to be maintained for such purpose in accordance with Section 3.2 and the
Trustee shall authenticate and make available for delivery in exchange for such
temporary Securities of such series an equal aggregate principal amount of
definitive Securities of the same series in authorized denominations. Until so
exchanged, the temporary Securities of any series shall be entitled to the same
benefits under

                                      -17-
<PAGE>

this Indenture as definitive Securities of such series, unless otherwise
established pursuant to Section 2.3.  The provisions of this Section are subject
to any restrictions or limitations on the issue and delivery of temporary
Securities of any series that may be established pursuant to Section 2.3.

2.12  Computation of Interest

      Except as otherwise specified as contemplated by Section 2.3 for
Securities of any series, interest, if any, on the Securities of each series
shall be computed on the basis of a 360-day year of twelve 30-day months.

                    ARTICLE III.   COVENANTS OF THE ISSUER

3.1   Payment of Principal and Interest

      The Issuer covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay or cause to be paid the
principal of, and interest, if any, on, each of the Securities of such series
(together with any additional amounts payable pursuant to the terms of such
Securities) at the place or places, at the respective times and in the manner
provided in such Securities and in this Indenture.  The interest on Securities
(together with any additional amounts payable pursuant to the terms of such
Securities) shall be payable only to or upon the written order of the Holders
thereof and, at the option of the Issuer, may be paid by wire transfer or by
mailing checks for such interest payable to or upon the written order of such
Holders at their last addresses as they appear on the registry books of the
Issuer.

3.2   Offices for Payments, etc.

      So long as any Securities are outstanding hereunder, the Issuer will
maintain in The City of New York, State of New York an office or agency where
the Securities of each series may be presented for payment, where the Securities
of each series may be presented for exchange as in this Indenture provided, and
where the Securities of each series may be presented for registration of
transfer as in this Indenture provided.

      The Issuer will maintain in The City of New York an office or agency where
notices and demands to or upon the Issuer in respect of the Securities of any
series, or this Indenture may be served.

      The Issuer will give to the Trustee prompt written notice of the location
of each such office or agency and of any change of location thereof.  In case
the Issuer shall fail to maintain any office or agency required by this Section
to be located in The City of New York, State of New York or shall fail to give
such notice of the location or of any change in the location of any of the above
offices or agencies, presentations and demands may be made and notices may be
served at the Corporate Trust Office of the Trustee, and, in such event, the
Trustee shall act as the Issuer's agent to receive all such presentations,
surrenders, notices and demands.

                                      -18-
<PAGE>

      The Issuer may from time to time designate one or more additional offices
or agencies where the Securities of any series may be presented for payment,
where the Securities of such series may be presented for exchange as in this
Indenture provided, where the Securities of such series may be presented for
registration of transfer as in this Indenture provided and the Issuer may from
time to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Issuer of its
obligation to maintain any office or agency provided for in this Section.  The
Issuer will give to the Trustee prompt written notice of any such designation or
rescission thereof and of change in the location of any such other office or
agency.

3.3   Appointment to Fill a Vacancy in Office of Trustee

      The Issuer, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee with respect to each series of
Securities hereunder.

3.4   Paying Agents

      Whenever the Issuer shall appoint a paying agent other than the Trustee
with respect to the Securities of any series, it will cause such paying agent to
execute and deliver to the Trustee an instrument in which such agent shall agree
with the Trustee, subject to the provisions of this Section:

      (a) that such paying agent will hold all sums received by it as such agent
for the payment of the principal of or interest, if any, on the Securities of
such series (whether such sums have been paid to it by the Issuer or by any
other obligor on the Securities of such series) in trust for the benefit of the
Holders of the Securities of such series entitled thereto or of the Trustee
until such sums shall be paid to such Holders or otherwise disposed of as herein
provided;

      (b) that such paying agent will give the Trustee notice of any failure by
the Issuer (or by any other obligor on the Securities of such series) to make
any payment of the principal of or interest on the Securities of such series
when the same shall be due and payable; and

      (c) at any time during the continuance of any such failure, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such paying agent.

      The Issuer will, on or prior to each due date of the principal of or
interest, if any, on the Securities of any series, deposit with the paying agent
a sum sufficient to pay such principal or interest so becoming due, such sum to
be held in trust for the benefit of the Holders of the Securities of such series
entitled to such principal or interest, and (unless such paying agent is the
Trustee) the Issuer will promptly notify the Trustee of any failure to take such
action.

                                      -19-
<PAGE>

      If the Issuer shall act as its own paying agent with respect to the
Securities of any series, it will, on or before each due date of the principal
of or interest, if any, on the Securities of such series, set aside, segregate
and hold in trust for the benefit of the Holders of the Securities of such
series a sum sufficient to pay such principal or interest, if any, so becoming
due until such sums shall be paid to such Holders or otherwise disposed of as
herein provided.  The Issuer will promptly notify the Trustee of any failure to
take such action.

      Anything in this section to the contrary notwithstanding, but subject to
Section 10.1, the Issuer may at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or more or all series of
Securities hereunder, or for any other reason, pay or cause to be paid to the
Trustee all sums held in trust for any such series by the Issuer or any paying
agent hereunder, as required by this Section, such sums to be held by the
Trustee upon the trusts herein contained, and, upon such payment by any paying
agent to the Trustee, such paying agent shall be released from all further
liability with respect to such money.

      Anything in this Section to the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section is subject to the provisions of
Sections 10.3 and 10.4.

3.5   Limitation on Dividends; Transactions with Affiliates

      If Securities are issued to a PSE Trust or a trustee of such trust in
connection with the issuance of Trust Securities by such PSE Trust and (a) an
Event of Default shall have occured, (b) there shall have occurred any event of
which the Issuer has actual knowledge that (i) is, or with the giving of notice
or the lapse of time, or both, would constitute an Event of Default and (ii) in
respect of which the Issuer shall not have taken reasonable steps to cure, (c)
the Issuer shall be in default with respect to its payment or any obligations
under the Preferred Securities Guarantee or Common Securities Guarantee relating
to such Trust Securities or (d) the Issuer shall have given notice of its
election to defer payments of interest on such Securities by extending the
interest payment period as provided in any indenture supplemental hereto and
such period, or any extension thereof, shall be continuing, then (x) the Issuer
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its capital stock, (y) the Issuer shall not make any payment of interest or
principal or premium on, or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Issuer which rank pari passu with or junior
to such Securities and (z) the Issuer shall not make guarantee payments with
respect to the foregoing (other than, with respect to clauses (x), (y) and (z),
(A) dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of the Issuer; (B) any
declaration of a dividend in connection with the implementation of a
shareholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto; (C)
payments under the Preferred Securities Guarantee; (D) as a direct result of,
and only to the extent required in order to avoid the issuance of fractional
shares of capital stock, following a reclassification of the Issuer's capital
stock or the exchange or conversion of one

                                      -20-
<PAGE>

class or series of the Issuer's capital stock for another class or series of the
Issuer's capital stock; and (E) the purchase of fractional interests in shares
of the Issuer's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged).

3.6   Covenants as to PSE Trust

      In the event Securities are issued to a PSE Trust or a trustee of such
trust, in connection with the issuance of Trust Securities by such trust, for so
long as such Trust Securities remain outstanding, the Issuer will (i) maintain
100% direct or indirect ownership of the Common Securities of such trust;
provided, however, that any permitted successor of the Issuer under the
Indenture may succeed to the Issuer's ownership of the Common Securities, (ii)
not cause, as sponsor of such trust, or permit, as holder of Common Securities
of such trust, the dissolution, winding-up or termination of such trust, except
in connection with a distribution of Securities as provided in the Declaration
and in connection with certain mergers, consolidations or amalgamations
permitted by the Declaration and (iii) use its reasonable efforts to cause such
trust (a) to remain a business trust, except in connection with a distribution
of Securities, the redemption of all of the Trust Securities of such PSE Trust
or certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of such PSE Trust, and (b) to otherwise continue to be classified
for United States federal income tax purposes as a grantor trust.

      ARTICLE IV. SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE
                                    TRUSTEE

4.1   Issuer to Furnish Trustee Names and Addresses of Securityholders

      The Issuer and any other obligor on the Securities covenant and agree that
they will furnish or cause to be furnished to the Trustee a list in such form as
the Trustee may reasonably require of the names and addresses of the Holders of
the Securities of each series:

      (a) Semi-annually and not more than 15 days after each Record Date for the
payment of interest on such Securities, as of such Record Date and on dates to
be determined pursuant to Section 2.3 for non-interest bearing Securities, in
each year; and

      (b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Issuer of any such request, as of a date not more than
15 days prior to the time such information is furnished;

provided that if and so long as the Trustee shall be the Security Registrar for
such series such list shall not be required to be furnished.

                                      -21-
<PAGE>

4.2   Preservation and Disclosure of Securityholders Lists

      (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to it
as provided in Section 4.1, (ii) received by it in the capacity of Security
Registrar for such series, if so acting, and (iii) filed with it within the two
preceding years pursuant to Section 4.3.  The Trustee may destroy any list
furnished to it as provided in Section 4.1 upon receipt of a new list so
furnished.

      (b) In case three or more Holders of Securities (hereinafter referred to
as "applicants") apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Security for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of
Securities of a particular series (in which case the applicants must all hold
Securities of such series) or with Holders of all Securities with respect to
their rights under this Indenture or under such Securities and such application
is accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either:

          (i)  afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection (a) of
this Section; or

          (ii) inform such applicants as to the approximate number of Holders of
Securities of such series or of all Securities, as the case may be, whose names
and addresses appear in the information preserved at the time by the Trustee, in
accordance with the provisions of such subsection (a) and as to the approximate
cost of mailing to such Holders the form of proxy or other communication, if
any, specified in such application. If the Trustee shall elect not to afford to
such applicants access to such information, the Trustee shall, upon the written
request of such applicants, mail to each Holder of such series or all Holders of
Securities, whose name and address appears in the information preserved at the
time by the Trustee in accordance with the provisions of such subsection (a) a
copy of the form of proxy or other communication which is specified in such
request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interests of the Holders of Securities of such series or of all Securities, as
the case may be, or would be in violation of applicable law.  Such written
statement shall specify the basis of such opinion.  If the Commission, after
opportunity for a hearing upon the objections specified in the written statement
so filed, shall enter an order refusing to sustain any of such objections or if,
after the entry of an order sustaining one or more of such objections, the
Commission shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met, and shall enter an

                                      -22-
<PAGE>

order so declaring, the Trustee shall mail copies of such material to all such
Holders with reasonable promptness after the entry of such order and the renewal
of such tender; otherwise the Trustee shall be relieved of any obligation or
duty to such applicants respecting their application.

      (c) Each and every Holder of Securities by receiving and holding the same,
agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee
nor any agent of the Issuer or the Trustee shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
Holders of Securities in accordance with the provisions of subsection (b) of
this Section, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under such subsection (b).

