Document:

Exhibit
4.2.7

 

NEW YORK STATE
ENERGY RESEARCH

 

AND
DEVELOPMENT AUTHORITY

 

and

 

CONSOLIDATED
EDISON COMPANY OF NEW YORK, INC.

 

 

 

PARTICIPATION
AGREEMENT

 

 

 

Dated as of
January 1, 2004

 

relating to

$146,975,000 Facilities Revenue Bonds, Series 2004B

(Consolidated Edison Company of New York, Inc. Project)

 

 

TABLE OF
CONTENTS

 

PARTICIPATION AGREEMENT

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PARTIES

  	
   

  	
   

  	
   

  
	
  RECITALS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  	
   

  
	
  DEFINITIONS; EFFECTIVE DATE AND DURATION OF

  PARTICIPATION AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Definitions

  	
   

  
	
  Section 1.02.

  	
   

  	
  Effective Date of Participation Agreement;
  Duration of Participation Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  	
   

  
	
  REPRESENTATIONS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Representations and Warranties by the
  Authority

  	
   

  
	
  Section 2.02.

  	
   

  	
  Representations and Warranties by the
  Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  	
   

  
	
  THE PROJECT; ISSUANCE OF BONDS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  The Project

  	
   

  
	
  Section 3.02.

  	
   

  	
  Sale of Bonds and Deposit of Proceeds

  	
   

  
	
  Section 3.03.

  	
   

  	
  Disbursements from Project Fund

  	
   

  
	
  Section 3.04.

  	
   

  	
  Adequacy of Project Fund

  	
   

  
	
  Section 3.05.

  	
   

  	
  Ownership and Possession of the Project

  	
   

  
	
  Section 3.06.

  	
   

  	
  Operation, Maintenance and Repair

  	
   

  
	
  Section 3.07.

  	
   

  	
  Investment of Monies in Funds Under the
  Indenture

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  	
   

  
	
  NOTE AND PAYMENTS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Execution and Delivery of Note to Trustee

  	
   

  
	
  Section 4.02.

  	
   

  	
  Payments Payable; Note Payments; Additional
  Payments

  	
   

  
	
  Section 4.03.

  	
   

  	
  Notice to Pay; Medium of Payment;
  Acceleration

  	
   

  
	
  Section 4.04.

  	
   

  	
  Prepayment of Note Payments

  	
   

  
	
  Section 4.05.

  	
   

  	
  Company’s Payments as Trust Funds

  	
   

  

 

i

 

	
  Section 4.06.

  	
   

  	
  Absolute Obligation to Make Payments

  	
   

  
	
  Section 4.07.

  	
   

  	
  Assignment of Authority’s Rights

  	
   

  
	
  Section 4.08.

  	
   

  	
  Actions with Respect to or by or on behalf
  of the Authority under the Indenture

  	
   

  
	
  Section 4.09.

  	
   

  	
  Agreements of Company relating to Support
  Facilities

  	
   

  
	
  Section 4.10.

  	
   

  	
  Compensation of Trustee and Paying Agents

  	
   

  
	
  Section 4.11.

  	
   

  	
  Project not Security for Bonds

  	
   

  
	
  Section 4.12.

  	
   

  	
  Payment of Taxes and Assessments; No Liens
  or Charges

  	
   

  
	
  Section 4.13.

  	
   

  	
  Company to Pay Attorneys’ Fees and
  Disbursements

  	
   

  
	
  Section 4.14.

  	
   

  	
  No Abatement of Administration Fees and
  Other Charges

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  	
   

  
	
  SPECIAL COVENANTS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  No Warranty as to Suitability of Project

  	
   

  
	
  Section 5.02.

  	
   

  	
  Authority’s Right to Inspect Project

  	
   

  
	
  Section 5.03.

  	
   

  	
  Company Consent to Amendment of Indenture

  	
   

  
	
  Section 5.04.

  	
   

  	
  Tax Covenant

  	
   

  
	
  Section 5.05.

  	
   

  	
  Company Agrees to Perform Obligations
  Imposed by Indenture

  	
   

  
	
  Section 5.06.

  	
   

  	
  Authority Agrees to Take Certain Actions at
  Direction of Company

  	
   

  
	
  Section 5.07.

  	
   

  	
  Certificates as to Defaults

  	
   

  
	
  Section 5.08.

  	
   

  	
  Recording and Filing

  	
   

  
	
  Section 5.09.

  	
   

  	
  Limited Obligation of Authority;
  Indemnification of Authority, Registrar and Paying Agent, Auction Agent and
  Trustee

  	
   

  
	
  Section 5.10.

  	
   

  	
  Provision of Information

  	
   

  
	
  Section 5.11.

  	
   

  	
  Ratings

  	
   

  
	
  Section 5.12.

  	
   

  	
  Notices

  	
   

  
	
  Section 5.13.

  	
   

  	
  Maintenance of Office or Agency

  	
   

  
	
  Section 5.14.

  	
   

  	
  Maintenance of Properties

  	
   

  
	
  Section 5.15.

  	
   

  	
  Insurance

  	
   

  
	
  Section 5.16.

  	
   

  	
  Proper Books of Record and Account

  	
   

  
	
  Section 5.17.

  	
   

  	
  Compliance with Laws

  	
   

  
	
  Section 5.18.

  	
   

  	
  Consolidation, Merger or Sale of Assets

  	
   

  
	
  Section 5.19.

  	
   

  	
  Financial Statements of Company

  	
   

  
	
  Section 5.20.

  	
   

  	
  Information to Bond Insurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  	
   

  
	
  REDEMPTION OF BONDS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Redemption of Bonds

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

ii

 

	
  ARTICLE VII

  
	
   

  	
   

  	
   

  	
   

  
	
  EVENTS OF DEFAULT AND REMEDIES

  
	
   

  	
   

  
	
  Section 7.01.

  	
   

  	
  Events of Default Defined

  	
   

  
	
  Section 7.02.

  	
   

  	
  Remedies on Default

  	
   

  
	
  Section 7.03.

  	
   

  	
  No Remedy Exclusive

  	
   

  
	
  Section 7.04.

  	
   

  	
  No Additional Waiver Implied by One Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
   

  	
  Disposition of Amounts after Payment of
  Bonds

  	
   

  
	
  Section 8.02.

  	
   

  	
  Notices

  	
   

  
	
  Section 8.03.

  	
   

  	
  Successors and Assigns

  	
   

  
	
  Section 8.04.

  	
   

  	
  Amendment of Participation Agreement

  	
   

  
	
  Section 8.05.

  	
   

  	
  Participation Agreement Supersedes Any
  Prior Agreements

  	
   

  
	
  Section 8.06.

  	
   

  	
  Further Assurances and Corrective
  Instruments

  	
   

  
	
  Section 8.07.

  	
   

  	
  Counterparts

  	
   

  
	
  Section 8.08.

  	
   

  	
  Severability

  	
   

  
	
  Section 8.09.

  	
   

  	
  Delegation of Duties by Authority

  	
   

  
	
  Section 8.10.

  	
   

  	
  Survival of Representations, Warranties and
  Covenants

  	
   

  
	
  Section 8.11.

  	
   

  	
  NEW YORK LAW TO GOVERN

  	
   

  
	
  Section 8.12.

  	
   

  	
  Third Party Beneficiary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TESTIMONIUM

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURES AND SEALS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ACKNOWLEDGMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT
  A

  	
   

  	
  Description
  of Project Exempt Facilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT
  B

  	
   

  	
  Description
  of Other Project Facilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT
  C

  	
   

  	
  Form
  of Note

  	
   

  

 

iii

 

This PARTICIPATION AGREEMENT, dated as of January 1, 2004, between
NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY, a body corporate and
politic, constituting a public benefit corporation, established and existing
under and by virtue of the laws of the State of New York (the “Authority”) and
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., a corporation duly organized and
existing and qualified to do business as a public utility under the laws of the
State of New York (the “Company”),

 

W I T N E S S
E T H :

 

WHEREAS, pursuant to a special act of the Legislature of the State of
New York (Title 9 of Article 8 of the Public Authorities Law of New York,
as from time to time amended and supplemented, herein called the “Act”), the
Authority has been established, as a body corporate and politic, constituting a
public benefit corporation; and

 

WHEREAS, pursuant to the Act, the Authority is empowered to contract
with any power company to participate in the construction of facilities for the
furnishing of electric energy and the furnishing of gas to the extent required
by the public interest in development, health, recreation, safety, conservation
of natural resources and aesthetics; and

 

WHEREAS, pursuant to the Act, the Authority is also authorized to
extend credit and make loans from bond proceeds to any person for the
construction, acquisition, installation, reconstruction, improvement,
maintenance, equipping, furnishing or leasing of any special energy project (as
defined in the Act) including, but not limited to, facilities for the
distribution of steam or for the reimbursement to any person for costs incurred
in connection with a special energy project completed or not completed at the
time of such credit or loan, which credits or loans may, but need not, be
secured by mortgages, contracts, leases or other instruments, upon such terms
and conditions as the Authority shall determine reasonable in connection with
such credits or loans; and

 

WHEREAS, the Authority is also authorized under the Act to borrow money
and issue its negotiable bonds and notes to provide sufficient monies for
achieving its corporate purposes, including the refunding of its outstanding
obligations; and

 

WHEREAS, the Authority is also authorized under the Act to enter into
any contracts and to execute all instruments necessary or convenient for the
exercise of its corporate powers and the fulfillment of its corporate purposes;
and

 

WHEREAS, the Company is a public utility corporation doing business in
the State of New York and provides electric energy and gas service in The City
of New York and the County of Westchester, New York and provides steam service
in the Borough of Manhattan; and

 

WHEREAS, the Company has requested that the Authority issue bonds for
the purpose of refunding the Authority’s 5 1/4% Facilities Refunding Revenue
Bonds, Series 1993 B (Consolidated Edison Company of New York, Inc.
Project), in the aggregate principal amount of $127,715,000 and the Authority’s
5 3/8% Facilities Refunding Revenue Bonds, Series 1993C (Consolidated Edison
Company of New York, Inc. Project), in the aggregate principal amount of

 

1

 

$19,760,000 (the “Prior Bonds”). 
The Prior Bonds were issued for the purpose of refunding a portion of
the Authority’s 9% Electric Facilities Revenue Bonds, Series 1985A
(Consolidated Edison Company of New York, Inc. Project) and 9 1/4% Electric
Facilities Revenue Bonds, Series 1987B (Consolidated Edison Company of New
York, Inc. Project), which were issued to finance the acquisition,
construction, and installation (or any combination thereof) of certain
facilities of the Company for the local furnishing of electric energy within
the Company’s electric energy service area; and

 

WHEREAS, the Authority proposes to issue a series of such bonds in the
aggregate principal amount of $146,975,000 Facilities Revenue Bonds, Series
2004B (Consolidated Edison Company of New York, Inc. Project) (the “Bonds”),
which will be used, together with Company funds, to refund the Prior Bonds,
such Bonds to be issued under and secured by a Trust Indenture dated as of
January 1, 2004, between the Authority and The Bank of New York, as
Trustee (the “Indenture”); and

 

WHEREAS, the Authority, by Resolution No. 1039, adopted
September 22, 2003, has determined to issue the Bonds, in an aggregate
principal amount not to exceed $147,715,000, for the purpose of refunding the
Prior Bonds, all such Bonds to be issued under and secured by the Indenture;

 

NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, it is hereby agreed by
and between the parties as follows:

 

2

 

ARTICLE I

 

DEFINITIONS; EFFECTIVE DATE AND DURATION

OF PARTICIPATION AGREEMENT

 

Section 1.01.                             Definitions.  The terms used in this Participation
Agreement which are defined in the Indenture shall have the meanings,
respectively, herein which such terms are given in the Indenture.

 

Section 1.02.                             Effective
Date of Participation Agreement; Duration of Participation Agreement.  This Participation Agreement shall become
effective upon its execution and delivery, and shall continue in full force and
effect until the principal of and premium, if any, and interest on the Note and
Bonds have been fully paid (or provision for their payment has been made in
accordance with the provisions of the Indenture), and all sums to which the
Authority or the Trustee are entitled hereunder have been fully paid.

 

3

 

ARTICLE II

 

REPRESENTATIONS

 

Section 2.01.                             Representations
and Warranties by the Authority. 
The Authority represents and warrants as follows:

 

(a)                                  The
Authority is a body corporate and politic, constituting a public benefit
corporation, established and existing under the laws of the State of New York;

 

(b)                                 The
Authority has full power and authority to execute and deliver the Bonds, this
Participation Agreement, the Tax Regulatory Agreement, the Indenture, the Bond
Purchase Trust Agreement and to consummate the transactions contemplated hereby
and thereby and perform its obligations hereunder and thereunder;

 

(c)                                  The
Authority is not in violation of or in default under any of the provisions of
the laws or the Constitution of the State of New York which would affect its
existence or its powers referred to in the preceding paragraph (b);

 

(d)                                 The
Authority has determined that its participation in the Project and the refunding
of the Prior Bonds, as contemplated by this Participation Agreement, is in the
public interest;

 

(e)                                  The
Authority has duly authorized the execution and delivery of this Participation
Agreement, the Indenture, the Tax Regulatory Agreement and the Bond Purchase
Trust Agreement and the execution and delivery of the other documents
incidental to this transaction and all necessary authorizations therefor or in
connection with the performance by the Authority of its obligations hereunder
or thereunder have been obtained and are in full force and effect; and

 

(f)                                    The
execution and delivery by the Authority of the Bonds, this Participation
Agreement, the Tax Regulatory Agreement, the Indenture, the Bond Purchase Trust
Agreement and the other documents incidental to this transaction and the
consummation of the transactions herein or therein contemplated will not
violate or cause a default under any indenture, mortgage, loan agreement or
other contract or instrument to which the Authority is a party or by which it
is bound, or any judgment, decree, order, statute, rule or regulation
applicable to the Authority.

 

Section 2.02.                             Representations
and Warranties by the Company.  The
Company represents and warrants as follows:

 

(a)                                  The
Company is a corporation duly incorporated and in good standing under the laws
of the State of New York, is duly qualified and authorized to transact business
as a public utility in the State of New York and is not in violation of any
provision of its Certificate of Incorporation or its By-Laws, has power to
enter into, execute and deliver this Participation Agreement, the Tax
Regulatory Agreement and the

 

4

 

Note and by proper corporate action has duly authorized the execution
and delivery of this Participation Agreement, the Tax Regulatory Agreement and
the Note;

 

(b)                                 The
execution and delivery by the Company of this Participation Agreement, the Tax
Regulatory Agreement and the Note and the consummation of the transactions
herein and therein contemplated will not conflict with or constitute a breach
of or a default under the Company’s Certificate of Incorporation or By-Laws or
a default in any material respect under any indenture, mortgage, loan agreement
or other contract or instrument to which the Company is a party or by which it
is bound, or any judgment, decree, order, statute, rule or regulation
applicable to the Company;

 

(c)                                  This
Participation Agreement, the Tax Regulatory Agreement and the Note have been
duly executed and delivered by the Company and constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other laws
relating to or affecting the enforcement of creditors’ rights or contractual
obligations generally or principles of equity or judicial discretion;

 

(d)                                 The
execution and delivery by the Company of this Participation Agreement and the
Note in the manner and for the purposes herein set forth have been duly
authorized by order of the Public Service Commission of the State of New York;
and

 

(e)                                  No
additional authorizations for or approvals of the execution and delivery by the
Company of this Participation Agreement, the Tax Regulatory Agreement and the
Note need be obtained by the Company or if any such authorization or approval
is necessary it has been obtained.

 

5

 

ARTICLE III

 

THE PROJECT; ISSUANCE OF BONDS

 

Section 3.01.                             The
Project.  Construction of the
Project is complete.  The Project is the
property of the Company.  In order to
effectuate the purposes of this Participation Agreement, the Company, in its
own name, will do or cause to be done all things requisite or proper for the
fulfillment of the obligations of the Company under this Participation
Agreement.

 

Section 3.02.                             Sale
of Bonds and Deposit of Proceeds. 
In order to provide funds for the refunding of the Prior Bonds, the
Authority, on the date specified in the Bond Purchase Agreement or as soon
thereafter as practicable, and concurrently with the issuance and delivery to
the Trustee of the Note as provided in Section 4.01 hereof, will issue,
sell and deliver the Bonds, all pursuant to and as provided in the Bond
Purchase Agreement and subject to the conditions set forth in Section 2.06
of the Indenture, and will deposit the proceeds of such sale including the
accrued interest, if any, paid by the initial purchasers of the Bonds in the
Project Fund.

 

Section 3.03.                             Disbursements
from Project Fund. 
1.  The Authority has in the Indenture authorized and
directed the Trustee to make payments from the Project Fund in accordance with
Section 8.01 of the Indenture, to pay the redemption price of the Prior
Bonds and costs related thereto upon receipt from time to time of letters
signed by an Authorized Company Representative in accordance with
Section 8.01 of the Indenture. Concurrently with the delivery by the
Company of each such letter to the Trustee, the Company will deliver to the
Authority a copy thereof and any attachments thereto.  The Company will indemnify and save harmless the Authority and
the Trustee from any liability incurred in connection with any letter so
delivered and any payments made in reliance thereon.

 

2.                                       All monies
remaining in the Project Fund after the redemption of the Prior Bonds and
payment of all costs related thereto shall, at the written direction of an
Authorized Company Representative, be paid to the Company.

 

Section 3.04.                             Adequacy
of Project Fund.  The Company
acknowledges that the monies in the Project Fund are not sufficient to pay the
redemption price of the Prior Bonds and costs related thereto in full.  The Company shall pay that portion of the
redemption price of the Prior Bonds and costs related thereto in excess of the
monies available therefor in the Project Fund with its own funds.

 

Section 3.05.                             Ownership
and Possession of the Project. 
Issuance of the Bonds will not vest in the owners thereof, the Trustee,
the Authority or any other person, ownership, or the right to possession, of
the Project.  The Company is entitled to
sole and exclusive ownership and possession of the Project.

 

Section 3.06.                             Operation,
Maintenance and Repair.  The Company
agrees to proceed in good faith to maintain the availability of the Project for
use as an authorized project under the Act. 
Notwithstanding the foregoing, the Authority and the Company recognize
that the Project will constitute integrated portions of electric energy
distribution facilities of the

 

6

 

Company and
that it is not feasible to administer the Project separately from such
facilities.  The Company shall operate
the Project (with such changes, improvements or additions as the Company may
deem desirable) as part of such facilities for the joint useful lives of the
Project and such facilities and shall maintain and repair the Project in
conformity with the Company’s normal maintenance and repair programs for such
facilities; provided that the Company shall have no obligation to operate,
maintain or repair any element or item of the Project the operation,
maintenance or repair of which becomes uneconomic to the Company because of
damage or destruction or obsolescence (including physical, functional and
economic obsolescence), or change in government standards and regulations, or
the termination by the Company of the operation of the facilities to which the
element or item of the Project is an adjunct.

 

Section 3.07.                             Investment
of Monies in Funds Under the Indenture. 
Any monies held as a part of any fund created under the Indenture shall,
at the direction of an Authorized Company Representative, be invested or
reinvested by the Trustee as provided in Article IX of the Indenture.

 

7

 

ARTICLE IV

 

NOTE AND PAYMENTS

 

Section 4.01.                             Execution
and Delivery of Note to Trustee. 
Concurrently with the authentication by the Trustee and delivery by the
Authority of the Bonds and in order to evidence the obligation of the Company
to the Authority to repay the Bonds, the Authority hereby directs the Company,
and the Company hereby agrees, to execute and deliver to the Trustee its Note,
duly and validly executed and delivered, relating to the Bonds.  The Note shall be in substantially the form
attached hereto as Exhibit C with only such changes to such form as may be
approved by the Authority.  Thereafter,
the Company shall be obligated to make the Note Payments, constituting payments
of principal of, and premium, if any, and interest on the Note, and the
Additional Payments required by this Participation Agreement.  Such obligations shall terminate on the date
when the Note has been paid in full. 
The Note may be prepaid in accordance with Section 4.04
hereof.  Upon payment or provision for
payment in full of all amounts payable or to become payable under the Note, the
Trustee shall cancel the Note and deliver the same to the Company.  Provision for payment in full of all amounts
payable or to become payable under the Note shall be deemed to have occurred
upon receipt by the Trustee of written notice from the Authority acknowledging
that the Company has satisfied its obligations to the Authority under the Note.  The Authority agrees to deliver such written
notice to the Trustee and the Bond Insurer promptly when such provision for
payment in full has been made.

 

Section 4.02.                             Payments
Payable; Note Payments; Additional Payments.  (a) The Company covenants and agrees
to pay the Payments as and when the same are due and payable in accordance with
the Note and this Section 4.02. 
The Company shall provide the Trustee with a written allocation of
amounts paid under this Section 4.02 among the various purposes set forth
in this Section 4.02.

 

(b)                                 The
Note Payments shall be in an aggregate amount sufficient for, together with
other amounts held by the Trustee and available under the Indenture for
application to, the payment in full of the Bonds consisting of (i) the
total interest becoming due and payable on the 
Bonds to the date of payment thereof, and (ii) the total principal
amount plus premium, if any, of the Bonds.

 

(c)                                  The
Company shall make Note Payments as set forth in Section  4.02(b) at
or prior to the time the corresponding payment is due on the Bonds.  Each installment of Note Payments paid by
the Company shall be increased as may be necessary to make up any previous
deficiency of any of the required payments and to make up any deficiency in the
Bond Fund.

 

(d)                                 In
addition, the Company shall  pay to the
Registrar and Paying Agent for deposit in the Bond Purchase Fund and credit to
the Company Account therein an amount sufficient to provide for the payment of
the Purchase Price (as defined in the Bond Purchase Trust Agreement) of any Bond
tendered for purchase  pursuant to the
Bond Purchase Trust Agreement to the extent that sufficient moneys are not
available for the payment of such Purchase Price from the other sources
described therein.

 

8

 

(e)                                  The
Company covenants that it shall deposit, or cause to be deposited with the
Trustee, sufficient funds to assure that no default shall occur in the payment
of the principal of or premium, if any, or the interest on, or the Purchase
Price of, the Bonds as and when due, and that no unreasonable delay shall occur
in the payment of the costs and expenses payable from Additional Payments.

 

(f)                                    The
Company further covenants and agrees to pay, when due and payable, as
Additional Payments, certain additional amounts and costs and expenses.  Each installment of Additional Payments, if
any, shall be equal to the sum of the amounts set forth in clauses (i) to (iv),
inclusive, below, and shall be paid directly to the persons entitled to such
payments. “Additional Payments” is hereby defined to be the aggregate of the
installments of the following:

 

(i)                                     the
reasonable fees and expenses payable to the Trustee, any Indexing Agent, the
Registrar and Paying Agent, any issuer of a Support Facility and any
Remarketing Agent under any Remarketing 
Agreement (and in the case of Auction Rate Bonds, the Auction Agent
under the Auction Agency Agreement, any Broker-Dealers under the respective
Broker-Dealer Agreements), and of any counsel or agents of any of the
foregoing;

 

(ii)                                  all
costs incurred in connection with the transfer, exchange, purchase or
redemption of Bonds not otherwise paid by the holders thereof, including all
charges of the Authority (and in the case of Auction Rate Bonds, the Auction
Agent, any Broker-Dealer and any Remarketing Agent), the Registrar and Paying
Agent and the Trustee with respect thereto, to the extent monies are not
otherwise available therefor;

 

(iii)                               the
reasonable fees and other costs incurred for services of such attorneys and
accountants as are employed to make examinations, provide services, render
opinions and prepare reports required under this Participation Agreement, the
Tax Regulatory Agreement, the Bond Purchase Trust Agreement, and the Indenture;
and

 

(iv)                              initial
administration fees of the Authority in the amount of $245,812.50 on the date
of authentication and delivery of the Bonds to the initial purchasers thereof,
an annual fee equal to $130 per million dollar principal amount of the Bonds on
January 1, 2005 and on January 1 of each year thereafter, based upon
the amount of Bonds Outstanding as of such January 1 and for purposes of
the calculation of such fee, rounding up to the nearest whole million dollars,
and all reasonable expenses, disbursements, advances, taxes, assessments or
impositions, not otherwise paid under this Participation Agreement or the
Indenture, incurred by or imposed upon the Authority in connection with its
administration and enforcement of, and compliance with, this Participation
Agreement, the Auction Agency Agreement, the Bond Purchase Trust Agreement, any
Remarketing Agreement and the Indenture, which amounts the Company is obligated
to pay, including, but not limited to, reasonable attorneys’ fees.  In addition, the Company shall deliver to
the Authority a check payable to the State

 

9

 

of New York with respect to a bond issuance charge applicable to the
Bonds pursuant to Section 2976 of the Public Authorities Law of the State
of New York in the amount specified by such section on the date of
authentication and delivery of the Bonds.

 

(g)                                 In
the event that the Company shall fail to make any Payment as required by
Sections 4.02(a) - (e) hereof, the Payment so in default shall continue as
an obligation of the Company until the amount in default shall have been fully
paid, and the Company agrees to pay the same with interest thereon, which
interest shall also constitute an obligation of the Company at the maximum rate
of interest payable on the Bonds pursuant to the Indenture, to the extent
permitted by law, from the date of default until paid; provided, that the
Company agrees in the event the Company shall fail to make any Payment during
an Auction Rate Period, the Payment so in default shall continue as an obligation
of the Company until the amount in default shall have been fully paid, and the
Company agrees to pay the same with interest thereon, which interest shall also
constitute an obligation of the Company at the Overdue Rate, to the extent
permitted by law, from the date of default until paid.  Nothing in this Section 4.02 shall
require the Company to pay costs and expenses mentioned in clause (f)(iii)
above so long as the validity or the reasonableness thereof shall be contested
in good faith unless the Trustee shall receive an opinion of independent
counsel that such contest jeopardizes the respective interests of the Authority
and the Trustee in this Participation Agreement, the Auction Agency Agreement,
the Bond Purchase Trust Agreement, the Indenture or any Remarketing Agreement,
in which event the Company shall pay such costs and expenses (without prejudice
to any rights of the Company to recover such costs and expenses if not valid or
reasonable) to the end that the respective interests of the Authority and the
Trustee, in the opinion of independent counsel, are not jeopardized.

 

Section 4.03.                             Notice
to Pay; Medium of Payment; Acceleration. 
Failure to receive any prior notice of the due date of any Payment will
not relieve the Company of its obligation to pay such Payment when it is due
and payable.  The Company covenants and
agrees that it will pay or cause to be paid when due and payable hereunder the
Payments, and every installment thereof, without notice or demand therefor and
without abatement, reduction or set-off of any kind or nature whatsoever, in
lawful money of the United States of America.

 

If pursuant to the provisions of Section 12.03 of the Indenture,
the Bonds are accelerated or shall otherwise be declared due and payable
immediately, then the Company shall forthwith pay or cause to be paid to the
Trustee an amount sufficient with all other funds available therefor, to pay
the Bonds in full and, secondly an amount which shall be sufficient, with all
other funds available therefor, to pay all other obligations of the Authority
or the Company incurred or to be incurred under the Indenture, this
Participation Agreement, the Auction Agency Agreement, the Bond Purchase Trust
Agreement or any Remarketing Agreement.

 

Section 4.04.                             Prepayment
of Note Payments.  The Note may be
prepaid, in whole or in part, at the option of the Company in connection with
an optional redemption of the Bonds pursuant to Article V of the Indenture
and shall be prepaid, in whole or in part, in

 

10

 

connection
with any mandatory redemption of the Bonds pursuant to Article V of the
Indenture other than a mandatory redemption pursuant to Section 5.07 of
the Indenture.  Prepayment of the Note
pursuant to the preceding sentence shall be with or without premium, as
required to provide sufficient funds to redeem the Bonds being redeemed
pursuant to Article V of the Indenture. The Note also may be prepaid in
whole or in part at any time, without premium, at the option of the Company
subsequent to the redemption of the Bonds with moneys furnished by the State of
New York pursuant to Section 5.07 of the Indenture.

 

The Company shall give notice to the Trustee and the Authority of any
intention to prepay the Note in whole or in part and of the principal amount to
be prepaid not more than sixty (60) nor less than thirty-five (35) days prior
to the date on which such prepayment is to be made on the Note.  Such optional prepayment may be made not
later than one (1) Business Day prior to the date of prepayment of the
Bonds.

 

The Company may also elect to provide for the defeasance of the Bonds
in accordance with Article XV of the Indenture and upon the defeasance of
the Bonds, the Note will be deemed paid, in whole or in applicable part.

 

Section 4.05.                             Company’s
Payments as Trust Funds.  All Note
Payments and Additional Payments required to be made by the Company under this
Participation Agreement and the Note to the Authority, the Trustee or the
Registrar and Paying Agent which under the Indenture are required to be applied
in payment of or as security for the Bonds, shall be and constitute and are
hereby declared to be trust funds, whether held by the Authority, the Trustee,
the Registrar and Paying Agent, or any bank or trust company, designated for
such purpose and shall continue to be impressed with a trust until such monies
are applied in the manner provided in the Indenture.

 

Section 4.06.                             Absolute
Obligation to Make Payments.  The
obligation of the Company to pay the Note Payments and the Additional Payments,
as required by this Participation Agreement and the Note, and to satisfy any
other financial liabilities incurred hereunder and thereunder shall be an
absolute, direct, general obligation, and shall be unconditional and shall not
be abated, rebated, set off, reduced, abrogated, waived, diminished or
otherwise modified in any manner or to any extent whatsoever (other than for
prior payment), regardless of any rights of set-off, recoupment or counterclaim
that the Company might otherwise have against the Authority or the Trustee or
any other party or parties and regardless of any contingency, act of God, event
or cause whatsoever and notwithstanding any circumstance or occurrence that may
arise or take place including, but without limiting the generality of the
foregoing, the following:

 

(a)                                  any
damage to or destruction of any part or all of the Project;

 

(b)                                 the
taking or damaging of any part or all of the Project by any public authority or
agency in the exercise of the power of eminent domain or otherwise;

 

(c)                                  any
assignment, novation, merger, consolidation, transfer of assets, subleasing or
other similar transaction of or affecting the Company whether with or

 

11

 

without the approval of the Trustee, except as otherwise expressly
provided in this Participation Agreement;

 

(d)                                 with
respect solely to the obligation of the Company to pay the Additional Payments,
the termination of this Agreement and payment or provision for payment in full
of the amount due under the Note pursuant to the provisions hereof;

 

(e)                                  any
failure of any party to perform or observe any agreement or covenant, whether
express or implied, or any duty, liability or obligation arising out of or in
connection with this Participation Agreement, the Note, the Auction Agency
Agreement, any Broker-Dealer Agreement, any Remarketing Agreement, the Bond
Purchase Trust Agreement or the Indenture;

 

(f)                                    any
change or delay in the time of availability of the Project or any part thereof
for use of the Project or any part thereof;

 

(g)                                 any
acts or circumstances that may constitute an eviction or constructive eviction
from any part of the Project;

 

(h)                                 failure
of consideration, failure of title to any part of the Project or commercial
frustration; and

 

(i)                                     any
change in the tax or other laws of the United States or of any state or other
governmental authority;

 

provided, however, that the foregoing shall not be deemed to be a
waiver of any right of recourse the Company may have against the Authority, the
holder of any Bond or others, including but not limited to, the rights, causes
of action or claims which may arise out of the breach of their respective
obligations or the inaccuracy of their respective warranties, provided,
however, that the Company may pursue any such right, claim or cause of action
only by a separate proceeding or action and not by counterclaim or set-off
hereunder and the bringing of such separate proceeding or action shall not
affect the Company’s absolute, irrevocable and unconditional obligation to make
payments pursuant to this Section 4.06.

 

Section 4.07.                             Assignment
of Authority’s Rights.  As security
for the payment of the Bonds, the Authority will assign to the Trustee the
Participation Agreement and the Note and all of the Authority’s rights,
remedies and interest under this Participation Agreement and the Note,
including the right to receive payments under this Participation Agreement and
the Note (except the Authority’s rights with respect to (a) administrative
compensation, attorney’s fees and indemnification, (b) the receipt of notices,
opinions, reports, copies of instruments and other items of a similar nature
required to be delivered to the Authority under this Participation Agreement,
(c) granting approvals and consents and making determinations when required
under this Participation Agreement, (d) making requests for information and
inspections in accordance with this Participation Agreement,
(e) Article III and Sections 4.02(f), 4.14 and 5.09 of this Participation
Agreement and, insofar as the obligations of the Company under
Section 4.12 of this Participation Agreement relate to taxes and
assessments imposed upon the Authority and not the Trustee, Section 4.12
thereof and (f) the right to amend this Participation Agreement) and

 

12

 

hereby directs
the Company to make said payments directly to the Trustee or in the case of the
Purchase Price to the Registrar and Paying Agent.  The Company herewith assents to such assignment and will make
payments under this Participation Agreement and the Note (except payments made
pursuant to Sections 4.02(f) and 5.09 hereof which shall be made directly to
the Authority) directly to the Trustee (or in the case of the Purchase Price,
to the Registrar and Paying Agent) without defense or set-off by reason of any
dispute between any of the Company, the Trustee or Registrar and Paying
Agent.  Except as provided in the
Indenture, the Authority will not sell, assign, transfer, convey or otherwise
dispose of its interest in this Participation Agreement during the term of this
Participation Agreement.

 

Section 4.08.                             Actions
with Respect to or by or on behalf of the Authority under the Indenture.  The Authority hereby grants the right to the
Company to request the Authority to take certain actions under the Indenture
and/or to perform or undertake certain actions as specified under the
Indenture.  The Company agrees to
request the Authority to take action or undertake or perform any action solely
in compliance with or after complying with the requirements and provisions of
the Indenture.  The Company further
agrees to consent to any removal and appointment of the Auction Agent by the
Authority pursuant to the second paragraph of Section 11.21 of the
Indenture.

 

Section 4.09.                             Agreements
of Company relating to Support Facilities. 
The Company agrees not to request that the interest rate mode applicable
to the Bonds be adjusted to an Adjustable Rate or a Fixed Rate unless on the
effective date of the applicable Change in the Interest Rate Mode the Bonds
shall be rated at least “A” by S&P or “A2” by Moody’s or “A” by Fitch or an
equivalent rating by any nationally recognized rating agency.  Subject to the requirements of the next
paragraph, such rating of the Bonds may, but is not required to, be achieved by
obtaining a Support Facility which meets the requirements of Article VI of
the Indenture.

 

The Company
further agrees that it will maintain a Liquidity Facility acceptable to the
Bond Insurer with respect to the Bonds at all times, except with respect to
Bonds bearing interest at an Auction Rate, a Fixed Rate or a Term
Rate for a period of at least five years.

 

Section 4.10.                             Compensation
of Trustee and Paying Agents.  The
Company agrees:

 

(1)                                  to pay to the Trustee
from time to time such compensation for all services rendered by it in any
capacity under the Indenture as shall from time to time be agreed in writing
(which compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);

 

(2)                                  except as otherwise
expressly provided herein, to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred by the Trustee under
the Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and

 

13

 

(3)                                  to pay to the
Registrar and Paying Agent, if other than the Trustee, reasonable compensation
for all services rendered by it as Registrar and Paying Agent under the
Indenture and reimburse it for its reasonable expenses incurred under the
Indenture, except any such expense as may be attributable to its negligence or
bad faith.

 

Section 4.11.                             Project
not Security for Bonds.  It is
expressly recognized by the parties that the Project will not constitute any
part of the security for the Bonds.  The
principal security for the Bonds shall be the Note and the absolute,
irrevocable and unconditional obligation of the Company to make the Note
Payments.

 

Section 4.12.                             Payment
of Taxes and Assessments; No Liens or Charges.  The Company will (a) pay, when the same shall become due and
payable, all taxes and assessments, including income, profits, property or
excise taxes, if any, or other municipal or governmental charges, imposed,
levied or assessed by the Federal, state or any municipal government upon the
Authority or the Trustee in respect of any payments (other than payments made
pursuant to Section 4.10) made or to be made pursuant to this
Participation Agreement or the Notes and (b) pay or cause to be
discharged, within sixty (60) days after the same shall accrue, any lien or
charge upon any such payment (except as aforesaid) made or to be made under
this Participation Agreement; provided that the Company shall not be required
to pay any such tax, assessment or charge so long as (i) the Company at
its expense contests by appropriate legal proceedings conducted in good faith
and with due diligence the amount, validity or application of any such tax,
assessment or charge, (ii) such proceedings shall have the effect of
suspending the collection thereof from the Authority and the Trustee, and
(iii) the Company shall indemnify and hold the Authority and the Trustee
harmless from any losses, costs, charges, expenses (including reasonable
attorneys’ fees and disbursements), judgments and liabilities arising in respect
of such tax, assessment or charge and the nonpayment thereof.

 

Section 4.13.                             Company
to Pay Attorneys’ Fees and Disbursements. 
If the Company shall default under any of the provisions of this
Participation Agreement and the Authority or the Trustee or both shall employ
attorneys or incur other expenses for the collection of payments due under this
Participation Agreement or the Note or for the enforcement of performance or
observance of any obligation or agreement on the part of the Company contained
in this Participation Agreement, the Company will on demand therefor reimburse
the reasonable fees of such attorneys and such other reasonable disbursements
so incurred.

 

Section 4.14.                             No
Abatement of Administration Fees and Other Charges.  It is understood and agreed that so long as
any Bonds are outstanding under the Indenture, the Administration Fees and
other charges payable to the Authority pursuant to this Participation Agreement
or the Note shall continue to be payable at the times and in the amount herein specified,
whether or not the Project, or any portion thereof, shall have been destroyed
by fire or other casualty, or title thereto or the use thereof shall have been
taken by the exercise of the power of eminent domain, and that there shall be
no abatement of any such Administration Fees and other charges by reason
thereof.

 

14

 

ARTICLE V

 

SPECIAL COVENANTS

 

Section 5.01.                             No
Warranty as to Suitability of Project. 
The Authority makes no warranty, either express or implied, with respect
to actual or designed capacity of the Project, as to the suitability of the
Project for the purposes specified in this Participation Agreement, as to the
condition of the Project, or that the Project will be suitable for the Company’s
purposes or needs.

 

Section 5.02.                             Authority’s
Right to Inspect Project.  The
Authority shall have the right at all reasonable times to examine and inspect
the Project.

 

Section 5.03.                             Company
Consent to Amendment of Indenture. 
The Authority and the Trustee shall not enter into any indenture
supplemental to or amendatory of the Indenture which affects the rights or
obligations of the Company without the prior consent of the Company as
evidenced by a certificate in writing signed by an Authorized Company
Representative.

 

Section 5.04.                             Tax
Covenant.  Notwithstanding any other
provision hereof, the Company covenants and agrees that it will not take or
authorize any action or permit any action within its reasonable control to be
taken, or fail to take any action within its reasonable control, with respect
to the Project, or the proceeds of any series of the Bonds, including any
amounts treated as proceeds of the Bonds for any purpose of Section 103 of
the Code, which will result in the loss of the exclusion of interest on any
series of Bonds from gross income for Federal income tax purposes under
Section 103 of the Code (except for any Bond during any period while any
such Bond is held by a person referred to in Section 147(a) of the Code).  This provision shall control in case of
conflict or ambiguity with any other provision of this Participation
Agreement.  In furtherance of such
covenant and agreement as it relates to the Bonds, the Authority and the
Company have entered into the Tax Regulatory Agreement and the Company hereby
covenants and agrees to comply with the provisions thereof.

 

Section 5.05.                             Company
Agrees to Perform Obligations Imposed by Indenture.  The Company agrees to perform such
obligations as may be required of it by the provisions of the Indenture.

 

Section 5.06.                             Authority
Agrees to Take Certain Actions at Direction of Company.  The Authority agrees to exercise any option
to redeem the Bonds pursuant to Section 5.01 of the Indenture at the
direction of the Company.  The Authority
agrees to exercise its rights under Article XV of the Indenture upon the
request of the Company.

 

Section 5.07.                             Certificates
as to Defaults.  The Company shall
file with the Trustee and the Bond Insurer, on or before August 15 of each
year, commencing on August 15, 2004, a certificate signed by an Authorized
Company Representative stating that, to the best of his or her  knowledge, information and belief, the
Company has kept, observed, performed and fulfilled each and every one of its
covenants and obligations contained in this Participation Agreement, the Tax
Regulatory Agreement and in the Note and, to the best of his knowledge,
information and belief, there does not exist at the date of such certificate
any Event of Default

 

15

 

hereunder or
other event which, with notice or the lapse of time specified in
Section 7.01 hereof, or both, would become an Event of Default or, if any
such Event of Default or other event shall so exist, specifying the same and
the nature and status thereof.