4.3   Reports by the Issuer

      The Issuer covenants:

      (a) to file with the Trustee, within 15 days after the Issuer is required
to file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Issuer may be required to file with the Commission pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or if the
Issuer is not required to file information, documents or reports pursuant to
either of such Sections, then to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents, and
reports which may be required pursuant to Section 13 of the Securities Exchange
Act of 1934 in respect of a debt security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;

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

      (c) to transmit by mail to the Holders of Securities within 30 days after
the filing thereof with the Trustee, in the manner and to the extent provided in
Section 4.4(c), such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to subsections (a) and (b) of this
Section as may be required to be transmitted to such Holders by rules and
regulations prescribed from time to time by the Commission; and

                                      -23-
<PAGE>

      (d) to furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Issuer's
compliance with all conditions and covenants under this Indenture (such
compliance to be determined without regard to any period of grace or requirement
of notice provided under this Indenture).

4.4   Reports by the Trustee

      (a) The Trustee shall transmit to the Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
Annually, not later than 60 days after May 15 of each year, the Trustee shall
transmit to the Holders and the Commission a report with respect to events
described in Section 313(a) of the Trust Indenture Act, in such manner and to
the extent revised thereunder.

      (b) Reports pursuant to this Section shall be transmitted by mail to all
Holders of Securities, as the names and addresses of such Holders appear upon
the Security Register;

      (c) A copy of each such report shall, at the time of such transmission to
the Holders, be furnished to the Issuer and be filed by the Trustee with each
stock exchange, if any, upon which the Securities of any series are listed and
also with the Commission.  The Issuer agrees to notify the Trustee when and as
the Securities of such series become admitted to trading on any national
securities exchange.

    ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT

5.1   Event of Default Defined; Acceleration of Maturity; Waiver of Default

      "Event of Default" with respect to Securities of any series, wherever used
herein, means each of the following events which shall have occurred and be
continuing (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):

      (a) default in the payment of any installment of interest upon any of the
Securities of such series as and when the same shall become due and payable,
(whether or not payment is prohibited by the provisions of Article XII hereof),
and continuance of such default for a period of 30 days; provided, however, that
if the Issuer is permitted by the terms of the Securities of such series to
defer the payment in question, the date on which such payment is due and payable
shall be the date on which the Issuer is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the
Securities; or

      (b) default in the payment of all or any part of the principal of the
Securities of such series as and when the same shall become due and payable
(whether or not payment is

                                      -24-
<PAGE>

prohibited by the provisions of Article XII hereof), whether at Maturity, upon
purchase by the Issuer at the option of the Holder, upon any redemption, by
declaration or otherwise; or

      (c) default in the deposit or payment of any sinking fund or analogous
payment (whether or not payment is prohibited by the provisions of Article XII
hereof) for the benefit of the Securities of such series as and when the same
shall become due and payable; or

      (d) failure on the part of the Issuer duly to observe or perform any other
of the covenants or agreements on the part of the Issuer in the Securities of
such series or in this Indenture contained (other than a covenant or agreement
expressly included herein solely for the benefit of Securities of other series)
for a period of 90 days after the date on which written notice specifying such
failure, stating that such notice is a "Notice of Default" hereunder and
demanding that the Issuer remedy the same, shall have been given by registered
or certified mail, return receipt requested, to the Issuer by the Trustee, or to
the Issuer and the Trustee by the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of all series affected thereby;
or

      (e) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Issuer in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, adjudging the Issuer a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Issuer under any applicable law, or appointing a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar
official) of the Issuer or for any substantial part of the property of the
Issuer, or ordering the winding up or liquidation of the affairs of the Issuer,
and such decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or

      (f) the Issuer shall commence a voluntary case or proceeding under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or any other case or proceeding to be adjudicated a bankrupt or
insolvent, or consent to the entry of a decree or order for relief in an
involuntary case under any such law, or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable law, or
consent to the filing of such petition or to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Issuer or for any substantial part of
the property of the Issuer, or make any general assignment for the benefit of
creditors, or the notice by it in writing of its inability to pay its debts
generally as they become due, or the taking of any corporate action by the
Issuer in furtherance of any such action; or

      (g) in the event Securities are issued to a PSE Trust or the trustee of
such trust of the Company in connection with the issuance of Trust Securities by
such trust, such trust shall have voluntarily or involuntarily dissolved, wound-
up its business or otherwise terminated its existence except in connection with
(i) the distribution of Securities to holders

                                      -25-
<PAGE>

of Trust Securities in liquidation of their interests in such trust, (ii) the
redemption of all outstanding Trust Securities of such trust, and (iii) mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
trust;

then, unless the principal of all the Securities shall have already become due
and payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of all the Securities of such series then Outstanding, by
notice in writing to the Issuer (and to the Trustee if given by such Holders),
may declare the entire principal of all the Securities of such series then
Outstanding and interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately due
and payable.

      The foregoing paragraph, however, is subject to the condition that if, at
any time after the principal of the Securities of one or more series shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, the Issuer shall pay or shall deposit with the Trustee a sum
sufficient to pay all matured installments of interest upon all the Securities
of such series and the principal of all Securities of such series which shall
have become due otherwise than by acceleration (with interest upon such
principal and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest at the same rate as the rate
of interest specified in the Securities of such series, to the date of such
payment or deposit) and such amount as shall be sufficient to cover reasonable
compensation to the Trustee, its agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee except
as a result of negligence or bad faith, and if any and all Events of Default
under this Indenture with respect to such series, other than the non-payment of
the principal of Securities of such series which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as provided
herein then, and in every such case, the Holders of a majority in aggregate
principal amount of all the Securities of such affected series then Outstanding
by written notice to the Issuer and to the Trustee, may direct the Trustee to
waive all defaults with respect to such series and rescind and annul such
declaration and its consequences, but no such waiver or rescission and annulment
shall extend to or shall affect any subsequent default or shall impair any right
consequent thereon.

5.2   Collection of Indebtedness by Trustee; Trustee May Prove Debt

      The Issuer covenants that (a) in case default shall be made in the payment
of any installment of interest on any of the Securities of any series when such
interest shall have become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of all or any part of the principal of any of the Securities of any
series when the same shall have become due and payable, whether at Maturity,
upon redemption, by declaration or otherwise -- then, upon demand of the
Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of
the Securities of such series the whole amount that then shall have become due
and payable on all Securities of such

                                      -26-
<PAGE>

series for principal or interest, as the case may be (with interest to the date
of such payment upon the overdue principal and, to the extent that payment of
such interest is enforceable under applicable law, on overdue installments of
interest at the same rate as the rate of interest specified in the Securities of
such series); and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation to the Trustee, its agents, attorneys and counsel, and any expenses
and liabilities incurred by such parties, and all advances made by the Trustee
except as a result of its negligence or bad faith.

      Until such demand is made by the Trustee, the Issuer may pay the principal
of and interest on the Securities of such series to the Holders, whether or not
the Securities of such series be overdue.

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

      In case there shall be pending proceedings relative to the Issuer or any
other obligor upon the Securities of any series under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor, or in case of any other comparable judicial proceedings relative to the
Issuer or such other obligor, or to the creditors or property of the Issuer or
such other obligor, the Trustee, irrespective of whether the principal of the
Securities of any series shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section, shall be entitled
and empowered, by intervention in such proceedings or otherwise:

      (a) to file and prove a claim or claims for the whole amount of the
principal and interest owing and unpaid in respect of the Securities of each
series, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and its agents, attorneys and counsel,
and for reimbursement of all expenses and liabilities incurred, and all advances
made, by the Trustee, except as a result of negligence or bad faith) and of the
Securityholders allowed in any judicial proceedings relative to the Issuer or
such other obligor, or to the creditors or property of the Issuer or such other
obligor;

                                      -27-
<PAGE>

      (b) unless prohibited by applicable law and regulations, to vote on behalf
of the Holders of the Securities of each series in any election of a trustee or
a standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or person performing similar functions in
comparable proceedings; and

      (c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Securityholders and of the Trustee on their behalf;
and any trustee, receiver, liquidator, custodian or other similar official is
hereby authorized by each of the Securityholders to make payments to the
Trustee, and, in the event that the Trustee shall consent to the making of
payments directly to the Securityholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee, and its
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee except, in each case, as a result of
negligence or bad faith.

      Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar person.

      All rights of action and of asserting claims under this Indenture, or
under any of the Securities of any series may be prosecuted and enforced by the
Trustee without the possession of any of the Securities of such series or the
production thereof at any trial or other proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Trustee and
its agents, attorneys and counsel, shall be for the ratable benefit of the
Holders of the Securities in respect of which such action was taken.

      In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Securities in respect to which action was taken, and it shall not
be necessary to make any Holders of such Securities parties to any such
proceedings.

5.3   Application of Proceeds

      Any moneys collected by the Trustee pursuant to this Article in respect of
the Securities of any series shall be applied in the following order at the date
or dates fixed by the Trustee and, in case of the distribution of such moneys on
account of principal or interest, upon presentation of the several Securities in
respect of which moneys have been collected and stamping (or otherwise noting)
thereon the payment, and upon surrender thereof if fully

                                      -28-
<PAGE>

paid, or issuing Securities of the same series in reduced principal amounts in
exchange for the presented Securities if only partially paid, or upon surrender
thereof if fully paid;

      FIRST:  To the payment of costs and expenses of collection applicable to
such series, including reasonable compensation to the Trustee and its agents,
attorneys and counsel and of all expenses and liabilities incurred, and all
advances made, by the Trustee except as a result of negligence or bad faith;

      SECOND:  In case the principal of the Securities of such series in respect
of which moneys have been collected shall not have become and be then due and
payable, to the payment of interest, if any, on the Securities of such series in
default in the order of the maturity of the installments of such interest, with
interest (to the extent that such interest has been collected by the Trustee and
to the extent permitted by law) upon the overdue installments of interest at the
same rate as the rate of interest specified in such Securities, such payments to
be made ratably to the Persons entitled thereto, without discrimination or
preference;

      THIRD:  In case the principal of the Securities of such series in respect
of which moneys have been collected shall have become and be then due and
payable, to the payment of the whole amount then owing and unpaid upon all the
Securities of such series for principal and interest, if any, with interest upon
the overdue principal, and (to the extent that such interest has been collected
by the Trustee and to the extent permitted by law) upon overdue installments of
interest at the same rate as the rate of interest specified in the Securities of
such series; and in case such moneys shall be insufficient to pay in full the
whole amount so due and unpaid upon the Securities of such series, then to the
payment of such principal and interest, without preference or priority of
principal over interest, or of interest over principal, or of any installment of
interest over any other installment of interest, or of any Security of such
series over any other Security of such series, ratably to the aggregate of such
principal and accrued and unpaid interest; and

      FOURTH:  To the payment of the remainder, if any, to the Issuer or any
other Person lawfully entitled thereto.

5.4   Suits for Enforcement

      In case an Event of Default has occurred, has not been waived and is
continuing, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.

5.5   Restoration of Rights on Abandonment of Proceedings

                                      -29-
<PAGE>

      In case the Trustee or any Holder shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the Trustee
or to such Holder, then, and in every such case, the Issuer, the Trustee and the
Holders shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Issuer, the Trustee and
the Holders shall continue as though no such proceedings had been taken.