 

Section 5.08.                             Recording
and Filing.  The Company hereby
covenants that it will cause all financing statements related to the Indenture
and all supplements thereto and this Participation Agreement and all
supplements thereto, as well as such other security agreements, financing
statements and all supplements thereto and other instruments as may be required
from time to time to be kept, to be recorded and filed in such manner and in
such places as may from time to time be required by law in order to preserve
and protect fully the security of Holders of the Bonds and the rights of the
Trustee hereunder, and to take or cause to be taken any and all other action
necessary to perfect the security interest created by the Indenture and shall,
within ten (10) days after such filing, cause there to be furnished to the
Trustee and the Bond Insurer an opinion of counsel as to the adequacy and
details of such filing and specifying any re-filing to be effected in the
future.

 

Section 5.09.                             Limited
Obligation of Authority; Indemnification of Authority, Registrar and Paying
Agent, Auction Agent and Trustee. 
The Bonds shall not be general obligations of the Authority, and shall
not constitute an indebtedness of or a charge against the general credit of the
Authority or give rise to any pecuniary liability of the Authority.  The liability of the Authority under the
Bonds shall be enforceable only to the extent provided in the Indenture, and
the Bonds shall be payable solely from the Note Payments and any other funds
held by the Trustee under the Indenture and available for such payment.  The Bonds shall not be a debt of the State
of New York, and the State of New York shall not be liable thereon.

 

No member, officer, agent or employee of the Authority shall be
personally liable for the payment of the Bonds or any money or damages
hereunder or related hereto. 
Notwithstanding the fact that it is the intention of the parties hereto
that the Authority and all officers and employees thereof shall not incur
pecuniary liability by reason of the terms of this Participation Agreement, or
the undertakings required of the Authority hereunder or any officer or employee
thereof, by reason of the issuance of the Bonds, the execution and delivery of
any document, including, but not limited to, the Indenture, the Tax Regulatory
Agreement, this Participation Agreement, the Note, the Auction Agency
Agreement, any Remarketing Agreement, the Bond Purchase Trust Agreement, any
Broker-Dealer Agreement or any final official statement, or by reason of the
performance or non-performance of any act required of it by this Participation
Agreement or any such other agreement, or the performance or non-performance of
any act requested of it by the Company, including all claims, liabilities or
losses arising in connection with the violation of any statutes or regulations
pertaining to the foregoing; nevertheless, if the Authority (including any
person at any time serving as an officer or employee of the Authority) should
incur any such pecuniary liability, then in such event the Company shall
indemnify and hold harmless the Authority (including any person at any time
serving as an officer or employee of the Authority) against all claims by or on
behalf of any person, firm or corporation or other legal entity, arising out of
the same, and all costs and expenses incurred in connection with any such claim
or in connection with any action or proceeding brought thereon.

 

16

 

The Company releases the Authority (including any person at any time
serving as an officer or employee of the Authority), the Registrar and Paying
Agent, the Auction Agent and the Trustee (including any person at any time
serving as an officer or employee of the Trustee, the Registrar and Paying
Agent or the Auction Agent) from, agrees that the Authority (including any
person at any time serving as an officer or employee of the Authority), the
Registrar and Paying Agent, the Auction Agent and the Trustee (including any
person at any time serving as an officer or employee of the Trustee, the
Registrar and Paying Agent or the Auction Agent) shall not be liable for, and
agrees to indemnify and hold the Authority (including any person at any time
serving as an officer or employee of the Authority) and the Trustee, the
Auction Agent, the Registrar and Paying Agent (including any person at any time
serving as an officer or employee of the Trustee, Auction Agent or the
Registrar and Paying Agent) harmless, to the fullest extent permitted by law
from any losses, costs, charges, expenses (including reasonable attorneys’ and
agents’ fees and expenses), by reason of (i) any
liability for any loss or damage to property or any injury to, or death of, any
person that may be occasioned by any cause whatsoever arising out of the
construction or operation of the Project, or (ii) any
action, suit or proceeding instituted or threatened in connection with the
transactions contemplated by this Participation Agreement, the Indenture and
the Note, provided, however, that the Company shall not be liable as the result
of the negligence of the Authority, the Trustee, the Registrar and Paying
Agent, any Remarketing Agent or the Auction Agent or bad faith or wilful
misconduct of the Authority, the Trustee, the Registrar and Paying Agent, any
Remarketing Agent or the Auction Agent (including any person at any time
serving as an officer or employee of the Authority or the Trustee, the
Registrar and Paying Agent, any Remarketing Agent or the Auction Agent).  If any such claim is asserted, the
Authority, any individual indemnified herein, the Trustee, the Registrar and
Paying Agent, any Remarketing Agent or the Auction Agent, as the case may be,
shall give prompt notice to the Company and permit the Company to participate
in the defense thereof at its own expense. 
The Company will reimburse the indemnified parties for any legal or
other expenses reasonably incurred by the indemnified parties in investigating
or defending against any such claim, provided that the Company shall not be
required to reimburse any of the indemnified parties for fees and expenses of
counsel other than one counsel selected by the Trustee in its sole discretion
for all indemnified parties in which proceedings are brought or threatened to
be brought unless and to the extent there are actual or potential conflicts of
interest between or among indemnified parties or defenses available to some
indemnified parties that are not available to other indemnified parties in
which case, the Company will reimburse the indemnified parties for any legal or
other expenses reasonably incurred by the indemnified parties in investigating
or defending against any such claim by each counsel of each of the indemnified
parties affected.  The obligation of the
parties hereto under this Section shall survive the termination of this
Participation Agreement and the Indenture.

 

Section 5.10.                             Provision
of Information.  The Company shall
provide the Trustee with the forms of any notices required to be sent to
holders of Bonds in connection with any redemption of Bonds, a change in the
Auction Period, the Interest Period or Change in the Interest Rate Mode
pursuant to Articles III,  IV and V
of the Indenture or the establishment of a Fixed Rate on the Bonds pursuant to
Section 4.02 of the Indenture.

 

Section 5.11.                             Ratings.  During any Auction Rate Period, the Company
shall take all reasonable action necessary to enable at least two nationally
recognized, statistical rating

 

17

 

organizations
(as that term is used in the rules and regulations of the Commission under the
Exchange Act) to provide ratings for the Auction Rate Bonds.

 

Section 5.12.                             Notices.  During any Auction Rate Period, the Company
on behalf of the Authority shall provide the Trustee and, so long as no Event
of Default has occurred and is continuing and the ownership of any Auction Rate
Bonds is maintained in book-entry form by the Securities Depository, the
Auction Agent, with notice of any change in (a) the Statutory Corporate
Tax Rate under the Indenture, (b) the Applicable Percentage, or
(c) the maximum rate permitted by law on the Bonds.  There is currently no such maximum rate.

 

Section 5.13.                             Maintenance
of Office or Agency.  So long as the
Note remains outstanding and unpaid, the Company will at all times keep, in New
York, New York, or another location in the State of New York, an office or
agency where notices and demands with respect to the Note may be served, and
will, from time to time, give written notice to the Trustee of the location of
such office or agency; and, in case the Company shall fail so to do, notices
may be served and demands may be made at the principal office of the Trustee.

 

Section 5.14.                             Maintenance
of Properties.  So long as the Note
remains outstanding and unpaid, the Company will at all times make or cause to
be made such expenditures for repairs, maintenance and renewals, or otherwise,
as shall be necessary to maintain its properties in good repair, working order
and condition as an operating system or systems to the extent necessary to meet
the Company’s obligations under the Public Service Law of the State of New York
and the Participation Agreement.

 

Section 5.15.                             Insurance.  So long as the Note remains outstanding and
unpaid, the Company will keep or cause to be kept its properties that are of an
insurable nature, insured against loss or damage by fire or other risks, the
risk of which in the opinion of an Authorized Company Representative (who shall
be an officer or employee of the Company responsible for the management of such
risks) is customarily insured against by companies similarly situated and
operating like properties, to the extent that property of similar character is,
in such Authorized Company Representative’s opinion, customarily insured
against by such companies, either (a) by reputable insurers or (b) in
whole or in part in the form of reserves or of one or more insurance funds
created by the Company, whether alone or with other Corporations.

 

Section 5.16.                             Proper
Books of Record and Account.  So
long as the Note remains outstanding and unpaid, the Company will at all times
keep or cause to be kept proper books of record and account, in which full,
true and correct entry will be made of all dealings, business and affairs of
the Company, including proper and complete entries to capital or property
accounts covering property worn out, obsolete, abandoned or sold, all in
accordance with the requirements of any system of accounting or keeping
accounts or the rules, regulations or orders prescribed by a regulatory
commission with jurisdiction over the rates of the Company giving rise to at
least fifty-one percent (51%) of the Company’s gross revenues, or if there are
no such requirements or rules, regulations or orders, then in compliance with
generally accepted accounting principles.

 

Section 5.17.                             Compliance
with Laws.  So long as the Note
remains outstanding and unpaid, the Company agrees to use its best efforts to
comply in all material respects with all

 

18

 

applicable
laws, rules and regulations and orders of any governmental authority,
non-compliance with which would have a material adverse effect on its business,
financial condition or results of operations (to the extent the Company deems
it can reasonably comply while maintaining its public utility operations) or
would materially adversely affect the Company’s ability to perform its
obligations hereunder or under the Participation Agreement, except laws, rules,
regulations or orders being contested in good faith or laws, rules, regulations
or orders which the Company has applied for variances from, or exceptions to.

 

Section 5.18.                             Consolidation,
Merger or Sale of Assets.  So long
as the Note remains outstanding and unpaid, the Company will not consolidate
with or permit itself to be merged into any other corporation or corporations,
or sell, lease, transfer or otherwise dispose of all or substantially all of
its properties and assets, except in the manner and upon the terms and conditions
set forth in this Section 5.18.

 

Nothing contained herein or in the Note shall prevent (and the Note
shall be construed as permitting and authorizing, without acceleration of the
maturity of the Note) any lawful consolidation or merger of the Company with or
into any other corporation or corporations lawfully authorized to acquire and
operate the properties of the Company, or a series of consolidations or
mergers, or successive consolidations or mergers, in which the Company or its
successor or successors shall be a party, or any sale of all or substantially
all the properties of the Company as an entirety to a corporation lawfully
authorized to acquire and operate the same; provided that, upon any
consolidation, merger or sale, the corporation formed by such consolidation, or
into which such merger may be made if other than the Company, or making such
purchase shall execute and deliver to the Trustee an instrument, in form
reasonably satisfactory to the Trustee, whereby such corporation shall effectually
assume the due and punctual payment of the principal of and premium, if any,
and interest on the Note according to its tenor and the due and punctual
performance and observance of all covenants and agreements to be performed by
the Company pursuant to the Note and the Participation Agreement on the part of
the Company to be performed and observed; and, thereupon, such corporation
shall succeed to and be substituted for the Company hereunder, with the same
effect as if such successor corporation had been named herein as obligor.

 

Every such successor corporation shall possess, and may exercise, from
time to time, each and every right and power hereunder of the Company, in its
name or otherwise; and any act, proceeding, resolution or certificate by any of
the terms of the Note required or provided to be done, taken and performed or
made, executed or verified by any board or officer of the Company shall and may
be done, taken and performed or made, executed and verified with like force and
effect by the corresponding board or officer of any such successor Company.

 

If consolidation, merger or sale or other transfer is made as permitted
by this Section, the provisions of this Section shall continue in full
force and effect and no further consolidation, merger or sale or other transfer
shall be made except in compliance with the provisions of this Section.

 

Section 5.19.                             Financial
Statements of Company.  The Company
agrees to have an annual audit made by independent accountants and to furnish
the Trustee with a balance sheet and statements of income, retained earnings
and cash flow showing the financial condition of the

 

19

 

Company and
its consolidated subsidiaries, if any, at the close of each fiscal year, and the
results of operations of the Company and its consolidated subsidiaries, if any,
for each fiscal year, as audited by said accountants, on or before the last day
of the third month following the close of the fiscal year or as soon thereafter
as they are reasonably available.  The
Company further agrees to furnish to the Trustee, the Authority and to any
owner of Bonds if requested in writing by such owner all financial statements
which it sends to its shareholders.  The
delivery of such financial statements to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute
constructive notice of any information contained therein, including the
Company’s compliance with any of its covenants hereunder.

 

Section 5.20.                             Information
to Bond Insurer.  (a)  To the extent that the Company has entered
into a continuing disclosure agreement with respect to the Bonds, the Bond
Insurer shall be included as party to be notified.

 

(b)                                 The
Company shall immediately notify the Bond Insurer if at any time there are
insufficient moneys to make any payments of principal and/or interest as
required and immediately upon the occurrence of any Event of Default hereunder.

 

20

 

ARTICLE VI

 

REDEMPTION OF BONDS

 

Section 6.01.                             Redemption
of Bonds.  If the Company is not in
default in making Note Payments, the Authority and the Trustee, at the request
of the Company, at any time the aggregate monies in the Bond Fund are
sufficient to effect a redemption of Bonds and if the same are then redeemable
under the provisions of the Indenture and the Bonds, shall forthwith take all
steps that may be necessary under the applicable redemption provisions of
Article V of the Indenture to effect redemption of all or part of the then
Outstanding Bonds as may be specified by the Company on such redemption date.

 

21

 

ARTICLE VII

 

EVENTS OF DEFAULT AND REMEDIES

 

Section 7.01.                             Events
of Default Defined.  The following
shall be an “Event of Default” under this Participation Agreement and the term
“Event of Default” shall mean, whenever it is used in this Participation
Agreement, any one or more of the following events:

 

(a)                                  Failure
by the Company to pay or cause to be paid, when due and payable, any
installment of Note Payments and, in the case of failure to pay any installment
of interest on the Note, continuance of such failure for one (1) Business Day.

 

(b)                                 Failure
by the Company to observe and perform any covenant, condition or agreement in
this Participation Agreement or the Note on its part to be observed or
performed, other than as referred to in subsection (a) of this
Section 7.01 (and other than failure to pay the amounts due under
Sections 4.02(f), 4.13 and 5.09 of this Participation Agreement), for a
period of ninety (90) days after written notice, specifying such failure
and requesting that it be remedied, has been given to the Company unless the
Trustee (with any required consent of Bondholders under the provisions of the
Indenture) shall agree in writing to an extension of such time prior to its
expiration, provided that if any such failure shall be such that it cannot be
cured or corrected within such ninety-day period, it shall not constitute an
Event of Default hereunder if curative or corrective action is instituted
within such period and diligently pursued until the failure of performance is
cured or corrected.

 

(c)                                  The
dissolution or liquidation of the Company or the filing by the Company of a
voluntary petition in bankruptcy, or failure by the Company promptly to
discharge or cause to be discharged any execution, garnishment or attachment of
such consequence as will impair its ability to carry on its operations
generally or the commission by the Company of any act of bankruptcy, or
adjudication of the Company as a bankrupt, or assignment by the Company for the
benefit of its creditors, or the entry by the Company into an agreement of
composition with its creditors, or the approval by a court of competent jurisdiction
of a petition applicable to the Company in any proceeding for its
reorganization instituted under the provisions of the federal bankruptcy laws
or the Company becomes insolvent or is unable to pay its debts as they become
due.  The term “dissolution or
liquidation of the Company”, as used in this subsection, shall not be construed
to include the cessation of the corporate existence of the Company resulting
either from a merger or consolidation of the Company into or with another
corporation or a dissolution or liquidation of the Company following a transfer
of all or substantially all of its assets as an entirety, under the conditions
permitting such action with respect to the Company contained in
Section 5.18 hereof.

 

(d)                                 The
occurrence of an Event of Default as defined in Section 12.01 of the
Indenture.

 

Subsection (b) of this Section 7.01 is subject to the
following limitations: Except for the obligations of the Company contained in
Article IV hereof, if by reason of force majeure

 

22

 

the Company is unable in whole or in part to carry out the agreements
on its part herein contained, the Company shall not be deemed in default during
the continuance of such inability.  The
term “force majeure” as used herein shall include the following: acts of God;
strikes, lockouts or other industrial disturbances; acts of public enemies;
orders of any kind of the government of the United States or of the State of
New York or any of their departments, agencies, or officials, or any civil or
military authority; insurrections; riots; epidemics; landslides; lightning;
earthquake; fire; typhoons; storms; floods; washouts; droughts; arrests; civil
disturbances; explosions; breakage or accident to machinery, transmission pipes
or canals; partial or entire failure of utilities; or any other cause or event
not reasonably within the control of the Company.  The Company agrees, however, to remedy with all reasonable
dispatch the cause or causes preventing the Company from carrying out its
agreements; provided, that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion of the Company,
and the Company shall not be required to make settlement of strikes, lockouts
and other industrial disturbances by acceding to the demands of the opposing
party or parties when such course is in the judgment of the Company unfavorable
to the Company.

 

Section 7.02.                             Remedies
on Default.  In the event any of the
Bonds shall at the time be Outstanding and unpaid and provision for the payment
thereof shall not have been made in accordance with the provisions of the
Indenture, whenever any Event of Default referred to in Section 7.01
hereof shall have happened and be subsisting, the Authority, with respect to
those rights not assigned to the Trustee, or the Trustee, following
acceleration of the Bonds in accordance with provisions of Section 12.03
of the Indenture where so provided, may take any one or more of the following
remedial steps:

 

(a)                                  The
Trustee as provided in the Indenture may, at its option, or shall, to the
extent required by the Indenture, declare all payments payable under clauses
(a) - (e) of Section 4.02 hereof and the Note for the remainder of the
term of this Participation Agreement to be immediately due and payable,
whereupon the same shall become immediately due and payable.

 

(b)                                 The
Authority, with respect to those rights not assigned to the Trustee, or the
Trustee may take whatever action at law or in equity that may appear necessary
or desirable to collect the amounts then due and thereafter to become due, or
to enforce performance and observance of any obligation, agreement or covenant
of the Company under this Participation Agreement or the Note whether for
specific performance of any covenant or agreement contained herein or therein
or in aid of the execution of any power herein granted.

 

Any amounts collected pursuant to action taken under this
Section 7.02 shall be paid into the Bond Fund and applied in accordance
with the provisions of the Indenture.

 

If any such declaration of acceleration of the Bonds shall have been
annulled pursuant to the terms of the Indenture and if, at any time after such
declaration, but before all the Bonds shall have matured by their terms, all
arrears of interest upon the Note, and interest on overdue installments of
interest (to the extent enforceable under applicable law) at the rate or rates
per annum specified for the Note and the principal of and premium, if any, on
the Note which shall have become due and payable otherwise than by
acceleration, and all other sums

 

23

 

payable hereunder, except the principal of, and interest on, the Note
which pursuant to such declaration shall have become due and payable, shall
have been paid by or on behalf of the Company or provision satisfactory to the
Trustee shall have been made for such payment, then such acceleration of the
Note shall ipso  facto be deemed to be rescinded and any such
Event of Default and its consequences shall ipso  facto be deemed
to be annulled, but no such annulment shall extend to or affect any subsequent
Event of Default or impair or exhaust any right or remedy consequent thereon.

 

Section 7.03.                             No
Remedy Exclusive.  No remedy herein
conferred upon or reserved to the Authority or to the Trustee is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Participation Agreement or now or hereafter existing at law or in
equity or by statute.  No delay or
omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient.  In
order to entitle the Authority or the Trustee to exercise any remedy reserved
to it in this Article, it shall not be necessary to give any notice, other than
such notice as may be herein expressly required.  Such rights and remedies as are given the Authority hereunder
shall also extend to the Trustee and, the Trustee, the Bond Insurer and the
Holders of the Bonds issued under the Indenture shall be deemed third party
beneficiaries of all covenants and agreements herein contained.

 

In case the Trustee (as assignee of the Authority under the Indenture)
or the Authority shall have proceeded to enforce its rights under this
Participation Agreement and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee
or the Authority, then and in every such case, the Company, the Authority and
the Trustee shall be restored respectively to their several positions and
rights hereunder, and all rights, remedies and powers of the Company, the
Authority and the Trustee shall continue as though no such proceeding had been
taken.

 

The Company covenants that, in case an Event of Default shall occur
with respect to any Note Payments payable under Sections 4.02(a) - (e)
hereof and the Note, then, upon demand of the Trustee (as assignee of the
Authority under the Indenture) the Company will pay to the Trustee the whole
amount that then shall have become due and payable under said Sections, with
interest (to the extent permitted by law) on said amount at the rate of
interest then borne by the Bonds pursuant to the Indenture, but not exceeding
the maximum rate permitted by law, until paid, and in addition thereto, such further
amounts 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 other expenses or liabilities incurred by the Trustee other
than those incurred through bad faith or negligence.

 

In case the Company shall fail forthwith to pay such amounts upon such
demand, the Authority, with respect to those rights not assigned to the
Trustee, or the Trustee (as assignee of the Authority under the Indenture) shall
be entitled and empowered to institute any action or proceeding at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such

 

24

 

judgment or final decree against the Company and collect, in the manner
provided by law out of the property of the Company, the monies adjudged or
decreed to be payable.

 

In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company under the Federal bankruptcy laws or any
other applicable law, or in case a receiver or trustee shall have been
appointed for the property of the Company or in the case of any other similar
judicial proceedings relative to the Company or to the creditors or property of
the Company, the Trustee shall be entitled and empowered, by intervention in
such proceedings or otherwise, to file and provide a claim or claims for the
whole amount owing and unpaid pursuant to this Participation Agreement and, in
case of any judicial proceedings, to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of
the Holders and the Trustee allowed in such judicial proceedings relative to
the Company, its creditors, or its property, and to collect and receive any
monies or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Trustee, and to pay to the Trustee any
amount due it for compensation and expenses, including reasonable counsel fees
and expenses incurred by it up to the date of such distribution.

 

Nothing herein contained shall be construed to prevent the Authority
from enforcing directly any of its rights under Sections 4.02(f), 4.13 and
5.09 hereof; provided that, in case the Company shall have failed to pay amounts
required to be paid under Sections 4.02(f), 4.13 and 5.09 hereof which
event shall have continued for a period of thirty (30) days after the date on
which written notice of such failure, requiring the Company to remedy the same,
shall have been given to the Company by the Authority or the Trustee, the
Authority or the Trustee may take whatever action at law or in equity as may
appear necessary or desirable to enforce performance or observance of any
obligations or agreements of the Company under Sections 4.02(f), 4.13 and
5.09 hereof.

 

Section 7.04.                             No
Additional Waiver Implied by One Waiver. 
In the event any agreement contained herein or in the Note should be
breached by any party and thereafter waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to
waive any other breach hereunder.

 

25

 

ARTICLE VIII

 

MISCELLANEOUS

 

Section 8.01.                             Disposition
of Amounts after Payment of Bonds. 
Any amounts remaining in the funds created under the Indenture after
payment in full of principal of and premium, if any, and interest on all the
Bonds, or provision for payment thereof having been made in accordance with the
provisions of the Indenture, and payment of all the fees, charges and expenses
of the Authority, the Trustee, the Auction Agent, any Remarketing Agent, and
the Registrar and Paying Agent and any other paying agent in accordance with
the Indenture and this Participation Agreement, shall belong to and be promptly
paid to the Company by the Trustee in accordance with the provisions of the
Indenture.

 

Section 8.02.                             Notices.  All notices, certificates, requests or other
communications between the Authority, the Company and the Trustee required to
be given under this Participation Agreement or under the Indenture shall be
sufficiently given and shall be deemed given when delivered by hand or first
class mail, postage prepaid, addressed as follows: if to the Authority, at 17
Columbia Circle, Albany, New York 12203-6399, Attention:  President; if to the Company, at 4 Irving
Place, New York, New York 10003, Attention: Secretary; and if to the Trustee or
the Registrar and Paying Agent, at The Bank of New York, 101 Barclay Street -
21W, New York, New York 10286, Attention: 
Corporate Trust Trustee Administration. 
A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Authority, the Company or the Trustee
shall also be given to the others.  The
Company, the Authority and the Trustee may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
certificates, requests or other communications shall be sent.

 

Section 8.03.                             Successors
and Assigns.  This Participation
Agreement shall inure to the benefit of and shall be binding upon the
Authority, the Company, the Trustee and their respective successors and
assigns.

 

Section 8.04.                             Amendment
of Participation Agreement.  This
Participation Agreement may not be amended except by an instrument in writing
signed by the parties and upon compliance with the provisions of
Sections 14.06 and 14.07 of the Indenture.

 

Section 8.05.                             Participation
Agreement Supersedes Any Prior Agreements. 
This Participation Agreement  and
the Bond Purchase Agreement  supersede
any other prior agreements or understandings, written or oral, between the
parties with respect to the transactions contemplated hereby and thereby.

 

Section 8.06.                             Further
Assurances and Corrective Instruments. 
The Authority and the Company agree that they will, from time to time,
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such supplements hereto and such further instruments as may
reasonably be required for correcting any inadequate or incorrect description
of the Project or for carrying out the expressed intention of this
Participation Agreement in accordance with the provisions of the Indenture.

 

26

 

Section 8.07.                             Counterparts.  This Participation Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be an original; but such counterparts shall together constitute but one
and the same Participation Agreement.

 

Section 8.08.                             Severability.  If any clause, provision or section of
this Participation Agreement is held illegal, invalid or unenforceable by any
court or administrative body, this Participation Agreement shall be construed
and enforced as if such illegal or invalid or unenforceable clause, provision
or section had not been contained in this Participation Agreement.  In case any agreement or obligation in this
Participation Agreement be held to be in violation of law, then such agreement
or obligation shall be deemed to be the agreement or obligation of the
Authority or the Company, as the case may be, to the full extent permitted by
law.

 

Section 8.09.                             Delegation
of Duties by Authority.  It is
agreed that under the terms of this Participation Agreement and also under the
terms of the Indenture the Authority has delegated certain of its duties
hereunder to the Company.  The fact of
such delegation shall be deemed a sufficient compliance by the Authority to
satisfy the duties so delegated and the Authority shall not be liable in any
way by reason of acts done or omitted by the Company or any Authorized Company
Representative.  The Authority shall
have the right at all times to act in reliance upon the authorization,
representation or certification of an Authorized Company Representative unless
such reliance is in bad faith.

 

Section 8.10.                             Survival
of Representations, Warranties and Covenants.  The respective agreements, representations, warranties and
covenants set forth herein will remain in full force and will survive the
execution and delivery of this Participation Agreement.

 

Section 8.11.                             NEW
YORK LAW TO GOVERN.  THE LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION OF THIS PARTICIPATION
AGREEMENT.

 

Section 8.12.                             Third
Party Beneficiary.  To the extent
that this Participation Agreement confers upon or gives or grants to the Bond
Insurer any right, remedy or claim under or by reason of this Participation
Agreement, the Bond Insurer is hereby explicitly recognized as being a
third-party beneficiary hereunder and may enforce any such right remedy or
claim conferred, given or granted hereunder.

 

 

[Signature Page of this Agreement Follows]

 

27

 

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

 

 

	
   

  	
  NEW YORK STATE ENERGY RESEARCH AND
  DEVELOPMENT AUTHORITY

  
	
   

  	
   

  	
   

  
	
  (SEAL)

  	
  By:

  	
   

  
	
   

  	
   

  	
  Acting President

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Assistant Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CONSOLIDATED EDISON COMPANY OF NEW YORK,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  (SEAL)

  	
  By:

  	
   

  
	
   

  	
   

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  
				

 

 

[Signature Page of Participation Agreement]

 

28

 

EXHIBIT
A

 

(To Participation Agreement,

dated as of January 1, 2004,

between New York State Energy Research and Development Authority

and Consolidated Edison Company of New York, Inc.)

 

DESCRIPTION OF PROJECT

EXEMPT FACILITIES

 

 

[A copy of Exhibit A to the Participation
Agreement
 entered into in connection with the Prior
Bonds will be inserted at this place]

 

A-1

 

EXHIBIT
B

 

(To Participation Agreement

dated as of January 1, 2004,

between New York State Energy Research and Development Authority

and Consolidated Edison Company of New York, Inc.)

 

 

DESCRIPTION OF OTHER PROJECT FACILITIES

 

 

[A copy of Exhibit B to the Participation
Agreement
 entered into in connection with the
Prior Bonds will be inserted at this place]

 

B-1

 

EXHIBIT C

 

(To Participation Agreement dated as of
January 1, 2004 between

New York State Energy Research and Development Authority and|

Consolidated Edison Company of New York, Inc.,

relating to Series 2004B Bonds)

 

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

 

$                
PROMISSORY NOTE

 

FOR

 

FACILITIES REVENUE BONDS, SERIES 2004B

(CONSOLIDATED EDISON COMPANY OF NEW YORK, INC. PROJECT)

 

New York, New York

January 29, 2004

 

FOR VALUE RECEIVED,
Consolidated Edison Company of New York, Inc., a New York corporation (the
“Company”), promises to pay to the order of The Bank of New York, as trustee
(the “Trustee”) under the hereinafter referred to Indenture, in lawful money of
the United States, moneys that are in the aggregate sufficient for, together
with other amounts held by the Trustee and available under the Indenture (as
defined below) for application to, the payment of the principal sum of
$[                      ],
together with interest thereon at such rate or rates applicable to, and with such
redemption premiums, if any, becoming due and payable on, the Facilities
Revenue Bonds, Series 2004B (Consolidated Edison Company of New York, Inc.
Project) (the “Bonds”), issued by New York State Energy Research and
Development Authority (the “Authority”) in the aggregate principal amount of
$146,975,000 pursuant to a Trust Indenture (the “Indenture”) dated as of
January 1, 2004, between the Authority and the Trustee, and at such times
as provided in the Indenture.  This Note
is being delivered pursuant to and in accordance with the Participation
Agreement dated as of January 1, 2004, between the Company and the
Authority (the “Participation Agreement”), the terms and provisions of
which  are incorporated herein by
reference and made a part hereof.  All
terms used and not otherwise defined herein are used as defined in the
Indenture.

 

In the event the Company should fail to make any payment required by
this Note, the Company’s obligation to make such payment shall continue as an
obligation of the Company until the amount in default shall have been fully
paid, and the Company agrees to pay the same with interest thereon at the rate
of interest borne by the Bonds, to the extent, but not exceeding the maximum
rate, permitted by law, until paid.

 

This Note, unless paid earlier as permitted by the Participation
Agreement, shall mature on May 1, 2032 with respect to the Subseries 2004B-1-1,
Subseries 2004B-1-2, Subseries B-1-3 

 

C-1

 

and Subseries B-1-4 Bonds, and on October 1, 2035 with respect to
the Subseries B-2 Bonds.

 

This Note is subject to optional and mandatory prepayment  and to acceleration as provided in the  Participation Agreement.

 

All payments hereunder shall be payable at the principal corporate
trust office of the Trustee in New York, New York.

 

The obligation of the Company to make payments under this Note shall be
an absolute, direct, general obligation, and shall be unconditional and shall
not be abated, rebated, set off, reduced, abrogated, waived, diminished or
otherwise modified in any manner or to any extent whatsoever (other than for
prior payment).

 

The Company hereby waives presentment for payment, demand, demand and
protest and notice of protest, demand and dishonor and nonpayment of this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND  CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK.

 

	
   

  	
  CONSOLIDATED EDISON COMPANY OF

  NEW YORK, INC.

  
	
   

  	
   

  	
   

  
	
  (SEAL)

  	
  By:

  	
   

  
	
   

  	
   

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Assistant Secretary

  	
   

  
				

 

C-2Exhibit 4.2.12

 

 

 

TRUST INDENTURE

 

 

BETWEEN

 

 

NEW YORK STATE ENERGY RESEARCH

AND DEVELOPMENT AUTHORITY

 

 

AND

 

 

THE BANK OF NEW YORK,

as Trustee

 

 

Dated as of January 1, 2004

 

 

-relating to-

 

 

$98,325,000 Facilities Revenue Bonds, Series
2004A

(Consolidated Edison Company of New York, Inc. Project)

 

 

 

 

Table of Contents

 

	
  ARTICLE I

  
	
   

  
	
  DEFINITIONS; COMPUTATIONS; CERTIFICATES AND
  OPINIONS; EVIDENCE OF ACTION BY AUTHORITY

  
	
   

  	
   

  	
   

  
	
  SECTION
  1.01.

  	
  Definitions
  of Specific Terms

  	
   

  
	
  SECTION
  1.02.

  	
  Definitions
  of General Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  
	
  AUTHORIZATION OF BONDS

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.01.

  	
  Limitation
  on Issuance of Bonds

  	
   

  
	
  SECTION
  2.02.

  	
  Authorization
  of Bonds

  	
   

  
	
  SECTION
  2.03.

  	
  Global
  Form; Securities Depository

  	
   

  
	
  SECTION
  2.04.

  	
  Limitations
  on Transfer

  	
   

  
	
  SECTION
  2.05.

  	
  Application
  of Bond Proceeds

  	
   

  
	
  SECTION
  2.06.

  	
  Delivery
  of the Bonds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  
	
  INTEREST ON BONDS

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.01.

  	
  Interest
  on Bonds-General

  	
   

  
	
  SECTION
  3.02.

  	
  Commercial
  Paper Rate

  	
   

  
	
  SECTION
  3.03.

  	
  Auction
  Rate Period - Auction Rate: Auction Period -  General

  	
   

  
	
  SECTION
  3.04.

  	
  Auction
  Rate Period - Auction Rate Bonds: Change of Auction Period by Authority

  	
   

  
	
  SECTION
  3.05.

  	
  Auction
  Rate Period - Auction Rate Bonds: Change of Auction Date by Market Agents

  	
   

  
	
  SECTION
  3.06.

  	
  Auction
  Rate Period - Auction Rate Bonds: Orders by Existing Holders and Potential
  Holders

  	
   

  
	
  SECTION
  3.07.

  	
  Auction
  Rate Period - Auction Rate Bonds: Submission of Orders by Broker-Dealers to
  Auction Agent

  	
   

  
	
  SECTION
  3.08.

  	
  Auction
  Rate Period - Auction Rate Bonds: Determination of Sufficient Clearing Bids,
  Winning Bid Rate and Auction Rate

  	
   

  
	
  SECTION
  3.09.

  	
  Auction
  Rate Period - Auction Rate Bonds: Acceptance and Rejection of Submitted Bids
  and Submitted Sell Orders and Allocation of Auction Rate Bonds

  	
   

  

 

i

 

	
  SECTION
  3.10.

  	
  Auction
  Rate Period - Auction Rate Bonds: Adjustment in Percentage

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  
	
  CHANGES IN THE INTEREST RATE MODE

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.01.

  	
  Optional
  Conversion to an Adjustable Rate by Authority

  	
   

  
	
  SECTION
  4.02.

  	
  Optional
  Conversion to a Fixed Rate

  	
   

  
	
  SECTION
  4.03.

  	
  Conversion
  Generally

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  
	
  REDEMPTION AND PURCHASE OF BONDS

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.01.

  	
  Optional
  Redemption

  	
   

  
	
  SECTION
  5.02.

  	
  [Reserved]

  	
   

  
	
  SECTION
  5.03.

  	
  Tender
  for and Purchase upon Election of Holder.

  	
   

  
	
  SECTION
  5.04.

  	
  Mandatory
  Tender for Purchase upon Change in the Interest Rate Mode or on Business Day
  Following Certain Calculation Periods

  	
   

  
	
  SECTION
  5.05.

  	
  Extraordinary
  Optional Redemption

  	
   

  
	
  SECTION
  5.06.

  	
  Special
  Tax Redemption Provisions

  	
   

  
	
  SECTION
  5.07.

  	
  Redemption
  at Demand of the State of New York

  	
   

  
	
  SECTION
  5.08.

  	
  Mandatory
  Tender for Purchase Upon Expiration of any Support  Facility or
  Upon Delivery of an Alternate Support Facility

  	
   

  
	
  SECTION
  5.09.

  	
  Mandatory
  Tender Upon Occurrence of any Terminating Event

  	
   

  
	
  SECTION
  5.10.

  	
  General
  Provisions Applicable to Mandatory and Optional Tenders for Purchase of Bonds

  	
   

  
	
  SECTION
  5.11.

  	
  Selection
  of Bonds to be Redeemed

  	
   

  
	
  SECTION
  5.12.

  	
  Notice
  of Redemption

  	
   

  
	
  SECTION
  5.13.

  	
  Bonds
  Purchased for Account of Liquidity Facility Issuer

  	
   

  
	
  SECTION
  5.14.

  	
  Effect
  of Redemption

  	
   

  
	
  SECTION
  5.15.

  	
  Cancellation
  of Redeemed Bonds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  
	
  SUPPORT FACILITY

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.01.

  	
  Support
  Facility - General

  	
   

  
	
  SECTION
  6.02.

  	
  Support
  Facility - Delivery of an initial Liquidity Facility and Alternate Support
  Facility

  	
   

  
	
  SECTION
  6.03.

  	
  Trustee
  not Responsible for Enforcement of Support Facility

  	
   

  

 

ii

 

	
  SECTION
  6.04.

  	
  Payments
  Pursuant to the Policies

  	
   

  
	
  SECTION
  6.05.

  	
  Rights
  of Credit Facility Issuer After an Event of Default

  	
   

  
	
  SECTION
  6.06.

  	
  Additional
  Rights of Bond Insurer

  	
   

  
	
  SECTION
  6.07.

  	
  Qualification
  of Bond Insurer’s Right to Consent

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  
	
  GENERAL TERMS AND PROVISIONS OF BONDS

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.01.

  	
  Execution
  and Authentication of Bonds

  	
   

  
	
  SECTION
  7.02.

  	
  Books
  of Registry

  	
   

  
	
  SECTION
  7.03.

  	
  Transfer,
  Registration and Exchange of Bonds

  	
   

  
	
  SECTION
  7.04.

  	
  Mutilated,
  Lost, Stolen, or Destroyed Bonds

  	
   

  
	
  SECTION
  7.05.

  	
  Temporary
  Bonds

  	
   

  
	
  SECTION
  7.06.

  	
  Disposition
  of Bonds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  
	
  ESTABLISHMENT OF THE PROJECT FUND

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.01.

  	
  Project
  Fund

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  
	
  CREATION OF SPECIAL FUNDS AND
  ACCOUNTS;APPLICATION AND INVESTMENT OF REVENUES

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.01.

  	
  Creation
  of Funds and Accounts

  	
   

  
	
  SECTION
  9.02.

  	
  Deposit
  of Note Payments

  	
   

  
	
  SECTION
  9.03.

  	
  Application
  of Monies in the Bond Fund and the Bond Purchase Fund

  	
   

  
	
  SECTION
  9.04.

  	
  Investment
  of Funds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
   

  
	
  PARTICULAR COVENANTS OF THE AUTHORITY

  
	
   

  	
   

  	
   

  
	
  SECTION
  10.01.

  	
  Payment
  of Principal of and Interest and Redemption Premium on Bonds

  	
   

  
	
  SECTION
  10.02.

  	
  Performance
  of Covenants

  	
   

  
	
  SECTION
  10.03.

  	
  Further
  Instruments

  	
   

  

 

iii

 

	
  SECTION
  10.04.

  	
  Inspection
  of Project Books

  	
   

  
	
  SECTION
  10.05.

  	
  No
  Extension of Time of Payment of Interest

  	
   

  
	
  SECTION
  10.06.

  	
  Trustee’s,
  Auction Agent’s, Remarketing Agent’s, Broker-Dealers’, Registrar and Paying
  Agent’s and Indexing Agent’s Fees, Charges and Expenses

  	
   

  
	
  SECTION
  10.07.

  	
  Agreement
  of the State of New York

  	
   

  
	
  SECTION
  10.08.

  	
  Recording
  and Filing

  	
   

  
	
  SECTION
  10.09.

  	
  Rights
  Under the Participation Agreement and the Note

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  
	
   

  
	
  CONCERNING THE TRUSTEE; APPOINTMENT
  OFREGISTRAR AND PAYING AGENT, REMARKETING AGENT, AUCTION AGENT AND INDEXING
  AGENT

  
	
   

  	
   

  	
   

  
	
  SECTION
  11.01.

  	
  Appointment
  of Trustee

  	
   

  
	
  SECTION
  11.02.

  	
  Indemnification
  of Trustee as Condition for Remedial Action

  	
   

  
	
  SECTION
  11.03.

  	
  Trustee
  Not Liable for Failure of the Authority or Company to Act

  	
   

  
	
  SECTION
  11.04.

  	
  Certain
  Duties and Responsibilities of the Trustee

  	
   

  
	
  SECTION
  11.05.