5.6   Limitations on Suits by Securityholders

      No Holder of any Security of any series shall have any right by virtue or
by availing of any provision of this Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to this Indenture, or for the appointment of a trustee, receiver,
liquidator, custodian or other similar official or for any other remedy
hereunder, unless such Holder previously shall have given to the Trustee written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of not less than 25% in aggregate principal amount of
the Securities of each affected series then Outstanding (determined as provided
herein and voting as one class) shall have made written request upon the Trustee
to institute such action or proceedings in its own name as trustee hereunder and
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby
and the Trustee for 60 days after its receipt of such notice, request and offer
of indemnity shall have failed to institute any such action or proceeding and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 5.9; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Security with every other
taker and Holder and the Trustee, that no one or more Holders of Securities of
any series shall have any right in any manner whatever by virtue or by availing
of any provision of this Indenture to affect, disturb or prejudice the rights of
any other Holder of Securities or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities of the affected series.  For the
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

5.7   Unconditional Right of Securityholders to Receive Principal and Interest
      and to Institute Certain Suits

      Notwithstanding any other provision in this Indenture and any provision of
any Security, the right of any Holder of any Security to receive payment of the
principal of and interest, if any, on such Security on or after the respective
due dates expressed in such Security or any date fixed for redemption, or to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.

                                      -30-
<PAGE>

5.8  Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default

     Except as provided in Section 5.6, no right or remedy herein conferred upon
or reserved to the Trustee or to the Holders of Securities is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

     No delay or omission of the Trustee or of any Holder of Securities to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein; and, subject to Section 5.6, every right and power given by this
Indenture or by law to the Trustee or to the Holders of Securities may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Holders of Securities, as the case may be.

5.9  Control by Holders of Securities

     The Holders of a majority in aggregate principal amount of the Securities
of each series affected at the time Outstanding (determined as provided herein
and voting as one class) shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee with respect to the
Securities of such affected series by this Indenture; provided that such
direction shall not be otherwise than in accordance with law and the provisions
of this Indenture; and provided further that (subject to the provisions of
Section 6.1) the Trustee shall have the right to decline to follow any such
direction if the Trustee, being advised by counsel of its choice, shall
determine that the action or proceeding so directed may not lawfully be taken or
if the Trustee in good faith by its board of directors, its executive committee
or a trust committee of directors or Responsible Officers of the Trustee shall
determine that the action or proceedings so directed would involve the Trustee
in personal liability or that the actions or forbearances specified in or
pursuant to such direction would be unduly prejudicial to the interests of
Holders of the Securities of all affected series not joining in the giving of
said direction, it being understood that (subject to Section 6.1) the Trustee
shall have no duty to ascertain whether or not such actions or forbearances are
unduly prejudicial to such Holders.

     Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.

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5.10   Waiver of Past Defaults

       Prior to the declaration of acceleration of the Maturity of any
Securities as provided in Section 5.1, the Holders of a majority in aggregate
principal amount of the Securities of all series at the time Outstanding with
respect to which a default or an Event of Default shall have occurred and be
continuing (determined as provided herein and voting as one class) may on behalf
of the Holders of all such affected Securities waive any past default or Event
of Default described in Section 5.1 and its consequences, except a default or an
Event of Default (i) in the payment of the principal of or interest, if any, on
any Security of such series, or (ii) in respect of a covenant or provision
hereof or of any Security which cannot be modified or amended without the
consent of the Holder of each Security affected. In the case of any such waiver,
the Issuer, the Trustee and the Holders of all such affected Securities shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.

       Upon any such waiver, such default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.

5.11   Trustee to Give Notice of Default, But May Withhold in Certain
       Circumstances

       The Trustee shall, within 90 days after the occurrence of a default with
respect to the Securities of any series, give notice of all defaults with
respect to such series actually known to a Responsible Officer of the Trustee to
all Holders of Securities of such series in the manner and to the extent
provided in Section 4.4(c), unless in each case such defaults shall have been
cured before the mailing or publication of such notice (the term "default" for
the purpose of this Article being hereby defined to mean any event or condition
which is, or with notice or lapse of time or both would become, an Event of
Default); provided that, except in the case of default in the payment of the
principal of or the interest, if any, on any of the Securities of such series,
or in the payment of any sinking fund installment or analogous payment on such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors or trustees and/or Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interests of the
Securityholders of such series.

5.12   Right of Court to Require Filing of Undertaking to Pay Costs

       All parties to this Indenture agree, and each Holder of any Security by
his or her acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such

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<PAGE>

court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders of any series holding in the aggregate more than 10% in
aggregate principal amount of the Securities of such series, or, in the case of
any suit relating to or arising under clause (d) or (g) of Section 5.1 (if the
suit relates to the Securities of more than one but less than all series), 10%
in aggregate principal amount of the Securities then Outstanding and affected
thereby, or, in the case of any suit relating to or arising under clause (d) or
(g) (if the suit relates to all the Securities then Outstanding), 10% in
aggregate principal amount of all Securities then Outstanding, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of or the interest on any Security on or after the due date expressed
in such Security or any date fixed for redemption.

                      ARTICLE VI. CONCERNING THE TRUSTEE

6.1  Duties and Responsibilities of the Trustee; During Default; Prior to
     Default

     The Trustee, prior to the occurrence of an Event of Default with respect to
the Securities of a particular series and after the curing or waiving of all
Events of Default which may have occurred with respect to such series,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default with respect to the
Securities of a particular series has occurred (which has not been cured or
waived), the Trustee shall exercise with respect to such series such of the
rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.

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

     (a)  prior to the occurrence of an Event of Default with respect to the
Securities of any series and after the curing or waiving of all such Events of
Default which may have occurred with respect to such series:

          (i)   the duties and obligations of the Trustee with respect to the
Securities of such series shall be determined solely by the express provisions
of this Indenture, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and

          (ii)  in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements, certificates
or opinions furnished to the Trustee and

                                      -33-
<PAGE>

conforming to the requirements of this Indenture; but in the case of any such
statements, certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Indenture;

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

     (c)  the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with an appropriate
direction of the Holders pursuant to Section 5.9 relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture.

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

6.2  Certain Rights of the Trustee

     Subject to Section 6.1:

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

     (b)  any request, direction, order or demand of the Issuer mentioned herein
shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the secretary or an assistant secretary of the Issuer;

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

     (d)  the Trustee shall be under no obligation to exercise any of the trusts
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee

                                      -34-
<PAGE>

reasonable indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;

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

     (f)  prior to the occurrence of an Event of Default with respect to the
Securities of any series and after the curing or waiving of all such Events of
Default, the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, security or other paper or document unless requested in writing
so to do by the Holders of not less than a majority in aggregate principal
amount of the Securities of all affected series then Outstanding; provided that,
if the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such costs, expenses or liabilities as a condition
to proceeding; the reasonable expenses of every such investigation shall be paid
by the Issuer or, if paid by the Trustee, shall be repaid by the Issuer upon
demand; and

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

6.3  Trustee Not Responsible for Recitals, Disposition of Securities or
     Application of Proceeds Thereof

     The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Issuer,
and the Trustee assumes no responsibility for the correctness of the same. The
Trustee makes no representation as to the validity or sufficiency of this
Indenture or of the Securities, other than as to the due execution and delivery
of the Indenture by the Trustee. The Trustee shall not be accountable for the
use or application by the Issuer of any of the Securities or of the proceeds
thereof.

6.4  Trustee and Agents May Hold Securities; Collections, etc.

     The Trustee or any agent of the Issuer or the Trustee, in its individual or
any other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and, subject to
Sections 6.8 and 6.13, may otherwise deal with the Issuer and receive, collect,
hold and retain collections from the Issuer with the same rights it would have
if it were not the Trustee or such agent.

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<PAGE>

6.5  Moneys Held by Trustee

     Subject to the provisions of Section 10.4, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law.  Neither the
Trustee nor any agent of the Issuer or the Trustee shall be under any liability
for interest on any moneys received by it hereunder.

6.6  Compensation and Indemnification of Trustee and Its Prior Claim

     The Issuer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Issuer covenants and agrees to pay or reimburse the
Trustee upon its written request for all reasonable expenses, disbursements and
advances incurred or made by or on behalf of it in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Issuer also covenants to
indemnify the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on the part of the Trustee
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and the Trustee's duties hereunder, including
the costs and expenses of defending itself against or investigating any claim of
liability in the premises. The obligations of the Issuer under this Section to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder and shall survive the resignation or removal of the Trustee and the
satisfaction and discharge of this Indenture. Such additional indebtedness shall
not be deemed to be Subordinated Securities, as that term is defined in Section
12.1, and shall be a senior claim to that of the Securities upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the Holders of particular Securities, and the Securities are
hereby subordinated to such senior claim. When the Trustee incurs expenses after
the occurrence of a default, the expenses are intended to constitute expenses of
administration under any bankruptcy law.

6.7  Right of Trustee to Rely on Officers' Certificate, etc.

     Subject to Sections 6.1 and 6.2, whenever in the administration of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the

                                      -36-
<PAGE>

Trustee for any action taken, suffered or omitted by it under the provisions of
this Indenture in reliance thereon.

6.8    Qualification of Trustee; Conflicting Interests

       If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.

6.9    Persons Eligible for Appointment as Trustee

       There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any State thereof or the District of Columbia having a combined
capital and surplus of at least $50,000,000, and which is authorized under such
laws to exercise corporate trust powers and is subject to supervision or
examination by Federal, State or District of Columbia authority. Such
corporation shall have an office in The City of New York, if there be such a
bank in such location willing to act upon reasonable and customary terms and
conditions. If such bank publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then, for the purposes of this Section, the combined capital and
surplus of such bank shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 6.10.

6.10   Resignation and Removal; Appointment of Successor Trustee

       (a)  The Trustee, or any trustee or trustees hereafter appointed, may at
any time resign and be discharged of the trusts created by this Indenture by
giving written notice of resignation to the Issuer and by mailing notice of such
resignation to the Holders of the then Outstanding Securities at their addresses
as they shall appear on the Security registry books. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a successor trustee or
trustees with respect to the applicable series by written instrument, in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee or trustees. If no successor trustee shall have been so
appointed with respect to any series and shall have accepted appointment within
30 days after the mailing of such notice of resignation, the resigning trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Holder who has been a bona fide Holder of a Security
or Securities of such series for at least six months may, subject to the
provisions of Section 5.12, on behalf of such Holder and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.

       (b)  In case at any time any of the following shall occur:

                                      -37-
<PAGE>

          (i)    the Trustee shall fail to comply with the provisions of Section
6.8 after written request therefor by the Issuer or by any Holder who has been a
bona fide Holder of a Security or Securities of such series for at least six
months; or

          (ii)   the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.9 and shall fail to resign after written request
therefor by the Issuer or by any Holder; or

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

then, in any such case, the Issuer may remove the Trustee with respect to the
Securities of any or all series, as appropriate, and appoint a successor trustee
for such series by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee or trustees, or,
subject to the provisions of Section 5.12, any Holder who has been a bona fide
Holder of a Security or Securities of such series for at least six months may,
on behalf of such Holder and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.

     (c)  The Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Issuer the evidence provided for in
Section 7.1 of the action in that regard taken by the Holders.

     (d)  Any resignation or removal of the Trustee and any appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 6.11.

     (e)  Except in the case of a default in the payment of the principal of or
interest on any Security, or in the payment of any sinking or purchase fund
installment, the Trustee shall not be required to resign as provided by Section
6.8 if the Trustee shall have sustained the burden of proving, on application to
the Commission and after opportunity for hearing thereon, that:

          (i)    the default under this Indenture may be cured or waived during
a reasonable period and under the procedures described in such application; and

          (ii)   a stay of the Trustee's duty to resign will not be inconsistent
with the interests of the Securityholders.