  	
  Limitations
  on Obligations and Responsibilities of Trustee

  	
   

  
	
  SECTION
  11.06.

  	
  Compensation
  and Indemnification of Trustee

  	
   

  
	
  SECTION
  11.07.

  	
  Statements
  from Trustee

  	
   

  
	
  SECTION
  11.08.

  	
  Notice
  of Default

  	
   

  
	
  SECTION
  11.09.

  	
  Trustee
  May Deal in Bonds

  	
   

  
	
  SECTION
  11.10.

  	
  Trustee
  Not Responsible For Recitals

  	
   

  
	
  SECTION
  11.11.

  	
  Qualification
  of the Trustee

  	
   

  
	
  SECTION
  11.12.

  	
  Resignation
  and Removal of Trustee

  	
   

  
	
  SECTION
  11.13.

  	
  Successor
  Trustee

  	
   

  
	
  SECTION
  11.14.

  	
  Appointment
  of Remarketing Agent

  	
   

  
	
  SECTION
  11.15.

  	
  Appointment
  of Registrar and Paying Agent

  	
   

  
	
  SECTION
  11.16.

  	
  General
  Provisions Regarding Registrar and Paying Agent

  	
   

  
	
  SECTION
  11.17.

  	
  Payment
  of Registrar and Paying Agent; Indemnification

  	
   

  
	
  SECTION
  11.18.

  	
  Registrar
  and Paying Agent’s Performance; Duty of Care

  	
   

  
	
  SECTION
  11.19.

  	
  Qualifications
  of Registrar and Paying Agent

  	
   

  
	
  SECTION
  11.20.

  	
  Resignation
  or Removal of Registrar and Paying Agent and Successor to Registrar and
  Paying Agent; Termination of Registrar and Paying Agent’s Obligations

  	
   

  
	
  SECTION
  11.21.

  	
  Appointment
  of Auction Agent; Qualifications of Auction Agent, Resignation; Removal

  	
   

  
	
  SECTION
  11.22.

  	
  Appointment
  of Broker-Dealers

  	
   

  
	
  SECTION
  11.23.

  	
  Appointment
  of Additional Paying Agents; Each Paying Agent to Hold Money in Trust

  	
   

  

 

iv

 

	
  SECTION
  11.24.

  	
  Appointment
  and Duties of Indexing Agents

  	
   

  
	
  SECTION
  11.25.

  	
  Qualifications
  of Indexing Agents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  
	
   

  
	
  EVENTS OF DEFAULT; REMEDIES UPON OCCURRENCE THEREOF

  
	
   

  	
   

  	
   

  
	
  SECTION
  12.01.

  	
  Events
  of Default

  	
   

  
	
  SECTION
  12.02.

  	
  Notice
  to Holders and Others Upon Occurrence of an Event of Default or a Payment
  Default

  	
   

  
	
  SECTION
  12.03.

  	
  Declaration
  of Principal and Interest As Due

  	
   

  
	
  SECTION
  12.04.

  	
  Action
  by Trustee Upon Occurrence of Event of Default

  	
   

  
	
  SECTION
  12.05.

  	
  Powers
  of Trustee With Respect to Participation Agreement and Other Agreements

  	
   

  
	
  SECTION
  12.06.

  	
  Disposition
  of Monies in Event of Insufficiencies in Funds and Accounts

  	
   

  
	
  SECTION
  12.07.

  	
  Effect
  of Delay or Omission; Waiver of Default; Direction of Remedial Proceedings by
  the Holders

  	
   

  
	
  SECTION
  12.08.

  	
  Suits
  or Actions by Holders; Any Holder May Enforce Overdue Payment of His or Her
  Bond or Interest Thereon

  	
   

  
	
  SECTION
  12.09.

  	
  Remedies
  Not Exclusive

  	
   

  
	
  SECTION
  12.10.

  	
  Effect
  of Abandonment of Proceedings on Default

  	
   

  
	
  SECTION
  12.11.

  	
  Interest
  on Overdue Amounts

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
   

  
	
  EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND
  OWNERSHIP OF BONDS; EXCLUSION OF BONDS OWNED BY THE AUTHORITY OR THE COMPANY

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.01.

  	
  Execution
  of Requests, Directions and Consents and Other Instruments and Proof of Same;
  Ownership of Bonds and Proof of Same

  	
   

  
	
  SECTION
  13.02.

  	
  Meetings
  of Holders

  	
   

  
	
  SECTION
  13.03.

  	
  Exclusion
  of Bonds Held by or for the Authority, the Company and of Bonds No Longer
  Deemed Outstanding Hereunder

  	
   

  

 

v

 

	
  ARTICLE XIV

  
	
   

  
	
  AMENDING AND SUPPLEMENTING THE
  INDENTURE,THE PARTICIPATION AGREEMENT, THE REMARKETING AGREEMENT, AUCTION
  AGENCY AGREEMENT, BROKER-DEALER AGREEMENTS, BOND PURCHASE TRUST AGREEMENT

  
	
   

  	
   

  	
   

  
	
  SECTION
  14.01.

  	
  Amending
  and Supplementing Indenture Without Consent of Holders

  	
   

  
	
  SECTION
  14.02.

  	
  Amending
  and Supplementing Indenture with Consent of Holders

  	
   

  
	
  SECTION
  14.03.

  	
  Notation
  upon Bonds; New Bonds Issued upon Amendments

  	
   

  
	
  SECTION
  14.04.

  	
  Effectiveness
  of Supplemental Indentures

  	
   

  
	
  SECTION
  14.05.

  	
  Supplemental
  Indenture Affecting Support Facility Provider

  	
   

  
	
  SECTION
  14.06.

  	
  Supplemental
  Participation Agreements Not Requiring the Consent of the Holders

  	
   

  
	
  SECTION
  14.07.

  	
  Notice
  and Consent for Supplemental Participation Agreements Requiring the Consent
  of the Holders

  	
   

  
	
  SECTION
  14.08.

  	
  Effectiveness
  of Supplemental Participation Agreement

  	
   

  
	
  SECTION
  14.09.

  	
  Amending
  and Supplementing the Remarketing Agreement, Auction Agency Agreement,
  Broker-Dealer Agreements or Bond Purchase Trust Agreement

  	
   

  
	
  SECTION
  14.10.

  	
  Supplemental
  Participation Agreement Affecting Support Facility Provider

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV

  
	
   

  
	
  DEFEASANCE; MONEYS HELD FOR PAYMENT OF
  DEFEASED BONDS

  
	
   

  	
   

  	
   

  
	
  SECTION
  15.01.

  	
  Discharge
  of Liens and Pledges; Bonds No Longer Deemed to be Outstanding Hereunder

  	
   

  
	
  SECTION
  15.02.

  	
  Release
  of Indenture, Termination of Right, Title and Interest of Trustee

  	
   

  
	
  SECTION
  15.03.

  	
  Bonds
  Not Presented for Payment When Due; Monies Held for the Bonds after Due Date
  of Bonds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  
	
   

  
	
  FORM OF BONDS AND ENDORSEMENT AND
  ASSIGNMENT PROVISIONS

  
	
   

  	
   

  	
   

  
	
  SECTION
  16.01.

  	
  Form
  of Bonds and Endorsement and Assignment Provisions

  	
   

  

 

vi

 

	
  ARTICLE XVII

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  SECTION
  17.01.

  	
  Benefits
  of Indenture Limited to Authority, Company, Trustee, Registrar and Paying
  Agent, Support Facility Issuer, and Auction Agent and Holders of the Bonds

  	
   

  
	
  SECTION
  17.02.

  	
  Indenture
  a Contract; Indenture Binding Upon Successors or Assigns of the Authority

  	
   

  
	
  SECTION
  17.03.

  	
  Notice
  to Holders of Bonds

  	
   

  
	
  SECTION
  17.04.

  	
  Waiver
  of Notice

  	
   

  
	
  SECTION
  17.05.

  	
  Effect
  of Saturdays, Sundays and Non-Business Days

  	
   

  
	
  SECTION
  17.06.

  	
  Partial
  Invalidity

  	
   

  
	
  SECTION
  17.07.

  	
  Law
  and Place of Enforcement of Indenture

  	
   

  
	
  SECTION
  17.08.

  	
  Requests,
  Approvals and Directions of Authority

  	
   

  
	
  SECTION
  17.09.

  	
  Notices,
  Demands; Requests

  	
   

  
	
  SECTION
  17.10.

  	
  Effect
  of Article and Section Headings and Table of Contents

  	
   

  
	
  SECTION
  17.11.

  	
  Indenture
  May be Executed in Counterparts; Effectiveness of Indenture

  	
   

  
	
  SECTION
  17.12.

  	
  Liability
  of Authority Limited to Revenues

  	
   

  
	
  SECTION
  17.13.

  	
  Waiver
  of Personal Liability

  	
   

  

 

vii

 

THIS
TRUST INDENTURE, made and dated as of January 1, 2004, by and between New York
State Energy Research and Development Authority (the “Authority”), a body
corporate and politic, constituting a public benefit corporation, and The Bank
of New York, as trustee (the “Trustee”), a banking corporation organized and
existing under and by virtue of the laws of the State of New York with its
principal corporate trust office located in The City of New York.

 

W I T N E S S E T H  T H A T:

 

WHEREAS,
pursuant to a special act of the Legislature of the State of New York (Title 9
of Article 8 of the Public Authorities Law of New York, as from time to time
amended and supplemented, herein called the “Act”), the Authority has been established,
as a body corporate and politic, constituting a public benefit corporation; and

 

WHEREAS,
pursuant to the Act, the Authority is empowered to contract with any power
company to participate in the construction of facilities for the furnishing of
electric energy and the furnishing of gas to the extent required by the public
interest in development, health, recreation, safety, conservation of natural
resources and aesthetics; and

 

WHEREAS,
pursuant to the Act, the Authority is also authorized to extend credit and make
loans from bond proceeds to any person for the construction, acquisition,
installation, reconstruction, improvement, maintenance, equipping, furnishing
or leasing of any special energy project (as defined in the Act) including, but
not limited to, facilities for the distribution of steam or for the
reimbursement to any person for costs incurred in connection with a special
energy project completed or not completed at the time of such credit or loan,
which credits or loans may, but need not, be secured by mortgages, contracts,
leases or other instruments, upon such terms and conditions as the Authority
shall determine reasonable in connection with such credits or loans; and

 

WHEREAS,
the Authority is also authorized under the Act to borrow money and issue its
negotiable bonds and notes to provide sufficient monies for achieving its
corporate purposes, including the refunding of its outstanding obligations; and

 

WHEREAS,
the Authority is also authorized under the Act to enter into any contracts and
to execute all instruments necessary or convenient for the exercise of its
corporate powers and the fulfillment of its corporate purposes; and

 

WHEREAS,
the Consolidated Edison Company of New York, Inc. (the “Company”) has requested
that the Authority issue bonds for the purpose of refunding the Authority’s 6%
Facilities Revenue Bonds, Series 1993 A (Consolidated Edison Company of New
York, Inc. Project), in the aggregate principal amount of $101,000,000 (the
“Prior Bonds”) issued to finance the acquisition, construction and installation
of certain facilities for the furnishing of gas within the Company’s gas
service area; and

 

WHEREAS,
pursuant to Resolution No. 1024 adopted January 13, 2003, the Authority has
determined to issue the Bonds, in an aggregate principal amount not to exceed

 

1

 

$101,000,000, for the purpose of refunding
the Prior Bonds, all such Bonds to be issued under and secured by this Trust
Indenture; and

 

WHEREAS,
contemporaneously with the execution hereof, the Company and the Authority have
entered into a Participation Agreement of even date herewith (herein referred
to as the “Participation Agreement”); and

 

WHEREAS,
the bonds to be issued will be in the aggregate principal amount of $98,325,000
and will be designated as Facilities Revenue Bonds, Series 2004A (Consolidated
Edison Company of New York, Inc. Project) (the “Bonds”), which will be used,
together with Company funds, to refund the Prior Bonds, such Bonds to be issued
under and secured by this Trust Indenture; and

 

WHEREAS,
simultaneously with the issuance and delivery of such bonds, the Company will
execute and deliver a promissory note dated the date of issuance of such bonds
(the “Note”) as evidence of its obligation to make payments required by the
Participation Agreement; and

 

WHEREAS,
all acts, conditions and things necessary or required by the Constitution and
statutes of the State of New York, or otherwise, to exist, happen, and be
performed as prerequisites to the passage of this Indenture, do exist, have
happened, and have been performed; and

 

WHEREAS,
the Trustee has accepted the trusts created by this Trust Indenture and in
evidence thereof has joined in the execution hereof;

 

NOW,
THEREFORE, THIS TRUST INDENTURE WITNESSETH:

 

That
in order to declare the terms and conditions upon which the Bonds are
authenticated, issued and delivered, and in consideration of the premises and
the acceptance by the Trustee of the trusts hereby created and of the purchase
and acceptance of the Bonds by the Holders thereof, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, and in
order to secure payment of the principal of and premium, if any, and interest
on the Bonds according to their tenor and effect and the performance and
observance by the Authority of all covenants, agreements and conditions herein
and in the Bonds contained, the Authority has acknowledged, executed, signed
and delivered this Indenture and hereby assigns, confirms, pledges with and
sets over and entrusts to the Trustee hereunder, its successors in trust and
assigns, subject to the provisions of this Indenture (the following being
called the “Trust Estate”):  (1) the
Revenues (as hereinafter defined); (2) the Participation Agreement and the Note
and all rights, remedies and interest of the Authority under the Participation
Agreement and the Note, and any other agreement relating to the Project
(exclusive of the Authority’s rights with respect to (a) administrative
compensation, attorney’s fees and indemnification, (b) the receipt of notices,
opinions, reports, copies of instruments and other items of a similar nature
required to be delivered to the Authority under the Participation Agreement,
(c) granting approvals and consents and making determinations when required
under the Participation Agreement, (d) making requests for information and
inspections in accordance with the Participation Agreement,

 

2

 

(e) Article III and Sections 4.02(f), 4.14
and 5.09 of the Participation Agreement and, insofar as the obligations of the
Company under Section 4.12 relate to taxes and assessments imposed upon the
Authority and not the Trustee, Section 4.12 thereof, and (f) the right to amend
the Participation Agreement); (3) the Tax Regulatory Agreement (as hereinafter
defined), and all rights, remedies and interest of the Authority thereunder,
subject to the provisions of the Tax Regulatory Agreement relating to the
amendment thereof and to a reservation by the Authority of the right to enforce
the obligations of the Company thereunder independently of the Trustee; (4) all
other monies, rights and properties held by the Trustee or other depositary
under this Indenture including, but only for the benefit of the persons
specified herein, the proceeds of any draw, borrowing or payment under any
Credit Facility (other than the Policies (as hereinafter defined)), and the
securities (and the interest, income and profits therefrom) in which such
monies may from time to time be invested (exclusive of the proceeds of a
Liquidity Facility (as hereinafter defined) or the Project Fund (as hereinafter
defined)); and (5) any and all other real or personal property of every nature
from time to time hereafter by delivery or by writing of any kind specially
mortgaged, pledged, or hypothecated, as and for additional security hereunder,
by the Company in favor of the Trustee or the Authority which are hereby
authorized to receive any and all such property at any and all times and to
hold and apply the same subject to the terms hereof.

 

TO
HAVE AND TO HOLD, all and singular of said Trust Estate unto the Trustee, its
successors in trust and assigns, forever, in trust, nevertheless, to inure to
the use and benefit of the Holders of all the Bonds, for the securing of the
observance or performance of all the terms, provisions and conditions therein
and herein contained and for the equal and proportionate benefit and security
of all and singular the present and future Holders of the Bonds, without
preference, priority, prejudice or distinction as to lien or otherwise of any
Bond over any other Bond, to the end that each Holder of a Bond shall have the
same rights, privileges and lien under and by virtue of this Trust Indenture, except
as hereinafter otherwise specifically provided;

 

AND
UPON THE CONDITION THAT, if the Authority shall cause to be paid fully and
promptly and indefeasibly when due all of its indebtedness, liabilities,
obligations and sums at any time secured hereby, including interest, the
Trustee’s fees and reasonable expenses (including reasonable attorneys’ fees
and expenses), and shall promptly, faithfully and strictly keep, perform and
observe, or cause to be kept, performed and observed, all of its covenants, obligations,
warranties and agreements contained herein, then and in such event, this Trust
Indenture shall be and become void and of no further force and effect,
otherwise the same shall remain in full force and effect.

 

THIS
TRUST INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all
Bonds issued and secured hereunder are to be issued, authenticated and
delivered and all said income and Revenues hereby pledged are to be dealt with
and disposed of under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes as hereinafter expressed, and
the Authority has agreed and covenanted, and does hereby agree and covenant,
with the Trustee and with the respective Holders, from time to time, of the
said Bonds, or any part thereof, as follows (provided that in the performance
of the agreements of the Authority herein contained any obligation it may
thereby incur for the payment of money shall never constitute a general or
moral obligation of the State of New York

 

3

 

or any political subdivision thereof within
the meaning of any state constitutional provision or statutory limitation, and
shall not be secured directly or indirectly by the full faith and credit, the
general credit or any revenue or taxes of the State of New York or any
political subdivision thereof, but shall be payable solely out of the income
and Revenues derived under the Participation Agreement and the Note and from
drawings under the Credit Facility (paid to the Insurance Trustee (as
hereinafter defined) in the case of the Policies), if any, and other monies,
rights and properties of the Trust Estate), that is to say:

 

4

 

ARTICLE I

 

DEFINITIONS;
COMPUTATIONS; CERTIFICATES

AND OPINIONS; EVIDENCE OF ACTION BY AUTHORITY

 

SECTION 1.01.           Definitions of Specific Terms.  Unless the context shall clearly indicate
some other meaning or may otherwise require, the terms defined in this Section
shall, for all purposes of this Indenture and of any indenture, resolution or
other instrument amendatory hereof or supplemental hereto and of any
certificate, opinion, instrument or document herein or therein mentioned, have
the meanings herein specified, with the following definitions to be equally
applicable to both the singular and plural forms of any terms herein defined
and vice versa.

 

“Act”
shall mean the New York State Energy Research and Development Authority Act,
Title 9 of Article 8 of the Public Authorities Law of the State of New York, as
from time to time amended and supplemented.

 

“Additional
Payments” shall mean the Additional Payments as defined in Section 4.02(f)
of the Participation Agreement.

 

“Adjustable
Rate” shall mean any of the following types of interest rates: a Commercial
Paper Rate, an Auction Rate, a Daily Rate, a Weekly Rate, a Monthly Rate, a
Semi-annual Rate and a Term Rate.

 

“Administration
Fees” shall mean the amounts payable by the Company to the Authority
pursuant to Section 4.02(f) of the Participation Agreement to defray a portion
of the expenses incurred by the Authority in conducting and administering its
special energy project programs and the amount payable as state bond issuance
charge pursuant to Section 4.02(f) of the Participation Agreement.

 

“Affiliate”
shall mean any person known to the Auction Agent to be controlled by, in
control of or under common control with the Company; provided that no
Broker-Dealer controlled by, in control of or under common control with the
Company shall be an Affiliate nor shall any corporation or any person
controlled by, in control of or in common control with such corporation be an
Affiliate solely because a director or executive officer of such Broker-Dealer
is also a director of the Company.

 

“After-Tax
Equivalent Rate” on any date of determination shall mean with respect to
Auction Rate Bonds, the interest rate per annum equal to the product of (x)
Commercial Paper/Treasury Rate on such date and (y) (1.00 minus the Statutory
Corporate Tax Rate on such date).

 

“Agent
Member” shall mean a member of, or participant in, the Securities
Depository.

 

5

 

“All
Hold Rate” shall mean for any subseries of Bonds on any date of
determination with respect to Auction Rate Bonds the rate per annum equal to
85% (as such percentage may be adjusted pursuant to Section 3.10) of the lesser
of (i) the BMA Index on such date and (ii) the After-Tax Equivalent Rate on
such date; provided, however, that in no event shall such All
Hold Rate exceed the Maximum Allowed Rate.

 

“Alternate
Support Facility” shall mean any Support Facility obtained pursuant to the
provisions of Section 6.02 in replacement of an existing Support Facility.

 

“Applicable
Percentage” on any date of determination for any subseries of Bonds shall
mean the percentage determined as set forth below (as such percentage may be
adjusted for Auction Rate Bonds pursuant to Section 3.10) based on the
prevailing long-term rating of the Auction Rate Bonds in effect at the close of
business on the Business Day immediately preceding such date of determination:

 

	
  Prevailing Rating

  	
   

  	
  Applicable Percentage

  	
   

  
	
  AAA/”Aaa”

  	
   

  	
  175

  	
  %

  
	
  AA/”Aa”

  	
   

  	
  175

  	
  %

  
	
  A/”A”

  	
   

  	
  175

  	
  %

  
	
  BBB/”Baa”

  	
   

  	
  200

  	
  %

  
	
  Below
  BBB/”Baa”

  	
   

  	
  265

  	
  %

  

 

For
purposes of this definition, the “prevailing rating” of the Auction Rate Bonds
will be (a) AAA/”Aaa,” if the Auction Rate Bonds have a rating of AAA or better
by S&P and a rating of “Aaa” or better by Moody’s, or the equivalent of
such ratings by a substitute rating agency or agencies selected as provided
below, (b) if not AAA/”Aaa,” then AA/”Aa” if the Auction Rate Bonds have a
rating of AA- or better by S&P and a rating of “Aa3” or better by Moody’s,
or the equivalent of such ratings by a substitute rating agency or agencies selected
as provided below, (c) if not AAA/”Aaa” or AA/”Aa,” then A/”A” if the Auction
Rate Bonds have a rating of A- or better by S&P and a rating of “A3” or
better by Moody’s, or the equivalent of such ratings by a substitute rating
agency or agencies selected as provided below, (d) if not AAA/”Aaa,” AA/”Aa” or
A/”A,” then BBB/”Baa,” if the Auction Rate Bonds have a rating of BBB- or
better by S&P and a rating of “Baa3” or better by Moody’s, or the
equivalent of such ratings by a substitute rating agency or agencies selected
as provided below, and (e) if not AAA/”Aaa,” AA/”Aa”, A/”A” or BBB/”Baa,” then
below BBB/”Baa,” whether or not the Auction Rate Bonds are rated by any
securities rating agency.

 

If
(x) the Auction Rate Bonds, are rated by a rating agency or agencies other than
Moody’s or S&P and (y) the Company has delivered on behalf of the Authority
to the Trustee and the Auction Agent an instrument designating one or two of
such rating agencies to replace Moody’s or S&P, or both, then for purposes
of the definition of “prevailing rating” Moody’s or S&P, or both, will be
deemed to have been replaced in accordance with such instrument; provided,
however, that such instrument must be accompanied by the consent of the
applicable Market Agent.  For purposes of
this definition, S&P’s rating categories of AAA, AA-, A- and BBB-, and
Moody’s rating categories of “Aaa,” “Aa3,” “A3” and “Baa3,” refer to and
include the respective rating categories correlative thereto in the event that
either or both of such rating

 

6

 

agencies have changed or modified their
generic rating categories.  If the
prevailing ratings for the Bonds are split between the categories set forth
above, the lower rating will determine the prevailing rating.

 

“Auction”
shall mean each periodic implementation of the Auction Procedures for Auction
Rate Bonds.

 

“Auction
Agency Agreement” shall mean the Auction Agency Agreement to be entered
into between the Company and the Auction Agent with respect to the Auction Rate
Bonds, as from time to time amended and supplemented.

 

“Auction
Agent” shall mean any entity appointed as such pursuant to Section 11.21
and its successors and assigns.

 

“Auction
Date” shall mean with respect to each Auction Period, the last Wednesday of
the immediately preceding Auction Period (or such other day that the applicable
Market Agent shall establish as the Auction Date therefor pursuant to Section
3.05); provided, that if such day is not a Business Day, the Auction Date shall
be the next succeeding Business Day.

 

“Auction
Period” shall mean for any subseries of Bonds the period from and including
the Closing Date to and including the initial Auction Date for such subseries
and thereafter, or after a Change in the Interest Rate Mode to an Auction Rate,
until the effective date of a Change in the Interest Rate Mode or the Stated
Maturity, each period from and including the last Interest Payment Date for the
immediately preceding Auction Period or Calculation Period, as the case may be,
to and including the next succeeding Auction Date or, in the event of a Change
in the Interest Rate Mode, to but excluding the effective date of such change,
provided, if any day that would be the last day of any such period does not
immediately precede a Business Day, such period shall end on the next day which
immediately precedes a Business Day.

 

“Auction
Procedures” shall mean with respect to the Auction Rate Bonds the
procedures set forth in Sections 3.03 through 3.10.

 

“Auction
Rate” shall mean with respect to Auction Rate Bonds and each Auction Period
for such Auction Rate Bonds, the rate of interest per annum determined for the
Bonds pursuant to Article III.

 

“Auction
Rate Bonds” shall mean with respect to an Auction Rate Period, any Bonds or
subseries of Bonds which bear interest at the Auction Rate.

 

“Auction
Rate Bonds Period Record Date” shall mean, with respect to each Interest
Payment Date during an Auction Rate Period, the Business Day immediately
preceding such Interest Payment Date.

 

“Auction
Rate Period” shall mean any period during which the Auction Rate Bonds bear
interest at an Auction Rate determined pursuant to the implementation of
Auction Procedures established under Article III, which period shall commence
on the Closing Date or on

 

7

 

the effective date of a Change in the
Interest Rate Mode to an Auction Rate and shall extend through the day
immediately preceding the earlier of (a) the effective date of a Change in the
Interest Rate Mode or (b) the Stated Maturity.

 

“Authority”
shall mean New York State Energy Research and Development Authority, the public
benefit corporation created by the Act, and its successors and assigns.

 

“Authorized
Company Representative” shall mean any officer or other employee of the
Company at the time designated to act on behalf of the Company by written
certificate furnished to the Authority and the Trustee containing the specimen
signature of such person and signed on behalf of the Company by its Chairman,
President or a Vice President and its Secretary or an Assistant Secretary.

 

“Authorized
Officer” shall mean the Chair, Vice-Chair, President, Vice President,
Treasurer, Assistant Treasurer or Secretary of the Authority.

 

“Available
Auction Rate Bonds” shall mean with respect to the Auction Rate Bonds,
Available Auction Rate Bonds as defined in Section 3.08.

 

“Bid”
shall mean with respect to the Auction Rate Bonds, Bid as defined in Section
3.06.

 

“Bidder”
shall mean with respect to the Auction Rate Bonds, Bidder as defined in Section
3.06.

 

“BMA
Index” shall mean, as of any date of determination, The Bond Market
Association Municipal Swap Index that is most recently released by Municipal
Market Data to its subscribers prior to such date of determination; provided,
however, that if the BMA Index is unavailable for a period of over 21
days preceding such date of determination, references to the BMA Index shall be
replaced by the After-Tax Equivalent Rate.

 

“Bond
Counsel” shall mean an attorney or firm or firms of attorneys, satisfactory
to the Authority and the Trustee, nationally recognized and experienced in
matters relating to tax exemption of interest on bonds issued by states and
their political subdivisions.

 

“Bond
Fund” shall mean the special trust fund of the Authority designated as
“Consolidated Edison Company of New York, Inc. Series 2004A Project Bond Fund”
created and established under, and to be held and administered by the Trustee
as provided in Section 9.01 and, unless the context shall clearly indicate
otherwise, shall include the “Interest Account,” the “Principal Account,” and
the “Redemption Account” created and established therein.

 

“Bond
Insurer” shall mean XL Capital Assurance Inc., or any successor thereto.

 

“Bond
Insurer Default” shall mean the occurrence and continuance of one or more
of the following events:  (a) the
failure of the Bond Insurer to pay principal of or interest on the Bonds when
and to the extent required by a Policy; (b) the issuance of an order of
liquidation or

 

8

 

dissolution of a Bond Insurer; (c) the
commencement by a Bond Insurer of a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect including, without limitation, the appointment of a trustee, receiver,
liquidator, custodian or other similar official for itself or any substantial
part of its property; (d) the consent of a Bond Insurer to any relief referred
to in the preceding clause (c) in an involuntary case or other proceeding
commenced against it; (e) the making by a Bond Insurer of an assignment for the
benefit of creditors; (f) the failure of a Bond Insurer to generally pay its
debts as they become due; (g) a default by the Bond Insurer under a Policy; or
(h) the initiation by a Bond Insurer of any actions to authorize any of the
foregoing; provided that the events described in clauses (b) - (e) above shall
constitute a Bond Insurer Default only if such event has the effect of lowering
the rating assigned to the bonds insured by the Bond Insurer to less than “AA”
by S&P or “Aa2” by Moody’s or “A” by Fitch.

 

“Bond
Purchase Agreement” shall mean the Bond Purchase Agreement, dated as of
January 28, 2004, among the Authority, the Company and the underwriters named
therein.

 

“Bond
Purchase Fund” shall mean the Bond Purchase Fund established pursuant to
the Bond Purchase Trust Agreement.

 

“Bond
Purchase Trust Agreement” shall mean the Bond Purchase Trust Agreement
dated as of the date hereof between the Authority and the Registrar and Paying
Agent, as from time to time amended or supplemented.

 

“Bond
Year” shall have the meaning set forth in the Tax Regulatory Agreement.

 

“Bondholder”,
“Holder of a Bond” or “Holder” shall mean any registered owner of
a Bond.

 

“Bonds”
shall mean $98,325,000 aggregate principal amount of the “Facilities Revenue
Bonds, Series 2004A (Consolidated Edison Company of New York, Inc. Project)”
issued as authorized in Section 2.02 at any time Outstanding.

 

“Broker-Dealer”
shall mean any broker-dealer (as defined in the Securities Exchange Act),
commercial bank or other entity permitted by law to perform the functions
required of a Broker-Dealer set forth in the Auction Procedures (i) that is an
Agent Member (or an affiliate of an Agent Member), (ii) that has been selected
by the Auction Agent and the Company with the consent of the Authority, and
(iii) that has entered into a Broker-Dealer Agreement with the Auction Agent
and the Company that remains effective.

 

“Broker-Dealer
Agreement” shall mean each agreement applicable to the Auction Rate Bonds,
between a Broker-Dealer, the Company and the Auction Agent pursuant to which
the Broker-Dealer, among other things, agrees to participate in Auctions as set
forth in the Auction Procedures, as from time to time amended and supplemented.

 

9

 

“Business
Day” shall mean any day other than (a) a Saturday or Sunday or (b) a day on
which banking institutions in the State of New York, or any city in which is
located the principal corporate trust office of the Trustee or the Auction
Agent, or the fiscal agent appointed by the Bond Insurer are authorized or
required by law or executive order to remain closed.

 

“Calculation
Period” shall mean (a) during any Commercial Paper Rate Period following a
Change in the Interest Rate Mode to a Commercial Paper Rate Period, the  period from and including the effective date
of the Change in the Interest Rate Mode to a Commercial Paper Rate Period to
but not including any day not more than 270 days thereafter which is a day
immediately preceding a Business Day established by a Remarketing Agent
pursuant to Section 3.02 and, thereafter, any Calculation Period established by
such Remarketing Agent pursuant to Section 3.02 which shall end on a day not
later than 270 days from the commencement thereof; (b) during any Daily Rate
Period, the period from and including a Business Day to but not including the
next succeeding Business Day; (c) during any Weekly Rate Period following a
Change in the Interest Rate Mode to a Weekly Rate, the period from and
including the effective date of the Change in the Interest Rate Mode to and
including the following Tuesday, and, thereafter, the period from and including
Wednesday of each week to and including the following Tuesday; (d) during any
Monthly Rate Period following a Change in the Interest Rate Mode to a Monthly
Rate, the period from and including the effective date of the Change in the
Interest Rate Mode to but excluding the first Business Day of the following
month, and, thereafter each period from and including the first Business Day of
the month to but excluding the first Business Day of the following month; (e)
during any Semi-annual Rate Period following a Change in the Interest Rate Mode
to a Semi-annual Rate, the period from and including the effective date of the
Change in the Interest Rate Mode to but excluding the next succeeding Interest Payment
Date and, thereafter, each period from and including the day following the end
of the last Calculation Period to but excluding the next succeeding Interest
Payment Date; (f) during any Term Rate Period, any period of not less than 365
days from and including a Business Day to and including any day (established by
the Authority, at the request of the Company, pursuant to Section 4.01.1) not
later than the day prior to the Stated Maturity; and (g) during any Fixed Rate
Period following a Change in the Interest Rate Mode to a Fixed Rate, the period
from and including the effective date of the Change in the Interest Rate Mode
through the day immediately preceding the Stated Maturity.

 

“Change
in the Interest Rate Mode” shall mean any change in the type of interest
rate borne by the Bonds pursuant to Section 4.01 or Section 4.02.

 

“Change
of Preference Law” shall mean any amendment to the Code or other statute
enacted by the Congress of the United States or any temporary, proposed or
final regulation promulgated by the United States Treasury, after the date
hereof which (a) changes or would change any deduction, credit or other
allowance allowable in computing liability for any Federal tax with respect to,
or (b) imposes, or would impose, or increases or would increase any Federal tax
(including, but not limited to, preference or excise taxes) upon, any interest
earned by any holder of bonds the interest on which is excluded from Federal
gross income under Section 103 of the Code.

 

10

 

“Closing
Date” shall mean the date on which the Note becomes legally effective, the
same being the date on which the Bonds are paid for by and delivered to the
original purchasers thereof.

 

“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.
Each reference to a section of the Code herein shall be deemed to include the
United States Treasury Regulations proposed or in effect thereunder and applied
to the Bonds or the use of proceeds thereof, and also includes all amendments
and successor provisions unless the context clearly requires otherwise.

 

“Commercial
Paper Dealers” shall mean Lehman Commercial Paper Inc. and CS First Boston
Corporation or any other commercial paper dealers specified by the Authority at
the request of the Company, or in lieu of any thereof, their respective
affiliates or successors, provided that any such entity is a commercial paper
dealer and, if not, as replaced by the Substitute Commercial Paper Dealer.

 

“Commercial
Paper Period Record Date” shall mean, with respect to each Interest Payment
Date during a Commercial Paper Rate Period, the Business Day next preceding
such Interest Payment Date.

 

“Commercial
Paper Rate” shall mean with respect to each Calculation Period during a Commercial
Paper Rate Period, a rate or rates of interest equal to the rate or rates of
interest per annum established and certified to the Trustee (with a copy to the
Authority, the Registrar and Paying Agent and the Company) by a Remarketing
Agent no later than 12:00 noon (New York City time) on and as of the
Determination Date as the minimum rate or rates of interest per annum which, in
the opinion of such Remarketing Agent, would be necessary on and as of such day
to remarket Bonds in a secondary market transaction at a price equal to the
principal amount thereof; provided that such rate or rates of interest shall
not exceed the lesser of  110% of the
Commercial Paper Rate Index on and as of such date and the Maximum Allowed
Rate.

 

“Commercial
Paper Rate Index” shall mean with respect to the Determination Date of each
Calculation Period during a Commercial Paper Rate Period, the average of yield
evaluations at par, determined by the Indexing Agent, of securities (whether or
not actually issued) all of which shall have a term as near as practicable to
such Calculation Period or which are subject to optional or mandatory tender by
the owner thereof at the end of a term as near as practicable to such
Calculation Period, the interest on which is not included in gross income for
Federal income tax purposes, of no fewer than ten Component Issuers selected by
the Indexing Agent, including issuers of commercial paper, project notes, bond
anticipation notes and tax anticipation notes, computed by the Indexing Agent on
and as of such day.  If the Bonds are
rated by a Rating Agency in its highest note or commercial paper rating
category or one of its two highest long-term debt rating categories, each
Component Issuer must (a) have outstanding securities rated by a Rating Agency
in its highest note or commercial paper rating category or (b) not have
outstanding notes or commercial paper rated by a Rating Agency but have
outstanding securities rated by a Rating Agency in one of its two highest
long-term debt rating categories.  If
the Bonds are rated by a Rating Agency in a rating category that is lower than
its

 

11

 

highest note or commercial paper rating
category or its two highest long-term debt rating categories (and the Bonds are
not rated in one of such categories by the other Rating Agency), each Component
Issuer must (a) have outstanding securities rated by a Rating Agency in its
note or commercial paper rating category which is the same or correlative, in
the Indexing Agent’s judgment, to the note or commercial paper rating category
or the long-term debt rating category of the Bonds or (b) have outstanding
securities rated by a Rating Agency in the same long-term debt rating category
as the Bonds are rated by that Rating Agency and not have any outstanding notes
or commercial paper rated by such Rating Agency.  The Indexing Agent may change the Component Issuers from time to
time in its discretion, subject to the foregoing requirements.  In addition, at the request of the Company
and upon delivery to the Trustee of an Opinion of Bond Counsel that such action
will not adversely affect the exclusion of interest on the Bonds from gross
income of the owners thereof for Federal income tax purposes, the Authority,
with the consent of the Company, may designate a new method of setting the
Commercial Paper Rate Index in the event any of the above-described methods are
determined by the Authority to be unavailable, impracticable or unrealistic in
the market place.

 

“Commercial
Paper Rate Period” shall mean any period during which the Bonds bear
interest at a Commercial Paper Rate or Rates, which period shall commence on
the effective date of a Change in the Interest Rate Mode to a Commercial Paper
Rate or Rates, as the case may be, and extend through the day immediately
preceding the earlier of (a) the effective date of another Change in the
Interest Rate Mode or (b) the Stated Maturity.

 

“Commercial
Paper/Treasury Rate” on any date of determination shall mean with respect
to Auction Rate Bonds (i) in the case of any Auction Period of less than 49
days, the interest equivalent of the 30-day rate, (ii)  in the case of any Auction Period of 49 days
or more and but less than 70 days, the interest equivalent of the 60-day
rate,  (iii) in the case of any Auction
Period of 70 days or more but less than 85 days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (iv)  in the case of any Auction Period of 85 days
or more but less than 99 days, the interest equivalent of the 90-day rate; (v)
in the case of any Auction Period of 99 days or more but less than 120 days,
the arithmetic average of the interest equivalent of the 90-day and 120-day
rates, (vi)  in the case of any Auction
Period of 120 days or more but less than 141 days, the interest equivalent of
the 120-day rate,  (vii) in the case of
any Auction Period of 141 days or more but less than 162 days, the arithmetic
average of the interest equivalent of the 120-day and 180-day rates,
(viii)  in the case of any Auction
Period of 162 days or more but less than 183 days, the interest equivalent of
the 180-day rate, and (ix) in the case of any Auction Period of 183 days or
more, the Treasury Rate for such Auction Period. The foregoing rates shall in
all cases, except with respect to the Treasury Rate, be rates on commercial
paper placed on behalf of issuers whose corporate bonds are rated “AA” by
S&P, or the equivalent of such rating by Moody’s, as made available on a
discount basis or otherwise by the Federal Reserve Bank of New York for the
Business Day immediately preceding such date of determination, or in the event
that the Federal Reserve Bank of New York does not make available any such
rate, then the arithmetic average of such rates, as quoted on a discount basis
or otherwise, by the Commercial Paper Dealers, to the Auction Agent for the
close of business on the Business Day immediately preceding such date of
determination.

 

12

 

If
any Commercial Paper Dealer does not quote a commercial paper rate required to
determine the Commercial Paper/Treasury Rate, the Commercial Paper/Treasury
Rate shall be determined on the basis of a commercial paper quotation or
quotations furnished by the remaining Commercial Paper Dealer or Commercial
Paper Dealers and any Substitute Commercial Paper Dealer or Substitute
Commercial Paper Dealers selected by the Authority at the request of the
Company to provide such quotation or quotations not being supplied by any
Commercial Paper Dealer or Commercial Paper Dealers, as the case may be, or if
the Authority does not select any such Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers, by the remaining Commercial Paper Dealer
or Commercial Paper Dealers. For purposes of this definition, the “interest
equivalent” of a rate stated on a discount basis (a “discount rate”) for
commercial paper of a given day’s maturity shall be equal to the product of (A)
100 times (B) the quotient (rounded upwards to the next higher one-thousandth
(.001) of 1%) of (x) the discount rate (expressed in decimals) divided by (y)
the difference between (1) 1.00 and (2) a fraction the numerator of which shall
be the product of the discount rate (expressed in decimals) times the number of
days in which such commercial paper matures and the denominator of which shall
be 360.  In no event shall the
Commercial Paper/Treasury Rate be greater than the lesser of 15% or the maximum
rate permitted by applicable law.

 

“Commission”
shall mean the Securities and Exchange Commission.