                                      -38-
<PAGE>

6.11   Acceptance of Appointment by Successor Trustee

       Any successor trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Issuer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, trusts and duties of its predecessor hereunder, with like
effect as if originally named as trustee hereunder; but, nevertheless, on the
written request of the Issuer or of the successor Trustee, upon payment of its
charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4,
pay over and transfer to the successor Trustee all moneys and property at the
time held by it hereunder and shall execute, acknowledge and deliver an
instrument transferring to such successor Trustee all such rights, powers,
trusts and duties. Upon request of any such successor Trustee, the Issuer shall
execute and acknowledge any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor Trustee all such money,
property, rights, powers and trusts. Any Trustee ceasing to act shall,
nevertheless, retain a prior claim upon all property or funds held or collected
by such Trustee for the benefit of such applicable series to secure any amounts
then due it pursuant to the provisions of Section 6.6.

       No successor Trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be qualified
under the provisions of Section 6.8 and eligible under the provisions of Section
6.9.

       Upon acceptance of appointment by any successor Trustee as provided in
this Section, the Issuer shall give notice thereof to the Holders of Securities,
by mailing such notice to such Holders at their addresses as they shall appear
on the Security registry books. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
6.10. If the Issuer fails to give such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be given at the expense of the Issuer.

6.12   Merger, Conversion, Consolidation or Succession to Business of Trustee

       Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 6.8 and eligible under the provisions
of Section 6.9, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

       In case at the time of such succession to the Trustee any of the
Securities of any series shall have been authenticated but not delivered, any
such successor Trustee may adopt the

                                      -39-
<PAGE>

certificate of authentication of any predecessor Trustee and deliver the
Securities so authenticated; and, in case at that time any of the Securities of
any series shall not have been authenticated, any successor Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of such successor Trustee; and in all such cases such certificate of
authentication shall have the full force which is anywhere in the Securities of
such series or in this Indenture provided that the certificate of authentication
of the Trustee shall have; provided that the right to adopt the certification of
any predecessor Trustee or to authenticate Securities of any series in the name
of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.

6.13   Preferential Collection of Claims Against the Issuer

       The Trustee shall comply with its obligations under the applicable
provisions of Section 311 of the Trust Indenture Act.

6.14   Appointment of Authenticating Agent

       As long as any Securities of a series remain Outstanding, the Trustee
may, by an instrument in writing, appoint with the approval of the Issuer an
authenticating agent (the "Authenticating Agent") which shall be authorized to
act on behalf of, but subject to the direction of, the Trustee to authenticate
and deliver Securities of such series, including Securities issued upon
exchange, registration of transfer, partial redemption or pursuant to Section
2.9. Securities of such series so authenticated and delivered shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee. Whenever reference is made in this
Indenture to the authentication and delivery of Securities of any series by the
Trustee or to the Trustee's certificate of authentication, such reference shall
be deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent for such series and a certificate of authentication
executed on behalf of the Trustee by such Authenticating Agent. Such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States of America or of any State thereof
or of the District of Columbia authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $5,000,000
(determined as provided in Section 6.9 with respect to the Trustee) and subject
to supervision or examination by Federal or State authority.

       Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of any Authenticating Agent, shall be the successor to
such Authenticating Agent with respect to all series of Securities for which it
served as Authenticating Agent without the execution or filing of any paper or
any further act on the part of the Trustee or such Authenticating Agent.

       Any Authenticating Agent may at any time, and if it shall cease to be
eligible hereunder shall, resign by giving written notice of resignation to the
Trustee and to the Issuer.

                                      -40-
<PAGE>

The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice thereof to such Authenticating Agent and the Issuer. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time any Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, the Trustee shall upon receipt of an Issuer
Order appoint a successor Authenticating Agent and shall provide notice of such
appointment to all Holders of Securities affected thereby in the manner and to
the extent provided in Section 6.11 with respect to the appointment of a
successor trustee. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers and duties of
its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. The Authenticating Agent for the Securities of any series
shall have no responsibility or liability for any action taken by it as such at
the direction of the Trustee.

       Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any
Authenticating Agent.

                  ARTICLE VII. CONCERNING THE SECURITYHOLDERS

7.1    Evidence of Action Taken by Securityholders

       Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by a specified
percentage in aggregate principal amount of the Holders of one or more series of
Securities may be evidenced (i) by one or more instruments of substantially
similar tenor signed by such specified percentage of Holders in person or by an
agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee; (ii) by the record of such specified
percentage of Holders voting in favor thereof at any meeting of such Holders
duly called and held by the Trustee; and (iii) by a combination of such
instrument or instruments and any such record of a meeting.

7.2    Proof of Execution of Instruments and of Holding of Securities

       Subject to Sections 6.1 and 6.2, the execution of any instrument by a
Holder or his agent or proxy and proof of the holding by any Person of any of
the Securities of any series shall be sufficient if made in the following
manner:

       (a)  The fact and date of the execution by any such Person of any
instrument may be proved by the certificate of any notary public or other
officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or other such officer. Where such execution is by or
on behalf of any legal entity other than an individual, such certificate or
affidavit shall also constitute sufficient proof of the authority of the Person
executing the same.

                                      -41-
<PAGE>

       (b)  The ownership of Securities shall be proved by the Security Register
or by a certificate of the Security Registrar.

7.3    Holders to Be Treated as Owners

       The Issuer, the Trustee and any agent of the Issuer or the Trustee may
deem and treat the Person in whose name any Security of any series shall be
registered upon the Security Register for such series as the absolute owner of
such Security (whether or not such Security shall be overdue and notwithstanding
any notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of and, subject to the provisions of
Section 2.7 of this Indenture, interest, if any, on such Security and for all
other purposes; and none of the Issuer, the Trustee and any agent of the Issuer
or the Trustee shall be affected by any notice to the contrary. All such
payments so made to any such Person, or upon his order, shall be valid, and, to
the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.

       No holder of any beneficial interest in any Global Security held on its
behalf by a Depository shall have any rights under this Indenture with respect
to such Global Security, and such Depository may be treated by the Issuer, the
Trustee, and any agent of the Issuer or the Trustee as the owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall impair, as between a Depository and such holders of beneficial
interests, the operation of customary practices governing the exercise of the
rights of the Depository as holder of any Security.

7.4    Securities Owned by Issuer Deemed Not Outstanding

       In determining whether the Holders of the requisite aggregate principal
amount of Outstanding Securities of one or more series have concurred in any
direction, consent or waiver under this Indenture, Securities which are owned by
the Issuer or any other obligor on the Securities with respect to which such
determination is being made or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Issuer or
any other obligor on the Securities with respect to which such determination is
being made shall be disregarded and deemed not to be Outstanding for the
purposes of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver, only Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Issuer or any other obligor upon such Securities or any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer or any other obligor on such Securities.
In case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice. Upon request of the Trustee, the Issuer shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known

                                      -42-
<PAGE>

by the Issuer to be owned or held by or for the account of any of the above
described Persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be
entitled to accept such Officers' Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purposes of any such determination.

7.5    Right of Revocation of Action Taken

       At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.1, of the taking of any action by the Holders of the
requisite percentage in aggregate principal amount of the Securities of one or
more series, as the case may be, specified in this Indenture in connection with
such action, any Holder of a Security the serial number of which is shown by the
evidence to be included among the serial numbers of the Securities the Holders
of which have consented to such action may, by filing written notice at the
Corporate Trust Office and upon proof of ownership as provided in Section 7.2,
revoke such action so far as concerns such Security. Except as aforesaid, any
such action taken by the Holder of any Security of any series shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Security and of any Securities of such series issued in exchange or
substitution therefor or on registration of transfer thereof, irrespective of
whether or not any notation in regard thereto is made upon any such Security.
Any action taken by the Holders of the requisite percentage in aggregate
principal amount of the Securities of one or more series, as the case may be,
specified in this Indenture in connection with such action shall be conclusively
binding upon the Issuer, the Trustee and the Holders of all the Securities of
such series.

7.6    Calculation of Original Issue Discount

       The Company shall file with the Trustee promptly at the end of each
calendar year a written notice specifying the amount of original issue discount
(including daily accruals and accrual periods) accrued on Outstanding Securities
as of the end of such year.

                     ARTICLE VIII. SUPPLEMENTAL INDENTURES

8.1    Supplemental Indentures Without Consent of Securityholders

       The Issuer, when authorized by a resolution of the Board of Directors
(which resolution may provide general terms or parameters for such action and
may provide that the specific terms of such action may be determined in
accordance with or pursuant to an Issuer Order), and the Trustee may, from time
to time and at any time, enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of 1939
as in force at the date of the execution thereof) without the consent of the
Holders of Securities for one or more of the following purposes:

       (a)  to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities of one or more series any property or assets;

                                      -43-
<PAGE>

       (b)  to evidence the succession of another corporation to the Issuer, or
successive successions, and the assumption by the successor corporation of the
covenants, agreements and obligations of the Issuer pursuant to Article IX;

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

       (d)  to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions as the Issuer may deem necessary or
desirable, with respect to matters or questions arising under this Indenture,
provided that no such action shall adversely affect the interests of the Holders
of the Securities of any series appertaining thereto;

       (e)  to establish the form and terms of the Securities of any series as
permitted by Sections 2.1 and 2.3; and

       (f)  to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities and to add to or change
any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one trustee,
all as provided in Section 6.11.

       The Trustee is hereby authorized to join with the Issuer in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property or assets thereunder,
but the Trustee shall not be obligated to enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.

       Any supplemental indenture authorized by the provisions of this Section
may be executed without the consent of the Holders of any of the Securities at
the time Outstanding, notwithstanding any of the provisions of Section 8.2.

                                      -44-
<PAGE>

8.2    Supplemental Indentures With Consent of Securityholders

       With the consent (evidenced as provided in Article VII) of the Holders of
not less than a majority in aggregate principal amount of the Securities of all
series at the time Outstanding affected by such supplemental indenture (voting
as one class), the Issuer, when authorized by a resolution of the Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order), and the Trustee may, from
time to time and at any time, enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of 1939
as in force at the date of execution thereof) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities of each such series; provided that
no such supplemental indenture shall (a) change the time of payment of the
principal, or any installment of the principal, of any Security or reduce the
principal amount thereof, or reduce the rate or change the time of payment of
interest, if any, thereon, or reduce any amount payable on the redemption
thereof, or make the principal thereof or the interest thereon payable in any
coin or currency other than that provided in such Security in accordance with
the terms thereof or impair or affect the right to institute suit for the
payment thereof when due, or, if such Security shall so provide, any right of
repayment at the option of the Holder, in each case without the consent of the
Holder of each Security so affected, (b) reduce the percentage in principal
amount of the Outstanding Securities of the affected series, the consent of
whose Holders is required for any such supplemental indenture or for any waiver
provided for in this Indenture, without the consent of the Holders of each
Security so affected or (c) without the consent of the Holders of each Security
so affected, modify any of the provisions of this Section or Section 5.10,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby; provided, however,
that this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant changes in
this Section, or the deletion of this proviso, in accordance with the
requirements of Sections 6.11 and 8.1(f).

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

       Upon the request of the Issuer, accompanied by a Board Resolution
complying with the first paragraph of this Section and evidence of the consent
of the Holders of the Securities as aforesaid and such other documents, if any,
as may be required by Section 7.1, the Trustee shall join with the Issuer in the
execution of such supplemental indenture unless such

                                      -45-
<PAGE>

supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.

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

       Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall give notice thereof to the Holders of then Outstanding Securities of each
series affected thereby, by mailing a notice thereof by first-class mail to such
Holders at their addresses as they shall appear on the Security Register, and in
each case such notice shall set forth in general terms the substance of such
supplemental indenture.  Any failure of the Issuer to give such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.

8.3    Effect of Supplemental Indenture

       Upon the execution of any supplemental indenture pursuant to the
provisions hereof, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Issuer and the Holders of Securities of each series affected thereby shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

8.4    Documents to Be Given to Trustee

       The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall be
provided an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article
complies with the applicable provisions of this Indenture.

8.5    Notation on Securities in Respect of Supplemental Indentures

       Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to the provisions of this Article may
bear a notation in form approved by the Trustee as to any matter provided for by
such supplemental indenture. If the Issuer or the Trustee shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by the
Issuer, authenticated by the Trustee and delivered in exchange for the
Securities of such series then Outstanding.

                                      -46-
<PAGE>

             ARTICLE IX. CONSOLIDATION, MERGER, SALE OR CONVEYANCE

9.1    Covenant of Issuer Not to Merge, Consolidate, Sell or Convey Property
       Except Under Certain Conditions

       Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation of the Issuer with, or merger of the Issuer into, any
other corporation or corporations (whether or not affiliated with the Issuer),
or successive consolidations or mergers to which the Issuer or its successor or
successors shall be a party or parties, shall prevent any sale, lease or
conveyance of the property of the Issuer as an entirety or substantially as an
entirety, shall prevent any consolidation of any Person with, or the merger of
any Person into, the Issuer or shall prevent any sale, lease or conveyance of
the property of any Person as an entirety or substantially as an entirety to the
Issuer; provided, that, and the Issuer hereby covenants and agrees, upon any
such consolidation, merger, sale, lease or conveyance, the due and punctual
payment of the principal of and interest, if any, on all the Securities,
according to their tenor, and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be performed or
observed by the Issuer, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the corporation formed by such consolidation, or into which the Issuer shall
have been merged, or which shall have acquired such property; provided, further,
that the corporation formed by such consolidation or into which the Issuer
merged or the Person which acquired by conveyance or sale, or which leases, the
properties and assets of the Issuer as an entirety or substantially as an
entirety shall be a corporation organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia;
provided, further, that immediately after giving effect to such transaction, and
treating any indebtedness which becomes an obligation of the Issuer or a
Subsidiary as a result of such transaction as having been incurred by the Issuer
or such Subsidiary at the time of such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing.

9.2    Successor Corporation Substituted for Issuer

       In case of any consolidation, merger, sale, lease or conveyance referred
to in, and in accordance with, Section 9.1, and following such an assumption by
the successor corporation, such successor corporation shall succeed to and be
substituted for the Issuer, with the same effect as if it had been named herein
as Issuer. Such successor corporation may cause to be signed, and may issue
either in its own name or in the name of the Issuer prior to such succession,
any or all of the Securities issuable hereunder which theretofore shall not have
been signed by the Issuer and delivered to the Trustee; and, upon the order of
such successor corporation, instead of the Issuer, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Issuer

                                      -47-
<PAGE>

to the Trustee for authentication, and any Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Trustee for
that purpose. All of the Securities so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Securities theretofore
or thereafter issued in accordance with the terms of this indenture as though
all of such Securities had been issued at the date of the execution hereof.

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

       In the event of any such sale or conveyance (other than a conveyance by
way of lease), the Issuer or any successor corporation which shall theretofore
have become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Indenture and the Securities and
may be liquidated and dissolved.

9.3    Documents to be Delivered to Trustee

       The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall be
provided an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, lease or conveyance, and any
such assumption, and any such liquidation or dissolution, complies with the
applicable provisions of this Indenture and that all conditions precedent herein
provided for relating to such transactions have been complied with.

     ARTICLE X. SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

10.1   Satisfaction and Discharge of Indenture

       (a)  If at any time (i) the Issuer shall have paid or caused to be paid
the principal of, and interest, if any, on all the Securities of each series
theretofore authenticated, (other than Securities which have been destroyed,
lost or stolen and which have been replaced or paid as provided in Section 2.9),
in accordance with the terms of this Indenture and such Securities or (ii) as to
Securities not so paid, the Issuer shall have delivered to the Trustee for
cancellation all Securities of each series theretofore authenticated (other than
any Securities which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.9) or (iii) as to Securities
not so paid or delivered for cancellation, (A) all the Securities of such series
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and (B) the Issuer shall have irrevocably deposited or caused to be deposited
with the Trustee as trust funds money in an amount (other than moneys repaid by
the Trustee or any paying agent to the Issuer in accordance with Section 10.4)
or Government Obligations, maturing as to principal and interest at such times
and in such amounts as will insure the availability of

                                      -48-
<PAGE>

money, or a combination thereof, sufficient in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay (i) the principal and
interest, if any, on all Securities of such series on each date that such
principal or interest, if any, is due and payable and (ii) any mandatory sinking
fund or analogous payments on the dates on which such payments are due and
payable in accordance with the terms of this Indenture and the Securities of
such series; and if, in any such case, the Issuer shall also pay or cause to be
paid all other sums payable hereunder by the Issuer then this Indenture shall
cease to be of further effect (except as to (A) rights of registration of
transfer and exchange of Securities, (B) substitution of mutilated, defaced,
destroyed, lost or stolen Securities, (C) the rights of Holders of Securities to
receive payments of principal thereof, and interest, if any, thereon, upon the
original stated due dates therefor or any date of redemption (but not upon
acceleration), and remaining rights of such Holders to receive mandatory sinking
fund or analogous payments, if any, (D) the rights, obligations, duties and
immunities of the Trustee hereunder, (E) the rights of Holders of Securities as
beneficiaries hereof with respect to the property so deposited with the Trustee
and payable to all or any of them and (F) the obligations of the Issuer under
Section 3.2) and the Trustee, on demand of the Issuer accompanied by an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with, and at the cost and expense
of the Issuer, shall execute proper instruments acknowledging such satisfaction
and discharge of this Indenture, provided that the rights of Holders of the
Securities to receive amounts in respect of principal of and interest on the
Securities held by them shall not be delayed longer than required by then
applicable mandatory rules or policies of any national securities exchange upon
which the Securities are listed. The Issuer agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Securities.

       (b)  The following provisions shall apply to the Securities of each
series unless specifically otherwise provided in the Board Resolution, Officers'
Certificate or supplemental indenture relating thereto provided pursuant to
Section 2.3. In addition to discharge of this Indenture pursuant to the next
preceding paragraph (a) the Issuer shall be deemed to have paid and discharged
the entire indebtedness on all the Securities of such series on the 91/st/ day
after the date of making the deposit referred to in clause (a), and the
provisions of this Indenture with respect to the Securities of such series shall
no longer be in effect (except as to (i) rights of registration of transfer and
exchange of Securities of such series, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities, (iii) the rights of Holders of Securities
of such series appertaining thereto to receive payments of principal thereof and
interest, if any, thereon, upon the original stated due dates therefor or any
date of redemption (but not upon acceleration), and remaining rights of such
Holders to receive mandatory sinking fund or analogous payments, if any, solely
from the trust fund referred to in subparagraph (1) below, (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, (v) the rights of
Holders of Securities of such series as beneficiaries hereof with respect to the
property so deposited with the Trustee and payable to all or any of them and

                                      -49-
<PAGE>

(vi) the obligations of the Issuer under Section 3.2), and the Trustee, at the
cost and expense of the Issuer, shall, at the Issuer's written request, execute
proper instruments acknowledging the same, if:

            (1)  the Issuer shall have irrevocably deposited or caused to be
irrevocably deposited with the Trustee as a trust fund specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Securities of such series (i) money in an amount, or (ii) Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of money, or (iii) a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (A) the principal and interest, if any, on all
Securities of such series on each date that such principal or interest, if any,
is due and payable and (B) any mandatory sinking fund or analogous payments on
the dates on which such payments are due and payable in accordance with the
terms of this Indenture and the Securities of such series;

            (2)  no Event of Default or event which, with notice or lapse of
time or both, would become an Event of Default with respect to the Securities of
such series shall have occurred and be continuing on the date of such deposit or
at any time during the period ending on the 91/st/ day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until the expiration of such period);

            (3)  such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement or
instrument to which the Issuer is a party or by which it is bound;

            (4)  such deposit shall not cause any Securities of such series then
listed on any national securities exchange registered under the Securities
Exchange Act of 1934, as amended, to be delisted;

            (5)  the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) if such deposits shall include Government
Obligations in respect of any government other than the United States of
America, such deposit shall not result in the Issuer, the Trustee or such trust
constituting an "investment company" under the Investment Company Act of 1940,
as amended, and (ii) if any such deposit occurs more than one year prior to the
stated maturity or redemption date of the Securities of such series, the Holders
of the Securities of such series then Outstanding will not recognize income,
gain or loss for Federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such deposit, defeasance and discharge had not occurred; and

            (6)  the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the defeasance contemplated by this
paragraph have been complied with.

                                      -50-
<PAGE>

10.2   Application by Trustee of Funds Deposited for Payment of Securities

       Subject to Section 10.4, all moneys and Government Obligations deposited
with the Trustee (or other trustee), and all money received by the Trustee in
respect of Government Obligations deposited with the Trustee, pursuant to
Section 10.1 in respect of the Outstanding Securities of a particular series
shall be held in trust and applied by it to the payment, either directly or
through any paying agent (including the Issuer acting as its own paying agent),
to the Holders of such Securities of all sums due and to become due thereon for
principal and interest, if any; but such money need not be segregated from other
funds except to the extent required by law.

10.3   Repayment of Moneys Held by Paying Agent

       In connection with the satisfaction and discharge of this Indenture with
respect to the Securities of any series, all moneys then held by any paying
agent under the provisions of this Indenture with respect to such series of
Securities shall, upon demand of the Issuer, be repaid to it or paid to the
Trustee and thereupon such paying agent shall be released from all further
liability with respect to such moneys.

10.4   Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three
       Years

       Any moneys deposited with or paid to the Trustee or any paying agent for
the payment of the principal of or interest, if any, on any Security of any
series and not applied but remaining unclaimed for three years after the date
upon which such principal or interest shall have become due and payable, shall,
upon the written request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Issuer by the Trustee or such paying agent, and any Holder
of the Securities of such series shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to the Issuer for any payment which such Holder may be
entitled to collect, and all liability of the Trustee or any paying agent with
respect to such moneys shall thereupon cease; provided, however, that the
Trustee or such paying agent, before being required to make any such repayment
with respect to moneys deposited with it for any payment shall at the expense of
the Issuer, mail by first-class mail to Holders of such Securities at their
addresses as they shall appear on the Security Register for the Securities of
such series, notice that such moneys remain and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing any
unclaimed balance of such moneys then remaining will be repaid to the Issuer.

10.5   Indemnity for Government Obligations

       The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 10.1 or the principal or interest received in respect of
such Government Obligations,

                                      -51-
<PAGE>

other than any such tax, fee or other charge which by law is for the account of
the Holders of the Securities for whose benefit such Government Obligations are
held.