 

“Company”
shall mean Consolidated Edison Company of New York, Inc., and any surviving,
resulting or transferee corporation as provided in Section 5.18 of the
Participation Agreement.

 

“Company
Account” shall mean the account created pursuant to Section 2.01(a) of the
Bond Purchase Trust Agreement.

 

“Component
Issuers” shall mean issuers of securities, the interest on which is
excluded from gross income for Federal income tax purposes, selected by the
Indexing Agent.

 

“Computation
Date” shall mean each date which is one (1) Business Day prior to any
Determination Date.

 

“Computation
Period” shall have the meaning set forth in the Tax Regulatory Agreement.

 

“Credit
Facility” shall mean any Support Facility which provides for the payments
referred to in clause (ii) of the definition thereof.  The initial Credit Facilities are the Policies.

 

“Credit
Facility Issuer” shall mean any bank or banks or other financial
institution or institutions, having issued any Credit Facility.  The initial Credit Facility Issuer is the
Bond Insurer.

 

“Current
Adjustable Rate” shall mean the interest rate borne by Bonds immediately
prior to a Change in the Interest Rate Mode or the establishment of a Fixed
Rate.

 

13

 

“Daily
Period Record Date” shall mean, with respect to each Interest Payment Date
during a Daily Rate Period, the Business Day next preceding such Interest
Payment Date.

 

“Daily
Rate” shall mean with respect to each Calculation Period during a Daily
Rate Period, a rate of interest equal to the rate of interest per annum
established and certified to the Trustee (with a copy to the Authority, the
Registrar and Paying Agent and the Company) by a Remarketing Agent no later
than 12:00 noon (New York City time) on and as of the Determination Date as the
minimum rate of interest per annum which, in the opinion of such Remarketing
Agent, would be necessary on and as of such day to remarket Bonds in a
secondary market transaction at a price equal to the principal amount thereof
plus accrued interest thereon; provided that such rate of interest shall
not exceed the lesser of 110% of the Daily Rate Index on and as of such day and
the Maximum Allowed Rate.

 

“Daily
Rate Index” shall mean with respect to the Determination Date of each
Calculation Period during a Daily Rate Period, the average of one-day yield
evaluations at par, determined by the Indexing Agent, of securities (whether or
not actually issued), the interest on which is not included in gross income for
Federal income tax purposes, of no fewer than ten Component Issuers selected by
the Indexing Agent and which have redemption or tender provisions comparable to
the then applicable provisions of the Bonds, computed by the Indexing Agent on
and as of the Determination Date.  If
the Bonds are rated by a Rating Agency, each Component Issuer must have
outstanding securities rated by a Rating Agency in a short-term debt rating
category which is the same as the short-term debt rating category in which the
Bonds are rated.  The specific issuers
included in the Component Issuers may be changed from time to time by the
Indexing Agent in its discretion and shall be issuers whose securities, in the
judgment of the Indexing Agent, have characteristics similar to the Bonds.  In addition, at the request of the Company
and upon delivery to the Trustee of an Opinion of Bond Counsel that such action
will not adversely affect the exclusion of interest on the Bonds from gross
income of the owners thereof for Federal income tax purposes, the Authority,
with the consent of the Company, may designate a new method of setting the
Daily Rate Index in the event any of the above-described methods are determined
by the Authority to be unavailable, impracticable or unrealistic in the market
place.

 

“Daily
Rate Period” shall mean any period during which Bonds bear interest at a
Daily Rate which period shall commence on the effective date of the Change in
the Interest Rate Mode to a Daily Rate and shall extend through the day
immediately preceding the earlier of (a) the effective date of a Change in the
Interest Rate Mode or (b) the Stated Maturity.

 

“Determination
Date” shall mean, for any Calculation Period, the first Business Day
occurring during such Calculation Period; provided, however, with respect to
Bonds which bear interest at the Weekly Rate, each Wednesday or, if such
Wednesday is not a Business Day, the Business Day next preceding such
Wednesday.

 

“Direct-Pay
Credit Facility” shall mean any Credit Facility which by its terms permits
the Trustee to draw moneys thereunder for deposit in the Bond Fund.

 

“Event
of Default” shall mean Event of Default as defined in Section 12.01.

 

14

 

“Existing
Holder” shall mean with respect to Auction Rate Bonds a person that is
listed as the beneficial owner of Auction Rate Bonds in the records of the
Auction Agent.

 

“Fiscal
Year” shall mean the fiscal year of the Company as established from time to
time by the Company which as of the Closing Date is the twelve-month period
commencing on January 1 of each calendar year and ending on December 31 of the
next calendar year.

 

“Fitch”
shall mean Fitch Ratings and its successor or successors, and if such
corporation shall for any reason no longer perform the functions of a
securities rating agency or shall be replaced by some other nationally
recognized rating agency by the Authority at the request of the Company,
“Fitch” shall be deemed to refer to such other nationally recognized rating
agency designated by the Authority at the request of the Company.

 

“Fixed
Rate” shall mean, with respect to a Fixed Rate Period, the rate of interest
per annum established and certified to the Trustee (with a copy to the
Authority, the Registrar and Paying Agent and the Company) by a Remarketing
Agent no later than 12:00 noon (New York City time) on and as of such date as
the minimum rate of interest per annum which, in the opinion of such
Remarketing Agent, would be necessary on and as of such date to remarket the
Bonds in a secondary market transaction at a price equal to 100% of the
Outstanding principal amount thereof; provided that such rate of interest shall
not exceed the lesser of 110% of the Fixed Rate Index on and as of such date
and 18% per annum;

 

“Fixed
Rate Conversion Date” shall have the meaning set forth in Section 4.02.

 

“Fixed Rate Index” shall mean with respect to a Fixed Rate Conversion Date,  the average of the yield evaluations (on the
basis of full coupon securities trading at par with a term approximately equal
to the Fixed Rate Period) of securities (whether or not actually issued), the
interest on which is not included in gross income for Federal income tax
purposes, of no fewer than ten Component Issuers selected by the Indexing Agent
and which have a long-term rating by a Rating Agency in the same rating
category as the Bonds are rated at the time by such Rating Agency or, if no
such bonds are so rated, shall be debt which, in the judgment of the Indexing
Agent, is of credit quality comparable to that of the Bonds, computed by the
Indexing Agent on and as of the Fixed Rate Conversion Date.  In the event that the Indexing Agent fails
to compute the Fixed Rate Index and no other qualified municipal securities
evaluation service can be appointed Indexing Agent by the Authority, the Fixed
Rate Index shall be determined by the 
applicable Remarketing Agent and shall be 90% of the average yield shown
for the most recent calendar month for United States Treasury notes or bonds
having the same number of years to maturity as the number of 12-month periods
(or months if the Fixed Rate Period is less than one year) in the Fixed Rate
Period, as published in the Federal Reserve Bulletin in the last issue before
the Fixed Rate Conversion Date.  If that
issue does not contain such a yield, the Fixed Rate Index will be determined by
linear interpolation between the yields shown in that issue for United States
Treasury notes and bonds having the next shorter and next longer number of
years (or months) to maturity.  In
addition, at the request of the Company and upon delivery to the Trustee of an
Opinion of Bond Counsel that such action will not adversely affect the
exclusion of interest on the Bonds from gross income of the owners thereof for
Federal income tax purposes, the Authority, with the consent of the Company,
may designate a new method of setting the

 

15

 

Fixed Rate Index in the event any of the
above-described methods are determined by the Authority to be unavailable, impracticable
or unrealistic in the market place.

 

“Fixed
Rate Period” shall mean any period during which Bonds bear interest at a
Fixed Rate, which period shall commence on the effective date of a Change in
the Interest Rate Mode to a Fixed Rate, and shall extend through the day
immediately preceding the Stated Maturity.

 

“Fixed
Rate Record Date” shall mean, with respect to each Interest Payment Date
during a Fixed Rate Period, the fifteenth day of the month next preceding such
Interest Payment Date, or, if such day shall not be a Business Day, the next
preceding Business Day.

 

“Governmental
Obligations” shall mean any of the following which are non-callable:

 

(a)           direct obligations of, or obligations
the payment of the principal of and interest on which is unconditionally
guaranteed by, the United States of America; and

 

(b)           bonds, debentures or notes issued by
the Federal Financing Bank, Farmers Home Administration, or any other
comparable Federal agency hereafter created to the extent that said obligations
are unconditionally guaranteed by the United States of America.

 

“Hold
Order” shall mean with respect to the Auction Rate Bonds, Hold Order as
defined in Section 3.06.

 

“Indenture”
shall mean this Trust Indenture dated as of January 1, 2004 between the Authority
and the Trustee, as the same may be amended or supplemented.

 

“Indexing
Agent” shall mean the Indexing Agent appointed in accordance with Section
11.24.

 

“Interest
Payment Date” shall mean:

 

(a)           during each Commercial Paper Rate
Period, the Business Day immediately succeeding the last day of any Calculation
Period;

 

(b)           during an Auction Rate Period (i) for
an Auction Period of 91 days or less, the Business Day immediately succeeding
such Auction Period and (ii) for an Auction Period of more than 91 days, each
13th Thursday after the first day of such Auction Period or the next Business
Day if such Thursday is not a Business Day, and the Business Day immediately
succeeding the last day of each such Auction Period;

 

(c)           during each Daily Rate Period, the
first Business Day of each month thereof;

 

16

 

(d)           during each Weekly Rate Period, the
first Business Day of each month thereof;

 

(e)           during each Monthly Rate Period, the
first Business Day of each month thereof;

 

(f)            during each Semi-annual Rate Period,
(i) the first Business Day of the sixth calendar month following the month in
which the first day of such Semi-annual Rate Period occurred, (ii) each
anniversary of the date so determined, and (iii) each anniversary of the first
day of the first month of such Semi-annual Rate Period;

 

(g)           during each Term Rate Period, the
April 1 or October 1 next succeeding the first day of a Calculation Period and
each April 1 or October 1 thereafter; provided, however, that if the April 1 or
October 1 next succeeding the first day of a Calculation Period occurs less
than twenty-one (21) days after the first day of such Calculation Period, the
first Interest Payment Date shall be the second such date following the first day
of such Calculation Period;

 

(h)           the April 1 or October 1 next
succeeding a Fixed Rate Conversion Date and each April 1 or October 1
thereafter; provided, however, that if the April 1 or October 1 next succeeding
a Fixed Rate Conversion Date occurs less than twenty-one (21) days after such
Fixed Rate Conversion Date, the first Interest Payment Date shall be the second
such date following the first day of the Fixed Rate Period;

 

(i)            a Fixed Rate Conversion Date;

 

(j)            any day on which Bonds are subject
to mandatory tender for purchase pursuant to Section 5.04, 5.08 or 5.09 or
redemption in whole pursuant to Section 5.01, 5.05, 5.06 or 5.07; and

 

(k)           the Stated Maturity;

 

provided, however, that if
any such date determined in any of the foregoing clauses is not a Business Day,
the Interest Payment Date shall be the next succeeding day which is a Business
Day.

 

“Investment
Securities” shall mean any of the following which at the time are legal
investments under the laws of the State of New York for the monies held
hereunder:

 

(a)           direct obligations of the United
States of America (including obligations issued or held in book-entry form on
the books of the Department of the Treasury, and CATS and TIGRS) or obligations
the principal of and interest of which are unconditionally guaranteed by the
United States of America (“Direct U.S. governments”).

 

(b)           bonds, debentures, notes or other
evidence of indebtedness issued or guaranteed by any of the following federal
agencies and provided such obligations are 

 

17

 

backed
by the full faith and credit of the United States of America, including
(stripped securities are only permitted if they have been stripped by the
agency itself):

 

(i)            U.S.
Export-Import Bank (Eximbank).  Direct
obligations or fully guaranteed certificates of beneficial ownership;

 

(ii)           Farmers
Home Administration (FmHA). 
Certificates of Beneficial Ownership;

 

(iii)          U.S.
Maritime Administration.  Guaranteed
Title XI financing;

 

(iv)          General
Service Administration.  Participation
Certificates;

 

(v)           U.S.
Department of Housing & Urban Development (HUD).  Project Notes; Local Authority Bonds; New Communities Debentures
- U.S. government guaranteed debentures; and U.S. Public Housing Notes and
Bonds - U.S. government guaranteed, public housing notes and bonds;

 

(vi)          Federal
Housing Administration (FHA Debentures);

 

(vii)         Federal
Financing Bank; and

 

(viii)        Government
National Mortgage Association (GNMA or “Ginnie Mae”).  GNMA - guaranteed mortgage-backed bonds; GNMA - guaranteed
pass-through obligations

 

(c)           bonds, debentures, notes or other
evidence of indebtedness issued or guaranteed by any of the following federal
agencies which are not backed by the full faith and credit of the United States
of America (stripped securities are only permitted if they have been stripped
by the agency itself):

 

(i)            Federal
Home Loan Bank System.  Senior debt
obligations;

 

(ii)           Federal
Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”).  Participation Certificate; Senior debt
obligations;

 

(iii)          Resolution
Funding Corporation (REFCORP) obligations;

 

(iv)          Federal
National Mortgage Association (FNMA or “Fannie Mae”).  Mortgage-backed securities and senior debt obligations;

 

(v)           Student
Loan Marketing Association (SLMA or “Sallie Mae”).  Senior debt obligations; and

 

(vi)          Farm
Credit System.  Consolidated system-wide
bonds and notes.

 

18

 

(d)           Federal funds and bankers acceptances
with a maximum term of one year  of any
bank which has an unsecured, uninsured and unguaranteed obligation rating  of “Prime-1” or “A3” or better by Moody’s
and “A-1” or “A” or better by S&P.;

 

(e)           commercial paper rated, at the time
of purchase,  “Prime-1” by Moody’s and
“A-1” or better by S&P;

 

(f)            bonds or notes issued by any state
or municipality which are rated by Moody’s and S&P in one of the two
highest rating categories assigned by such agencies;

 

(g)           money market funds registered under
the Federal Investment Company Act of 1940, whose shares are registered under
the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G;
AAA-m; or AA-m and if rated by Moody’s rated Aaa, Aa1 or Aa2;

 

(h)           certificates of deposit secured at
all times by collateral described in (a) and/or (b) above.  Such certificates must be issued by
commercial banks, savings and loan associations or mutual savings banks.  The collateral must be held by a third party
and the bondholders must have a perfected first security interest in the
collateral;

 

(i)            certificate of deposit, savings
account, deposit accounts or market deposits which are fully insured by FDIC,
including BIF and SAIF;

 

(j)            investment agreements, including
GIC’s, Forward Purchase Agreements and Reserve Fund Put Agreements acceptable
to the Bond Insurer;

 

(k)           repurchase agreements (“Repos”) for
30 days or less must follow the following criteria.  Repos which exceed 30 days must be acceptable to the Bond
Insurer.  Repos provide for the transfer
of securities from a dealer bank or securities firm (seller/borrower) to a
municipal entity (buyer/lender), and the transfer of cash from a municipal
entity to the dealer bank or securities firm with an agreement that the dealer
bank or securities firm will repay the cash plus a yield to the municipal
entity in exchange for the securities at a specified date:

 

(i)            Repos
must be between the municipal entity and a dealer bank or securities firm:

 

(A)          Primary
dealers on the Federal Reserve reporting dealer list which are rated A or
better by Standard & Poor’s Corporation and Moody’s Investor Services, or

 

(B)           Banks
rated “A” or above by Standard & Poor’s Corporation and Moody’s Investor
Services;

 

(ii)           The
written Repo contract must include the following:

 

19

 

(A)          Securities
which are acceptable for transfer are: (1) Direct U.S. governments, or (2)
obligations of federal agencies referred to in (b) above, and (3) obligations
of FNMA and FHLMC;

 

(B)           The
term of the Repo may be up to 30 days;

 

(C)           The
collateral must be delivered to the municipal entity, trustee (if trustee is
not supplying the collateral) or third party acting as agent for the trustee
(if the trustee supplying the collateral) before/simultaneous with payment
(perfection by possession of certified securities);

 

(D)          Valuation
of Collateral (1) the securities must be valued weekly, marked-to-market at
current market price plus accrued interest, (2) The value of collateral
must be equal to 104% of the amount of cash transferred by the municipal entity
to the dealer bank or security firm under the repo plus accrued interest.  If the value of securities held as
collateral slips below 104% of the value of the cash transferred by
municipality, then additional cash and/or acceptable securities must be
transferred.  If, however, the
securities used as collateral are FNMA or FHLMC, then the value of collateral
must equal 105%.

 

(iii)          A
legal opinion which must be delivered to the municipal entity that states that
the Repo meets guidelines under state law for legal investment of public funds.

 

Any such Investment Securities
may be held by the Trustee in book entry form, whereby certificated securities
are held by an independent custodian and the Trustee is the beneficial owner of
all or a portion of such certificated securities.

 

“Liquidity
Facility” shall mean a Support Facility which provides for the payments
referred to in clause (i) of the definition thereof.

 

“Liquidity
Facility Issuer” shall mean any bank or banks or other financial
institution or institutions, having issued any Liquidity Facility.

 

“Market
Agent” shall mean the Remarketing Agent or Remarketing Agents appointed
pursuant to Section 11.14 to perform certain duties and obligations hereunder
with respect to the Bonds of a subseries while 
Bonds of such subseries are in an Auction Rate Period.

 

“Market
Agent Agreement” shall mean an agreement among the Company and a Market
Agent dated the Closing Date and any similar agreement or agreements entered
into between the Company and one or more successor Market Agents, as from time
to time amended,  pursuant to which the
applicable Market Agent undertakes to perform its duties and obligations
hereunder while Bonds of a subseries are in an Auction Rate Period.

 

“Maximum
Allowed Rate” shall mean as of any date 15% per annum, or if lower, the
rate specified as such in any Support Facility then in effect, provided,
however, that such Maximum Allowed Rate shall not exceed the maximum
rate, if any, permitted by applicable law.

 

20

 

“Maximum
Auction Rate” shall mean on any date of determination with respect to
Auction Rate Bonds, the lesser of the Maximum Allowed Rate and the following:
(i)  in all cases other than as provided
in (ii) or (iii) below, the interest rate per annum equal to the Applicable
Percentage of the higher of the After-Tax Equivalent Rate determined on such
date with respect to a Standard Auction Period and the BMA Index, (ii) with
respect to any change in an Auction Period and/or the Standard Auction Period
pursuant to Section 3.04, including any automatic reversion to a Standard
Auction Period pursuant to Section 3.03, the interest rate per annum equal to
the highest of (a) the Applicable Percentage of the higher of the After-Tax
Equivalent Rate determined on such date with respect to a Standard Auction
Period, and the BMA Index, (b) the Applicable Percentage of the higher of the
After-Tax Equivalent Rate determined on such date with respect to the Auction
Period which is proposed to be established and the BMA Index, and (c) the
Applicable Percentage of the higher of the After-Tax Equivalent Rate determined
on such date with respect to the Auction Period in effect immediately prior to
such proposed change in the Auction Period and the BMA Index, or (iii) with respect
to any Change in the Interest Rate Mode from an Auction Rate pursuant to
Section 4.01 or any change from an Auction Rate to a Fixed Rate pursuant to
Section 4.02, the interest rate per annum equal to the higher of (a) the
Applicable Percentage of the higher of the After-Tax Equivalent Rate determined
on such date with respect to a Standard Auction Period and the BMA Index, and
(b) the Applicable Percentage of the higher of the After-Tax Equivalent Rate
determined on such date with respect to the Auction Period in effect
immediately prior to such proposed change and the BMA Index.

 

“Monthly
Period Record Date” shall mean, with respect to each Interest Payment Date
during a Monthly Period, the Business Day next preceding such Interest Payment
Date.

 

“Monthly
Rate” shall mean with respect to each Calculation Period during a Monthly
Rate Period, a rate of interest equal to the rate of interest per annum
established and certified to the Trustee (with a copy to the Authority, the
Registrar and Paying Agent, and the Company) by a Remarketing Agent no later
than 12:00 noon (New York City time) on and as of the Determination Date as the
minimum rate of interest per annum which, in the opinion of such Remarketing
Agent, would be necessary on and as of such day to remarket Bonds in a
secondary market transaction at a price equal to the principal amount thereof;
provided that such rate of interest shall not exceed the lesser of 110% of the
Monthly Rate Index on and as of such date and the Maximum Allowed Rate.

 

“Monthly
Rate Index” shall mean with respect to the Determination Date of each
Calculation Period during a Monthly Rate Period, the average of 30-day yield
evaluations at par, determined by the Indexing Agent, of securities (whether or
not actually issued), the interest on which is not included in gross income for
Federal income tax purposes, of no fewer than ten Component Issuers selected by
the Indexing Agent, including issuers of commercial paper, project notes, bond
anticipation notes and tax anticipation notes, computed by the Indexing Agent
on and as of such day.  If the Bonds are
rated by a Rating Agency in its highest note or commercial paper rating
category or one of its two highest long-term debt rating categories, each
Component Issuer must (a) have outstanding securities rated by a Rating Agency
in its highest note or commercial paper rating category or (b) not have
outstanding notes or commercial paper rated by a Rating Agency but have
outstanding securities rated by a Rating Agency in one of its

 

21

 

two highest long-term debt rating
categories.  If the Bonds are rated by a
Rating Agency in a rating category that is lower than its highest note or
commercial paper rating category or its two highest long-term debt rating
categories (and the Bonds are not rated in one of such categories by the other
Rating Agency), each Component Issuer must (a) have outstanding securities
rated by a Rating Agency in its note or commercial paper rating category which
is the same or correlative, in the Indexing Agent’s judgment, to the note or
commercial paper rating category or the long-term debt rating category of the
Bonds or (b) have outstanding securities rated by a Rating Agency in the same
long-term debt rating category as the Bonds are rated by that Rating Agency and
not have any outstanding notes or commercial paper rated by such Rating
Agency.  The Indexing Agent may change
the Component Issuers from time to time in its discretion, subject to the
foregoing requirements.  In addition, at
the request of the Company and upon delivery to the Trustee of an Opinion of
Bond Counsel that such action will not adversely affect the exclusion of
interest on the Bonds from gross income of the owners thereof for Federal
income tax purposes, the Authority, with the consent of the Company, may
designate a new method of setting the Monthly Rate Index in the event any of
the above-described methods are determined by the Authority to be unavailable,
impracticable or unrealistic in the market place.

 

“Monthly
Rate Period” shall mean any period during which Bonds bear interest at a
Monthly Rate which period shall commence with the effective date of the Change
in the Interest Rate Mode to a Monthly Rate and shall extend through the day
immediately preceding the earlier of (a) the effective date of another Change
in the Interest Rate Mode or (b) the Stated Maturity.

 

“Moody’s”
shall mean Moody’s Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware and its successor or
successors, and if such corporation shall for any reason no longer perform the
functions of a securities rating agency or if Moody’s shall be replaced,
subject to the definition of “prevailing rating” in the definition of
Applicable Percentage, by some other nationally recognized rating agency by the
Authority at the request of the Company, “Moody’s” shall be deemed to refer to
such other nationally recognized rating agency designated by the Authority at
the request of the Company.

 

“Note”
shall mean the promissory note of the Company executed by the Company and
delivered to the Trustee, to evidence the obligations of the Company to repay
the loan to be made by the Authority pursuant to the Participation Agreement.

 

“Note
Payments” shall mean the portion of the Payments required to be made
pursuant to Section 4.02 of the Participation Agreement and the Note to be
applied to the payment of principal of, premium, if any, and interest on the
Bonds.

 

“Notice
of Election to Tender” shall mean the notice given by a Holder of Bonds
pursuant to Section 5.03.

 

“Opinion
of Bond Counsel” shall mean a written opinion of Bond Counsel.

 

22

 

“Option
to Convert” shall mean the Authority’s right and option to convert the rate
of interest payable on the Bonds from an Adjustable Rate to a Fixed Rate as
provided in Section 4.02.

 

“Order”
shall mean with respect to Auction Rate Bonds, an Order as defined in Section
3.06.

 

“Outstanding”,
whether appearing in upper or lower case, when used with respect to any Bond
shall mean, as of any date, any Bond theretofore or thereupon being
authenticated and delivered pursuant to this Indenture, except:

 

1.          a Bond cancelled by
the Trustee or delivered to the Trustee for cancellation at or prior to such
date;

 

2.          a Bond in lieu of or
in substitution for which another Bond shall have been issued under Sections
5.10, 5.11, 7.03, 7.04 or 7.05; and

 

3.          a Bond or portion
thereof deemed to have been paid in accordance with Section 15.01;

 

provided,
however, that with respect to Auction Rate Bonds for the purposes of the
Auction Procedures on any Auction Date, Auction Rate Bonds as to which the
Company or any person known to the Auction Agent to be an Affiliate of the
Company is the Existing Holder thereof shall be disregarded and deemed not to
be Outstanding; and provided further, however, that to the extent the principal
of or interest due on the Bonds is paid by the Bond Insurer pursuant to the
applicable Policy, such Bonds shall remain Outstanding for all purposes until
the Bond Insurer receives full payment therefor.

 

“Overdue
Rate” shall mean on any date of determination 265% of the higher of the
After-Tax Equivalent Rate determined on such date with respect to a Standard
Auction Period and the BMA Index on such date of determination; provided that
in no event shall the Overdue Rate exceed the Maximum Allowed Rate.

 

“Participation
Agreement” shall mean the Participation Agreement dated as of the date
hereof, between the Authority and the Company, as amended and supplemented by
Supplemental Participation Agreements from time to time.

 

“Payments”
shall mean collectively the Note Payments and the Additional Payments.

 

“Payment
Default” shall mean the receipt by the Auction Agent of a notice from the
Trustee of (i) failure to make payments of principal of and premium, if any, or
interest on any  subseries of the Bonds
when the same shall become due and payable and (ii) the occurrence of a default
by the Bond Insurer under the Policy applicable to such subseries of the Bonds.

 

“Policy”
shall mean each Credit Facility issued by the Bond Insurer on the Closing Date
in the form of a financial guaranty insurance policy insuring the regularly 

 

23

 

scheduled payments of principal of and
interest on a subseries of the Bonds (collectively, the “Policies”).

 

“Potential
Holder” shall mean a person, including any Existing Holder, who may be
interested in acquiring a beneficial interest in Auction Rate Bonds in addition
to Auction Rate Bonds currently owned by such person, if any.

 

“Principal
Corporate Trust Office” shall mean the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date hereof is located at 101 Barclay Street
- 21W, New York, New York 10286.

 

“Project”
shall mean any acquisition, purchase, construction, reconstruction,
improvement, betterment, extension and equipping, as described in Exhibit A and Exhibit B to the Participation Agreement as the same may be
revised from time to time to reflect any changes or substitutions therein,
additions thereto, or deletions therefrom permitted by the Participation
Agreement.

 

“Project
Fund” shall mean the special trust fund designated as “Consolidated Edison
Company of New York, Inc. Series 2004A Project Fund” created and established
under, and to be held and administered by the Trustee as provided in, Section
8.01.

 

“Purchase
Price” shall mean the purchase price of Bonds tendered or deemed tendered
for purchase pursuant to Section 5.03, 5.04, 5.08 or 5.09, consisting of the
principal amount of such Bonds together with any accrued and unpaid interest
plus, in the event Bonds bearing interest at a Term Rate or a Fixed Rate are
subject to tender for purchase pursuant to Section 5.04, any premium which
would have been required to be paid as part of redemption price on any date on
which such Bonds are subject to tender for purchase if such Bonds were subject
to optional redemption pursuant to Section 5.01 on such date.  With respect to Bonds tendered for purchase
on an Interest Payment Date, Purchase Price shall include any accrued interest
on such Bonds which is not otherwise being paid pursuant to Section 9.03(a).

 

“Rate
Index” means the Daily Rate Index, the Fixed Rate Index, the Commercial
Paper Rate Index, the Monthly Rate Index, the Semi-annual Rate Index, the Term
Rate Index, or the Weekly Rate Index.

 

“Rating
Agency” means Moody’s, if the Bonds are then rated by Moody’s, S&P, if
the Bonds are then rated by S&P, and Fitch, if the Bonds are then rated by
Fitch.

 

“rating
category” shall mean one of the generic rating categories of a Rating
Agency, without regard to any refinement or gradation of such rating category
by a numerical modifier, plus or minus sign, or otherwise.

 

“Record
Date”, at any time, shall mean each Commercial Paper Period Record Date
during a Commercial Paper Rate Period, each Auction Rate Bonds Period Record
Date during an Auction Rate Period, each Daily Period Record Date during a
Daily Rate Period, each Weekly Period Record Date during a Weekly Rate Period,
each Monthly Period Record Date 

 

24

 

during a Monthly Rate Period, each
Semi-annual Period Record Date during a Semi-annual Rate Period, each Term
Period Record Date during a Term Rate Period and each Fixed Rate Record Date
during a Fixed Rate Period.

 

“Registrar
and Paying Agent” shall mean The Bank of New York in its separate capacity
as Registrar and Paying Agent for the Bonds, or its successors or assigns.

 

“Remarketing
Agent” shall mean the Remarketing Agent or Remarketing Agents appointed
pursuant to Section 11.14, its or their successors or assigns, including
without limitation  any Market Agent
appointed in connection with Auction Rate Bonds of a subseries.

 

“Remarketing
Agreement” shall mean any Market Agent Agreement between the Company and a
Market Agent dated the Closing Date and any agreement or agreements entered
into between the Company and one or more successor Remarketing Agents, as from
time to time amended, including without limitation any Market Agent Agreement,
pursuant to which the applicable Remarketing Agent undertakes to perform its
duties and obligations hereunder during a period of time specified in such
agreement.

 

“Responsible
Officer” shall mean, when used with respect to the Trustee, any officer
within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person’s knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.

 

“Revenues”
shall mean and include all income, revenues and monies derived by the Authority
under the Participation Agreement and the Note (except administrative
compensation and indemnification payable under the Participation Agreement),
and, without limiting the generality of the foregoing, shall include to the
extent provided in this Indenture, earnings on the investment of monies held
under this Indenture and the proceeds of the sale of any such investments.  The term “Revenues” shall not include monies
received as proceeds from the sale of the Bonds or any other bonds, notes or
evidences of indebtedness or as grants or gifts.

 

“S&P”
shall mean Standard & Poor’s, a division of The McGraw-Hill Companies and
its successor or successors, and if such corporation shall for any reason no
longer perform the functions of a securities rating agency or if S&P shall
be replaced, subject to the definition of “prevailing rating” in the definition
of Applicable Percentage, by some other nationally recognized rating agency by
the Authority at the request of the Company, “S&P” shall be deemed to refer
to such other nationally recognized rating agency designated by the Authority
at the request of the Company.

 

“Securities
Depository” shall mean The Depository Trust Company and its successors and
assigns or if (i) the then Securities Depository resigns from its functions as
depository of the Bonds or (ii) the Authority discontinues use of the then
Securities Depository pursuant to Section 2.03, any other securities depository
which agrees to follow the procedures

 

25

 

required to be followed by a Securities
Depository in connection with the Bonds and which is selected by the Authority,
with the consent of the Company, the Trustee, the Auction Agent and the
applicable Remarketing Agent pursuant to Section 2.03.

 

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

 

“Sell
Order” shall mean with respect to Auction Rate Bonds, Sell Order as defined
in Section 3.06.

 

“Semi-annual
Period Record Date” shall mean, with respect to each Interest Payment Date
during a Semi-annual Rate Period, the fifteenth day of the calendar month next
preceding such Interest Payment Date.

 

“Semi-annual
Rate” shall mean with respect to each Calculation Period during a
Semi-annual Rate Period, a rate of interest equal to the rate of interest per
annum established and certified to the Trustee (with a copy to the Authority,
the Registrar and Paying Agent and the Company) by a Remarketing Agent no later
than 12:00 noon (New York City time) on and as of the Determination Date as the
minimum rate of interest per annum which, in the opinion of such Remarketing
Agent, would be necessary on and as of such day to remarket Bonds in a
secondary market transaction at a price equal to the principal amount thereof;
provided that such rate of interest shall not exceed the lesser of 110% of the
Semi-annual Rate Index on and as of such date and the Maximum Allowed Rate.

 

“Semi-annual
Rate Index” shall mean with respect to the Determination Date of each
Calculation Period during a Semi-annual Rate Period, the average of six-month
yield evaluations at par, determined by the Indexing Agent, of securities
(whether or not actually issued), the interest on which is not included in
gross income for Federal income tax purposes, of no fewer than ten Component
Issuers selected by the Indexing Agent, including issuers of commercial paper,
project notes, bond anticipation notes and tax anticipation notes, computed by
the Indexing Agent on and as of such day. 
If the Bonds are rated by a Rating Agency in its highest note or
commercial paper rating category or one of its two highest long-term debt
rating categories, each Component Issuer must (a) have outstanding securities
rated by a Rating Agency in its highest note or commercial paper rating category
or (b) not have outstanding notes or commercial paper rated by a Rating Agency
but have outstanding securities rated by a Rating Agency in one of its two
highest long-term debt rating categories. 
If the Bonds are rated by a Rating Agency in a rating category that is
lower than its highest note or commercial paper rating category or its two
highest long-term debt rating categories (and the Bonds are not rated in one of
such categories by the other Rating Agency), each Component Issuer must (a)
have outstanding securities rated by a Rating Agency in its note or commercial
paper rating category which is the same or correlative, in the Indexing Agent’s
judgment, to the note or commercial paper rating category or the long-term debt
rating category of the Bonds or the other debt obligations supported by support
facilities issued by the issuer of a Support Facility or (b) have outstanding
securities rated by a Rating Agency in the same long-term debt rating category
as the Bonds are rated by that Rating Agency and not have any outstanding notes
or commercial paper rated by such Rating Agency.  The Indexing  Agent may
change the Component Issuers from

 

26

 

time to time in its discretion, subject to
the foregoing requirements.  In
addition, at the request of the Company and upon delivery to the Trustee of an
Opinion of Bond Counsel that such action will not adversely affect the
exclusion of interest on the Bonds from gross income of the owners thereof for
Federal income tax purposes, the Authority, with the consent of the Company,
may designate a new method of setting the Semi-annual Rate Index in the event
any of the above-described methods are determined by the Authority to be
unavailable, impracticable or unrealistic in the market place.

 

“Semi-annual
Rate Period” shall mean any period during which Bonds bear interest at a
Semi-annual Rate, which period shall commence on the effective date of a Change
in the Interest Rate Mode to a Semi-annual Rate, and shall extend through the
day immediately preceding the earlier of (a) the effective date of another
Change in the Interest Rate Mode, or (b) the Stated Maturity.

 

“Standard
Auction Period” initially shall mean an Auction Period of 35 days, and
after the establishment of a different Standard Auction Period pursuant to
Section 3.04, shall mean such different Standard Auction Period.

 

“State”
shall mean any state of the United States of America.

 

“Stated
Maturity” with respect to the Bonds shall mean January  1, 2039, provided that, subject to the next
sentence, in any case where the date of maturity of, or payment of premium on,
interest on, or principal of, the Bonds or the date fixed for redemption of any
Bonds shall be on a day other than a Business Day, then payment of interest,
principal and premium, if any, need not be made on such date but may be made
(without additional interest) 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.  Notwithstanding anything in
this Indenture to the contrary, in no event shall the final maturity date of
the Bonds extend beyond 35 years from the Closing Date, and the length of any
Auction Period shall be reduced at the discretion of the Authority to the extent
necessary to ensure compliance with the provisions of this sentence.

 

“Statutory
Corporate Tax Rate” shall mean as of any date of determination the highest
tax rate bracket (expressed in decimals) now or hereafter applicable in each
taxable year on the taxable income of every corporation as set forth in Section
11 of the Code or any successor section without regard to any minimum
additional tax provision or provisions regarding changes in rates during a
taxable year, which on the date hereof is .35. 
Any change in the Statutory Corporate Tax Rate shall be evidenced by a
certificate of the Company.

 

“Submission
Deadline” shall mean 1:00 p.m., New York City time, on any Auction Date or
such other time on any such Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.

 

“Submitted
Bid” shall mean with respect to Auction Rate Bonds, Submitted Bid as
defined in Section 3.08.

 

27

 

“Submitted
Hold Order” shall mean with respect to Auction Rate Bonds, Submitted Hold
Order as defined in Section 3.08.

 

“Submitted
Order” shall mean with respect to Auction Rate Bonds, Submitted Order as
defined in Section 3.08.

 

“Submitted
Sell Order” shall mean with respect to Auction Rate Bonds, Submitted Sell
Order as defined in Section 3.08.

 

“Substitute
Commercial Paper Dealers” shall mean Merrill Lynch, Pierce, Fenner &
Smith Incorporated or any other commercial paper dealers specified by the Authority
at the request of the Company or their respective affiliates or successors, if
any such person is a commercial paper dealer, provided that none of such
persons nor any of their affiliates or successors shall be a Commercial Paper
Dealer.

 

“Substitute
U.S. Government Securities Dealer” shall mean Merrill Lynch, Pierce, Fenner
& Smith Incorporated or any other dealer or dealers in U.S. government
securities that may be specified by the Authority at the request of the Company
at the time of a Change in the Interest Rate Mode to an Auction Rate, or their
respective affiliates or successors, if any such person is a dealer in U.S.
government securities, provided that none of such persons nor any of their
affiliates or successors shall be  a
U.S. Government Securities Dealer.

 

“Sufficient
Clearing Bids” shall mean with respect to Auction Rate Bonds, Sufficient
Clearing Bids as defined in Section 3.08.

 

“Supplemental
Indenture” shall mean any indenture between the Trustee and the Authority
entered into pursuant to and in compliance with the provisions of Article XIV
hereof amending or supplementing the provisions of this Indenture as originally
executed or as theretofore amended or supplemented.

 

“Supplemental
Participation Agreement” shall mean an agreement supplementing or amending
the Participation Agreement entered into pursuant to and in compliance with the
provisions of Article XIV.

 

“Support
Facility” shall mean any instrument satisfactory to the Authority entered
into or obtained in connection with the Bonds, such as a letter of credit,
committed line of credit, insurance policy, surety bond or standby bond
purchase agreement, or any combination of the foregoing, and issued by a bank
or banks, insurance company, other financial institution or institutions, or
any combination of the foregoing which provides for the payment of (i) the
Purchase Price on Bonds tendered for purchase pursuant to the provisions hereof
and the Bond Purchase Trust Agreement and/or (ii) principal of and interest on
all Bonds coming due and payable during the term thereof.

 

“Support
Facility Issuer” shall mean any bank or banks, or other financial
institution or institutions which is the issuer of any Support Facility.

 

28

 

“Tax
Regulatory Agreement” shall mean the Tax Regulatory Agreement, dated the
Closing Date, between the Authority and the Company, and any and all
modifications, alterations, amendments and supplements thereto.

 

“Term
Period Record Date” shall mean, with respect to each Interest Payment Date
during a Term Rate Period, the fifteenth day of the month next preceding such
Interest Payment Date.

 

“Term
Rate” shall mean with respect to each Calculation Period during a Term Rate
Period, a rate of interest equal to the rate of interest per annum established
and certified to the Trustee (with a copy to the Authority, the Registrar and
Paying Agent and the Company) by a Remarketing Agent no later than 12:00 noon
(New York City time) on and as of the Determination Date as the minimum rate of
interest per annum which, in the opinion of such Remarketing Agent, would be
necessary on and as of such day to remarket such Bonds in a secondary market
transaction at a price equal to the principal amount thereof; provided that
such rate of interest shall not exceed the lesser of 110% of the Term Rate
Index on and as of such date and the Maximum Allowed Rate.

 

“Term
Rate Index” shall mean with respect to the Determination Date of each
Calculation Period during a Term Rate Period, the average of the yield
evaluations at par, determined by the Indexing Agent, of securities (whether or
not actually issued), having a term approximately equal to the Term Rate Period
or which are subject to optional or mandatory tender by the owner thereof at
the end of a term approximately equal to the Term Rate Period, the interest on
which is not included in gross income for Federal income tax purposes, of no
fewer than ten Component Issuers selected by the Indexing Agent, computed by
the Indexing Agent on and as of such day. 
If the Bonds are rated by a Rating Agency in one of its two highest
long-term debt rating categories, each Component Issuer must have outstanding
securities rated by a Rating Agency in one of its two highest long-term debt
rating categories.  If the Bonds are
rated by a Rating Agency in a rating category that is lower than its two
highest long-term debt rating categories (and the Bonds are not rated in one of
the two highest such categories by the other Rating Agency), each Component
Issuer must have outstanding securities rated by a Rating Agency in the same
long-term debt rating category as the Bonds are rated by that Rating
Agency.  The Indexing Agent may change
the Component Issuers from time to time in its discretion, subject to the
foregoing requirements.  In addition, at
the request of the Company and upon delivery to the Trustee of an Opinion of
Bond Counsel that such action will not adversely affect the exclusion of
interest on the Bonds from gross income of the owners thereof for Federal
income tax purposes, the Authority, with the consent of the Company, may
designate a new method of setting the Term Rate Index in the event any of the
above-described methods are determined by the Authority to be unavailable,
impracticable or unrealistic in the market place.

 

“Term
Rate Period” shall mean any period during which Bonds bear interest at a
Term Rate which period shall commence with the effective date of the Change in
the Interest Rate Mode to a Term Rate and shall extend through the day immediately
preceding the earlier of (a) the effective date of another Change in the
Interest Rate Mode or (b) the Stated Maturity.

 

“Terminating
Event” shall mean:

 

29

 

(a)           Any event or events under the terms
of a Support Facility or any agreement providing for the issuance of such
Support Facility which would cause the termination of such Support Facility but
would specifically allow for the mandatory tender of Bonds pursuant to Section
5.09 with a draw on or borrowing or payment under such Support Facility prior
to such termination; or

 

(b)           Receipt by the Trustee of written
notice from the financial institution providing any Direct-Pay Credit Facility
following a draw on or borrowing or payment under such Direct-Pay Credit
Facility for payment of interest on the Bonds that the amount so drawn,
borrowed or paid has not been reinstated in the amount of such drawing.

 

“Treasury
Rate” on any date, shall mean (i) the yield, calculated in accordance with
prevailing industry convention, of the rate on the most recently auctioned
direct obligations of the U.S. Government having a maturity at the time of
issuance of 364 days or less with a remaining maturity closest to the length of
such Auction Period, as quoted in The Wall Street Journal on such date for the
Business Day next preceding such date; or (ii) in the event that any such rate
is not published in The Wall Street Journal, then the bond equivalent yield,
calculated in accordance with prevailing industry convention, as calculated by
reference to the arithmetic average of the bid price quotations of the most
recently auctioned direct obligation of the U.S. Government having a maturity
at the time of issuance of 364 days or less with a remaining maturity closest
to the length of such Auction Period, based on bid price quotations on such
date obtained by the Auction Agent from a U.S. Government Securities Dealer. If
any U.S. Government Securities Dealer does not quote a rate required to
determine the Treasury Rate, the Treasury Rate shall be determined on the basis
of the quotation or quotations furnished by the remaining U.S. Government
Securities Dealer or Dealers and any Substitute U.S. Government Securities
Dealer or Dealers selected by the Authority at the request of the Company to
provide such rate or rates not being supplied by any U.S. Government Securities
Dealer or U.S. Government Securities Dealers, as the case may be, or, if the
Authority does not select any such Substitute U.S. Government Securities Dealer
or Substitute U.S. Government Securities Dealers, by the remaining U.S.
Government Securities Dealer or U.S. Government Securities Dealers.

 

“Trust
Estate” shall mean the meaning assigned to such term in the first paragraph
following the recitals herein.

 

“Trustee”
shall mean the corporation having trust powers appointed by the Authority as
Trustee hereunder and serving as such hereunder, and any surviving, resulting
or transferee corporation as provided in Section 11.13.  References to principal office of the
Trustee shall mean the Principal Corporate Trust Office of the Trustee.

 

 “U.S. Government” shall mean the
Federal government of the United States of America.

 

“U.S.
Government Securities Dealers” shall mean the Market Agents for any Auction
Rate Bonds, or, in lieu of any thereof, their respective affiliates or
successors, provided that any such entity is a U.S. Government securities
dealer.

 

30

 

“Weekly
Period Record Date” shall mean, with respect to each Interest Payment Date
during a Weekly Rate Period, the Business Day next preceding such Interest
Payment Date.

 

“Weekly
Rate” shall mean with respect to each Calculation Period during a Weekly
Rate Period, a rate of interest equal to the rate of interest per annum
established and certified to the Trustee (with a copy to the Authority, the
Registrar and Paying Agent and the Company) by a Remarketing Agent no later
than 12:00 noon (New York City time) on and as of the Determination Date as the
minimum rate of interest per annum which, in the opinion of such Remarketing
Agent, would be necessary on and as of such day to remarket Bonds in a
secondary market transaction at a price equal to the principal amount thereof
plus accrued interest thereon; provided that such rate of interest shall not
exceed the lesser of 110% of the Weekly Rate Index on and as of such date and
the Maximum Allowed Rate.

 

“Weekly
Rate Index” shall mean with respect to the Determination Date of each
Calculation Period during a Weekly Rate Period, the average of 30-day yield
evaluations at par, determined by the Indexing Agent, of securities (whether or
not actually issued), the interest on which is not included in gross income for
Federal income tax purposes, of no fewer than ten Component Issuers selected by
the Indexing Agent, including issuers of commercial paper, project notes, bond
anticipation notes and tax anticipation notes, computed by the Indexing Agent
on and as of such day.  If the Bonds are
rated by a Rating Agency in its highest note or commercial paper rating
category or one of its two highest long-term debt rating categories, each
Component Issuer must (a) have outstanding securities rated by a Rating Agency
in its highest note or commercial paper rating category or (b) not have
outstanding notes or commercial paper rated by a Rating Agency but have
outstanding securities rated by a Rating Agency in one of its two highest
long-term debt rating categories.  If
the Bonds are rated by a Rating Agency in a rating category that is lower than
its highest note or commercial paper rating category or its two highest
long-term debt rating categories (and the Bonds are not rated in one of such
categories by the other Rating Agency), each Component Issuer must (a) have
outstanding securities rated by a Rating Agency in its note or commercial paper
rating category which is the same or correlative, in the Indexing Agent’s
judgment, to the note or commercial paper rating category or the long-term debt
rating category of the Bonds or (b) have outstanding securities rated by a
Rating Agency in the  same long-term
debt rating category as the Bonds are rated by that Rating Agency and not have
any outstanding notes or commercial paper rated by such Rating Agency.  The Indexing Agent may change the Component
Issuers from time to time in its discretion, subject to the foregoing
requirements.  In addition, at the
request of the Company and upon delivery to the Trustee of an Opinion of Bond
Counsel that such action will not adversely affect the exclusion of interest on
the Bonds from gross income of the owners thereof for Federal income tax
purposes, the Authority, with the consent of the Company, may designate a new
method of setting the Weekly Rate Index in the event any of the above-described
methods are determined by the Authority to be unavailable, impracticable or
unrealistic in the market place.

 

“Weekly
Rate Period” shall mean any period during which the Bonds bear interest at
a Weekly Rate; the first such period shall commence on the effective date of a
Change in the Interest Rate Mode to a Weekly Rate and shall extend through the
day immediately preceding the earlier of (a) the effective date of a successive
Change in the Interest Rate Mode or (b) the Stated Maturity.

 

31

 

“Winning
Bid Rate” shall mean with respect to Auction Rate Bonds, Winning Bid Rate
as defined in Section 3.08.

 

SECTION 1.02.           Definitions
of General Terms.  Whenever in this
Indenture any governmental unit including the Authority or any official,
officer, director or department of a governmental unit, is defined or referred
to, such definition or reference shall be deemed to include the governmental
unit or official, officer, board, agency, commission, body or department
succeeding to or in whom or in which is vested, the functions, rights, powers,
duties and obligations of such governmental unit, official, officer, director
or department, as the case may be, encompassed by this Indenture.

 

Unless
the context shall clearly indicate otherwise or may otherwise require, in this
Indenture words importing persons include firms, partnerships, associations,
corporations (public and private), public bodies and natural persons, and also
include executors, administrators, trustees, receivers or other
representatives.

 

Unless
the context shall clearly indicate otherwise or may otherwise require
computation on other than an annual basis, in this Indenture whenever any
interest rate or rate of interest is defined or referred to, such rate shall be
a rate per annum.

 

Unless
the context shall clearly indicate otherwise or may otherwise require, in this
Indenture:  (i) references to articles,
sections and other subdivisions, whether by number or letter or otherwise, are
to the respective or corresponding articles, sections and subdivisions of this
Indenture, as such articles, sections or subdivisions may be amended from time
to time; (ii) the terms “herein,” “hereunder,” “hereby,” “hereto,” “hereof,”
and any similar terms, refer to this Indenture and to this Indenture as a whole
and not to any particular article, section or subdivision hereof; and (iii) the
word “heretofore” means before the time of effectiveness of this Indenture; and
the word “hereafter” means after the time of effectiveness of this Indenture.

 

32

 

ARTICLE II

 

AUTHORIZATION
OF BONDS

 

SECTION 2.01.           Limitation
on Issuance of Bonds.  No Bonds may
be issued under the provisions of this Indenture except in accordance with the
provisions of this Article.

 

SECTION 2.02.           Authorization
of Bonds.  1. There is hereby
created and established under this Indenture one issue of revenue bonds of the
Authority, limited to $98,325,000 in aggregate principal amount, of “Facilities
Revenue Bonds, Series 2004A (Consolidated Edison Company of New York, Inc.
Project)”.  In order to distinguish
between Bonds which are subject to different interest rate determination
methods and other features and to distinguish the portion of the Bonds to be
offered or  remarketed by any particular
underwriter or Remarketing Agent, the Bonds may be designated and redesignated
from time to time by the Authority in such a way as to identify one or more
subseries of the Bonds.  Such series may
be designated as subseries A-1, subseries A-2, or subseries A-3, as the case
may be, or may be further redesignated as subseries A-1-1, subseries A-1-2, or
subseries A-1-3, as the case may be, and so forth.  Each Bond shall bear upon the face thereof such designation or
redesignation, if any.  In the event any
Bonds are designated as one or more subseries, all references to a series of
the Bonds in this Indenture shall refer to each such subseries unless the
context otherwise requires.  The Bonds,
upon original issuance, shall be issued in four separate subseries designated
as “2004A-1” in the principal amount of $24,600,000 (the “Series 2004A-1
Bonds”), “2004A-2” in the principal amount of $24,575,000 (the “Series 2004A-2
Bonds”), “2004A-3” in the principal amount of $24,575,000 (the “Series 2004A-3 Bonds”)
and “2004A-4” in the principal amount of $24,575,000 (the “Series 2004A-4
Bonds”).

 

2.          The Bonds shall be
secured by the Trust Estate.  The lien,
pledge, charge and assignment of the Trust Estate created hereby shall be valid
and binding from the time of the effectiveness of this Indenture, as set forth
in Section 17.11, and the Note Payments made under the Note and the
Participation Agreement shall be immediately subject thereto upon receipt by
the Trustee.

 

3.          The Bonds are limited
obligations of the Authority payable solely from payments to be made by the
Company pursuant to the Note and the Participation Agreement and the other
monies, rights and properties pledged hereunder, hereafter obtained with
respect thereto and secured by a pledge from the Authority to the Trustee of
the Participation Agreement and the Note. 
The Bonds shall not be a debt of the State of New York, and the State of
New York shall not be liable thereon.

 

4.          The covenants and
agreements herein set forth to be performed by the Authority shall be for the
benefit, security and protection of any Holder of the Bonds and the Bond
Insurer.

 

5.          The Bonds shall be
issued under this Indenture for the purpose of paying a portion of the
redemption price of the Prior Bonds.

 

33

 

6.          The Bonds bearing a
Commercial Paper Rate, a Daily Rate, a Weekly Rate or a Monthly Rate shall be
fully registered Bonds in the denomination of $100,000 or any integral multiple
thereof. The Bonds bearing an Auction Rate shall be fully registered Bonds in
the denomination of $25,000 or any integral multiple thereof.  The Bonds bearing a Semi-annual Rate, a Term
Rate or a Fixed Rate shall be fully registered Bonds in the denomination of
$5,000 or any integral multiple thereof.

 

7.          The Bonds shall be
numbered consecutively from “2004A- [insert “1, 2, 3 or 4”, as appropriate]-1”
upwards as issued, or as otherwise provided by the Registrar and Paying
Agent.  If the Bonds are redesignated to
identify one or more additional subseries, the Bonds shall be numbered in
accordance with their subseries designation. 
The Bonds shall mature on the Stated Maturity.

 

8.          The Bonds shall be
initially issued in fully registered form, without coupons, and dated their
date of first authentication and delivery.

 

9.          Upon any partial
Change in the Interest Rate Mode for a subseries of Bonds from an Auction Rate
for an Auction Rate Period, there shall be Outstanding an aggregate principal
amount of not less than $10,000,000 of Auction Rate Bonds for such subseries
and in the applicable denominations set forth in Section 2.02.7.

 

10.        Neither the Trustee nor
any Holder of the Bonds shall be required to see that monies derived from such
Bonds are applied to the purpose or purposes for which such Bonds are issued.

 

SECTION 2.03.           Global
Form; Securities Depository. 
1.  Except as otherwise provided
in this Section 2.03, the Bonds in the form of one separate global bond for
each subseries shall be registered in the name of the Securities Depository or
its nominee and ownership thereof shall be maintained in book entry form by the
Securities Depository for the account of the Agent Members thereof.

 

Except
as provided in Subsections (3) and (4) of this Section 2.03, the Bonds of any
subseries may be transferred, in whole but not in part, only to the Securities
Depository or a nominee of the Securities Depository, or to a successor
Securities Depository selected or approved by the Authority, with the consent
of the Company, the Trustee, the Auction Agent (if any) and the Remarketing
Agent for such subseries, or to a nominee of such successor Securities
Depository.  Each global certificate for
the Bonds shall bear a legend substantially to the following effect: “Except as
otherwise provided in Section 2.03 of the Indenture, this global bond may be
transferred, in whole but not in part, only to the Securities Depository as
defined in the Indenture or a nominee of the Securities Depository or to a
successor Securities Depository or to a nominee of a successor Securities
Depository.”

 

2.          The Authority, the
Company, the Trustee, the Registrar and Paying Agent, the Auction Agent (if
any) and the applicable Remarketing Agent shall have no responsibility or
obligation with respect to:

 

34

 

(a)           the accuracy of the records of the
Securities Depository or any Agent Member with respect to any beneficial
ownership interest in the Bonds;

 

(b)           the delivery to any Agent Member,
beneficial owner of the Bonds or other person, other than the Securities
Depository or its nominee as registered owner, of any notice with respect to
the Bonds;

 

(c)           the payment to any Agent Member,
beneficial owner of the Bonds or other person, other than the Securities
Depository or its nominee as registered owner, of any amount with respect to
the principal or premium, if any, or interest on the Bonds;

 

(d)           its acceptance of any consent given
by the Securities Depository or other action taken by the Securities Depository
as registered owner; or

 

(e)           the selection by the Securities
Depository or any Agent Members of any beneficial owners to receive payment in
the event of a partial redemption of Bonds, except for the Trustee’s
obligations under Section 5.12.

 

So long as the certificates
for the Bonds of any subseries issued under the Indenture are not issued
pursuant to Subsection (4) of this Section 2.03, the Authority, the Company,
the Trustee, the Auction Agent (if any), the applicable Remarketing Agent and
the Registrar and Paying Agent may treat the Securities Depository as, and deem
the Securities Depository to be, the absolute owner of such series or subseries
of Bonds for all purposes whatsoever, including without limitation:

 

(a)           the payment of principal and premium,
if any, and interest on such series or subseries of the Bonds;

 

(b)           giving notices of redemption and
other matters with respect to such series or subseries of the Bonds; and

 

(c)           registering transfers with respect to
such series or subseries of the Bonds.

 

Payment
by the Trustee of principal or redemption price, if any, of and premium, if
any, and interest on such Bonds to or upon the order of the Securities
Depository or its nominee during any period when it is the registered owner of
such Bonds shall be valid and effective to satisfy and discharge fully the
Authority’s obligation with respect to the amounts so paid.

 

3.          (a)  The Authority may discontinue the use of a
Securities Depository for the Bonds at the time of a Change in the Interest
Rate Mode.

 

(b)           Registered ownership of the Bonds may
be transferred on the registration books of the Authority maintained by the
Registrar and Paying Agent and the Bonds may be delivered in physical form to
the following:  (i)  any successor Securities Depository or its
nominee; or (ii)  any person, upon (A)
the resignation of the Securities Depository or (B) the termination by the
Authority of the use of the Securities Depository from its

 

35

 

functions
as depository as set forth in this section, or (C) upon any Change in the
Interest Rate Mode to any Adjustable Rate other than an Auction Rate.

 

(c)           Upon any Change in the Interest Rate
Mode to an Auction Rate, the Registrar and Paying Agent shall register the
Auction Rate Bonds in the name of the Securities Depository or its nominee and
on the effective date of such change provide the Company with a list of the
Existing Holders of the Auction Rate Bonds.

 

4.          If at any time the
Securities Depository notifies the Authority and the Company that it is unwilling
or unable to continue as Securities Depository with respect to the Bonds or if
at any time the Securities Depository shall no longer be registered or in good
standing under the Securities Exchange Act or other applicable statute or
regulation and a successor Securities Depository is not appointed by the
Authority with the consent of the Company, the Trustee, the Auction Agent (if
any) and the applicable Remarketing Agent, within 90 days after the Authority
and the Company receive notice or become aware of such condition, as the case
may be, this Section shall no longer be applicable and the Authority shall
execute and the Trustee shall authenticate and deliver certificates
representing the Bonds of such series or subseries as provided below.  In addition, the Authority may determine at
any time, at the request of the applicable Remarketing Agent, that the Bonds
shall no longer be represented by global bonds and that the provisions of
Subsections (1) and (2) above shall no longer apply to such series or subseries
of Bonds.  In any such event the
Authority shall execute and the Trustee shall authenticate and deliver
certificates representing the Bonds of such series or subseries as provided
below.  Certificates for the Bonds of
any series or subseries issued in exchange for a global bond pursuant to this
Subsection shall be registered in such names in authorized denominations as the
Securities Depository, pursuant to instructions from the Agent Members or
otherwise, shall instruct the Authority and the Trustee.  The Trustee shall deliver such certificates
representing the Bonds of such series or subseries to the persons in whose
names such Bonds are so registered on the Business Day immediately preceding
the first day of an Auction Period (with respect to Auction Rate Bonds during
any Auction Rate Period), or the effective date of a Change in the Interest
Rate Mode (with respect to any other Change in the Interest Rate Mode), as the
case may be.

 

5.          The Authority and the
Trustee are hereby authorized to enter into any arrangements determined
necessary or desirable with any Securities Depository in order to effectuate
this Section and both of them shall act in accordance with this Indenture and
any such agreement.  Without limiting
the generality of the foregoing, any such arrangements may alter the manner of
effecting delivery of Bonds and the transfer of funds for the payment of Bonds
to the Securities Depository.

 

SECTION 2.04.           Limitations
on Transfer.  So long as the
ownership of the Auction Rate Bonds is maintained in book-entry form by the
Securities Depository, a beneficial owner or an Existing Holder may sell,
transfer or otherwise dispose of Auction Rate Bonds only pursuant to a Bid or
Sell Order placed in an Auction or to a Broker-Dealer, provided, however,
that (a) sale, transfer or other disposition of Auction Rate Bonds from a
customer of a Broker-Dealer who is listed on the records of that Broker-Dealer
as the holder of such Auction Rate Bonds to that Broker-Dealer or another
customer of that Broker-Dealer shall not be deemed to

 

36

 

be a sale, transfer or other disposition for
purposes of this Section 2.04 if such Broker-Dealer remains the Existing Holder
of the Auction Rate Bonds so sold, transferred or disposed of immediately after
such sale, transfer or disposition and (b) in the case of all transfers other
than pursuant to Auctions such Broker-Dealer to whom such transfer is made
shall advise the Auction Agent of such transfer.

 

SECTION 2.05.           Application
of Bond Proceeds.  The proceeds of
sale of the Bonds shall be deposited with the Trustee for deposit in the
Project Fund to be paid out in accordance with Section 8.01.

 

SECTION 2.06.           Delivery
of the Bonds.  The Bonds shall be
executed by the Authority substantially in the form prescribed by Section 16.01
and in the manner herein set forth and shall be deposited with the Trustee for
authentication, but before the Bonds shall initially be delivered by the
Trustee, there shall be filed with the Trustee the following:

 

(a)           an order executed by an Authorized
Officer directing the authentication and delivery of the Bonds to or upon the
order of the Securities Depository or its nominee, upon payment to the Trustee
of the purchase price therein set forth;

 

(b)           a fully executed counterpart of this
Indenture;

 

(c)           a fully executed counterpart of the
Participation Agreement;

 

(d)           a fully executed counterpart of each
Market Agent Agreement;

 

(e)           the fully executed Policies;

 

(f)            the fully executed Note;

 

(g)           a fully executed counterpart of the
Bond Purchase Trust Agreement;

 

(h)           a fully executed counterpart of the
Tax Regulatory Agreement;

 

(i)            an opinion of counsel to the
Company, addressed to the Underwriters (as defined in the Bond Purchase
Agreement), with reliance letter addressed to the Authority,  the Trustee and the Bond Insurer,
substantially to the effect, and dated as, required by Section 7(d)(9)(ii) of
the Bond Purchase Agreement;

 

(j)            opinion of counsel to the Bond
Insurer, addressed to the Authority, the Company, and the Trustee,
substantially to the effect required by Section 7(d)(9)(iv) of the Bond
Purchase Agreement;

 

(k)           Opinion of Bond Counsel to the
Authority and the Trustee (i) as to the validity of the Bonds and (ii) that all
conditions precedent to the issuance of the Bonds have been met.

 

37

 

When
the documents mentioned in clauses (a) to (k), inclusive, of this Section shall
have been filed with the Trustee, and when the Bonds shall have been executed
and authenticated as required by this Indenture, the Trustee shall deliver the
Bonds to the Securities Depository, but only upon payment to the Trustee of the
purchase price of the Bonds specified in said order.

 

38

 

ARTICLE III

 

INTEREST ON
BONDS

 

SECTION 3.01.           Interest
on Bonds-General.

 

1.          Interest accruing on
Bonds bearing interest at a Commercial Paper Rate, a Daily Rate, a Weekly Rate,
a Monthly Rate or a Semi-annual Rate, shall be computed on the basis of a 365
or 366-day year, as applicable, for the number of days actually elapsed.  Interest accruing on Bonds bearing interest
at a Term Rate or a Fixed Rate shall be computed on the basis of a 360-day
year, consisting of twelve (12) thirty (30) day months.  Interest accruing on Bonds bearing interest
at an Auction Rate during an Auction Period of 180 days or less shall be
computed on the basis of a 360-day year for the number of days actually
elapsed.  Interest accruing on Bonds
bearing interest at an Auction Rate during an Auction Period of over 180 days
shall be computed on the basis of a 360-day year, consisting of twelve (12)
thirty (30) day months.  Bonds shall
bear interest from the date of issuance thereof payable in arrears on each
Interest Payment Date.  The Bonds issued
upon registration of transfers or exchanges of Bonds shall bear interest from
the Interest Payment Date next preceding their date of authentication, unless
the date of authentication is an Interest Payment Date in which case such Bonds
shall bear interest from such date, or unless the date of authentication is
after the Record Date next preceding the next succeeding Interest Payment Date,
in which case such Bonds shall bear interest from such next succeeding Interest
Payment Date.

 

2.          The Bonds shall
initially bear interest at an Auction Rate as specified in Section 3.03.1.  From and after any Change in the Interest
Rate Mode pursuant to Section 4.01 or 4.02, the Bonds with respect to which
such change is effective shall bear interest determined in accordance with the
provisions of this Indenture pertaining to the new Adjustable Rate or the Fixed
Rate, as the case may be.  Bonds shall
bear interest for each Calculation Period, Auction Period or Fixed Rate Period,
as the case may be, at the rate of interest per annum for such Calculation
Period, Auction Period or Fixed Rate Period established in accordance with this
Indenture.   Interest shall be payable
on each Interest Payment Date by check mailed to the registered owner at his or
her address as it appears on the registration books kept by the Registrar and
Paying Agent pursuant to the Indenture at the close of business on the
applicable Record Date; provided, that (i) while the Securities Depository is
the registered owner of the Bonds, all payments of principal of, premium, if
any, and interest on the Bonds shall be paid to the Securities Depository or
its nominee by wire transfer, (ii) prior to and including a Fixed Rate
Conversion Date, interest on the Bonds shall be payable to any registered owner
of at least one million dollars ($1,000,000) in aggregate principal amount of
Bonds by wire transfer, upon written notice received by the Registrar and
Paying Agent at least five days prior to the applicable Record Date, from such registered
owner containing the wire transfer address (which shall be in the continental
United States) to which such registered owner wishes to have such wire directed
and (iii) during a Commercial Paper Rate Period, interest shall be payable on
the Bonds only upon presentation and surrender thereof to the Registrar and
Paying Agent upon purchase thereof pursuant to Section 5.03 and if such
presentation and surrender is made by 2:00 p.m. (New York City time) such
payment shall be by wire transfer.  If
and to the extent that there shall be a default in the payment of the interest
due on any Interest Payment Date,

 

39

 

such
interest shall cease to be payable to the person in whose name each Bond of
such series was registered on such applicable Record Date and shall be payable,
when and if paid to the person in whose name each Bond of such series is
registered at the close of business on the record date fixed therefor by the
Trustee, which shall be the fifth Business Day next preceding the date of the
proposed payment.  Except as provided
above, payment of the principal of and premium, if any, on all Bonds shall be
made upon the presentation and surrender of such Bonds at the principal office
of the Registrar and Paying Agent as the same shall become due and
payable.  The principal of and premium,
if any, and interest on the Bonds shall be payable in lawful money of the
United States of America.

 

3.          Not less than one
Business Day prior to each Computation Date and two Business Days prior to a
Fixed Rate Conversion Date, the Indexing Agent shall establish and provide to
the applicable Remarketing Agent the related rate index as set forth in the
definition of such rate index in Section 1.01; provided that, for each Calculation
Period during a Daily Rate Period, the Indexing Agent shall establish and
provide the related rate index to the applicable Remarketing Agent on each
Determination Date; and provided further that, for each Calculation Period
during a Monthly Rate Period, the Indexing Agent shall establish and provide
the related rate index to the applicable Remarketing Agent not later than each
Computation Date.  Notwithstanding the
foregoing, in the event that the applicable Remarketing Agent, in its sole
judgment, shall determine on a Determination Date that any Daily Rate Index,
Weekly Rate Index or any Commercial Paper Rate Index so established is
sufficiently non-representative of current market conditions that the Bonds may
not be remarketed at par if such rate is set at a rate not greater than 110% of
the applicable rate index, the applicable Remarketing Agent may establish a new
rate index on a Determination Date in accordance with the procedures and
standards described in the definition of such rate index and for purposes of
such rate index so established, all references to Indexing Agent in this
Indenture shall be deemed to refer to the applicable Remarketing Agent.  On any date when any Weekly Rate Index or
any Commercial Paper Rate Index is established by a Remarketing Agent pursuant
to this paragraph, such rate index shall have the respective meaning set forth
in Section 1.01 (except as otherwise provided in the preceding sentence);
provided that for any Commercial Paper Rate Index, the applicable Remarketing
Agent shall select securities (whether or not actually issued) having a term
approximately equal to the applicable Commercial Paper Rate Period or which are
subject to optional or mandatory tender by the owner thereof at the end of a
term approximately equal to (or as close thereto as is practicably available)
the applicable Commercial Paper Rate Period.

 

4.          By 12:00 noon (New
York City time) on each Determination Date or by 3:00 p.m. (New York City time)
on each Auction Date, as the case may be, the applicable Remarketing Agent or
the Auction Agent, as the case may be, shall make available to the Authority,
the Trustee, the Registrar and Paying Agent, any issuer of a Support Facility,
the Company, any Broker-Dealer or any registered owner of a Bond the interest
rate or rates determined on such Determination Date or Auction Date.

 

5.          If for any reason on
any Determination Date (A) any rate of interest for a Calculation Period is not
determined by the applicable Remarketing Agent, (B) no Remarketing Agent is
serving as such hereunder or (C) the rate so determined is held to be invalid
or

 

40

 

unenforceable
by a final judgment of a court of competent jurisdiction, (i) during any Daily
Rate Period, the interest rate for the next succeeding Calculation Period shall
be the last interest rate in effect, or, if a Daily Rate is not determined by
the applicable Remarketing Agent hereunder for five or more consecutive
Business Days on the next and each succeeding Determination Date, the Daily
Rate shall be a rate per annum equal to 80% of the latest 30-day dealer taxable
commercial paper rate published by the Federal Reserve Bank of New York on or
immediately before such Determination Date, (ii) during any Weekly Rate Period,
the interest rate for the next succeeding Calculation Period shall be the last
interest rate in effect, or, if a Weekly Rate is not determined by the
applicable Remarketing Agent for two or more consecutive Calculation Periods,
the Weekly Rate shall be equal to 85% of the latest 30-day dealer taxable
commercial paper rate published by the Federal Reserve Bank of New York on or
before the day next preceding such Determination Date, (iii) during any Monthly
Rate, Semi-annual Rate or Term Rate Period, the interest rate per annum for the
next succeeding Calculation Period shall be equal to 85% of the rate listed in
the table most recently circulated by the United States Treasury Department
known as “Table [applicable dates shown on the most recent Table], Maximum
Interest Rate Payable on United States Treasury Certificates of Indebtedness,
Notes and Bonds-State and Local Government Series Subscribed for During Period
[applicable dates shown on the most recent Table]” or any substantially
equivalent table circulated by the United States Treasury Department for the
maturity most closely approximating the Calculation Period, and (iv) during any
Commercial Paper Rate Period, the next succeeding Calculation Period shall be a
Calculation Period which shall consist of the period from and including the
prior Interest Payment Date to but excluding the first Business Day of the
following calendar month and the Commercial Paper Rate shall be equal to 85% of
the interest rate applicable to 90-day United States Treasury Bills determined
on the basis of the average per annum discount rate at which such 90-day
Treasury Bills shall have been sold at the most recent Treasury auction within
the 30 days next preceding such Calculation Period, or if there shall have been
no such auction within the 30 days next preceding such Calculation Period, the
Commercial Paper Rate shall be equal to the rate of interest borne by such Bond
during the next preceding Calculation Period for such Bond.  The rate of interest or Calculation Period
and related Commercial Paper Rate shall be established pursuant to this
Subsection 5 until the applicable Remarketing Agent again determines the rates
of interest or Calculation Periods and related Commercial Paper Rates in
accordance with this Indenture.  The
Trustee shall, upon the direction of the Company, select any person otherwise
meeting the qualifications of Section 11.14 to obtain, calculate and prepare
any of the information required by this Subsection 5.

 

6.          The determination of
any rate of interest for a subseries of Bonds by a Remarketing Agent in
accordance with this Indenture or by the Auction Agent in accordance with the
Auction Procedures applicable to Auction Rate Bonds, or the establishment of
Calculation Periods or Auction Periods by a Remarketing Agent as provided in
this Indenture shall be conclusive and binding upon the Authority, the Company,
the Trustee, the Registrar and Paying Agent, such Remarketing Agent, the
Auction Agent, any issuer of a Support Facility, the Broker-Dealers for such
subseries of Bonds and the registered or beneficial owners of such subseries of
Bonds.  Failure of such Remarketing
Agent, the Trustee, the Registrar and Paying Agent, the Auction Agent or the
Securities Depository or any Securities Depository

 

41

 

participant
to give any of the notices described in this Indenture, or any defect therein,
shall not affect the interest rate to be borne by any of the Bonds nor the
applicable Calculation Period or Auction Period nor in any way change the
rights of the registered owners of the Bonds to tender their Bonds for purchase
or to have them redeemed in accordance with this Indenture.

 

7.          No transfer or
exchange of Bonds shall be required to be made by the Registrar and Paying
Agent after a Record Date until the next succeeding Interest Payment Date.

 

8.          Except as otherwise
provided in this Subsection 8, the Trustee shall calculate and notify the
Registrar and Paying Agent of the amount of interest due and payable on each
Interest Payment Date or date on which a Bond is subject to purchase by 10:00
a.m. on the Business Day next preceding such Interest Payment Date or date set
for purchase, as the case may be, unless such date is a date on which the
interest rate is determined, in which case the amount of interest due and
payable shall be calculated by 12:15 p.m. on such date.  In preparing such calculation the Trustee
may conclusively rely on calculations or other services provided by the Auction
Agent, the applicable Remarketing Agent, the Company or any person or persons
selected by the Trustee in its discretion. 
During a Commercial Paper Rate Period, the applicable Remarketing Agent
shall notify the Trustee, the Registrar and Paying Agent and the Company of the
amount of interest due and payable on each Interest Payment Date by 10:00 a.m.
on the Business Day next preceding such Interest Payment Date.

 

9.          Anything herein to the
contrary notwithstanding, in no event shall the interest rate borne by any Bond
exceed the Maximum Allowed Rate.

 

10.        Notwithstanding
anything in this Indenture to the contrary, if Bonds have been in a Term Rate
Period and there has been a failure to pay the Purchase Price of such Bonds on
the Business Day immediately following a Calculation Period, such Bonds shall
continue, to the extent permitted by applicable law, to bear interest at the
then-existing Term Rate until such Purchase Price has been paid.

 

SECTION 3.02.           Commercial
Paper Rate.

 

1.          During any Commercial
Paper Rate Period, at or prior to 12:00 noon (New York City time) on each
Determination Date, each Remarketing Agent shall establish Calculation Periods
and related Commercial Paper Rates.  In
determining Calculation Periods, each Remarketing Agent shall take the
following factors into account: (i) existing short-term taxable and tax-exempt
market rates and indices of such short-term rates, (ii) the existing market
supply and demand for short-term tax-exempt securities, (iii) existing yield
curves for short-term and long-term tax-exempt securities or obligations having
a credit rating that is comparable to the Bonds, (iv) general economic
conditions, (v) economic and financial factors present in the securities
industry that may affect or that may be relevant to the Bonds and (vi) any information
available to such Remarketing Agent pertaining to the Company regarding any
events or anticipated events which could have a direct impact on the
marketability of or interest rates on the Bonds.  Each Remarketing Agent shall select the Calculation Periods and
the applicable Commercial Paper Rates that, together with all other Calculation
Periods and related

 

42

 

Commercial
Paper Rates, in the sole judgment of the applicable Remarketing Agent, will
result in the lowest overall borrowing cost on the Bonds or are otherwise in
the best financial interests of the Company, as determined in consultation with
the Company.  Any Calculation Period
established hereunder may not extend beyond the second Business Day next
preceding the expiration date of the Support Facility or the day prior to the
Stated Maturity.

 

2.          The Authority, at the
request of the Company, may place such limitations upon the establishment of
Calculation Periods pursuant to Subsection 1 hereof as may be set forth in a
written direction from the Authority, which direction must be received by the
Trustee and the applicable Remarketing Agent prior to 10:00 a.m. (New York City
time) on the day prior to any Determination Date to be effective on such date,
but only if the Trustee receives an Opinion of Bond Counsel to the effect that
such action is authorized by this Indenture, is permitted under the Act and
will not have an adverse effect on the exclusion of interest on the Bonds from
gross income for Federal income tax purposes.

 

SECTION 3.03.           Auction
Rate Period - Auction Rate: Auction Period - General.

 

1.          During any Auction
Rate Period, the Auction Rate Bonds shall bear interest at the Auction Rate
determined as set forth in this Section 3.03 and Sections 3.04 through
3.10.  The initial Auction Period for
each subseries of the Bonds immediately after the Closing Date shall be a
period from and including the Closing Date to and including the initial Auction
Date for each such subseries.  The
initial Auction Date immediately after the Closing Date shall be March 3, 2004
for all subseries of the Bonds.  The
Auction Rate for the initial Auction Period immediately after the Closing Date
shall be 0.90% in the case of the Series 2004A-1 Bonds, 0.90% in the case of
the Series 2004A-2 Bonds, 0.80% in the case of the Series 2004A-3 Bonds and
0.90% in the case of the Series 2004A-4 Bonds. 
The initial Auction Period for each subseries of the Bonds immediately
after any Change in the Interest Rate Mode to an Auction Rate, shall be a
period from and including the effective date of such Change in the Interest
Rate Mode to and including the initial Auction Date which shall be determined
by the Authority, with notice to the Trustee, on or prior to the effective date
of the Change in the Interest Rate Mode. 
The Auction Rate for any initial Auction Period immediately after any
Change in the Interest Rate Mode to an Auction Rate for an Auction Rate Period,
shall be the rate of interest per annum determined by the applicable
Remarketing Agent, with notice to the Trustee, the Authority, the Registrar and
Paying Agent and the Company, on a date not later than the effective date of
such Change in the Interest Rate Mode as the minimum rate of interest which, in
the opinion of such Remarketing Agent, would be necessary as of such date to
market Auction Rate Bonds in a secondary market transaction at a price equal to
the principal amount thereof; provided that such interest rate shall not exceed
the Maximum Allowed Rate.  For any other
Auction Period, the Auction Rate shall be the rate of interest per annum that
results from implementation of the Auction Procedures.  If on any Auction Date the Auction Agent
shall fail to determine, or for any reason fail to timely provide, a rate of
interest pursuant to the Auction Procedures, the Auction Rate for the next
succeeding Auction Period shall be extended at the same rate and such Auction
Period and each succeeding Auction Period shall be a seven-day Auction Period
until an Auction Period for which the Auction Agent shall determine and timely
provide the rate of interest pursuant to the Auction Procedures; provided,
that, after three such

 

43

 

periods
during which such failure occurs, the Auction Rate shall become the Maximum
Auction Rate until an Auction Period for which the Auction Agent shall
determine and timely provide the rate of interest pursuant to the Auction
Procedures.  Determination of an Auction
Rate pursuant to the Auction Procedures shall be suspended upon a Change in the
Interest Rate Mode or the occurrence of a Payment Default.  The Auction Rate for any Auction Period or
remaining portion thereof following the occurrence of a Payment Default shall
be equal to the Overdue Rate as determined on and as of the immediately
preceding Auction Date.  Upon the
occurrence of a Payment Default that has not been waived or cured on or prior
to any Auction Date, no Auction will be held, all Submitted Bids and Submitted
Sell Orders shall be rejected, the existence of Sufficient Clearing Bids shall
be of no effect and the Auction Rate for the next succeeding Auction Period
shall equal the Overdue Rate on and as of such Auction Date.  In the event of the suspension of the
Auction Procedures due to a Payment Default, the Auction Procedures shall
resume two Business Days after the date on which the Auction Agent receives
notice from the Trustee that the Payment Default has been cured, with the next
Auction to occur on the next regularly scheduled Auction Date occurring
thereafter.  The Overdue Rate shall be
determined by the Trustee on each succeeding Auction Date.

 

2.          Auction Periods may be
established pursuant to Section 3.04 at any time unless a Payment Default has
occurred and has not been cured.  Each
Auction Period shall be a Standard Auction Period unless a different Auction
Period is established pursuant to Section 3.04 and each Auction Period which
immediately succeeds a non-Standard Auction Period shall be a Standard Auction
Period unless a different Auction Period is established pursuant to Section
3.04.

 

SECTION 3.04.           Auction
Rate Period - Auction Rate Bonds: Change of Auction Period by Authority.

 

1.          During an Auction Rate
Period, the Authority, at the request of the Company, may change the length of
a single Auction Period or the Standard Auction Period by means of a written
notice delivered at least 10 days prior to the Auction Date for such Auction
Period to the Trustee, the applicable Market Agents, the Auction Agent, the
Bond Insurer and the Company in substantially the form furnished to the Trustee
and the Auction Agent at the time of a Change in the Interest Rate Mode to an
Auction Rate.  Any Auction Period or
Standard Auction Period established by the Authority pursuant to this Section
3.04 may not exceed 365 days in duration. 
If such Auction Period will be of less than 28 days, such notice shall
be effective only if it is accompanied by a written statement of the Registrar
and Paying Agent, the Trustee, the applicable Market Agents and the Auction
Agent to the effect that they are capable of performing their duties hereunder
and under the related Market Agent Agreements and the Auction Agency Agreement
with respect to such Auction Period.  If
such notice specifies a change in the length of the Standard Auction Period,
such notice shall be effective only if it is accompanied by the written consent
of such Market Agents to such change. 
The length of an Auction Period or the Standard Auction Period may not
be changed pursuant to this Section 3.04 unless Sufficient Clearing Bids
existed at both the Auction immediately preceding the date the notice of such
change was given and the Auction immediately preceding such changed Auction
Period or Standard Auction Period or if a Payment Default has occurred and has
not been cured.