            ARTICLE XI. REDEMPTION OF SECURITIES AND SINKING FUNDS

11.1   Applicability of Article

       The provisions of this Article shall be applicable to the Securities of
any series which are redeemable before their maturity or to any Securities of a
series which have the benefit of a sinking fund, except as otherwise specified
as contemplated by Section 2.3 for Securities of any series.

11.2   Notice of Redemption; Partial Redemptions

       Notice of redemption to the Holders of Securities of any series to be
redeemed as a whole or in part shall be given by mailing notice of such
redemption by first class mail, postage prepaid, at least 30 days and not more
than 60 days prior to the date fixed for redemption, to such Holders at their
last addresses as they shall appear upon the registry books for such Securities.
Any notice which is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives the notice.
Failure to give notice by mail, or any defect in the notice to the Holder of any
Security of any series designated for redemption as a whole or in part, shall
not affect the validity of the proceedings for the redemption of any other
Security of such series.

       The notice of redemption to each such Holder shall specify (a) the
principal amount of each Security of such series held by such Holder to be
redeemed, (b) the date fixed for redemption, (c) the redemption price, (d) that
such redemption is pursuant to the mandatory or optional sinking or other
analogous fund, or both, if such be the case, (e) that interest accrued to the
date fixed for redemption will be paid as specified in such notice, (f) that on
and after said date interest thereon or on the portions thereof to be redeemed
will cease to accrue, (g) place for presentment and (h) the CUSIP number.  In
case any Security is to be redeemed in part only, the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall state
that on and after the date fixed for redemption, upon surrender of such
Security, a new Security or Securities of such series in authorized
denominations for an aggregate principal amount equal to the unredeemed portion
thereof will be issued.

       The notice of redemption of Securities of any series to be redeemed at
the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.

       On or before the redemption date specified in the notice of redemption
given as provided in this Section, the Issuer will deposit with the Trustee or
with one or more paying agents (or, if the Issuer is acting as its own paying
agent, set aside, segregate and hold in trust

                                      -52-
<PAGE>

as provided in Section 3.4) an amount of money sufficient to redeem on the
redemption date all the Securities of any series so called for redemption at the
applicable redemption price, together with accrued interest to the date fixed
for redemption. The Issuer will deliver to the Trustee at least 60 days prior
(except that the Trustee may in its sole discretion waive such notice period at
any time) to the date fixed for redemption an Officers' Certificate stating such
date, the aggregate principal amount of Securities of each series to be redeemed
and that no Events of Default with respect to the Securities of such series have
occurred (which have not been waived or cured). In case of a redemption at the
option of the Issuer prior to the expiration of any restriction on such
redemption, the Issuer shall deliver to the Trustee, prior to the giving of any
notice of redemption to Holders pursuant to this Section, an Officers'
Certificate stating that such restriction has been complied with. If less than
all the Securities of any series are to be redeemed, the Trustee shall select,
in such manner as it shall deem appropriate and fair, Securities of such series
to be redeemed in whole or in part. Securities may be redeemed in part in
multiples equal to the minimum authorized denomination for Securities of such
series or any multiple thereof. The Trustee shall promptly notify the Issuer in
writing of the Securities of such series selected for redemption and, in the
case of any Securities of such series selected for partial redemption, the
principal amount thereof to be redeemed. For all purposes of this Indenture,
unless the context otherwise requires, all provisions relating to the redemption
of Securities of any series shall relate, in the case of any Security redeemed
or to be redeemed only in part, to the portion of the principal amount of such
Security which has been or is to be redeemed.

11.3   Payment of Securities Called for Redemption

       If notice of redemption has been given as provided in Section 11.2, the
Securities or portions of Securities specified in such notice shall become due
and payable on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for
redemption, and on and after said date (unless the Issuer shall default in the
payment of such Securities at the applicable redemption price, together with
interest accrued to said date) interest on the Securities or portions of
Securities so called for redemption shall cease to accrue and, except as
provided in Sections 6.5 and 10.4, such Securities shall cease from and after
the date fixed for redemption to be entitled to any benefit or security under
this Indenture, and the Holders thereof shall have no right in respect of such
Securities except the right to receive the applicable redemption price thereof
and unpaid interest to the date fixed for redemption.  On presentation and
surrender of such Securities at a place of payment specified in said notice,
redemption, such Securities or the specified portions thereof shall be paid and
redeemed by the Issuer at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption.

       If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate of interest borne
by such Security.

                                      -53-
<PAGE>

       Upon presentation of any Security redeemed in part only, the Issuer shall
execute and the Trustee shall authenticate and make available for delivery to or
on the order of the Holder thereof, at the expense of the Issuer, a new Security
or Securities of such series, of authorized denominations, in principal amount
equal to the unredeemed portion of the Security so presented.

11.4   Exclusion of Certain Securities from Eligibility for Selection for
       Redemption

       Securities shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in an
Officers' Certificate delivered to the Trustee at least 60 days prior to the
last date on which notice of redemption may be given as being owned of record
and beneficially by, and not pledged or hypothecated by either (a) the Issuer or
(b) an entity specifically identified in such Officers' Certificate as an
Affiliate of the Issuer.

11.5   Mandatory and Optional Sinking Funds

       The minimum amount of any sinking fund payment provided for by the terms
of the Securities of any series is herein referred to as a "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of the Securities of any series is herein referred to as an "optional
sinking fund payment". The date on which a sinking fund payment is to be made is
herein referred to as the "sinking fund payment date."

       In lieu of making all or any part of any mandatory sinking fund payment
with respect to any series of Securities in cash, the Issuer may at its option
(a) deliver to the Trustee Securities of such series theretofore purchased or
otherwise acquired (except upon redemption pursuant to the mandatory sinking
fund) by the Issuer or receive credit for Securities of such series (not
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant
to Section 2.10, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section or (c) receive credit for
Securities of such series (not previously so credited) redeemed by the Issuer
through any optional redemption provision contained in the terms of such series.
Securities so delivered or credited shall be received or credited by the Trustee
at the sinking fund redemption price specified in such Securities.

       On or before the 60/th/ day next preceding each sinking fund payment date
for any series, the Issuer will deliver to the Trustee an Officers' Certificate
(which need not contain the statements required by Section 13.5) (a) specifying
the portion of the mandatory sinking fund payment due on such date to be
satisfied by payment of cash and the portion to be satisfied by credit of
Securities of such series and the basis for such credit, (b) stating that none
of the Securities of such series to be so credited has theretofore been so
credited, (c) stating that no defaults in the payment of interest or Events of
Default with respect to such series have occurred and are continuing (which have
not been waived or cured) and

                                      -54-
<PAGE>

(d) stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment on such date with respect to such series and, if
so, specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be so credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered for
cancellation pursuant to Section 2.10 to the Trustee with such Officers'
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officers' Certificate shall be irrevocable, and upon its receipt by the
Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or other deliveries therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such 60th day, to deliver such Officers' Certificate and securities specified in
this paragraph, if any, shall not constitute a default but shall constitute, on
and as of such 60/th/ day, the irrevocable election of the Issuer that (i) the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof and (ii) the
Issuer will make no optional sinking fund payment with respect to such series on
such date as provided in this Section.

       If the sinking fund payment or payments (mandatory or optional or both)
to be made in cash on the next succeeding sinking fund payment date plus any
unused balance of any preceding sinking fund payments made in cash shall exceed
$50,000 and if the Issuer shall so request with respect to the Securities of any
particular series, such cash shall be applied on the next succeeding sinking
fund payment date to the redemption of Securities of such series at the
applicable sinking fund redemption price, together with accrued interest to the
date fixed for redemption. If such amount shall be $50,000 or less and the
Issuer makes no such request, then such amount shall be carried over until a sum
in excess of $50,000 is available. The Trustee shall select, in the manner
provided in Section 11.2, for redemption on such sinking fund payment date a
sufficient principal amount of Securities of such series to absorb said cash, as
nearly as may be, and shall (if requested in writing by the Issuer) inform the
Issuer of the serial numbers of the Securities of such series (or portions
thereof) so selected. Securities shall be excluded from eligibility for
redemption under this Section if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at least
40 days prior to the sinking fund payment date as being owned of record and
beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b)
an entity specifically identified in such Officers' Certificate as an Affiliate
of the Issuer. The Trustee, in the name and at the expense of the Issuer (or the
Issuer, if it shall so request the Trustee in writing), shall cause notice of
redemption of the Securities of such series to be given in substantially the
manner provided in Section 11.2 (and with the effect provided in Section 11.3)
for the redemption of Securities of such series in part at the option of the
Issuer. The amount of any sinking fund payments not so applied or allocated to
the redemption of Securities of such series shall be added to the next cash
sinking fund payment for such series and, together with such payment, shall be
applied in accordance with the provisions of this Section. Any and all sinking
fund moneys held on the stated maturity date of the Securities

                                      -55-
<PAGE>

of a particular series (or earlier, if such maturity is accelerated), which are
not held for the payment or redemption of particular Securities of such series,
shall be applied, together with other moneys, if necessary, sufficient for the
purpose, to the payment of the principal of and interest on the Securities of
such series at maturity.

       Unless otherwise provided for, on or before each sinking fund payment
date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for
the payment of all interest accrued to the date fixed for redemption on
Securities to be redeemed on such sinking fund payment date.

       The Trustee shall not redeem or cause to be redeemed Securities of any
series with sinking fund moneys or give any notice of redemption of Securities
of such series by operation of the sinking fund for such series during the
continuance of any Event of Default with respect to such series except that, if
notice of redemption of any Securities of such series shall theretofore have
been given, the Trustee shall redeem or cause to be redeemed such Securities,
provided that the Trustee or one or more paying agents shall have received from
the Issuer a sum sufficient for such redemption.  Except as aforesaid, any
moneys in the sinking fund for such series at the time when any such Event of
Default shall occur, and any moneys thereafter paid into the sinking fund,
shall, during the continuance of such Event of Default, be deemed to have been
collected under Article V and held for the payment of all Securities of such
series.  In case such Event of Default shall have been waived as provided in
Section 5.10 or such Event of Default cured on or before the 60th day preceding
any sinking fund payment date, such moneys shall thereafter be applied on the
next succeeding sinking fund payment date in accordance with this Section to the
redemption of Securities of such series.

                          ARTICLE XII. SUBORDINATION

12.1   Applicability of Article; Securities Subordinated to Senior Indebtedness

       (a)  This Article XII shall apply only to the Securities of any series
which, pursuant to Section 2.3, are expressly made subject to this Article.
Such Securities are referred to in this Article XII as "Subordinated
Securities."

       (b)  The Issuer covenants and agrees, and each Holder of Subordinated
Securities by his acceptance thereof whether upon original issue or upon
assignment or transfer thereof likewise covenants and agrees, that the
indebtedness represented by the Subordinated Securities and the payment of the
principal and interest, if any, on the Subordinated Securities is subordinated
and subject in right, to the extent and in the manner provided in this Article,
to the prior payment in full of all Senior Indebtedness.