 

44

 

2.          The change in length
of an Auction Period or the Standard Auction Period by the Authority at the
request of the Company shall take effect only if (A) the Trustee, the Credit
Facility Issuer and the Auction Agent receive, by 11:00 a.m. (New York City
time) on the Business Day immediately preceding the Auction Date for such
Auction Period, a certificate from the Authority, on behalf of the Company, by
telecopy or similar means in substantially the form furnished to the Trustee
and the Auction Agent at the time of a Change in the Interest Rate Mode to an
Auction Rate authorizing establishment of and specifying the length of the new
Auction Period or the Standard Auction Period, which shall be specified in such
certificate, and confirming that Bond Counsel expects to be able to give an
Opinion of Bond Counsel on the first day of the Auction Period for which such
change is being required, (B) the Trustee shall not have delivered to the
Auction Agent by 12:00 noon (New York City time) on the Auction Date for such
Auction Period notice that a Payment Default has occurred, (C) Sufficient
Clearing Bids exist at the Auction on the Auction Date for such Auction Period,
and (D) the Trustee, the Credit Facility Issuer and the Auction Agent receive
by 9:30 a.m. (New York City time) on the first day of such Auction Period, an
Opinion of Bond Counsel to the effect that the change in the Auction Period or
the Standard Auction Period is authorized by this Indenture, is permitted under
the Act and will not have an adverse effect on the exclusion of interest on
such Bonds from gross income for Federal income tax purposes.  If the condition referred to in (A) above is
not met, the Auction Rate for the next succeeding Auction Period shall be
determined pursuant to the Auction Procedures and the next succeeding Auction
Period shall be a Standard Auction Period. 
If any of the conditions referred to in (B), (C) or (D) above is not
met, the Auction Rate for the next succeeding Auction Period shall equal the
Maximum Auction Rate as determined as of such Auction Date and the next
succeeding Auction Period shall be a seven-day Auction Period.

 

3.          On the Auction Date
immediately preceding the effective date of any change in the length of an
Auction Period or the Standard Auction Period, any Bonds which are not the
subject of a specific Order shall be deemed to be subject to a Sell Order.

 

4.          In the event of a
Change in the Interest Rate Mode to an Auction Rate, the Authority, at the
request of the Company, shall determine the length of the initial Auction
Period and may change the length of a single or the Standard Auction Period by
means of a written notice delivered on or prior to the effective date of such
Change in the Interest Rate Mode to an Auction Rate to the Trustee, the
applicable Market Agents, the Auction Agent and the Credit Facility
Issuer.  Notwithstanding anything to the
contrary in paragraphs 1 and 2 of this Section 3.04, the determination of the
initial Auction Period shall take effect on the effective date of such Change
in the Interest Rate Mode to an Auction Rate. 
Notwithstanding anything to the contrary in paragraphs 1 and 2 of this
Section 3.04, the change in the length of a single Auction Period or the
Standard Auction Period shall take effect only if the Trustee, the Credit
Facility Issuer and the Auction Agent receive on the effective date of such
Change in the Interest Rate Mode to an Auction Rate, an Opinion of Bond Counsel
to the effect that the change in the Auction Period or the Standard Auction
Period is authorized by this Indenture, is permitted under the Act and will not
have an adverse effect on the exclusion of interest on such Bonds from gross
income for Federal income tax purposes.

 

45

 

SECTION 3.05.           Auction
Rate Period - Auction Rate Bonds: Change of Auction Date by Market Agents.  During an Auction Rate Period the Market
Agent for a subseries of Bonds, with the written consent of the Company, may
change, in order to conform with then-current market practice with respect to
similar securities or to accommodate economic and financial factors that may
affect or be relevant to the day of the week constituting an Auction Date, the
Auction Date for all future Auction Periods relating to the applicable
subseries of Bonds to a different day, so long as the first such Auction Date
will be a Business Day in the calendar week in which the next succeeding
Auction Date is then scheduled to occur. 
If a change in an Auction Date is undertaken in conjunction with a
change in an Auction Period and the conditions for the establishment of such
change in Auction Period are not met, the Auction Date may be, and the next
succeeding Auction Period may be adjusted to end on, a Business Day in the
calendar week in which such Auction Date was scheduled to occur and such
Auction Period was scheduled to end to accommodate the change in the Auction
Date.  Such Market Agent shall
communicate its determination to change an Auction Date by means of a written
notice delivered at least 10 days prior to the Auction Date immediately
preceding such Auction Date, or with respect to a Change in the Interest Rate
Mode to an Auction Rate on or prior to the effective date of such Change in the
Interest Rate Mode, to the Authority, the Trustee, the Bond Insurer, the
Auction Agent and the Company which shall state (i) the determination of such
Market Agent to change the Auction Date, (ii) the new Auction Date and (iii)
the date on which such Auction Date shall be changed.  If as a result of any proposed change in the Auction Date any
Auction Period would be less than 28 days in duration, such notice shall be
effective only if it is accompanied by a written statement of the Auction
Agent, the Registrar and Paying Agent and the Trustee to the effect that they
are capable of performing their duties hereunder and under the Auction Agency
Agreement with respect to any such Auction Period.

 

SECTION 3.06.           Auction
Rate Period - Auction Rate Bonds: Orders by Existing Holders and Potential
Holders.  (a) Prior to the
Submission Deadline on each Auction Date during the Auction Rate Period, the
following orders may be submitted:

 

(i)            each
Existing Holder may submit to the Broker-Dealer by telephone or otherwise
information as to:

 

(A)          the principal amount
of Auction Rate Bonds, if any, held by such Existing Holder which such Existing
Holder desires to continue to hold without regard to the Auction Rate for the
next succeeding Auction Period;

 

(B)           the principal amount
of Auction Rate Bonds, if any, held by such Existing Holder which such Existing
Holder offers to sell if
the Auction Rate for the next succeeding Auction Period shall be less than the
rate per annum specified by such Existing Holder; and/or

 

(C)           the principal amount
of Auction Rate Bonds, if any, held by such Existing Holder which such Existing
Holder offers to sell without regard to the Auction Rate for the next
succeeding Auction Period;

 

46

 

(ii)           one
or more Broker-Dealers may contact Potential Holders by telephone or otherwise
to determine the principal amount of Auction Rate Bonds which each such
Potential Holder offers to purchase if the Auction Rate for the next succeeding
Auction Period shall not be less than the interest rate per annum specified by
such Potential Holder.

 

For
the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (i)(A), (i)(B) or (i)(C) or clause (ii) above is hereinafter
referred to as an “Order” and collectively as “Orders” and each Existing Holder
and each Potential Holder placing an Order is hereinafter referred to as a
“Bidder” and collectively as “Bidders”; an Order containing the information
referred to in clause (i)(A) above is hereinafter referred to as a “Hold Order”
and collectively as “Hold Orders”; an Order containing the information referred
to in clause (i)(B) or clause (ii) above is hereinafter referred to as a “Bid”
and collectively as “Bids”; and an Order containing the information referred to
in clause (i)(C) above is hereinafter referred to as a “Sell Order” and
collectively as “Sell Orders”.  The
submission by a Broker-Dealer of an Order to the Auction Agent shall likewise
be referred to herein as an “Order” and collectively as “Orders”.

 

Orders
may be submitted only in principal amounts of $25,000 or any integral multiple
thereof.

 

(b)(i)       Subject to the provisions of Section
3.07, a Bid by an Existing Holder shall constitute an irrevocable offer to
sell:

 

(A)         the principal amount of Auction Rate Bonds specified in such
Bid if the Auction Rate determined on such Auction Date shall be less than the
interest rate per annum specified therein; or

 

(B)          such principal amount or a lesser principal amount of
Auction Rate Bonds to be determined as set forth in Subsection (a)(iv) of
Section 3.09 if the Auction Rate determined on such Auction Date shall be equal
to the interest rate per annum specified therein; or

 

(C)          such principal amount or a lesser principal amount of
Auction Rate Bonds to be determined as set forth in Subsection (b)(iii) of
Section 3.09 if such specified rate shall be higher than the Maximum Auction
Rate and Sufficient Clearing Bids do not exist.

 

(ii)           Subject
to the provisions of Section 3.07, a Sell Order by an Existing Holder shall
constitute an irrevocable offer to sell:

 

(A)         the principal amount of Auction Rate Bonds specified in such
Sell Order; or

 

(B)          such principal amount or a lesser principal amount of
Auction Rate Bonds as set forth in Subsection (b)(iii) of Section 3.09 if
Sufficient Clearing Bids do not exist.

 

47

 

(iii)          Subject
to the provisions of Section 3.07, a Bid by a Potential Holder shall constitute
an irrevocable offer to purchase:

 

(A)         the principal amount of Auction Rate Bonds specified in such
Bid if the Auction Rate determined on such Auction Date shall be higher than
the rate specified therein; or

 

(B)          such principal amount or a lesser principal amount of
Auction Rate Bonds as set forth in Subsection (a)(v) of Section 3.09 if the
Auction Rate determined on such Auction Date shall be equal to such specified
rate.

 

SECTION 3.07.           Auction
Rate Period - Auction Rate Bonds: Submission of Orders by Broker-Dealers to
Auction Agent.  (a)  During an Auction Rate Period each
Broker-Dealer shall submit in writing to the Auction Agent prior to the
Submission Deadline on each Auction Date, all Orders obtained by such
Broker-Dealer, and shall specify with respect to each such Order:

 

(i)            the
name of the Bidder placing such Order;

 

(ii)           the
aggregate principal amount of Auction Rate Bonds that are subject to such
Order;

 

(iii)          to
the extent that such Bidder is an Existing Holder:

 

(A)         the principal amount of Auction Rate Bonds, if any, subject
to any Hold Order placed by such Existing Holder;

 

(B)          the principal amount of Auction Rate Bonds, if any, subject
to any Bid placed by such Existing Holder and the rate specified in such Bid;
and

 

(C)          the principal amount of Auction Rate Bonds, if any, subject
to any Sell Order placed by such Existing Holder; and

 

(iv)          to
the extent such Bidder is a Potential Holder, the principal amount of Auction
Rate Bonds subject to any Bid placed by such Potential Holder and the rate
specified in such Bid.

 

(b)           If any rate specified in any Bid
contains more than three figures to the right of the decimal point, the Auction
Agent shall round such rate up to the next highest one thousandth (.001) of 1%.

 

(c)           If an Order or Orders covering all
Auction Rate Bonds held by an Existing Holder is not submitted to the Auction
Agent prior to the Submission Deadline, the Auction Agent shall deem a Hold
Order to have been submitted on behalf of such Existing Holder covering the
principal amount of Auction Rate Bonds held by such Existing Holder and not
subject to Orders submitted to the Auction Agent; provided,

 

48

 

however, that if there is a change in the length of
the Auction Period or the Standard Auction Period in accordance with Section
3.04 hereof or an amendment or modification to the Indenture or the
Participation Agreement in accordance with Section 14.02 or 14.07 hereof, as
the case may be, and Orders  have not
been submitted to the Auction Agent prior to the Submission Deadline covering
the aggregate principal amount of Auction Rate Bonds that are subject to such
change in the length of the Auction Period or the Standard Auction Period or
amendment or modification, as the case may be, the Auction Agent shall deem a
Sell Order to have been submitted on behalf of such Existing Holder covering
the principal amount of Auction Rate Bonds subject to such change or
modification or amendment and not subject to Orders submitted to the Auction
Agent.

 

(d)           Neither the Authority, the Company,
the Trustee nor the Auction Agent shall be responsible for any failure of a
Broker-Dealer to submit an Order to the Auction Agent on behalf of any Existing
Holder or Potential Holder.

 

(e)           If any Existing Holder submits
through a Broker-Dealer to the Auction Agent one or more Orders covering in the
aggregate more than the principal amount of Auction Rate Bonds held by such
Existing Holder, such Orders shall be considered valid as follows and in the
following order of priority:

 

(i)            all
Hold Orders shall be considered valid, but only up to and including the
principal amount of Auction Rate Bonds held by such Existing Holder, and, if
the aggregate principal amount of Auction Rate Bonds subject to such Hold
Orders exceeds the aggregate principal amount of Auction Rate Bonds held by
such Existing Holder, the aggregate principal amount of Auction Rate Bonds
subject to each such Hold Order shall be reduced pro rata to cover the
aggregate principal amount of  Auction
Rate Bonds held by such Existing Holder;

 

(ii)           (A)          any Bid shall be considered valid up
to and including the excess of the principal amount of Auction Rate Bonds held
by such Existing Holder over the aggregate principal amount of Auction Rate
Bonds subject to any Hold Orders referred to in paragraph (i) above;

 

(B)           subject to clause (A) above, if more than one Bid with the
same rate is submitted on behalf of such Existing Holder and the aggregate
principal amount of Auction Rate Bonds subject to such Bids is greater than
such excess, such Bids shall be considered valid up to and including the amount
of such excess, and, the principal amount of Auction Rate Bonds subject to each
Bid with the same rate shall be reduced pro rata to cover the principal amount
of Auction Rate Bonds equal to such excess;

 

(C)           subject to clauses (A) and (B) above, if more than one Bid
with different rates is submitted on behalf of such Existing Holder, such Bids
shall be considered valid in the ascending order of their respective rates
until the highest rate is reached at which such excess exists and then at such
rate up to and including the amount of such excess; and

 

49

 

(D)          in any such event, the aggregate principal amount of
Auction Rate Bonds, if any, subject to any portion of Bids not valid under this
paragraph (ii) shall be treated as the subject of a Bid by a Potential Holder
at the rate therein specified; and

 

(iii)          all
Sell Orders shall be considered valid up to and including the excess of the
principal amount of Auction Rate Bonds held by such Existing Holder over the
aggregate principal amount of Auction Rate Bonds subject to valid Hold Orders
referred to in paragraph (i) of this Subsection (e) and valid Bids referred to
in paragraph (ii) of this Subsection (e).

 

(f)            If more than one Bid for Auction
Rate Bonds is submitted on behalf of any Potential Holder, each Bid submitted
shall be a separate Bid for Auction Rate Bonds with the rate and principal
amount therein specified.

 

(g)           Any Bid or Sell Order submitted by an
Existing Holder covering an aggregate principal amount of Auction Rate Bonds
not equal to $25,000 or an integral multiple thereof shall be rejected and
shall be deemed a Hold Order.  Any Bid
submitted by a Potential Holder covering an aggregate principal amount of
Auction Rate Bonds not equal to $25,000 or an integral multiple thereof shall
be rejected.

 

SECTION 3.08.           Auction
Rate Period - Auction Rate Bonds: Determination of Sufficient Clearing Bids,
Winning Bid Rate and Auction Rate. 
(a) During an Auction Rate Period not earlier than the Submission
Deadline on each Auction Date, the Auction Agent shall assemble all valid
Orders submitted or deemed submitted to it by the Broker-Dealers (each such
Order as submitted or deemed submitted by a Broker-Dealer being hereinafter
referred to as a “Submitted Hold Order,” a “Submitted Bid” or a “Submitted Sell
Order,” as the case may be, or as a “Submitted Order”) and shall determine:

 

(i)            the
excess of the total principal amount of Auction Rate Bonds over the aggregate
principal amount of Auction Rate Bonds subject to Submitted Hold Orders (such
excess being hereinafter referred to as the “Available Auction Rate Bonds”);
and

 

(ii)           from
the Submitted Orders whether the aggregate principal amount of Auction Rate
Bonds subject to Submitted Bids by Potential Holders specifying one or more
rates equal to or lower than the Maximum Auction Rate exceeds or is equal to
the sum of:

 

(A)          the aggregate principal amount of Auction Rate Bonds
subject to Submitted Bids by Existing Holders specifying one or more rates
higher than the Maximum Auction Rate; and

 

(B)           the aggregate principal amount of Auction Rate Bonds
subject to Submitted Sell Orders

 

50

 

(in the event of such excess or such equality (other
than because the sum of the principal amounts of Auction Rate Bonds in clauses
(A) and (B) above is zero because all of the Auction Rate Bonds are subject to
Submitted Hold Orders), such Submitted Bids by Potential Holders are hereinafter
referred to collectively as “Sufficient Clearing Bids”); and

 

(iii)          if
Sufficient Clearing Bids exist, the lowest rate specified in the Submitted Bids
(the “Winning Bid Rate”) which if:

 

(A)(I) each Submitted Bid
from Existing Holders specifying such lowest rate and (II) all other Submitted
Bids from Existing Holders specifying lower rates were rejected, thus requiring
such Existing Holders to continue to hold the principal amount of Auction Rate
Bonds that are the subject of such Submitted Bids; and

 

(B)(I) each Submitted Bid
from Potential Holders specifying such lowest rate and (II) all other Submitted
Bids from Potential Holders specifying lower rates were accepted,

 

would result in such Existing Holders described in
clause (A) above continuing to hold an aggregate principal amount of Auction
Rate Bonds which, when added to the aggregate principal amount of Auction Rate
Bonds to be purchased by such Potential Holders described in clause (B) above,
would equal not less than the Available Auction Rate Bonds.

 

(b)           Promptly after the Auction Agent has
made the determinations pursuant to Subsection (a) of this Section 3.08, the
Auction Agent, by telecopy confirmed in writing, shall advise the Company, the
Trustee and the Broker-Dealers of the Maximum Auction Rate and the components
thereof on the Auction Date and, based on such determinations, the Auction Rate
for the next succeeding Auction Period as follows:

 

(i)            if
Sufficient Clearing Bids exist, the Auction Rate for the next succeeding
Auction Period therefor shall be equal to the Winning Bid Rate so determined;

 

(ii)           if
Sufficient Clearing Bids do not exist (other than because all of the Auction
Rate Bonds are the subject of Submitted Hold Orders), the Auction Rate for the
next succeeding Auction Period therefor shall be equal to the Maximum Auction
Rate; and

 

(iii)          if
all of the Auction Rate Bonds are subject to Submitted Hold Orders, the Auction
Rate for the next succeeding Auction Period therefor shall be equal to the All
Hold Rate.

 

SECTION 3.09.           Auction
Rate Period - Auction Rate Bonds: Acceptance and Rejection of Submitted Bids
and Submitted Sell Orders and Allocation of Auction Rate Bonds.  

 

51

 

During an Auction Rate Period Existing Holders shall
continue to hold the principal amounts of Auction Rate Bonds that are subject
to Submitted Hold Orders, and, based on the determinations made pursuant to
Subsection (a) of this Section 3.09, the Submitted Bids and Submitted Sell
Orders shall be accepted or rejected, and the Auction Agent shall take such
other actions as are set forth below:

 

(a)           If Sufficient Clearing Bids exist,
all Submitted Sell Orders shall be accepted and, subject to the provisions of
paragraphs (e) and (f) of this Section 3.09, Submitted Bids shall be accepted
or rejected as follows in the following order of priority:

 

(i)               Existing
Holders’ Submitted Bids specifying any rate that is higher than the Winning Bid
Rate shall be accepted, thus requiring each such Existing Holder to sell the
aggregate principal amount of Auction Rate Bonds subject to such Submitted
Bids;

 

(ii)              Existing
Holders’ Submitted Bids specifying any rate that is lower than the Winning Bid
Rate shall be rejected, thus requiring each such Existing Holder to continue to
hold the aggregate principal amount of Auction Rate Bonds subject to such
Submitted Bids;

 

(iii)             Potential
Holders’ Submitted Bids specifying any rate that is lower than the Winning Bid
Rate shall be accepted, thus requiring each such Potential Holder to purchase
the aggregate principal amount of Auction Rate Bonds subject to such Submitted
Bids;

 

(iv)             each
Existing Holder’s Submitted Bid specifying a rate that is equal to the Winning
Bid Rate shall be rejected, thus requiring such Existing Holder to continue to
hold the aggregate principal amount of Auction Rate Bonds subject to such
Submitted Bid, unless the aggregate principal amount of Auction Rate Bonds
subject to all such Submitted Bids shall be greater than the principal amount
of Auction Rate Bonds (the “remaining principal amount”) equal to the excess of
Available Auction Rate Bonds over the aggregate principal amount of the Auction
Rate Bonds subject to Submitted Bids described in paragraphs (ii) and (iii) of
this Subsection (a), in which event such Submitted Bid of such Existing Holder
shall be rejected in part, and such Existing Holder shall be entitled to
continue to hold the principal amount of Auction Rate Bonds subject to such
Submitted Bid, but only in an amount equal to the principal amount of Auction
Rate Bonds obtained by multiplying the remaining principal amount by a
fraction, the numerator of which shall be the principal amount of Auction Rate
Bonds held by such Existing Holder subject to such Submitted Bid and the
denominator of which shall be the sum of the principal amounts of Auction Rate
Bonds subject to such Submitted Bids made by all such Existing Holders that
specified a rate equal to the Winning Bid Rate; and

 

(v)              each
Potential Holder’s Submitted Bid specifying a rate that is equal to the Winning
Bid Rate shall be accepted but only in an amount equal to

 

52

 

the principal amount of Auction Rate Bonds obtained by multiplying the
excess of the Available Auction Rate Bonds over the aggregate principal amount
of Auction Rate Bonds subject to Submitted Bids described in paragraphs (ii),
(iii) and (iv) of this Subsection (a) by a fraction the numerator of which
shall be the aggregate principal amount of Auction Rate Bonds subject to such
Submitted Bid of such Potential Holder and the denominator of which shall be
the sum of the principal amount of Auction Rate Bonds subject to Submitted Bids
made by all such Potential Holders that specified a rate equal to the Winning
Bid Rate.

 

(b)           If Sufficient Clearing Bids do not
exist (other than because all of the Auction Rate Bonds are subject to
Submitted Hold Orders), subject to the provisions of Subsection (e) of this
Section 3.09, Submitted Orders shall be accepted or rejected as follows in the
following order of priority:

 

(i)            Existing
Holders’ Submitted Bids specifying any rate that is equal to or lower than the
Maximum Auction Rate shall be rejected, thus requiring each such Existing
Holder to continue to hold the aggregate principal amount of Auction Rate Bonds
subject to such Submitted Bids;

 

(ii)           Potential
Holders’ Submitted Bids specifying any rate that is equal to or lower than the
Maximum Auction Rate shall be accepted, thus requiring each such Potential
Holder to purchase the aggregate principal amount of Auction Rate Bonds subject
to such Submitted Bids; and

 

(iii)          each
Existing Holder’s Submitted Bid specifying any rate that is higher than the
Maximum Auction Rate and the Submitted Sell Order of each Existing Holder shall
be accepted, thus requiring each Existing Holder that submitted any such
Submitted Bid or Submitted Sell Order to sell the Auction Rate Bonds subject to
such Submitted Bid or Submitted Sell Order, but in both cases only in an amount
equal to the aggregate principal amount of Auction Rate Bonds obtained by
multiplying the aggregate principal amount of Auction Rate Bonds subject to
Submitted Bids described in paragraph (ii) of this Subsection (b) by a
fraction, the numerator of which shall be the aggregate principal amount of
Auction Rate Bonds held by such Existing Holder subject to such Submitted Bid
or Submitted Sell Order and the denominator of which shall be the aggregate
principal amount of Auction Rate Bonds subject to all such Submitted Bids and
Submitted Sell Orders.

 

(c)           If all Auction Rate Bonds are subject
to Submitted Hold Orders, all Submitted Bids shall be rejected.

 

(d)           If (i) the Auction Agent shall fail
to determine, or for any reason fail to timely provide, an interest rate
pursuant to the Auction Procedures or (ii) the conditions set forth in
Subsection 2 of Section 3.04 to effect a change in the Auction Period are not
met, all Submitted Bids and Submitted Sell Orders shall be rejected and the
existence of Sufficient Clearing Bids shall be of no effect.

 

53

 

(e)           If, as a result of the procedures
described in Subsection (a) or (b) of this Section 3.09, any Existing Holder
would be required to sell, or any Potential Holder would be required to
purchase, a principal amount of Auction Rate Bonds that is not equal to $25,000
or an integral multiple thereof, the Auction Agent shall, in such manner as, in
its sole discretion, it shall determine, round up or down the principal amount
of such Auction Rate Bonds to be purchased or sold by any Existing Holder or
Potential Holder so that the principal amount purchased or sold by each
Existing Holder or Potential Holder shall be equal to $25,000 or an integral
multiple thereof.

 

(f)            If, as a result of the procedures
described in Subsection (a) of this Section 3.09, any Potential Holder would be
entitled or required to purchase less than $25,000 in aggregate principal
amount of Auction Rate Bonds, the Auction Agent shall, in such manner as, in
its sole discretion, it shall determine, allocate Auction Rate Bonds for
purchase among Potential Holders so that only Auction Rate Bonds in principal
amounts of $25,000 or an integral multiple thereof are purchased by any
Potential Holder, even if such allocation results in one or more of such
Potential Holders not purchasing any Auction Rate Bonds.

 

(g)           Based on the results of each Auction,
the Auction Agent shall determine the aggregate principal amounts of Auction
Rate Bonds to be purchased and the aggregate principal amounts of Auction Rate
Bonds to be sold by Potential Holders and Existing Holders on whose behalf each
Broker-Dealer submitted Bids or Sell Orders and, with respect to each
Broker-Dealer, to the extent that such aggregate principal amount of Auction
Rate Bonds to be sold differs from such aggregate principal amount of Auction
Rate Bonds to be purchased, determine to which other Broker-Dealer or
Broker-Dealers acting for one or more purchasers or Auction Rate Bonds such
Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers of Auction Rate Bonds such
Broker-Dealer shall receive, as the case may be, Auction Rate Bonds.

 

(h)           None of the Authority, the Company or
any Affiliate thereof may submit an Order in any Auction except as set forth in
the next sentence.  Any Broker-Dealer
that is an Affiliate of the Company may submit Orders in an Auction but only if
such Orders are not for its own account, except that if such affiliated Broker-Dealer
holds Auction Rate Bonds for its own account, it must submit a Sell Order on
the next Auction Date with respect to such Auction Rate Bonds.

 

54

 

SECTION 3.10.           Auction
Rate Period - Auction Rate Bonds: Adjustment in Percentage.

 

1.          During an Auction Rate
Period, the Market Agent for a subseries of Bonds may adjust the percentage
used in determining the All Hold Rate and the Applicable Percentages used in
determining the Maximum Auction Rate for such subseries of Bonds if any such
adjustment is necessary, in the judgment of such Market Agent, to reflect any
Change of Preference Law such that the All Hold Rate and Maximum Auction Rate
shall have substantially equal market values before and after such Change of
Preference Law.  In making any such
adjustment, such Market Agent shall take the following factors, as in existence
both before and after such Change of Preference Law, into account: (i)  short-term taxable and tax-exempt market
rates and indices of such short-term rates, (ii)  the market supply and demand for short-term tax-exempt
securities, (iii)  yield curves for
short-term and long-term tax-exempt securities or obligations having a credit
rating that is comparable to the Bonds, (iv) 
general economic conditions and (v) 
economic and financial factors present in the securities industry that
may affect or that may be relevant to the Bonds.

 

2.          A Market Agent shall
communicate its determination to adjust the percentage used in determining the
All Hold Rate and the Applicable Percentages used in determining the Maximum
Auction Rate pursuant to Subsection 1 hereof by means of a written notice
delivered at least ten days prior to the Auction Date on which such Market
Agent desires to effect the change to the Authority, the Bond Insurer, the
Trustee, the Auction Agent and the Company. 
Such notice is required to state the determination of such Market Agent
to change such percentage and the date such adjustment is proposed to take
effect (which date shall be an Auction Date). 
Such notice shall be effective only if it is accompanied by the form of
opinion that Bond Counsel expects to be able to give on such Auction Date to
the effect that such adjustment is authorized by this Indenture, is permitted
under the Act and will not have an adverse effect on the exclusion of interest
on the Auction Rate Bonds from gross income for Federal income tax
purposes.  The Auction Agent is required
to mail notice thereof to the Existing Holders within two Business Days of
receipt thereof.

 

3.          An adjustment in the
percentage used in determining the All Hold Rate and the Applicable Percentages
used in determining the Maximum Auction Rate shall take effect on an Auction
Date only if (A) the Trustee, the Credit Facility Issuer and the Auction Agent
receive, by 11:00 a.m. (New York City time) on the Business Day immediately
preceding such Auction Date, a certificate from the applicable Market Agent by
telecopy or similar means, (i) authorizing the adjustment of the percentage
used in determining the All Hold Rate and the Applicable Percentages used in
determining the Maximum Auction Rate which shall be specified in such
authorization, and (ii) confirming that Bond Counsel expects to be able to give
an opinion on such Auction Date to the effect that the adjustment in the
percentage used in determining the All Hold Rate and the Applicable Percentages
used in determining the Maximum Auction Rate is authorized by this Indenture,
is permitted under the Act and will not have an adverse effect on the exclusion
of interest on the Auction Rate Bonds from gross income for Federal income tax
purposes, and (B) the Trustee, the Credit Facility Issuer and the Auction Agent
receive by 9:30 a.m. (New York City time) on such Auction Date, an Opinion of
Bond Counsel to the effect that the adjustment in the percentage used in

 

55

 

determining
the All Hold Rate and the Applicable Percentages used in determining the
Maximum Auction Rate is authorized by this Indenture, is permitted under the Act
and will not have an adverse effect on the exclusion of interest on the Auction
Rate Bonds from gross income for Federal income tax purposes.  If the condition referred to in (A) above is
not met, the existing percentage used in determining the All Hold Rate and the
Applicable Percentages used in determining the Maximum Auction Rate shall
remain in effect and the Auction Rate for the next succeeding Auction Period
shall be determined pursuant to the Auction Procedures.  If the condition referred to in (B) above is
not met, the existing percentage used in determining the All Hold Rate and the
Applicable Percentages used in determining the Maximum Auction Rate shall
remain in effect and the Auction Rate for the next succeeding Auction Period
shall equal the Maximum Auction Rate as determined on such Auction Date and the
Auction Period shall be a seven-day Auction Period.

 

56

 

ARTICLE IV

 

CHANGES IN
THE INTEREST RATE MODE

 

SECTION 4.01.      Optional Conversion to an Adjustable
Rate by Authority.

 

1.             (A)          At
the times specified below, the Bonds, in whole or in part, shall cease to bear
interest at the Adjustable Rate or the Fixed Rate then borne by the Bonds and
shall bear interest at an Adjustable Rate to be specified as hereinafter
provided by the Authority, at the written request of the Company, in a written
notice delivered at least 30 days prior to the proposed effective date of the
Change in the Interest Rate Mode to the Trustee, the applicable Remarketing Agent,
the Bond Insurer, the Registrar and Paying Agent and the Company (and to the
Auction Agent and the Securities Depository if such Change in the Interest Rate
Mode is to or from an Auction Rate), in substantially the form attached hereto
as, or containing substantially the information contained in, Exhibit A hereto.  The written notice of the Authority must further state that the
Indenture provides that the conversion is conditioned on the Bonds being rated
no less than “A” by S&P, “A2” by Moody’s or “A” by Fitch as of the
effective date of the Change in the Interest Rate Mode.  A Change in the Interest Rate Mode may only
be effected on a day on which the affected Bonds may be redeemed at the option
of the Authority.

 

(B)           [Intentionally
Omitted]

 

(C)           In
the case of any Change in the Interest Rate Mode to a Term Rate, at least 15
days prior to the proposed effective date of the Change in Interest Rate Mode,
the Authority, at the written request of the Company, shall notify the Trustee
of the length of the Calculation Period and, unless otherwise specified, such
Calculation Period shall thereafter apply to the Bonds until a Change in the
Interest Rate Mode effected pursuant to this Section 4.01 or Section 4.02.  Notwithstanding the foregoing, no
Calculation Period shall be established during a Term Rate Period unless the
Trustee shall receive by 2:00 p.m., New York City time, on the first day of
such Calculation Period, evidence satisfactory to it that the Bonds shall be
rated at least “A” by S&P or “A2” by Moody’s or “A” by Fitch or an
equivalent rating by any nationally recognized rating agency on such date.  Any change in the Calculation Period during
a Term Rate Period shall be deemed an optional conversion pursuant to this
Section 4.01 and may not be made unless all the requirements of a conversion
pursuant to this Section 4.01 are met.

 

2.             The Trustee shall mail, or cause
the Registrar and Paying Agent to mail, the notice received pursuant to clause
(A) of this Section 4.01.1 the Holders at least 15 days prior to the proposed
effective date of the Change in the Interest Rate Mode.

 

3.             A Change in the Interest Rate Mode
to an Adjustable Rate shall be effective pursuant to Subsection 1 of this
Section 4.01 only if

 

(A)          with respect to any Change in the
Interest Rate Mode from an Auction Rate or from a Fixed Rate to an Adjustable
Rate, the Trustee and the Auction Agent (if any) shall receive:

 

57

 

(i)            a
certificate of an Authorized Company Representative by no later than the tenth
day prior to the effective date of such Change in the Interest Rate Mode
stating that a written agreement between the Company and the applicable
Remarketing Agent to remarket the Bonds on such effective date at a price of
100% of the principal amount thereof has been entered into, which agreement (i)
may be subject to such reasonable terms and conditions imposed by such
Remarketing Agent which in the judgment of that Remarketing Agent reflect the
current market standards regarding investment banking risk and (ii) must
include a provision requiring payment by such Remarketing Agent in same-day
funds for any Bond tendered or deemed tendered; and, if a Liquidity Facility is
required by Section 4.01.3(D), a Liquidity Facility, meeting the requirements
of this Indenture, including Section 6.02.3, and the Participation Agreement,
has or will be obtained by the Company and, by its terms, be in effect on or
prior to the effective date of such Change in the Interest Rate Mode;

 

(ii)           by
11:00 a.m. (New York City time) on the second Business Day prior to the
effective date of such Change in the Interest Rate Mode, by telecopy or other
similar means, a certificate in substantially the form attached hereto as, or
containing substantially the information contained in, Exhibit B hereto, from the Authority on
behalf of the Company (y) authorizing the establishment of the new Adjustable
Rate and (z) confirming that Bond Counsel has advised the Authority that it
expects to be able to give an opinion on the effective date of such Change in
the Interest Rate Mode to the effect that such Change in the Interest Rate Mode
is authorized by this Indenture, is permitted under the Act and will not have
an adverse effect on the exclusion of interest on the affected Bonds from gross
income for Federal income tax purposes; and

 

(iii)          by
4:00 p.m. (New York City time) on the effective date of such Change in the
Interest Rate Mode, a certificate from an Authorized Company Representative to
the effect that all of the Bonds tendered or deemed tendered have been
purchased at a price equal to the principal amount thereof with funds provided
from the remarketing of such Bonds in accordance with the Remarketing Agreement
and that premium, if any, and any accrued and unpaid interest on such Bonds has
been paid from funds deposited with the Trustee or the Registrar and Paying
Agent; and

 

(B)           with respect to any Change in the
Interest Rate Mode, the Trustee (and the Auction Agent in the case of any
Change in the Interest Rate Mode to an Auction Rate), shall receive by 4:00
p.m., New York City time, on the effective date of such Change in the Interest
Rate Mode, a certificate in substantially the form attached hereto as, or
containing substantially the information contained in, Exhibit C hereto, from an Authorized
Company Representative that all of the Bonds tendered or deemed tendered have
been purchased at a price equal to the principal amount thereof plus premium,
if any, plus any accrued and unpaid interest with funds provided from the remarketing
of such Bonds in accordance with the Remarketing Agreement, from the proceeds
of a Support Facility, or from funds deposited with the Trustee or the
Registrar and Paying Agent; provided that in case of a Change in the Interest
Rate Mode from an

 

58

 

Auction Rate, receipt of
such certificate shall not override the requirements of Section 4.01(3)(A)(iii)
herein;

 

(C)           with respect to any Change in the
Interest Rate Mode, the Trustee (and the Auction Agent in the case of any
Change in the Interest Rate Mode to or from an Auction Rate) shall receive, by
9:30 a.m. (New York City time) on the effective date of such Change in the
Interest Rate Mode, an Opinion of Bond Counsel to the effect that such Change in
the Interest Rate Mode is authorized by this Indenture, is permitted under the
Act and will not have an adverse effect on the exclusion of interest on such
Bonds from gross income for Federal income tax purposes;

 

(D)          with respect to any Change in the Interest
Rate Mode to an Adjustable Rate (other than to an Auction Rate or a Term Rate
for a Calculation Period of five years or more), the Trustee shall receive a
Liquidity Facility meeting the requirements of this Indenture, including
Section 6.02.3, and the Participation Agreement on or prior to the effective
date of such Change in the Interest Rate Mode which is, by its terms, in effect
on or prior to such effective date; and

 

(E)           with respect to any Change in the
Interest Rate Mode to an Adjustable Rate, the Trustee shall receive by 2:00
p.m., New York City time, on the effective date of such Change in the Interest
Rate Mode, evidence satisfactory to it that the Bonds shall be rated at least
“A” by S&P or “A2” by Moody’s or “A” by Fitch or an equivalent rating by
any nationally recognized rating agency on the effective date of such Change in
the Interest Rate Mode.

 

If any of the conditions referred to in (A)(i) or
(ii) above is not met with respect to any Change in the Interest Rate Mode from
an Auction Rate, the Auction Rate for the next succeeding Auction Period shall
be determined pursuant to the Auction Procedures applicable to the Auction Rate
Bonds.  If any of the conditions
referred to in (A)(iii), (B), (C), (D) or (E) above is not met with respect to
any Change in the Interest Rate Mode from an Auction Rate, the Auction Rate for
the next succeeding Auction Period shall equal the Maximum Auction Rate as
determined on such Auction Date and the Auction Period shall be a seven-day
Auction Period.  If any of the
conditions referred to in (A)(iii), (B), (C), (D) or (E) above is not met with
respect to any Change in the Interest Rate Mode from a Term Rate or a Fixed
Rate, the Bonds shall continue to bear interest at the current Term Rate or
Fixed Rate, as the case may be, and be subject to the provisions of this
Indenture applicable thereto while the Bonds bear interest at such current Term
Rate or Fixed Rate, as the case may be. If any of the conditions referred to in
(A)(iii), (B), (C) or (D) above is not met with respect to any Change in the
Interest Rate Mode from an Adjustable Rate (other than an Auction Rate or a
Term Rate), the Bonds shall continue to bear interest at the Current Adjustable
Rate and be subject to the provisions of this Indenture applicable thereto
while the Bonds bear interest at such Current Adjustable Rate; provided,
however, that notwithstanding the failure to meet such conditions, the Bonds
shall remain subject to mandatory tender for purchase on the date that would
have been the effective date of the new interest rate mode if all of such
conditions were met on such date.  If
any of the foregoing conditions for a Change in the Interest Rate Mode from a
Term Rate or a Fixed Rate is not met, the Trustee shall mail, or cause the
Registrar and Paying Agent to mail to the Authority, the Company and the
Holders notice thereof in substantially the form attached hereto as, or

 

59

 

containing
substantially the information contained in, Exhibit
D hereto within 3 Business Days after the failure to meet any of
such conditions.

 

4.             Notwithstanding
anything herein to the contrary, any Change in the Interest Rate Mode to an
Adjustable Rate (other than to an Auction Rate or a Term Rate for a Calculation
Period of five years or more) shall be effective only if the Trustee shall
receive a Liquidity Facility meeting the requirements of this Indenture,
including Section 6.02.3, and the Participation Agreement on or prior to the
effective date of such Change in the Interest Rate Mode which is, by its terms,
in effect on or prior to such effective date.

 

SECTION 4.02.           Optional
Conversion to a Fixed Rate.

 

1.          The Authority reserves
the right, at the request of the Company, to fix the rate of interest per annum
which  Bonds will bear, in whole or in
part, for the balance of the term thereof or until the effective date of a
Change in the Interest Rate Mode; provided however, that the Authority shall
not exercise such right and the Company shall not request the Authority to
exercise such right except on a day on which the affected Bonds may be redeemed
at the option of the Authority.  In the
event the Authority, at the request of the Company, as herein provided,
exercises its Option to Convert, the Bonds so converted shall cease to bear
interest at the Adjustable Rate then borne by the Bonds and shall bear interest
at a Fixed Rate until maturity or until the effective date of a Change in the
Interest Rate Mode, subject to the terms and conditions hereof (the date on which
a Fixed Rate shall take effect being herein called a “Fixed Rate Conversion
Date”).  The Option to Convert may be
exercised at any time through a written notice given by the Authority, at the
written direction of the Company.  Such
written notice of the Authority must be delivered not less than 30 nor more
than 45 days prior to the proposed Fixed Rate Conversion Date to the Trustee,
the Bond Insurer, the Registrar and Paying Agent and the applicable Remarketing
Agent (and the Auction Agent and the Securities Depository in the case of any
change to a Fixed Rate from an Auction Rate), in substantially the form
attached hereto as, or containing substantially the information contained in, Exhibit A hereto.  A notice of conversion to a Fixed Rate shall note that the
Indenture provides that a proposed conversion to a Fixed Rate is conditioned on
the Bonds being rated no less than “A” by S&P, “A2” by Moody’s or “A” by
Fitch as of the effective date of such Change in the Interest Rate Mode.