       "Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date hereof or thereafter
incurred, created or assumed:  (i) indebtedness of the Issuer for money borrowed
by the Issuer (including purchase money obligations) or evidenced by debentures
(other than the Subordinated Securities), notes,

                                      -56-
<PAGE>

bankers' acceptances or other corporate debt securities, or similar instruments
issued by the Issuer; (ii) all capital lease obligations of the Issuer; (iii)
all obligations of the Issuer issued or assumed as the deferred purchase price
of property, all conditional sale obligations of the Issuer and all obligations
of the Issuer under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) obligations with
respect to letters of credit; (v) all indebtedness of others of the type
referred to in the preceding clauses (i) through (iv) assumed by or guaranteed
in any manner by the Issuer or in effect guaranteed by the Issuer; (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
Persons secured by any lien on any property or asset of the Issuer (whether or
not such obligation is assumed by the Issuer), except for (A) any such
indebtedness that is by its terms subordinated to or pari passu with the
Subordinated Securities, as the case may be, including all other debt securities
and guaranties in respect of those debt securities, issued to any other trusts,
partnerships or other entities affiliated with the Issuer which act as a
financing vehicle of the Issuer in connection with the issuance of preferred
securities by such entity or other securities which rank pari passu with, or
junior to, the Preferred Securities, and (B) any indebtedness between or among
the Issuer and its Affiliates and/or (vii) renewals, extensions or refundings of
any of the indebtedness referred to in the preceding clauses unless, in the case
of any particular indebtedness, renewal, extension or refunding, under the
express provisions of the instrument creating or evidencing the same or the
assumption or guarantee of the same, or pursuant to which the same is
outstanding, such indebtedness or such renewal, extension or refunding thereof
is not superior in right of payment to the Subordinated Securities.

       This Article shall constitute a continuing obligation to all Persons who,
in reliance upon such provisions become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions.

12.2   Issuer Not to Make Payments with Respect to Subordinated Securities in
       Certain Circumstances

       (a)  Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof and premium and interest
thereon shall first be paid in full, or such payment duly provided for in cash
in a manner satisfactory to the holders of such Senior Indebtedness, before any
payment is made on account of the principal of, or interest on, Subordinated
Securities or to acquire any Subordinated Securities or on account of any
sinking fund provisions of any Subordinated Securities (except payments made in
capital stock of the Issuer or in warrants, rights or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before the maturity of such Senior
Indebtedness, and payments made through the exchange of other debt obligations
of the Issuer for such Subordinated Securities in accordance with the terms of
such Subordinated Securities, provided that such debt obligations are
subordinated to Senior Indebtedness at least to the extent that the Subordinated
Securities for which they are exchanged are so subordinated pursuant to this
Article XII).

                                      -57-
<PAGE>

     (b) Upon the happening and during the continuation of any default in
payment of the principal of, or interest on, any Senior Indebtedness when the
same becomes due and payable, then, unless and until such default shall have
been cured or waived or shall have ceased to exist, no payment shall be made by
the Issuer with respect to the principal of, or interest on, Subordinated
Securities or to acquire any Subordinated Securities or on account of any
sinking fund provisions of Subordinated Securities (except payments made in
capital stock of the Issuer or in warrants, rights, or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before such default and notice thereof, and
payments made through the exchange of other debt obligations of the Issuer for
such Subordinated Securities in accordance with the terms of such Subordinated
Securities, provided that such debt obligations are subordinated to Senior
Indebtedness at least to the extent that the Subordinated Securities for which
they are exchanged are so subordinated pursuant to this Article XII).

     (c) In the event that, notwithstanding the provisions of this Section 12.2,
the Issuer shall make any payment to the Trustee on account of the principal of
or interest on Subordinated Securities, or on account of any sinking fund
provisions of such Securities, after the maturity of any Senior Indebtedness as
described in Section 12.2(a) above or after the happening of a default in
payment of the principal of or interest on any Senior Indebtedness as described
in Section 12.2(b) above, then, unless and until all Senior Indebtedness which
shall have matured, and all premium and interest thereon, shall have been paid
in full (or the declaration of acceleration thereof shall have been rescinded or
annulled), or such default shall have been cured or waived or shall have ceased
to exist, such payment (subject to the provisions of Sections 12.6 and 12.7)
shall be held by the Trustee, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of such Senior Indebtedness (pro
rata as to each of such holders on the basis of the respective amounts of Senior
Indebtedness held by them) or their representative or the trustee under the
indenture or other agreement (if any) pursuant to which such Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of all such Senior Indebtedness remaining unpaid to the extent
necessary to pay the same in full in accordance with its terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness.  The Issuer shall give prompt written notice to the Trustee of any
default in the payment of principal of or interest on any Senior Indebtedness.

12.3 Subordinated Securities Subordinated to Prior Payment of All Senior
     Indebtedness on Dissolution, Liquidation or Reorganization of Issuer

     Upon any distribution of assets of the Issuer in any dissolution, winding
up, liquidation or reorganization of the Issuer (whether voluntary or
involuntary, in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or otherwise):

     (a) the holders of all Senior Indebtedness shall first be entitled to
receive payments in full of the principal thereof and premium and interest due
thereon, or provision

                                      -58-
<PAGE>

shall be made for such payment, before the Holders of Subordinated Securities
are entitled to receive any payment on account of the principal of or interest
on such Securities;

     (b) any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities (other than securities of the
Issuer as reorganized or readjusted or securities of the Issuer or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article XII
with respect to Subordinated Securities, to the payment in full without
diminution or modification by such plan of all Senior Indebtedness), to which
the Holders of Subordinated Securities or the Trustee on behalf of the Holders
of Subordinated Securities would be entitled except for the provisions of this
Article XII shall be paid or delivered by the liquidating trustee or agent or
other person making such payment or distribution directly to the holders of
Senior Indebtedness or their representative, or to the trustee under any
indenture under which Senior Indebtedness may have been issued (pro rata as to
each such holder, representative or trustee on the basis of the respective
amounts of unpaid Senior Indebtedness held or represented by each), to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution or
provision thereof to the holders of such Senior Indebtedness; and

     (c) in the event that notwithstanding the foregoing provisions of this
Section 12.3, any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities (other than securities of the
Issuer as reorganized or readjusted or securities of the Issuer or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article XII
with respect to Subordinated Securities, to the payment in full without
diminution or modification by such plan of all Senior Indebtedness), shall be
received by the Trustee or the Holders of the Subordinated Securities on account
of principal of or interest on the Subordinated Securities before all Senior
Indebtedness is paid in full, or effective provision made for its payment, such
payment or distribution (subject to the provisions of Section 12.6 and 12.7)
shall be received and held in trust for and shall be paid over to the holders of
the Senior Indebtedness remaining unpaid or unprovided for or their
representative, or to the trustee under any indenture under which such Senior
Indebtedness may have been issued (pro rata as provided in subsection (b)
above), for application to the payment of such Senior Indebtedness until all
such Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or distribution or provision therefor to the holders of
such Senior Indebtedness.

     The Issuer shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Issuer.

     The consolidation of the Issuer with, or the merger of the Issuer into,
another corporation or the liquidation or dissolution of the Issuer following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation

                                      -59-
<PAGE>

upon the terms and conditions provided for in Article IX hereof shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 12.3 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
such in Article IX.

12.4 Holders of Subordinated Securities to be Subrogated to Right of Holders of
     Senior Indebtedness

     Subject to the payment in full of all Senior Indebtedness, the Holders of
Subordinated Securities shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of the Issuer
applicable to the Senior Indebtedness until all amounts owing on Subordinated
Securities shall be paid in full, and for the purposes of such subrogation no
payments or distributions to the holders of the Senior Indebtedness by or on
behalf of the Issuer or by or on behalf of the Holders of Subordinated
Securities by virtue of this Article XII which otherwise would have been made to
the Holders of Subordinated Securities shall, as between the Issuer, its
creditors other than holders of Senior Indebtedness and the Holders of
Subordinated Securities, be deemed to be payment by the Issuer to or on account
of the Senior Indebtedness, it being understood that the provisions of this
Article XII are and are intended solely for the purpose of defining the relative
rights of the Holders of the Subordinated Securities, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.

12.5 Obligation of the Issuer Unconditional

     Nothing contained in this Article XII or elsewhere in this Indenture or in
any Subordinated Security is intended to or shall impair, as among the Issuer,
its creditors other than holders of Senior Indebtedness and the Holders of
Subordinated Securities, the obligation of the Issuer, which is absolute and
unconditional, to pay to the Holders of Subordinated Securities the principal
of, and interest on, Subordinated Securities as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders of Subordinated Securities and
creditors of the Issuer other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or the Holder of any
Subordinated Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article XII of the holders of Senior Indebtedness in respect of cash,
property or securities of the Issuer received upon the exercise of any such
remedy.  Upon any payment or distribution of assets of the Issuer referred to in
this Article XII, the Trustee and Holders of Subordinated Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or, subject to the provisions of Section
6.1 and 6.2, a certificate of the receiver, trustee in bankruptcy, liquidating
trustee or agent or other Person making such payment or distribution to the
Trustee or the Holders of  Subordinated Securities, for the purposes of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Issuer, the

                                      -60-
<PAGE>

amount thereof or payable thereon, the amount or amounts paid or distributed
therein and all other facts pertinent thereto or to this Article XII.

     Nothing contained in this Article XII or elsewhere in this Indenture or in
any Subordinated Security is intended to or shall affect the obligation of the
Issuer to make, or prevent the Issuer from making, at any time except during the
pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and, except as provided in subsections (a) and (b) of Section 12.2,
payments at any time of the principal of, or interest on Subordinated
Securities.

12.6 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice

     The Issuer shall give prompt written notice to the Trustee of any fact
known to the Issuer which would prohibit the making of any payment or
distribution to or by the Trustee in respect of the Subordinated Securities.
Notwithstanding the provisions of this Article XII or any provision of this
Indenture, the Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment or
distribution to or by the Trustee, unless at least two Business Days prior to
the making of any such payment, the Trustee shall have received written notice
thereof from the Issuer or from one or more holders of Senior Indebtedness or
from any representative thereof or from any trustee therefor, together with
proof satisfactory to the Trustee of such holding of Senior Indebtedness or of
the authority of such representative or trustee; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections 6.1
and 6.2, shall be entitled to assume conclusively that no such facts exist.  The
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or a
representative or trustee on behalf of the holder) to establish that such notice
has been given by a holder of Senior Indebtedness (or a representative of or
trustee on behalf of any such holder).  In the event that the Trustee
determines, in good faith, that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payments or distribution pursuant of this Article XII, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, as to the extent to
which such Person is entitled to participate in such payment or distribution,
and as to other facts pertinent to the rights of such Person under this Article
XII, and if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.  The Trustee, however, shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness and nothing in this Article
XII shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.6.

12.7 Application by Trustee of Monies or Government Obligations Deposited with
     It

                                      -61-
<PAGE>

     Money or Government obligations deposited in trust with the Trustee
pursuant to and in accordance with Section 10.1 shall be for the sole benefit of
Securityholders and, to the extent allocated for the payment of Subordinated
Securities, shall not be subject to the subordination provisions of this Article
XII, if the same are deposited in trust prior to the happening of any event
specified in Section 12.2.  Otherwise, any deposit of monies or Government
Obligations by the Issuer with the Trustee or any paying agent (whether or not
in trust) for the payment of the principal of, or interest on any Subordinated
Securities shall be subject to the provisions of Section 12.1, 12.2 and 12.3
except that, if prior to the date on which by the terms of this Indenture any
such monies may become payable for any purposes (including, without limitation,
the payment of the principal of, or the interest, if any, on any Subordinated
Security) the Trustee shall not have received with respect to such monies the
notice provided for in Section 12.6, then the Trustee or the paying agent shall
have full power and authority to receive such monies and Government Obligations
and to apply the same to the purpose for which they were received, and shall not
be affected by any notice to the contrary which may be received by it on or
after such date.  This Section 12.7 shall be construed solely for the benefit of
the Trustee and paying agent and, as to the first sentence hereof, the
Securityholders, and shall not otherwise effect the rights of holders of Senior
Indebtedness.

12.8 Subordination Rights Not Impaired by Acts or Omissions of Issuer or Holders
     of Senior Indebtedness

     No rights of any present or future holders of any Senior Indebtedness to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Issuer or
by any act or failure to act, in good faith, by any such holders or by any
noncompliance by the Issuer with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.

     Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Issuer may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Subordinated Securities, without incurring responsibility to the Holders of the
Subordinated Securities and without impairing or releasing the subordination
provided in this Article XII or the obligations hereunder of the Holders of the
Subordinated Securities to the holders of such Senior Indebtedness, do any one
or more of the following:  (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, such Senior Indebtedness, or
otherwise amend or supplement in any manner such Senior Indebtedness or any
instrument evidencing the same or any agreement under which such Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior Indebtedness;
(iii) release any Person liable in any manner for the collection for such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Issuer, as the case may be, and any other Person.

                                      -62-
<PAGE>

12.9  Securityholders Authorize Trustee to Effectuate Subordination of
      Securities

      Each Holder of Subordinated Securities by his acceptance thereof
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article XII and appoints the Trustee his attorney-in-fact for such purpose,
including in the event of any dissolution, winding up, liquidation or
reorganization of the Issuer (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise) the
immediate filing of a claim for the unpaid balance of his Subordinated
Securities in the form required in said proceedings and causing said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of Senior Indebtedness have
the right to file and are hereby authorized to file an appropriate claim for and
on behalf of the Holders of said Securities.

12.10 Right of Trustee to Hold Senior Indebtedness

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

      With respect to the holders of Senior Indebtedness of the Issuer, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XII, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee.  The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Sections 12.2 and 12.3, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Holders of Subordinated Securities, the Issuer or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article XII or otherwise.

12.11 Article XII Not to Prevent Events of Defaults

      The failure to make a payment on account of principal or interest by
reason of any provision in this Article XII shall not be construed as preventing
the occurrence of an Event of Default under Section 5.1.

                                      -63-
<PAGE>

                   ARTICLE XIII.   MISCELLANEOUS PROVISIONS

13.1 Incorporators, Stockholders, Officers and Directors of Issuer Exempt from
     Individual Liability

     No recourse under or upon any obligation, covenant or agreement contained
in this Indenture or in any Security, or because of any indebtedness evidenced
thereby, shall be had against any incorporator, as such, or against any past,
present or future stockholder, officer or director, as such, of the Issuer or of
any successor, either directly or through the Issuer or any successor, under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities appertaining thereto by the Holders thereof and as part of the
consideration for the issue of the Securities appertaining thereto.

13.2 Provisions of Indenture for the Sole Benefit of Parties and Holders of
     Securities

     Nothing in this Indenture, in the Securities expressed or implied, shall
give or be construed to give to any Person other than the parties hereto and
their successors and the Holders of the Securities, any legal or equitable
right, remedy or claim under this Indenture or under any covenant or provision
herein contained, all such covenants and provisions being for the sole benefit
of the parties hereto and their successors and of the Holders of the Securities.
Notwithstanding the foregoing, for so long as any Trust Securities remain
outstanding, the Issuer's obligations under this Indenture will also be for the
benefit of the holders of such Trust Securities, and the Issuer acknowledges and
agrees that such holders will be entitled to enforce certain payment obligations
under the Securities directly against the Issuer to the extent provided in
Sections 5(b) and 6(c) of Annex I of the Declaration dated May 18, 2001.

13.3 Successors and Assigns of Issuer Bound by Indenture

     All the covenants, stipulations, promises and agreements in this Indenture
made by or on behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.

13.4 Notices and Demands on Issuer, Trustee and Holders of Securities

     Any notice, direction, request or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
any Holder of Securities of any series or upon the Issuer shall be deemed to
have been sufficiently given or served by being deposited postage prepaid in the
United States mail, first-class mail (except as otherwise specifically provided
herein), addressed (until another address of the Issuer is filed by the Issuer
with the Trustee) to Puget Sound Energy, Inc., 411 - 108/th/ Avenue NE,
Bellevue, Washington  98004-5515, Attention:  Secretary.  Any notice, direction,
request or demand by the Issuer or any Holder of Securities of any series or
upon the Trustee shall be

                                      -64-
<PAGE>

deemed to have been sufficiently given or served by being deposited postage
prepaid in the United States mail, first-class mail (except as otherwise
specifically provided herein), addressed (until another address of the Trustee
is filed by the Trustee with the Issuer) to Bank One Trust Company, N.A., 1 Bank
One Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126, Attention: Corporate
Trust Administration. Any notice required or permitted to be given or served by
the Issuer or by the Trustee to or upon any Holders of Securities of any series
shall be deemed to have been sufficiently given or served by being deposited in
the United States mail, first-class mail (except as otherwise specifically
provided herein), addressed at their addresses as they shall appear on the
Security Register.

     In any case where notice to the Holders of Securities is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders.  Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice.  Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

     In case, by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be reasonably
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.

13.5 Officers' Certificates and Opinions of Counsel; Statements to be Contained
     Therein

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

     Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture (other than certificates provided pursuant to Section 4.3(d)
or Section 11.5) shall include (a) a statement that the individual signing such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto, (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in

                                      -65-
<PAGE>

such certificate or opinion are based, (c) a statement that, in the opinion of
such individual, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such covenant
or condition has been complied with and (d) a statement as to whether or not, in
the opinion of such individual, such condition or covenant has been complied
with.

     Any certificate, statement or opinion of an officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion of or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.  Any
such certificate, statement or Opinion of Counsel may be based, insofar as it
relates to factual matters, on information with respect to which is in the
possession of the Issuer, upon the certificate, statement or opinion of or
representations by an officer or officers of the Issuer, unless such counsel
knows that the certificate, statement or opinion or representations with respect
to the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous.

     Any certificate, statement or opinion of an officer of the Issuer or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.

     Any certificate or opinion of any independent firm of public accountants
filed with and directed to the Trustee shall contain a statement that such firm
is independent.

13.6 Payments Due on Saturdays, Sundays and Holidays

     If the date of maturity of interest on or principal of the Securities of
any series or the date fixed for redemption or repayment of any such Security
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of such interest or principal need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the date of maturity or the date fixed
for redemption or repayment, and no interest shall accrue for the period from
and after such date 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.

                                      -66-
<PAGE>

13.7  Conflict of any Provision of Indenture with Trust Indenture Act of 1939

      If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with any provision set forth in Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, that impose duties on any person,
such provision of the Trust Indenture Act of 1939 shall control.

13.8  Governing Law

      This Indenture and each Security shall be governed by and deemed to be a
contract under, and construed in accordance with, the laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
such State, except as may otherwise be required by mandatory provisions of law.

13.9  Counterparts

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

13.10 Effect of Headings and Table of Contents

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

13.11 Separability Clause

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

                   ARTICLE XIV.   SECURITYHOLDERS' MEETINGS

14.1  Purposes of Meetings

      A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article XIV for any of the following
purposes:

      (a) to give any notice to the Issuer or to the Trustee, or to give any
directions to the Trustee, or to consent to the waiving of any default hereunder
and its consequences, or to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of Article V;

      (b) to remove the Trustee and nominate a successor trustee pursuant to the
provisions of Article VI;

                                      -67-
<PAGE>

     (c) to consent to the execution of an indenture or indentures supplemental
hereto pursuant to the provisions of Section 8.2; or

     (d) to take any other action authorized to be taken by or on behalf of the
holders of any specified aggregate principal amount of such Securities under any
other provision of this Indenture or under applicable law.

14.2 Call of Meetings by Trustee

     The Trustee may at any time call a meeting of Securityholders to take any
action specified in Section 14.1, to be held at such time and at such place in
the Borough of Manhattan, The City of New York, as the Trustee shall determine.
Notice of every meeting of the Securityholders, setting forth the time and the
place of such meeting and in general terms the action proposed to be taken at
such meeting, shall be mailed to Holders of Securities at their addresses as
they shall appear on the Security Register.  Such notice shall be mailed not
less than 20 nor more than 180 days prior to the date fixed for the meeting.

14.3 Call of Meetings by the Issuer or Securityholders

     In case at any time the Issuer pursuant to a resolution of the Board of
Directors, or the holders of at least 10% in aggregate principal amount of the
Outstanding Securities, shall have requested the Trustee to call a meeting of
Securityholders, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such request,
then the Issuer or such Securityholders may determine the time and the place in
said Borough of Manhattan for such meeting and may call such meeting to take any
action authorized in Section 14.1, by mailing notice thereof as provided in
Section 14.2.

14.4 Qualifications for Voting

     To be entitled to vote at any meeting of Securityholders a person shall (a)
be a holder of one or more Securities or (b) a person appointed by an instrument
in writing as proxy by a holder of one or more Securities.  The only persons who
shall be entitled to be present or to speak at any meeting of Securityholders
shall be the persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Issuer and its counsel.

14.5 Regulations

     Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Securityholders, in regard to proof of the holding of Securities and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.

                                      -68-
<PAGE>

     The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the Issuer
or by Securityholders as provided in Section 14.3, in which case the Issuer or
the Securityholders calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman.  A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.

     Subject to the provisions of Section 14.4, at any meeting each holder of
Securities or proxy therefor shall be entitled to one vote for each $25
principal amount of Securities held or represented by him; provided, however,
                                                           --------  -------
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding.  The chairman of the meeting shall have no right to vote other than
by virtue of Securities held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Securityholders.  Any
meeting of Securityholders duly called pursuant to the provisions of Section
14.2 or 14.3 may be adjourned from time to time by a majority of those present,
whether or not constituting a quorum, and the meeting may be held as so
adjourned without further notice.

14.6 Voting

     The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such Holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them.  The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting.  A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 14.2.  The record shall show the serial numbers of the
Securities voting in favor of or against any resolution.  The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Issuer and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting.  Any record so signed and verified
shall be conclusive evidence of the matters therein stated.

     (The remainder of this page has intentionally been left blank)

                                      -69-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

                                   PUGET SOUND ENERGY, INC., as Issuer

                                   By:  /s/ Donald E. Gaines
                                      -----------------------------------
                                      Donald E. Gaines
                                      Vice President and Treasurer

By:  /s/ James W. Eldredge
   ------------------------------
   James W. Eldredge
   Secretary
                                   BANK ONE TRUST COMPANY, N.A., as Trustee

                                   By:  /s/ Janice Ott Rotunno
                                      -----------------------------------
                                      Name:  Janice Ott Rotunno
                                      Title: Vice President

By:  /s/ Steven M. Wagner
   ------------------------------
   Name:  Steven M. Wagner
   Title: First Vice President

                                      -70-

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