 

2.          The Trustee shall
mail, or cause the Registrar and Paying Agent to mail, the notice received
pursuant to Subsection 1 of this Section 4.02 to the Holders at least 15 days
prior to the proposed effective date of the Change in the Interest Rate Mode.

 

3.          A Fixed Rate shall take
effect only if

 

(A)          with respect to a change to a Fixed
Rate from an Auction Rate, the Trustee and the Auction Agent shall receive:

 

(i)            a
certificate of an Authorized Company Representative by no later than the tenth
day prior to a Fixed Rate Conversion Date stating that a written

 

60

 

agreement has been entered into by the Company and the applicable
Remarketing Agent to remarket the Bonds affected on a Fixed Rate Conversion
Date at a price of 100% of the principal amount thereof, which written
agreement (i) may be subject to reasonable terms and conditions imposed by such
Remarketing Agent which in the judgment of that Remarketing Agent reflect
current market standards regarding investment banking risk; and (ii) must
include a provision requiring payment by such Remarketing Agent in same-day
funds for any Auction Rate Bonds tendered or deemed tendered; and

 

(ii)           by
11:00 a.m. (New York City time) on the second Business Day prior to a Fixed
Rate Conversion Date, by telecopy or other similar means, a certificate  on behalf of the Company in substantially
the form attached hereto as, or containing substantially the information
contained in, Exhibit B hereto,
from the Authority (y) authorizing the establishment of a Fixed Rate and (z)
confirming that Bond Counsel has advised the Authority that it expects to be
able to give an opinion on a Fixed Rate Conversion Date to the effect that the
change to a Fixed Rate is authorized by this Indenture, is permitted under the
Act and will not have an adverse effect on the exclusion of interest on the
Bonds from gross income for Federal income tax purposes; and

 

(iii)          by
4:00 p.m. (New York City time) on the effective date of such Change in the
Interest Rate Mode, a certificate from an Authorized Company Representative to
the effect that all of the Bonds tendered or deemed tendered have been
purchased at a price equal to the principal amount thereof with funds provided
from the remarketing of such Bonds in accordance with the Remarketing Agreement
and that any accrued and unpaid interest on such Bonds has been paid from funds
deposited with the Trustee or the Registrar and Paying Agent;

 

(B)           with respect to any change to a Fixed
Rate the Trustee (and the Auction Agent in the case of any change to a Fixed
Rate from an Auction Rate) receives on a Fixed Rate Conversion Date:

 

(i)            by
9:30 a.m. (New York City time) an Opinion of Bond Counsel to the effect that
the conversion to a Fixed Rate is authorized by this Indenture, is permitted
under the Act and will not have an adverse effect on the exclusion of interest
on such Bonds from gross income for Federal income tax purposes;

 

(ii)           by
4:00 p.m. (New York City time) a certificate in substantially the form attached
hereto as, or containing substantially the information contained in, Exhibit C hereto, from an Authorized
Company Representative that all of the Bonds tendered or deemed tendered have
been purchased at a price equal to the principal amount thereof plus premium,
if any, plus any accrued and unpaid interest with funds provided from the
remarketing of such Bonds in accordance with the Remarketing Agreement, from
the proceeds of a Support Facility, or from funds deposited with the Trustee or
the Registrar and Paying Agent;

 

61

 

provided that receipt of such certificate shall not override the
requirements of Section 4.02(3)(A)(iii) herein; and

 

(iii)          by
2:00 p.m. (New York City time) evidence satisfactory to it that the Bonds shall
be rated at least “A” by S&P or “A2” by Moody’s or “A” by Fitch or an
equivalent rating by any nationally recognized rating agency on the Fixed Rate
Conversion Date.

 

If
any of the conditions referred to in (A)(i) or (A)(ii) above is not met with
respect to any Change in the Interest Rate Mode from an Auction Rate to a Fixed
Rate, the Auction Rate for the next succeeding Auction Period shall be
determined pursuant to the Auction Procedures applicable to the Auction Rate
Bonds.  If any of the conditions referred
to in (A)(iii) or (B) above is not met with respect to any Change in the
Interest Rate Mode from an Auction Rate to a Fixed Rate, the Auction Rate for
the next succeeding Auction Period shall be equal to the Maximum Auction Rate
as determined as of such Auction Date and the Auction Period shall be a
seven-day Auction Period.  If any of the
conditions referred to in (B) above is not met with respect to any Change in
the Interest Rate Mode from a Term Rate to a Fixed Rate, the Bonds shall
continue to bear interest at the current Term Rate and be subject to the
provisions of this Indenture applicable thereto while the Bonds bear interest
at such current Term Rate. If any of the conditions referred to in (B) above is
not met with respect to any other Change in the Interest Rate Mode from an
Adjustable Rate (other than an Auction Rate or a Term Rate) to a Fixed Rate,
the Bonds shall continue to bear interest at the Current Adjustable Rate and be
subject to the provisions of this Indenture applicable thereto while the Bonds
bear interest at such Current Adjustable Rate; provided, however, that
notwithstanding the failure to meet such conditions, the Bonds shall remain
subject to mandatory tender for purchase on the date that would have been the
effective date of the Fixed Rate if all of such conditions were met on such
date.  If any of the foregoing
conditions for a Change in the Interest Rate Mode from a Term Rate to a Fixed
Rate is not met, the Trustee shall mail, or cause the Registrar and Paying
Agent to mail to the Authority, the Company and the Holders notice thereof in
substantially the form attached hereto as, or containing substantially the
information contained in, Exhibit D
hereto within 3 Business Days after the failure to meet any of such conditions.

 

SECTION 4.03.              Conversion Generally.  1. 
In the event of a Change in the Interest Rate Mode on less than all the
Bonds of a series or subseries to or from an Auction Rate, the minimum
aggregate principal amount of Bonds of a subseries that continue to bear, or
are adjusted to bear interest at an Auction Rate for an Auction Rate Period,
shall not be less than $10,000,000 for such Auction Rate Bonds.

 

2.             Upon any Change in the Interest
Rate Mode to an Auction Rate, the Authority and the Trustee, shall take all
steps necessary to comply with any agreement entered into with a Securities
Depository or its nominee pursuant to Section 2.03(5) with respect to such
Change in the Interest Rate Mode, including, without limitation, the purchase
and designation of sufficient CUSIP numbers to comply with the requirements of
such Securities Depository following any such Change in the Interest Rate Mode.

 

62

 

3.             If the interest rate on less than
all Bonds of a subseries is to be converted to a new Adjustable Rate pursuant
to Section 4.01 or to a Fixed Rate pursuant to Section 4.02, the particular
Bonds to be converted shall be chosen by the Trustee by lot, or the Trustee
shall direct the Registrar and Paying Agent to so choose, by lot; provided,
however, that the portion of any Bond to be converted shall be in the principal
amount of $100,000 or any integral multiple of such amount during a Commercial
Paper Rate Period, a Daily Rate Period, a Weekly Rate Period or a Monthly Rate
Period, $25,000 or any integral multiple thereof during an Auction Rate Period,
or $5,000 or any integral multiple thereof at any other time and that, in
selecting Bonds for conversion, the Trustee or Registrar and Paying Agent shall
treat each Bond as representing that number of Bonds which is obtained by
dividing the principal amount of such registered Bond in excess of $100,000 by
$100,000 during a Commercial Paper Rate Period, a Daily Rate Period, a Weekly
Rate Period or a Monthly Rate Period, $25,000 during an Auction Rate Period,
and $5,000 at any other time (such amounts being hereinafter referred to as the
“applicable units of principal amount”). 
If it is determined that one or more, but not all of the $100,000,
$25,000 or $5,000 units of principal amount represented by any such Bond is to
be converted, then upon notice of intention to convert such $100,000, $25,000
or $5,000 unit or units pursuant to Sections 4.01 or 4.02, as the case may be,
the Holders of such Bonds shall forthwith surrender such Bonds to the Registrar
and Paying Agent for (1) payment of the purchase price (including the premium,
if any, and accrued and unpaid interest to the date fixed for conversion) of
the $100,000, $25,000 or $5,000 unit or units of principal amount called for
conversion and (2) exchange for a new Bond or Bonds in the aggregate principal
amount of the balance of the principal of such Bonds not subject to
conversion.  If the Holders of any such
Bond of a denomination greater than $100,000, $25,000 or $5,000 shall fail to
present such Bond to the Registrar and Paying Agent, for payment and exchange
as aforesaid, such Bond shall, nevertheless, become due and payable on the date
fixed for conversion to the extent of the $100,000, $25,000 or $5,000 unit or
units of principal amount subject to such conversion (and to that extent only).

 

4.             Notwithstanding anything in this
Article IV to the contrary, the Authority may not effect a Change in the
Interest Rate Mode pursuant to Section 4.01 and the Authority may not exercise
its option to convert to a Fixed Rate pursuant to Section 4.02 if such action
would require the payment of a premium upon purchase of Bonds pursuant to
Section 5.04 unless there shall have been deposited the full amount of such
premium in trust with the Trustee prior to any notification of a change
pursuant to Section 4.01 or 4.02.

 

63

 

ARTICLE V

 

REDEMPTION
AND PURCHASE OF
BONDS

 

SECTION 5.01.           Optional
Redemption.  The Bonds shall be
subject to redemption, in whole or in part, at the option of the Authority upon
the request of the Company, from related payments made by the Company pursuant
to Section 6.02 of the Participation Agreement and any other monies held by the
Trustee and available to be applied to the redemption of Bonds as provided in
this Section 5.01 and Section 9.03 hereof:

 

(a)           During any Commercial Paper Rate
Period, such Bonds shall be subject to redemption on each Interest Payment
Date, as a whole or in part, at the principal amount thereof, at a redemption
price equal to 100% of the principal amount.

 

(b)           During any Auction Rate Period,
Auction Rate Bonds shall be subject to redemption on the Business Day
immediately succeeding each Auction Date, as a whole or in part, at a
redemption price equal to 100% of the principal amount thereof plus accrued and
unpaid interest to the date fixed for redemption.

 

(c)           During any Daily Rate Period, such
Bonds shall be subject to redemption on any Business Day, as a whole or in
part, at the principal amount thereof, plus accrued and unpaid interest to the
date fixed for redemption, if any.

 

(d)           During any Weekly Rate Period, such
Bonds shall be subject to redemption on any Business Day, as a whole or in
part, at the principal amount thereof, plus accrued and unpaid interest to the
date fixed for redemption, if any.

 

(e)           During any Monthly Rate Period, such
Bonds shall be subject to redemption on each Interest Payment Date, as a whole
or in part, at the principal amount thereof.

 

(f)            During any Semi-annual Rate Period,
such Bonds shall be subject to redemption on each Interest Payment Date, as a
whole or in part, at the principal amount thereof.

 

(g)           During any Term Rate or Fixed Rate
Period, such Bonds shall be subject to redemption in whole or in part at any
time as follows:  after the No-Call
Period shown below, which shall begin on the first day of the Calculation
Period applicable to such Bonds or on a Fixed Rate Conversion Date, as the case
may be, and end on the enumerated anniversary thereof, at a redemption price
equal, initially, to the principal amount thereof, plus a premium equal to the
percentage of the principal amount to be redeemed shown in the Initial Premium
column, plus accrued and unpaid interest if paid on a Business Day other than
an Interest Payment Date.  The premium
percentage, if any, shall decline by the percentage shown in the Reduction in
Premium column on each anniversary of the date on which such Bonds are first
redeemable until the Bonds shall be redeemable without premium.

 

64

 

Calculation Period or Period to Maturity

Applicable to Subject Bonds

 

	
  Equal to or

  Greater Than

  	
   

  	
  But Less

  Than

  	
   

  	
  No Call

  Period

  	
   

  	
  Initial

  Premium

  	
   

  	
  Reduction

  in Premium

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  years

  	
   

  	
  N/A

  	
   

  	
  8

  	
  Years

  	
   

  	
   

  	
   

  	
  11⁄2%

  	
   

  	
  1⁄2%

  	
   

  
	
  12

  	
   

  	
  years

  	
   

  	
  18

  	
   

  	
  Years

  	
   

  	
  6

  	
  Years

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  1⁄2

  	
   

  
	
  7

  	
   

  	
  Years

  	
   

  	
  12

  	
   

  	
  Years

  	
   

  	
  3

  	
  Years

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5

  	
   

  	
  Years

  	
   

  	
  7

  	
   

  	
  Years

  	
   

  	
  2

  	
  Years

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4

  	
   

  	
  Years

  	
   

  	
  5

  	
   

  	
  Years

  	
   

  	
  2

  	
  Years

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  3

  	
   

  	
  Years

  	
   

  	
  4

  	
   

  	
  Years

  	
   

  	
  2

  	
  Years

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  0

  	
   

  	
  Years

  	
   

  	
  3

  	
   

  	
  Years

  	
   

  	
  Not callable

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

If
upon establishment of a Term Rate Period or a Fixed Rate Period, as the case
may be, the applicable Remarketing Agent certifies to the Trustee, Bond Counsel
and the Authority in writing that the foregoing schedule is not consistent with
then-prevailing market conditions, the Authority at the request of the Company
may revise the foregoing Initial Premium, Reductions in Premium and No-Call
Periods with respect to Bonds for which a Term Rate Period or Fixed Rate Period
is then being established without the approval of the Holders to reflect
then-prevailing market conditions, upon receipt of an Opinion of Bond Counsel
to the effect that any revisions pursuant to this paragraph, either by itself
or in conjunction with the establishment of a Calculation Period or a Fixed
Rate, as the case may be, are made in accordance with this Indenture, is
permitted under the Act and will not adversely affect the exclusion of interest
on the Bonds from gross income for Federal income tax purposes.

 

SECTION 5.02.           [Reserved]

 

SECTION 5.03.           Tender
for and Purchase upon Election of Holder.

 

1.          During any Daily Rate Period or Weekly
Rate Period, any Bond or portion thereof in a principal amount equal to an
authorized denomination (so long as the principal amount not purchased is an
authorized denomination) shall be purchased on the demand of the Holder thereof
on any Business Day at a price equal to the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase, upon delivery to
the Registrar and Paying Agent and the applicable Remarketing Agent at their
respective principal offices, by the close of business on any Business Day of a
Notice of Election to Tender in substantially the form attached hereto as, or
containing substantially the information contained in, Exhibit E hereto; provided, however, that
the substance of such Notice of Election to Tender must also be given
telephonically to the applicable Remarketing Agent prior to or simultaneously
with delivery of such written Notice of Election to Tender to such Remarketing
Agent.  The date on which such Bond
shall be purchased shall, at the request of the Holder thereof (i) if the Bond
then bears interest at a Daily Rate, be the date of delivery of such Notice of
Election to Tender if such Notice of Election to Tender is delivered to the
Registrar and Paying Agent and the applicable Remarketing Agent by 10:00 a.m.
(New York City time) on such date or may be any Business Day thereafter, and
(ii) if the Bond then bears interest at a Weekly Rate, shall be a Business Day
not prior to the 7th day next succeeding the date on which, by 10:00 a.m., such

 

65

 

Notice of Election to Tender is
delivered to the Registrar and Paying Agent and the Remarketing Agent.

 

2.             During any Monthly Rate Period or
Semi-annual Rate Period, any Bond or portion thereof in a principal amount
equal to an authorized denomination (so long as the principal amount not
purchased is an authorized denomination) shall be purchased on the demand of
the Holder thereof on the first Business Day following each Calculation Period
at a price equal to the principal amount thereof, upon delivery to the
Registrar and Paying Agent and the applicable Remarketing Agent, at their
respective principal offices of a Notice of Election to Tender in substantially
the form attached hereto as or containing substantially the information
contained in Exhibit E on or prior
to a Business Day which is not less than 10 days, in the case of Bonds bearing
interest at a Semi-annual Rate, or 7 days, in the case of Bonds bearing
interest at a Monthly Rate, prior to the proposed date of purchase; provided,
however, that the substance of such Notice of Election to Tender must also be
given telephonically to the applicable Remarketing Agent prior to or
simultaneously with delivery of such written Notice of Election to Tender to
such Remarketing Agent.

 

3.             Immediately upon receipt of a
Notice of Election to Tender delivered pursuant to the provisions of this
Section 5.03, the Registrar and Paying Agent shall notify, or cause to be
notified, the Trustee, the Company, the Authority and the applicable
Remarketing Agent, by telephone, promptly confirmed in writing, of such
receipt, specifying the contents thereof.

 

4.             Any Notice of Election to Tender
shall be irrevocable.  If a Holder fails
to deliver the Bonds referred to in such notice to the Registrar and Paying
Agent, such Bonds shall nevertheless be deemed to have been purchased on the
date established for the purchase thereof, no interest shall accrue on such
Bonds from and after the date of purchase and such Holder shall have no rights
hereunder thereafter as the owner of such Bonds except the right to receive the
purchase price of such Bonds.

 

5.             A Holder may not tender a Bond to
the Registrar and Paying Agent  pursuant
to this Section while such Bond bears interest at an Auction Rate, Commercial
Paper Rate, Term Rate or Fixed Rate.

 

SECTION 5.04.              Mandatory Tender for Purchase
upon Change in the Interest Rate Mode or on Business Day Following Certain
Calculation Periods.

 

1.             Upon a Change in the Interest Rate
Mode, the Bonds shall be subject to mandatory tender for purchase in accordance
with the terms hereof, on the effective date of such Change in the Interest
Rate Mode at the Purchase Price.

 

2.             During any Term Rate Period or
Commercial Paper Rate Period, the Bonds shall be subject to mandatory tender
for purchase in accordance with the terms hereof on the Business Day
immediately following each Calculation Period, each at a price equal to the
Purchase Price.

 

66

 

3.             Notice of mandatory tender for purchase upon a Change in
the Interest Rate Mode shall be in substantially the form attached hereto as,
or contain substantially the information contained in, Exhibit A hereto.

 

4.             Any such notice of mandatory tender
for purchase required by this Section 5.04 shall be given by the Trustee, in
the name of the Authority, or the Trustee shall cause the Registrar and Paying
Agent to give such notice (with copies thereof to be given to the Remarketing
Agent, the Registrar and Paying Agent, the Company, and in the case of Auction
Rate Bonds, the Auction Agent and the Authority) by first-class mail to the
Holders of the Bonds subject to purchase at their addresses shown on the books
of registry.

 

5.             Bonds held by or for the account of
the Company or the issuer of a Support Facility are not subject to mandatory
tender for purchase pursuant to this Section 5.04.

 

SECTION 5.05.              Extraordinary Optional
Redemption.  During any Term Rate
Period or Fixed Rate Period, the Bonds are also subject to redemption prior to
maturity in whole at any time at the option of the Authority, exercised at the
direction of the Company, upon notice given as provided in the Indenture, at a
redemption price equal to the principal amount thereof, together with unpaid
interest accrued thereon to the date fixed for redemption, in any of the
following events:

 

(i)            All
or substantially all of the Project shall have been damaged or destroyed or title
to, or the temporary use of, all or a substantial portion of the Project shall
have been taken under the exercise of the power of eminent domain by any
governmental authority, or person, firm or corporation acting under
governmental authority, as in each case renders the Project unsatisfactory to
the Company for its intended use;

 

(ii)           Unreasonable
burdens or excessive liabilities shall have been imposed upon the Authority or
the Company with respect to all or substantially all of the Project, including
without limitation the imposition of Federal, State or other ad valorem
property, income or other taxes other than ad valorem taxes in effect on the
date of original issuance of the Bonds levied upon privately owned property
used for the same general purpose as the Project; or

 

(iii)          Any
court or regulatory or administrative body shall enter or adopt, or fail to
enter or adopt, a judgment, order, approval, decree, rule or regulation, as a
result of which the Company elects to cease operation of all or substantially
all of the Project.

 

SECTION 5.06.           Special
Tax Redemption Provisions.

 

1.             During any
Semi-annual Rate Period, Term Rate Period or Fixed Rate Period, the Bonds shall
be subject to mandatory redemption as a whole (provided, however, that the Bonds
shall be redeemed in part if the Company obtains an Opinion of Bond Counsel to
the effect that, by redeeming such portion of the Bonds, the interest on the
remaining Bonds will

 

67

 

not be included for Federal
income tax purposes in the gross income of any owner of the Bonds (other than
an owner who is a “substantial user” of the Project or a “related person”
within the meaning of Section 147(a)(1) of the Code)) at any time at a
redemption price equal to 100% of the principal amount thereof, together with
unpaid interest accrued thereon to the redemption date, if, in a published or
private ruling of the Internal Revenue Service or in a final, nonappealable
judicial decision by a court of competent jurisdiction (provided that the
Company has been afforded the opportunity to participate at its own expense in
the proceeding resulting in such ruling or in the litigation resulting in such
decision, as the case may be), it is determined that, as a result of a failure
by the Company to observe any covenant, agreement or representation in the
Participation Agreement or the Tax Regulatory Agreement, interest on the Bonds
is included for Federal income tax purposes in the gross income (as defined in
Section 61 of the Code) of any owner of a Bond (other than a “substantial user”
of the Project or a “related person” within the meaning of Section 147(a)(1) of
the Code), and, in such event, the Bonds shall be subject to such mandatory
redemption not more than one hundred eighty (180) days after receipt by the
Trustee of notice of such published or private ruling or judicial decision and
a demand for redemption of the Bonds. 
The occurrence of an event requiring the redemption of the Bonds under
this paragraph does not constitute an event of default under any Note or under
the Indenture and the sole obligation in such event shall be for the Company to
prepay the Note in an amount sufficient to redeem the Bonds to the extent
required by this paragraph.

 

2.             During any Semi-annual Rate Period,
Term Rate Period or Fixed Rate Period, the Bonds may be redeemed in whole or in
part at any time at a redemption price equal to 100% of the principal amount
thereof, together with accrued and unpaid interest thereon to the redemption
date, if the Company has determined, on the basis of the advice of Bond Counsel
that, as a result of any action taken or expected to be taken, or failure to
take action, a reasonable risk exists that interest on the bonds will not be
excludable from gross income for Federal tax purposes.  Such conclusion and certification shall be
evidenced by delivery to the Trustee of a written certificate of an Authorized
Company Representative to the effect that the Company has reached such
conclusion, together with a copy of such advice of Bond Counsel.  The occurrence of an event permitting the
redemption of the Bonds under this paragraph does not constitute an event of
default under any Note or under the Indenture and the sole obligation in such
event shall be for the Company to prepay the Note in an amount sufficient to
redeem the  Bonds to the extent required
by this paragraph.

 

3.             During any Semi-annual Rate Period,
Term Rate Period or Fixed Rate Period, the Bonds will also be subject to
mandatory redemption at a redemption price equal to one hundred three percent
(103%) of the principal amount thereof plus unpaid interest accrued thereon to
the redemption date if the Company reasonably concludes and certifies to the
Trustee that the business, properties, condition (financial or otherwise),
operations or business prospects of the Company will be materially and
adversely affected unless the Company takes or omits to take a specified action
and that the Company has been advised in writing by Bond Counsel that the
specified action or omission would cause the use of the Project to be such
that, pursuant to Section 150 of the Code, the Company would not be entitled to
deduct the interest on the Bonds for purposes of determining the Company’s
Federal taxable income, for a period of not less than ninety (90) consecutive
or nonconsecutive days during a twelve-month period.  Such

 

68

 

conclusion and certification
shall be evidenced by delivery to the Trustee of a written certificate of an
Authorized Company Representative to the effect that the Company has reached
such conclusion, together with a certified copy of a resolution of the Board of
Trustees of the Company authorizing such certificate and a copy of such advice
of Bond Counsel.  In the event that the
Bonds become subject to redemption as provided in this paragraph, the Bonds
will be redeemed in whole unless redemption of a portion of the Bonds
outstanding would, in the Opinion of Bond Counsel, have the result that
interest payable on the Bonds remaining outstanding after such redemption would
be deductible for purposes of determining the Federal taxable income of the
Company, and, in such event, the Bonds to be redeemed shall be selected (in the
principal amount of $5,000 or any integral multiple thereof) by lot, in such
amount as is necessary to accomplish that result.  The occurrence of an event requiring the redemption of the Bonds
under this paragraph does not constitute an event of default under any Note or
under the Indenture and the sole obligation in such event shall be for the
Company to prepay the Note in an amount sufficient to redeem the Bonds to the
extent required by this paragraph.

 

SECTION 5.07.              Redemption
at Demand of the State of New York. 
In accordance with the provisions of Section 1864 of the Act, the State
of New York may, upon furnishing sufficient funds therefor, require the
Authority to redeem prior to maturity, as a whole, the Bonds on any Interest
Payment Date not less than twenty years after the Closing Date.  Any such redemption shall be at a redemption
price equal to the optional redemption price, if any, applicable on such date
set forth in Section 5.01 or if no such optional redemption price is applicable
at a redemption price equal to the principal amount thereof, in either case,
together with accrued and unpaid interest, if any, to the date fixed for
redemption, all in the manner provided in this Article V.  The Authority shall deposit any such funds
received by it with the Trustee.  During
any period during which no Direct-Pay Credit Facility is in effect, the Trustee
shall deposit any such funds in the Bond Fund and, upon notice published in the
manner provided in Section 1864 of the Act, shall apply such funds to the
redemption of the Bonds.  During any
period in which a Direct-Pay Credit Facility is in effect, the Trustee shall
deposit any such funds received by it in a segregated sub-account in the Bond
Fund, and upon notice published in the manner provided in Section 1864 of the
Act, shall draw monies under the related Credit Facility pursuant to Article IX
and apply such payment to the redemption of the Bonds at the price and in the
manner specified in the preceding sentence. 
Upon the application of such Credit Facility payments, the Trustee shall
pay the funds furnished by the State of New York to the issuer of the Credit
Facility with instructions to apply such funds to the reimbursement of the
issuer of the Credit Facility for such Credit Facility payment.  Upon such redemption and notwithstanding
anything to the contrary in this Indenture, the Trustee shall assign the Note
relating to the Bonds to or as directed by the Authority.

 

SECTION 5.08.              Mandatory Tender for Purchase
Upon Expiration of any Support  Facility
or Upon Delivery of an Alternate Support Facility.

 

1.             Except as otherwise set forth in
the last sentence of this Subsection 1, on the second Business Day next
preceding the date of expiration of any Support Facility, the Bonds shall be
subject to mandatory purchase at the Purchase Price, unless on or prior to the
35th day prior to such date of expiration the Company on behalf of the
Authority has furnished to the Trustee an extension of such Support
Facility.  The Bonds shall also be
subject to

 

69

 

mandatory purchase at the
Purchase Price, on the date there is delivered an Alternate Support Facility
meeting the requirements of Section 6.02. No tender for purchase of any Bonds
shall be required pursuant to this Section 5.08 during an Auction Rate Period
or a Fixed Rate Period.

 

2.             Notice of the mandatory tender for
purchase pursuant to this Section 5.08 shall be given on or prior to the 30th
day before the expiration date of the expiring Support Facility or on or prior
to the 30th day before the delivery of any Alternate Support Facility, as the
case may be, by the Trustee in the name of the Authority (with copies thereof
given to the Authority, the Remarketing Agent, the issuer of a Support
Facility, the Company and the Registrar and Paying Agent) by first-class mail
to the Holders of the Bonds subject to mandatory tender for purchase at their
addresses shown on the books of registry. Such notice shall be in substantially
the form attached hereto as, or contain substantially the information contained
in, Exhibit F hereto.

 

3.             Bonds held by or for the account of
the Company or the issuer of a Liquidity Facility are not subject to mandatory
tender for purchase pursuant to this Section 5.08.

 

SECTION 5.09.              Mandatory Tender Upon
Occurrence of any Terminating Event.

 

1.             Except as otherwise set forth in
the last sentence of this Subsection 1, upon the occurrence of any Terminating
Event, the Bonds shall be subject to mandatory tender for purchase at the
Purchase Price on a Business Day selected by the Trustee; provided, however,
that (i) such mandatory tender shall not occur later than the 5th day after
receipt of notice of the Terminating Event by the Trustee and (ii) such
mandatory tender date shall be a Business Day. 
The Bonds will not be subject to mandatory tender for purchase pursuant
to this Section 5.09 during any Auction Rate Period or any Fixed Rate Period.

 

2.             Notice of the mandatory tender for
purchase required by this Section 5.09 shall be in substantially the form
attached hereto as, or contain substantially the information contained in, Exhibit F hereto and shall be given to the
Holders of the Bonds subject to mandatory tender for purchase at their
addresses shown on the books of registry on or before the first Business Day
after receipt of notice of a Terminating Event from the issuer of the Support
Facility by the Trustee, in the name of the Authority, or the Trustee shall
cause the Registrar and Paying Agent to give such notice, by first-class mail
to the Holders of the Bonds subject to purchase at their address shown on the
books of registry (with copies thereof given to the Authority, the Remarketing
Agent, the Company and the Registrar and Paying Agent).

 

3.             Bonds held by or for the account of
the Company or the issuer of a Liquidity Facility are not subject to mandatory
tender for purchase pursuant to this Section 5.09.

 

70

 

SECTION 5.10.              General Provisions Applicable
to Mandatory and Optional Tenders for Purchase of Bonds.

 

1.             If interest has been paid on the
Bonds, or an amount sufficient to pay interest thereon has been deposited in
the Bond Fund, or an amount sufficient to pay accrued interest thereon, if any,
has been set aside in the Bond Purchase Fund held under the Bond Purchase Trust
Agreement, and the Purchase Price shall be available in the Bond Purchase Fund
for payment of Bonds subject to tender for purchase pursuant to Section 5.03,
5.04, 5.08 or 5.09, and if any Holder fails to deliver or does not properly
deliver the Bonds to the Registrar and Paying Agent for which a Notice of
Election to Tender has been properly filed or which are subject to mandatory
tender for purchase on the purchase date therefor, such Bonds shall
nevertheless be deemed tendered and purchased on the date established for the
purchase thereof, no interest shall accrue on such Bonds from and after the
date of purchase and such former Holders shall have no rights hereunder as the
registered owners of such Bonds, except the right to receive the Purchase Price
of and interest to the purchase date, if any, on such Bonds upon delivery
thereof to the Registrar and Paying Agent in accordance with the provisions
hereof.  The purchaser of any such Bonds
remarketed by the Remarketing Agent, or the issuer of any Support Facility, to
the extent Bonds are purchased with the proceeds of a draw on, or borrowing or
payment under, the Support Facility available therefor, shall be treated as the
registered owner thereof for all purposes of the Indenture.  The payment of Bonds pursuant to Section
5.03 shall be subject to delivery of such Bonds duly endorsed in blank for
transfer or accompanied by an instrument of transfer thereof in form
satisfactory to the Registrar and Paying Agent executed in blank for transfer
at the principal office of the Registrar and Paying Agent at or prior to 10:00
a.m. (11:30 a.m. for Bonds bearing interest at the Weekly Rate and 12:00 noon,
for Bonds bearing interest at the Daily Rate) (New York City time), on a
specified purchase date.  The Registrar
and Paying Agent may refuse to make payment with respect to any Bonds tendered
for purchase pursuant to Sections 5.03, 5.04, 5.08 or 5.09 not endorsed in
blank or for which an instrument of transfer satisfactory to the Registrar and
Paying Agent has not been provided.

 

2.             The Purchase Price of Bonds subject
to tender for purchase pursuant to Section 5.03, 5.04, 5.08 or 5.09 in an
aggregate principal amount of at least one million dollars ($1,000,000) shall
be payable in immediately available funds or by wire transfer upon written
notice from the Holder thereof containing the wire transfer address (which
shall be in the continental United States) to which such Holder wishes to have
such wire directed, if such written notice is received by the Registrar and
Paying Agent not less than five days prior to the related purchase date.

 

3.             Bonds subject to mandatory tender
for purchase pursuant to Sections 5.08 or 5.09 shall not be remarketed unless
and until an Alternate Support Facility meeting the requirements of Section
6.02 of the Indenture is in full force and effect; provided, however, that
Bonds may be remarketed and no such Alternate Support Facility is required to
be in effect if, at the time the Bonds are sought to be remarketed, the Bonds
bear interest at an Auction Rate or a Fixed Rate.

 

71

 

4.             In the event Bonds tendered for
purchase pursuant to Section 5.03 or 5.04 shall be paid from a drawing under a
Liquidity Facility, such Bonds shall not be remarketed unless and until the
Trustee or the Registrar and Paying Agent has been notified by the Liquidity
Facility Issuer and, upon receipt of such notice, the Trustee or the Registrar
and Paying Agent has notified the applicable Remarketing Agent that the amount
available for a drawing under such Liquidity Facility has been restored.

 

SECTION 5.11.              Selection of Bonds to be
Redeemed.  A redemption of Bonds
shall be a redemption of the whole or of any part of the Bonds from any funds
available for that purpose in a principal amount equal to an authorized
denomination (so long as the principal amount not redeemed is an authorized
denomination).  If less than all Bonds
shall be redeemed, the particular Bonds to be redeemed shall be chosen by the
Trustee, or the Trustee shall direct the Registrar and Paying Agent to so
choose, as hereinafter provided.  If
less than all the Bonds shall be called for redemption under any provision of
this Indenture permitting such partial redemption, the particular Bonds or
portions of Bonds to be redeemed shall be selected (a) first, from Bonds held
or owned by or for the issuer of a Support Facility pursuant to any Support
Facility, (b) second, from Bonds for which the Registrar and Paying Agent has
received, prior to such selection, a Notice of Election to Tender requiring the
Registrar and Paying Agent to purchase such Bonds on the date on which the
Bonds being selected are to be redeemed and (c) third, from all other Bonds
then Outstanding, by lot or on a pro rata basis by the Trustee or, upon
direction of the Trustee, by lot by the Registrar and Paying Agent; provided,
however, that the portion of any Bond to be redeemed shall be in the principal
amount of $100,000 or any integral multiple thereof during a Commercial Paper
Rate Period, a Daily Rate Period, a Weekly Rate Period or a Monthly Rate
Period, $25,000 or any integral multiple thereof during an Auction Rate Period,
or $5,000 or any integral multiple thereof at any other time and that, in
selecting Bonds for redemption, the Trustee or Registrar and Paying Agent shall
treat each Bond as representing that number of Bonds which is obtained by
dividing the principal amount of such registered Bond in excess of $100,000 by
$100,000 during a Commercial Paper Rate Period, a Daily Rate Period, a Weekly
Rate Period or a Monthly Rate Period, $25,000 during an Auction Rate Period,
and $5,000 at any other time (such amounts being hereinafter referred to as the
“applicable units of principal amount”). 
If it is determined that one or more, but not all of the $100,000,
$25,000 or $5,000 units of principal amount represented by any such Bond is to
be called for redemption, then upon notice of intention to redeem such
$100,000, $25,000 or $5,000 unit or units, the Holders of such Bonds shall forthwith
surrender such Bonds to the Registrar and Paying Agent for (1) payment of the
redemption price (including the redemption premium, if any, and accrued
interest to the date fixed for redemption) of the $100,000, $25,000 or $5,000
unit or units of principal amount called for redemption and (2) exchange for a
new Bond or Bonds of the aggregate principal amount of the unredeemed balance
of the principal of such Bonds.  If the
Holders of any such Bond of a denomination greater than $100,000, $25,000 or
$5,000 shall fail to present such Bond to the Registrar and Paying Agent, for
payment and exchange as aforesaid, such Bond shall, nevertheless, become due
and payable on the date fixed for redemption to the extent of the $100,000,
$25,000 or $5,000 unit or units of principal amount called for redemption (and
to that extent only).

 

72

 

SECTION 5.12.              Notice of Redemption.

 

1.             Notice of redemption shall be given
by the Trustee by mailing a copy of the redemption notice by first-class mail
at least 30 days prior to the date fixed for redemption to the Holders of the
Bonds to be redeemed at the addresses shown on the registration books
maintained by the Registrar and Paying Agent. 
A copy of such notice of redemption shall be given by the Trustee to the
Bond Insurer and the Auction Agent at least 30 days prior to the date fixed for
redemption.  Any redemption may be
conditioned on the receipt of moneys by the Registrar and Paying Agent
sufficient to pay the redemption price on the Redemption Date of Bonds called
for redemption, if the notice of redemption so states.

 

2.             The Registrar and Paying Agent
shall not be required to transfer or exchange Bonds during any period beginning
at the opening of business fifteen (15) days before the day of mailing of a
notice of redemption and ending at the close of business on the day fixed for
redemption; provided, however, that the foregoing shall not apply during a
Daily Rate Period, a Weekly Rate Period, a Commercial Paper Rate Period or an
Auction Rate Period.

 

3.             Each notice of redemption shall
state: (i) the full title of the Bonds, the redemption date, the place of
redemption and the redemption price payable upon such redemption; (ii) that the
interest on the Bonds, or on the principal amount thereof to be redeemed, shall
cease to accrue from and after such redemption date and (iii) that on said date
there will become due and payable on the Bonds the principal amount thereof to
be redeemed and the interest accrued on such principal amount to the redemption
date, if any, and the premium, if any, thereon. Each notice of redemption
mailed to the Holder of the Bonds shall, if less than the entire principal sum
thereof is to be redeemed, also state the principal amount thereof and the distinctive
numbers of the Bonds to be redeemed and that such Bonds must be surrendered to
the Trustee in exchange for the payment of the principal amount thereof to be
redeemed and the issuance of a new Bond equaling in principal amount that
portion of the principal sum not to be redeemed of the Bonds to be surrendered.
The failure to give notice to any Holder of a Bond or any defects in such
notice shall not affect the proceedings for the redemption of the Bonds for
which notice has been properly given.

 

SECTION 5.13.              Bonds Purchased for Account of
Liquidity Facility Issuer.  Bonds
subject to mandatory purchase pursuant to Section 5.03, 5.04, 5.08 or 5.09
shall be deemed to be purchased by the Company except to the extent the
Liquidity Facility expressly provides that the Bonds are to be purchased by the
issuer of the Liquidity Facility in which event such Bonds shall be deemed to
be purchased by the issuer of the Liquidity Facility in a principal amount
equal to the amount of a draw on, or borrowing or payment under, the Liquidity
Facility for the payment of Bonds subject to purchase, upon the deposit with
the Registrar and Paying Agent of the proceeds of such draw on, or borrowing or
payment under, the Liquidity Facility in an amount equal to the principal of
such Bonds plus accrued interest thereon to the purchase date, and such Bonds
shall not be deemed paid and shall remain outstanding hereunder until the
issuer of the Liquidity Facility has been reimbursed for such draws on, or
borrowings or payments under, the Liquidity Facility to pay such principal and
interest.  Unless the issuer of any
Liquidity Facility shall otherwise direct, any Bonds purchased by the issuer of
the Liquidity Facility shall be immediately registered in the name of the
Company except to the extent the Liquidity Facility expressly provides that the
Bonds are to be purchased by the issuer of the Liquidity Facility in which
event such Bonds shall be registered

 

73

 

in
the name of the issuer of the Liquidity Facility as a Holder and the issuer of
the Liquidity Facility shall have all rights of a Holder of Bonds under this
Indenture.

 

SECTION 5.14.              Effect of Redemption.  If the Bonds have been duly called for
redemption and notice of the redemption thereof has been duly given or provided
for as hereinbefore provided and if monies for the payment of the Bonds (or of
the principal amount thereof to be redeemed) and the interest to accrue to the
redemption date on the Bonds (or of the principal amount thereof to be
redeemed), if any, and the premium, if any, thereon are held for the purpose of
such payment by the Trustee, then the Bonds (or the principal amount thereof to
be redeemed) shall on the redemption date designated in such notice, become due
and payable and interest on the Bonds (or the principal amount thereof to be
redeemed) so called for redemption shall cease to accrue from such date and the
Holder thereof shall thereafter have no rights hereunder as the Holder of such
Bonds (or the principal amount thereof to be redeemed) except to receive the
principal amount thereof and premium (if any) thereon and interest to the
redemption date.

 

SECTION 5.15.              Cancellation of Redeemed Bonds.  Any Bonds surrendered or redeemed pursuant
to the provisions of this Article shall be cancelled by the Registrar and
Paying Agent.

 

74

 

ARTICLE VI

 

SUPPORT FACILITY

 

SECTION 6.01.              Support Facility - General.  Pursuant to the Participation Agreement, the
Company has agreed not to request that the interest rate mode applicable to the
Bonds be adjusted to an Adjustable Rate or a Fixed Rate unless on the effective
date of the applicable Change in
the Interest Rate Mode the Bonds shall be rated at least “A” by S&P or “A2”
by Moody’s or “A” by Fitch or an equivalent rating by any nationally recognized
rating agency.  Subject to the
requirements of the Participation Agreement, such rating of the Bonds may, but
is not required to, be achieved by obtaining a Support Facility which meets the
requirements of this Article VI.  The
Company has further agreed to maintain a Liquidity Facility meeting the
requirements of the Participation Agreement with respect to the Bonds at all
times, except with respect to Bonds bearing interest at an Auction Rate, a
Fixed Rate applicable to the stated maturity date of the Bonds or a Term Rate
for a period of at least five years.  A
Liquidity Facility also must be in effect on or prior to the effective date of
(i) any Change in the Interest Rate Mode from an Auction Rate to another
Adjustable Rate (other than a Change in the Interest Rate Mode to an Auction
Rate), and (ii) any change in the Interest Rate Mode from a Fixed Rate to an
Adjustable Rate (other than a Change in the Interest Rate Mode to an Auction
Rate).  The Trustee shall be furnished
with a certified copy of any Support Facility obtained pursuant to this Section
6.01.

 

Notwithstanding
anything herein to the contrary, for so long as no Bond Insurer Default has
occurred and is continuing, neither the Company nor the Authority shall obtain
or put into effect any Credit Facility other than such Policy for the
applicable subseries of the Bonds, nor consent to or approve any such action.

 

SECTION 6.02.              Support Facility - Delivery of
an initial Liquidity Facility and Alternate Support Facility.

 

1.             At any time, the Authority may, at
the request of the Company, provide for the delivery to the Trustee of an
initial Liquidity Facility or an Alternate Support Facility.  The termination date of such initial
Liquidity Facility or such Alternate Support Facility, as the case may be,
shall be a date not earlier than 364 days from its date of issuance, subject to
earlier termination upon the occurrence of (i) a Terminating Event or another
event of default under the related reimbursement agreement or other
corresponding agreement relating to such initial Liquidity Facility or
Alternate Support Facility, as the case may be, (ii) the issuance of an
alternate Liquidity Facility or a subsequent Alternate Support Facility, as the
case may be, (iii)  payment in full of
the Outstanding Bonds or (iv) in the case of an alternate Liquidity Facility, a
Change in the Interest Rate Mode to an Auction Rate or a Fixed Rate.  Any Liquidity Facility shall specifically
allow, in the case of occurrence of any event or events which under the terms
of such Liquidity Facility or any agreement providing for the issuance thereof
would cause the termination or expiration of such Liquidity Facility, for the
mandatory tender of Bonds pursuant to Section 5.09 with a draw on or borrowing
or payment under such Liquidity Facility prior to such termination or
expiration.  On or prior to the date of
the delivery of an initial Liquidity Facility or an Alternate Support Facility
to the Trustee, the Company shall furnish to the

 

75

 

Trustee on behalf of the
Authority (a) an Opinion of Bond Counsel stating that the delivery of such
initial Liquidity Facility or Alternate Support Facility, as the case may be,
to the Trustee is authorized under this Indenture and complies with the terms
hereof and (b) in the case of an Alternate Support Facility, confirmation from
S&P, if the Bonds are then rated by S&P, from Moody’s, if the Bonds are
then rated by Moody’s, or another rating agency, if the Bonds are then rated by
such rating agency, to the effect that such rating agency has reviewed the
proposed Alternate Support Facility and that the substitution of the proposed
Alternate Support Facility for the Support Facility will not, by itself, result
in a reduction or withdrawal of its long or short-term rating of the Bonds
below the rating category of S&P or Moody’s or such other rating agency, as
the case may be, then in effect with respect to the Bonds.

 

2.             Nothing contained herein shall
prevent the Authority, at the request of the Company, from delivering an
Alternate Support Facility in substitution for a Support Facility which will
result in a decline in the short-term or long-term rating or both assigned to
such Bonds by Moody’s or S&P or such other rating agency as a result of the
Alternate Support Facility; provided, that (i) the Opinion of Bond Counsel
referred to in the preceding paragraph is obtained;  provided that such opinion shall also be to the effect that
delivery of such Alternate Support Facility will not adversely affect the
exclusion from gross income of interest on the Bonds for Federal income tax
purposes and (ii) all Outstanding Bonds are subject to mandatory tender for
purchase pursuant to Section 5.08 (unless the Bonds bear an Auction Rate or a
Fixed Rate).  The Authority, or the
Company on behalf of the Authority, shall deliver notice to the Trustee of the
substitution of an Alternate Support Facility which will result in a decline in
the short-term or long-term ratings assigned to the Bonds pursuant to this
Subsection 2 of Section 6.02 at least forty-five (45) days before the date of
substitution.

 

3.             Each Liquidity Facility and each
Liquidity Facility Issuer shall be subject to the prior written approval of the
Bond Insurer, which approval shall not be unreasonably withheld.

 

SECTION 6.03.              Trustee not Responsible for
Enforcement of Support Facility. 
The Trustee shall have no responsibility with respect to the enforcement of any Support Facility obtained
hereunder.

 

SECTION 6.04.              Payments Pursuant to the
Policies.  At any time a Policy has
been issued by the Bond Insurer:

 

1.
            The Trustee shall, at least
one Business Day prior to each scheduled Interest Payment Date and each date on
which payment of principal of the Bonds is scheduled to be due (each such date
being a “Principal Payment Date”), determine whether there will be sufficient
funds in the Bond Fund to pay the principal of and/or interest on the Bonds on
such Interest Payment Date or Principal Payment Date.  If the Trustee determines that there will be insufficient funds
in the Bond Fund, the Trustee shall so notify the Bond Insurer and its
designated agent (if any) (the “Insurance Trustee”).  Such notice shall specify the amount of the anticipated
deficiency, the Bonds to which such deficiency is applicable and whether such
Bonds will be deficient as to principal or interest, or both.  If the Trustee has not so notified the Bond
Insurer and the Insurance Trustee (if any) and made a claim under the Policy
relating to

 

76

 

the
applicable subseries of the Bonds at least one Business Day prior to an
Interest Payment Date or Principal Payment Date, the Bond Insurer will make
payments of principal or interest due on the Bonds on or before the first
Business Day next following the date on which the Bond Insurer shall have
received notice of nonpayment from the Trustee.

 

2.          The Trustee shall
after giving notice to the Bond Insurer and the Insurance Trustee (if any) as
provided in paragraph 1 of this Section 6.04, make available to the Bond
Insurer and the Insurance Trustee (if any), the registration books of the
Authority maintained by the Trustee and all records relating to the Bond Fund maintained
under this Indenture.

 

3.          The Trustee shall
provide the Bond Insurer and the Insurance Trustee with a list of Holders of
the Bonds entitled to receive principal or interest payments from the Bond
Insurer under the terms of the applicable Policy, and shall make arrangements
with the Bond Insurer or the Insurance Trustee (if any) (i) to mail checks or
drafts to the Holders of the Bonds entitled to receive full or partial interest
payments from the Bond Insurer and (ii) to pay principal upon Bonds surrendered
to the Insurance Trustee by the Holders of Bonds entitled to receive full or
partial principal payments from the Bond Insurer.

 

4.          The Trustee shall, at
the time it provides notice to the Bond Insurer pursuant to paragraph 1 of this
Section 6.04, notify Holders of Bonds entitled to receive the payment of
principal or interest thereon from the Bond Insurer (i) as to the fact of such
entitlement, (ii) that the Bond Insurer will remit to them all or a part of the
interest payments next coming due upon proof of the Holders’ entitlement to
interest payments and delivery to the Bond Insurer or the Insurance Trustee (if
any), in form satisfactory to the Bond Insurer or the Insurance Trustee (if
any), of an appropriate assignment of the Holder’s right to payment, (iii) that
should they be entitled to receive full payment of principal from the Bond
Insurer, they must surrender their Bonds (along with an appropriate instrument
of assignment in form satisfactory to the Insurance Trustee to permit ownership
of such Bonds to be registered in the name of the Bond Insurer) for payment to
the Bond Insurer or the Insurance Trustee (if any), and not the Trustee, and
(iv) that should they be entitled to receive partial payment of principal from
the Bond Insurer, they must surrender their Bonds for payment thereon first to
the Trustee, who shall note on such Bonds the portion of the principal paid by
the Trustee and then, along with an appropriate instrument of assignment of the
Holder’s right to payment in form satisfactory to the Bond Insurer or the
Insurance Trustee (if any), to the Bond Insurer or the Insurance Trustee (if
any), which will then pay the unpaid portion of principal.

 

5.          In the event that the
Trustee has notice that any payment of principal of or interest on a subseries
of the Bonds which has become Due for Payment (as defined in the Bond Insurer’s
Policy applicable to such subseries) and which is made to a Holder of a Bond by
or on behalf of the Authority has been deemed a preferential transfer and theretofore
recovered from its Holder pursuant to the United States Bankruptcy Code by a
trustee in bankruptcy in accordance with the final, nonappealable order of a
court having competent jurisdiction, the Trustee shall, at the time the Bond
Insurer is notified pursuant to paragraph 1 of this Section 6.04, notify all
Holders of the Bonds that in the event that any Holder’s payment is so
recovered, such Holder will be entitled to payment from the Bond Insurer to the
extent of such recovery if sufficient funds are not otherwise available, and
the Trustee shall furnish to the

 

77

 

Bond
Insurer its records evidencing the payments of principal of and interest on the
Bonds which have been made by the Trustee and subsequently recovered from
Holders of the Bonds and the dates on which such payments were made.

 

6.          In
addition to those rights granted to the Bond Insurer under this Indenture, the
Bond Insurer shall, to the extent it makes payment of principal of or interest
on Bonds, become subrogated to the rights of the recipients of such payments in
accordance with the terms of the applicable Policy, and to evidence such
subrogation (i) in the case of subrogation as to claims for past due interest,
the Trustee shall note the Bond Insurer’s rights as subrogee on the
registration books upon receipt from the Bond Insurer of proof of the payment
of interest thereon to the Holders of the Bonds, and (ii) in the case of
subrogation as to claims for past due principal, the Trustee shall note the
Bond Insurer’s rights as subrogee on the registration books upon surrender of
the Bonds by the Holders thereof together with proof of the payment of
principal thereof to the Holders of the Bonds.

 

7.          If
the Trustee provides a notice to the Bond Insurer pursuant to paragraph 1 of
this Section 6.04, then, so long as any Bonds bear interest at an Auction Rate,
the Trustee shall confirm with the Bond Insurer and the Insurance Trustee (if
any) on or prior to the Business Day immediately following the day on which
such notice was given that the Bond Insurer made payments under the applicable
Policy in an amount that is equal to or exceeds the deficiency in the Bond
Fund.  If by the end of business on the
Business Day immediately following the day on which a notice was given pursuant
to paragraph 1 of this Section 6.04 the Trustee was unable to confirm, upon its
communication with the Bond Insurer and the Insurance Trustee (if any), that
the Bond Insurer made payments under the applicable Policy in an amount that is
equal to or exceeds the deficiency in the Bond Fund, then the Trustee shall
immediately send a notice to the Auction Agent and Holders of each subseries of
Bonds by telex, telecopy or similar means of the occurrence of a Payment
Default.  If at any time after the
occurrence of a Payment Default the Trustee confirms with the Bond Insurer and
the Insurance Trustee (if any) that the Bond Insurer made payments under the
applicable Policy in an amount that is equal to or exceeds the deficiency in the
Bond Fund, the Trustee shall immediately give a notice to the Auction Agent and
Holders of each subseries of the Bonds that the Bond Insurer has cured the
default under such Policy by making all scheduled payments thereunder.

 

8.          The
notice address for the Bond Insurer shall be:

 

	
   

  	
  XL Capital Assurance Inc.

  
	
   

  	
  1221 Avenue of the
  Americas

  
	
   

  	
  31st Floor

  
	
   

  	
  New York, NY 10020-1001

  

 

SECTION 6.05.           Rights of Credit Facility Issuer After an Event of Default.  Notwithstanding any other provision of this
Indenture, upon the occurrence of an Event of Default and so long as no Bond
Insurer Default has occurred and is continuing, then, in all such events, the
Bond Insurer shall be deemed to be the sole owner of the Bonds when the
approval, consent, direction or any other action of the owners of such Bonds is
required or may be exercised under this Indenture, and shall be entitled to
control and direct the enforcement of all

 

78

 

rights and remedies granted to the Holders or the Trustee for the
benefit of the Holders, including, without limitation, (i) the right to control
and direct the declaration of principal of and accrued interest on all the
Bonds then Outstanding to be due and payable immediately as described herein, (ii)
the right to rescind and annul such declaration and the consequences of such
declaration, (iii) the right to waive any Event of Default and its consequences
and (iv) the rights and remedies granted to the Trustee pursuant to Section
12.05.

 

SECTION 6.06.           Additional Rights of Bond Insurer.  For so long as no Bond Insurer Default has
occurred and is continuing, the following provisions shall apply:

 

(a)           the Bond Insurer’s consent shall be
required in addition to Holder consent, when required, for the initiation or
approval of any action which requires Holder consent;

 

(b)           to
the extent that the Company has entered into a continuing disclosure agreement
with respect to the Bonds, the Bond Insurer shall be included as a party to be
notified; and

 

(c)           To
the extent that this Indenture confers upon or gives or grants to the Bond
Insurer any right, remedy or claim under or by reason of this Indenture, the
Bond Insurer is hereby explicitly recognized as being a third-party beneficiary
hereunder and may enforce any such right, remedy or claim conferred, given or
granted hereunder.

 

SECTION 6.07.           Qualification of Bond Insurer’s Right to Consent.  A Bond Insurer’s right to consent pursuant
to the provisions of this Indenture shall not exist when a Bond Insurer Default
has occurred and is continuing.

 

79

 

ARTICLE
VII

 

GENERAL
TERMS AND PROVISIONS OF BONDS

 

SECTION 7.01.           Execution and Authentication of
Bonds.  The Bonds shall be executed
on behalf of the Authority by the manual or facsimile signature of its Chair,
Vice-Chair, President, Treasurer or any Vice President and shall be sealed with
the seal of the Authority, or in lieu thereof shall bear a lithographed,
engraved or otherwise reproduced facsimile of such seal attested by the manual
or facsimile signature of its Vice President, Treasurer, Secretary or an
Assistant Secretary.

 

Bonds
bearing the manual signature of the officer of the Authority authorized to
execute such Bonds in office on the date of such manual signing thereof and
Bonds bearing the facsimile signature of the officer of the Authority
authorized to execute such Bonds in office on the date of the reproducing of
such facsimile signature on such Bonds, shall be valid and binding obligations
in accordance with their terms, notwithstanding that before the delivery
thereof and payment therefor the person whose signature appears thereon shall
have ceased to be such officer.

 

Only
Bonds having endorsed thereon a certificate of authentication substantially in
the form set forth in Article XVI, duly executed by the Trustee shall be
entitled to any right or benefit under this Indenture.  No Bonds shall be valid or obligatory for
any purpose unless and until such certificate of authentication shall have been
duly executed by the Trustee, and such certificate of the Trustee upon a Bond
shall be conclusive evidence that such Bond has been duly authenticated and
delivered under this Indenture and that the Holder thereof is entitled to the
benefits of this Indenture.  The
Trustee’s certificate of authentication on any Bond shall be deemed to have
been duly executed if signed by an authorized officer of the Trustee.

 

SECTION 7.02.           Books of Registry.  The Registrar and Paying Agent shall keep or
cause to be kept at its principal office books (herein referred to as the
“books of registry” or “registration books”) for the registration and transfer
of the Bonds.  Upon presentation at its
principal office for such purpose the Registrar and Paying Agent, under such
reasonable regulations as it may prescribe, shall register or transfer, or
cause to be registered or transferred, on said books of registry, the Bonds as
hereinafter set forth.  The books of
registry shall at all times during business hours be open for inspection by the
Authority, the Company and the Trustee or their duly authorized agents or representatives.

 

SECTION 7.03.           Transfer, Registration and
Exchange of Bonds.  The transfer of
the Bonds may be registered only upon the books of registry required to be kept
pursuant to Section 7.02 upon
surrender thereof to the Registrar and Paying Agent, together with an
assignment duly executed by the Holder thereof or his or her duly authorized
agent and accompanied by a guarantee of signature, each in such form as shall
be satisfactory to the Registrar and Paying Agent.  Upon any such registration of transfer the Authority shall
execute and the Trustee shall authenticate and deliver in exchange for such
Bonds a new Bond or Bonds registered in the name of the transferee or transferees
for a like aggregate principal amount, of

 

80

 

any denomination or denominations authorized by this Indenture.  No transfer of any Bond shall be effective
until entered on the books of registry.

 

Any
Bond surrendered in any such registration of transfer shall forthwith be
cancelled by the Trustee.  Any Bonds
registered and transferred to a new Holder pursuant to this Section shall be
delivered to the Holder at the principal office of the Registrar and Paying
Agent or sent by first-class mail to the Holder at his or her request, risk and
expense.

 

Bonds,
upon surrender thereof at the principal corporate trust office of the Registrar
and Paying Agent, together with an assignment duly executed by the Holder or
his or her authorized agent and accompanied by a guarantee of signature, each
in such form as shall be satisfactory to the Registrar and Paying Agent, may,
at the option of the Holder thereof, be exchanged for an equal aggregate
principal amount of Bonds of any denomination or denominations authorized by
this Indenture and in the same form as the Bonds surrendered for exchange.  All Bonds so surrendered pursuant to this
Section shall be cancelled by the Trustee.

 

Any
Bonds to be delivered to the Holder upon any such exchange shall be delivered
to the Holder at the principal office of the Registrar and Paying Agent or sent
by first-class mail to the Holder thereof at his or her request, risk and
expense.

 

Any
taxes or other governmental charges required to be paid with respect to the
registration of transfer or exchange of the Bonds shall be paid by the Holder
requesting registration of such transfer or exchange, as a condition precedent
to the exercise of such privilege. The Authority or the Registrar and Paying
Agent, or both, may charge the Company for every registration of transfer or
exchange sufficient to reimburse it for any and all costs required to be paid
in respect thereof.

 

SECTION 7.04.           Mutilated, Lost, Stolen, or
Destroyed Bonds.  In the event any
Bond shall be lost, stolen, destroyed, wholly or in part, or so defaced as to
impair its value to the Holder, the Trustee shall, upon compliance with the
terms provided by law, authenticate and deliver a new Bond of like date and
tenor in exchange or replacement therefor against delivery for cancellation of
such mutilated Bond, or in lieu of and in replacement of a destroyed, stolen or
lost Bond, and upon payment by the Holder of the reasonable expenses of the
Registrar and Paying Agent and the Authority and the reasonable charges of the
Trustee and Registrar and Paying Agent in connection therewith and, in the
event that the Bond is destroyed, stolen or lost, the Holder’s filing with the
Registrar and Paying Agent of evidence satisfactory to it that the Bond was destroyed, stolen or lost, of the Holder’s
ownership thereof, and furnishing the Registrar and Paying Agent such security
and indemnity as is satisfactory to it which shall name the Authority as an
additional indemnified party. Any replacement Bond issued under the provisions
of this Section in exchange or substitution for the defaced, mutilated or
partly destroyed Bond or in substitution for the allegedly lost, stolen or
wholly destroyed Bond shall be entitled to the identical benefits under this
Indenture as was the original Bond in lieu of which such replacement Bond is
issued. Each such replacement Bond shall be prepared in substantially the same
manner as the original.

 

81

 

Notwithstanding
the foregoing provisions of this Section, if the lost, stolen, destroyed,
defaced or mutilated Bond has matured or been called for redemption and the
date fixed for redemption thereof has arrived, at the option of the Authority,
payment of the amount due thereon may be made without the issuance of any
replacement Bond upon receipt of like evidence, indemnity, security and payment
of expenses and the surrender for cancellation of the defaced or mutilated or
partly destroyed Bond and upon such other conditions as the Trustee may
prescribe.

 

Except
as provided in this sentence and as permitted in the following paragraph, any
replacement Bond shall be in the form of the Bond being replaced, and be dated
the date of its issuance and bear such number as shall be assigned thereto by
the Registrar and Paying Agent, with such subseries designation, if any, as may
be deemed appropriate by the Registrar and Paying Agent.  The Registrar and Paying Agent shall make an
appropriate notation in the books of registry that a replacement Bond has been
issued in exchange or substitution for the defaced, mutilated, lost, stolen, or
wholly or partly destroyed Bond.

 

There
may be imprinted or affixed on the face and the panel portion of any duplicate
Bond a mark to identify such Bond as a replacement Bond.

 

Prior
to arranging for the preparation or printing of a replacement Bond, the Trustee
and the Registrar and Paying Agent may require a deposit by the Holder to
secure the Trustee, the Registrar and Paying Agent and the Authority for costs
and expenses incurred by them in the preparation, printing, execution and
issuance of such replacement Bond.

 

Any
amount of such deposit received by the Registrar and Paying Agent in excess of
the amount required to reimburse the Registrar and Paying Agent, the Trustee or
the Authority for costs and expenses shall be returned to the party which made
the deposit.

 

Any
defaced, mutilated or partly destroyed Bond surrendered to the Registrar and
Paying Agent in substitution for a new Bond pursuant to this Section shall be
cancelled by the Trustee.

 

SECTION 7.05.           Temporary Bonds.  Pending the preparation of definitive Bonds,
interim receipts or certificates (herein referred to as “temporary Bonds”) may initially be issued, exchangeable for
definitive Bonds when the latter are ready for delivery. Such temporary Bonds
may be printed, lithographed or typewritten, shall be of such denomination or
denominations as may be determined by the Authority and may contain such
references to any of the provisions of this Indenture as may be appropriate. If
temporary Bonds are issued, the Authority will cause to be furnished duly
executed definitive Bonds without delay, and thereupon the temporary Bonds may
be surrendered for cancellation at the principal office of the Trustee in
exchange for definitive Bonds and without charge for such exchange, and the
Registrar and Paying Agent shall deliver in exchange for such temporary Bonds
so surrendered an equal aggregate principal amount of definitive duly executed
Bonds, of authorized denominations. Until so exchanged, the temporary Bonds
shall be entitled to the same benefits under this Indenture as definitive
Bonds.

 

82

 

Nothing
in this Indenture shall prevent the Authority from delivering, and the
Authority is hereby expressly permitted to deliver, Auction Rate Bonds in
typewritten form to the Securities Depository as registered owner thereof.

 

SECTION 7.06.           Disposition of Bonds.  Any Bond surrendered to the Registrar and
Paying Agent for payment shall be cancelled upon such payment by the Trustee.
The Trustee shall dispose of any cancelled Bond which has been paid and which
bears any date two (2) years prior to the date of disposition in accordance
with the Trustee’s procedures in effect for the disposition of cancelled
securities as of the date of such disposition.
When the Trustee shall dispose of any Bond, it shall deliver a certificate of
such disposition to the Authority and the Company.

 

83

 

ARTICLE VIII

 

ESTABLISHMENT
OF THE PROJECT FUND

 

SECTION 8.01.           Project Fund.

 

1.          There is hereby
created and established a special trust fund to be designated “Consolidated
Edison Company of New York, Inc. Series 2004A Project Fund” (hereinafter
referred to as the “Project Fund”) to be held by the Trustee.  All income or gain on monies deposited in
the Project Fund shall be retained therein.

 

2.          There shall be
deposited into the Project Fund the proceeds of the Bonds issued hereunder.

 

3.          The monies on deposit
from time to time in the Project Fund shall be held under and subject to this
Indenture, but shall not be subject to the liens, pledges, charges, assignments
and trusts created hereby for the security and benefit of the Holders of the Bonds
and shall not be available for the payment of Bonds within the meaning of the
Indenture, and shall be used and applied solely for the purpose of refunding
the Prior Bonds in accordance with the remaining provisions of this Section.

 

4.          The Trustee is authorized
and directed to make payments from the Project Fund to pay the redemption price
of the Prior Bonds or costs incurred in connection therewith, upon receipt of a
letter or letters signed by an Authorized Company Representative so directing.

 

84

 

ARTICLE IX

 

CREATION OF
SPECIAL FUNDS AND ACCOUNTS;

APPLICATION AND INVESTMENT OF REVENUES

 

SECTION 9.01.           Creation of Funds and Accounts.  (a) 
The following fund and the following accounts therein, which shall be a
special fund and accounts to be held by the Trustee, are hereby created and
designated as set forth below:

 

Bond Fund

 

(a)           Interest
Account

(b)           Principal
Account

(c)           Redemption
Account

(d)           Acceleration
Account

 

The
designation of each fund and account set forth above shall include the term
“Consolidated Edison Company of New York, Inc. Series 2004A,” which term shall
precede the designation as set forth above. 
Such fund and each such account is, however, sometimes referred to
herein as set forth above.

 

(b)           The Bond Fund and the accounts
therein shall be held in the custody of the Trustee.  All monies required to be deposited with or paid to the Trustee
under any provision of this Indenture shall be held by the Trustee in trust and
applied only in accordance with the provisions of this Indenture and shall be
trust funds for the purposes specified in this Indenture.

 

SECTION 9.02.           Deposit of Note Payments.  The Trustee shall deposit the Note Payments
or other money set forth below in the Bond Fund and credit the Accounts set
forth below in the order set forth below:

 

The
Company shall pursuant to Sections 4.02, 4.03 and 4.04 of the Participation
Agreement deposit, or cause to be deposited, the following in immediately
available funds with the Trustee as the Note Payments become due or are
declared to be immediately due and payable under the Participation Agreement
and the Note unless sufficient amounts are then available in such Accounts to
make the required payments therefrom:

 

(a)           No
later than 12:00 noon (New York City time) on the Business Day next preceding
each Interest Payment Date, into the Bond Fund for credit to the Interest
Account an aggregate amount of funds available on the next Business Day in The
City of New York equal to the aggregate amount required for the payment of the
interest payable on the Bonds, on such Interest Payment Date.

 

In
the event a Direct-Pay Credit Facility is in place, amounts required to be
deposited in the Bond Fund for credit to the Interest Account shall be derived
solely from the

 

85

 

following sources of funds in
the priority indicated and shall be so deposited and credited to the Interest
Account on the date indicated:

 

(I)            First, on each Interest Payment
Date, the proceeds of a draw, borrowing or payment under the Direct-Pay Credit
Facility in respect of interest payable on such Interest Payment Date; and

 

(II)           Second, on each Interest Payment
Date, any other monies provided by the Company pursuant to the preceding paragraph
for such purpose.

 

The
Trustee shall deposit the proceeds of a draw, borrowing or payment under a
Direct-Pay Credit Facility in a segregated sub-account of the Interest Account
in the Bond Fund and such proceeds shall not be commingled with moneys in any
other Account or sub-account or derived from any other source.

 

(b)(i)       During an Auction Rate Period, no later
than 12:00 noon (New York City time) on the second Business Day next preceding
each Auction Date, into the Bond Fund for credit to the Redemption Account an
aggregate amount of funds available on the next Business Day in The City of New
York equal to the aggregate amount required to pay the principal of and
premium, if any, and accrued interest on any Auction Rate Bonds, called for
redemption; provided, however if the scheduled date of such deposit to the
Redemption Account by the Company is not a Business Day then the date for such
deposit to the Redemption Account by the Company shall be the first Business
Day immediately preceding the scheduled date of such deposit to the Redemption
Account by the Company.

 

(ii)           Other
than during an Auction Rate Period, on the last Business Day prior to the day
on which any redemption is to occur or on the last Business Day prior to the
Stated Maturity, into the Bond Fund for credit to the Redemption Account or the
Principal Account, as appropriate, the amount required to pay principal of and
premium, if any, and accrued interest on any Bonds called for redemption or at
the Stated Maturity, the amount required to pay the principal of the Bonds.

 

In
the event a Direct-Pay Credit Facility is in place, amounts required to be
deposited in the Bond Fund for credit to the Redemption Account or the
Principal Account, as appropriate, shall be derived solely from the following
sources of funds in the priority indicated and shall be so deposited and
credited in the Redemption Account or the Principal Account, as appropriate, on
the date indicated:

 

(I)            First, on the date any redemption is scheduled to occur
and on the Stated Maturity, the proceeds of a draw, borrowing or payment under
the Direct-Pay Credit Facility in respect of the amounts described in the
preceding paragraph; and

 

(II)           Second, on the date any redemption is scheduled to occur
and on the Stated Maturity, any other monies provided by the Company pursuant
to the preceding paragraph for such purpose.

 

86

 

The
Trustee shall deposit the proceeds of a draw, borrowing or payment under a
Direct-Pay Credit Facility in a segregated sub-account of the Redemption
Account or Principal Account, as the case may be, in the Bond Fund and such
proceeds shall not be commingled with moneys in any other Account or
sub-account or derived from any other source.

 

If
other monies are received by the Trustee as advance payments of Note Payments
to be applied to the redemption of all or a portion of the Bonds, such monies
shall be deposited in the Bond Fund for credit to the Redemption Account
therein.

 

(c)         Immediately following
the declaration of principal of and accrued interest on the Bonds then
Outstanding to be immediately due and payable pursuant to Section 12.03, into
the Bond Fund for credit to the Acceleration Account, the amount required to
pay principal of and accrued interest on such Bonds.

 

In
the event a Direct-Pay Credit Facility is in place, amounts required to be
deposited in the Bond Fund for credit to the Acceleration Account shall be
derived solely from the following sources of funds in the priority indicated
and shall immediately be so deposited and credited in the Acceleration Account:

 

(I)           First, the proceeds of a draw, borrowing or payment under
the Direct-Pay Credit Facility in respect of principal of and accrued interest
on the Bonds; and

 

(II)          Second, any other monies provided by the Company pursuant
to the preceding paragraph for such purpose.

 

The
Trustee shall deposit the proceeds of a draw, borrowing or payment under a
Direct-Pay Credit Facility in a segregated sub-account of the Acceleration
Account in the Bond Fund and such proceeds shall not be commingled with moneys
in any other Account or sub-account or derived from any other source.

 

SECTION 9.03.           Application of Monies in the Bond
Fund and the Bond Purchase Fund.

 

1.          The Bond Fund shall be
used for the purpose of making scheduled payments of principal of and interest
on the Bonds, of making payments of principal of and premium, if any, and
accrued interest on Bonds then subject to redemption in the manner herein
provided and of making payments of principal of and accrued interest on the
Bonds then Outstanding that have been declared to be immediately due and
payable pursuant to Section 12.03.  The
monies in the Bond Fund shall be applied as follows:

 

(a)           Interest Account.  Subject to the succeeding sentence, on each
Interest Payment Date, the Trustee shall apply the amount of monies then
credited to the Interest Account equal to the interest then payable on the
Bonds to the payment of such interest on such Interest Payment Date.  In the event a Direct-Pay Credit Facility is
in place and payments are required to be made in the order specified in Section
9.02 (a)(ii), the

 

87

 

Trustee
shall request a draw, borrowing or payment under the Direct-Pay Credit Facility
in accordance with the terms thereof in an amount equal to the amount required
to pay the interest payable on the Outstanding Bonds on such Interest Payment
Date and shall notify the Company of the amount and date of such request.  If sufficient funds are not available under
Section 9.02(a)(ii)(I) to pay such interest, the Trustee shall apply funds, if
any, available pursuant to Section 9.02(a)(ii)(II), to the extent necessary, to
such payment of interest. If the interest on the Bonds has been paid in full
when due and all payments required under the Direct-Pay Credit Facility have
been made, the Trustee shall apply remaining funds, if any, available pursuant
to Section 9.02(a)(ii)(II) in an amount not to exceed the amount of the draw or
borrowing under the Direct-Pay Credit Facility to reimburse the Credit Facility
Issuer for such draw or borrowing after such draw or borrowing has been honored
by the Credit Facility Issuer.

 

(b)           Principal Account.  Subject to the succeeding sentence, on the
Stated Maturity, the Trustee shall apply the amount of monies then credited to
the Principal Account equal to the principal amount of Bonds then payable to
the payment of such principal on such date. 
In the event a Direct-Pay Credit Facility is in place, the Trustee shall
request a draw, borrowing or payment under the Direct-Pay Credit Facility in
accordance with the terms thereof in the amount required, to pay such principal
amount and shall notify the Company of the amount and date of such request.  If sufficient funds are not available under
Section 9.02(b)(ii)(I) to pay such principal, the Trustee shall apply funds, if
any, available pursuant to Section 9.02(b)(ii)(II), to the extent necessary, to
such payment. If the principal of the Bonds has been paid in full when due and
all payments required under the Direct-Pay Credit Facility have been made, the
Trustee shall apply remaining funds, if any, available pursuant to Section
9.02(b)(ii)(II) in an amount not to exceed the amount of the draw or borrowing
under the Direct-Pay Credit Facility to reimburse the Credit Facility Issuer
for such draw or borrowing after such draw or borrowing has been honored by the
Credit Facility Issuer.

 

(c)           Redemption Account.  The Trustee shall redeem on the date set for
the redemption thereof, as provided in Article V of this Indenture, a principal
amount of Bonds then subject to redemption. 
Subject to the following sentence, the Trustee shall apply an amount
credited to the Redemption Account equal to the principal amount and premium,
if any, of Bonds then subject to redemption, together with accrued interest
thereon to the redemption date, to the payment of such Bonds on the redemption
date from funds described in Section 9.02(b).

 

In
the event a Direct-Pay Credit Facility is in place, the Trustee shall request a
draw under the Direct-Pay Credit Facility in accordance with the terms thereof,
in an amount equal to the amount required to pay the principal amount and
premium, if any, of Bonds then to be redeemed, together with accrued interest
thereon to the date set for redemption and shall notify the Company of the date
and amount of such request.  If
sufficient amounts to make such payment are not available under Section
9.02(b)(ii)(I), the Trustee shall apply amounts, if any, available pursuant to
Section 9.02 (b)(ii)(II), to the extent necessary, to such payment.  Such redemption shall be made pursuant to
the provisions of Article V. If the redemption price of the Bonds equal to the
principal amount of Bonds then to be redeemed, together with premium, if

 

88

 

any,
and accrued interest thereon has been paid in full on the redemption date and
all payments required under the Direct-Pay Credit Facility have been made, the
Trustee shall apply remaining funds, if any, available pursuant to Section
9.02(b)(ii)(II) in an amount not to exceed the amount of the draw or borrowing
under the Direct-Pay Credit Facility to reimburse the Credit Facility Issuer
for such draw or borrowing after such draw or borrowing has been honored by the
Credit Facility Issuer.

 

Upon
the retirement of any portion of the Bonds by redemption pursuant to the
provisions of this Section 9.03, the Trustee shall file with the Authority and
the Company a statement stating the amounts of the Bonds so redeemed and
setting forth the date of their redemption and the amount paid as principal,
premium and interest thereon.  The
expenses in connection with the redemption of the Bonds shall be paid by the
Company as Additional Payments.

 

All
monies in the Redemption Account on the last Business Day prior to the Stated
Maturity shall be transferred to the Principal Account.

 

(d)           Acceleration Account.  The Trustee shall immediately apply an
amount credited to the Acceleration Account equal to the principal amount of
and accrued interest on the Bonds then Outstanding that have been declared to
be immediately due and payable pursuant to Section 12.03 from funds described
in Section 9.02(c).

 

In
the event a Direct-Pay Credit Facility is in place, the Trustee shall request a
draw under the Direct-Pay Credit Facility in accordance with the terms thereof,
in an amount equal to the amount required to pay the principal amount of and
accrued interest of the Bonds then Outstanding that have been declared to be
immediately due and payable pursuant to Section 12.03 and shall notify the
Company of the date and amount of such request.  If sufficient amounts to make such payment are not available
under Section 9.02(c)(I), the Trustee shall apply amounts, if any, available
pursuant to Section 9.02(c)(II), to the extent necessary, to such payment. If
the principal of and interest on the Bonds has been paid in full after such
Bonds have been declared to be immediately due and payable and all payments
required under the Direct-Pay Credit Facility have been made, the Trustee shall
apply remaining funds, if any, available pursuant to Section 9.02(c)(II) in an
amount not to exceed the amount of the draw or borrowing under the Direct-Pay
Credit Facility to reimburse the Credit Facility Issuer for such draw or
borrowing after such draw or borrowing has been honored by the Credit Facility
Issuer.

 

2.          Bond Purchase Fund.  Pursuant to Section 4.02(d) of the
Participation Agreement, the Company has agreed that the Company shall provide
funds to the Registrar and Paying Agent for deposit in the Bond Purchase Fund
and credit to the Company Account therein established under the Bond Purchase
Trust Agreement to be applied to the payment of the Purchase Price of any Bond
pursuant to the Bond Purchase Trust Agreement to the extent not otherwise
provided from the sources described in the Bond Purchase Trust Agreement.

 

In
the event sufficient funds are not available under Section 2.03(a)(i) of the
Bond Purchase Trust Agreement to pay such Purchase Price on the date of
purchase of any Bonds pursuant to Section 5.03, 5.04, 5.08 or 5.09 hereof, the
Registrar and Paying Agent on or prior to

 

89

 

the
time specified in the Bond Purchase Trust Agreement shall direct the Trustee to
request a draw or payment under the Liquidity Facility in accordance with the
terms thereof in the amount required, together with amounts, if any, available
under Section 2.03(a)(i) of the Bond Purchase Trust Agreement, to pay the
Purchase Price of such Bonds on such date of purchase.  The Trustee shall on or prior to the time
specified in the Bond Purchase Trust Agreement request such draw or payment
under the Liquidity Facility in accordance with the terms thereof and shall on
or prior to the time specified in the Bond Purchase Trust Agreement transfer
the proceeds of such draw or payment to the Registrar and Paying Agent, who
shall cause the proceeds of such draw or payment to be deposited in the Bond
Purchase Fund under the Bond Purchase Trust Agreement and credited to the
Liquidity Facility Proceeds Account therein. 
The Registrar and Paying Agent shall notify the Company of the amount
and date of such request.  The Registrar
and Paying Agent shall promptly notify the Company in the event that it has not
received any amounts requested under a Support Facility prior to the time
specified in the Bond Purchase Trust Agreement on any date a Purchase Price is
due.

 

The
Remarketing Agent for a subseries of Bonds shall notify the Registrar and
Paying Agent and the Trustee, at or prior to 11:15 a.m. (New York City time) on
a specified purchase date, of the amount of the proceeds of the related
remarketing, and shall specify whether remarketing proceeds (excluding any such
proceeds from the Company, the Authority or an affiliate of either) equal to
the full amount of the Purchase Price payable on such purchase date are held by
such Remarketing Agent and will be available on such purchase date for the
payment of such Purchase Price, and, if the amount of such remarketing proceeds
that will be available on such purchase date for the payment of such Purchase
Price shall not be equal to the full amount of the Purchase Price payable on
such purchase date, such notice shall specify the amount of the
deficiency.  By 11:45 a.m. (New York
City time) on such purchase date, the Remarketing Agent shall pay to the
Registrar and Paying Agent, for deposit in the Bond Purchase Fund and credit to
the Remarketing Proceeds Account, an aggregate amount of such remarketing
proceeds equal to the amount stated in such notice to be available on such
purchase date for the payment of such Purchase Price.

 

SECTION 9.04.           Investment of Funds.  Monies in the Bond Fund and the accounts in
such fund shall only be invested and reinvested by the Trustee in Investment
Securities selected by the Company, so long as the Company is not in default
hereunder or under the Participation Agreement, and maturing in the amounts and
at the times as determined by the Company so that the payments required to be
made from such funds and accounts may be made when due and subsequent to the
occurrence of an Event of Default hereunder or under the Participation
Agreement, the Trustee shall hold monies in the Bond Fund uninvested. Investment
earnings shall be considered on
deposit in any Fund or Account as of the date they are actually received by the
Trustee.  Notwithstanding the foregoing,
so long as a Direct-Pay Credit Facility is in effect, monies in the Bond Fund,
except for proceeds of refunding bonds, shall be held uninvested.

 

Monies
on deposit in the Project Fund shall be invested and reinvested by the Trustee
at the express direction of the Company, promptly confirmed in writing (which
may be provided by telecopy), so long as the Company is not in default under
the Participation Agreement, to the extent reasonable and practicable, in
Investment Securities maturing in such

 

90

 

amounts
and at such times as it is anticipated by the Company that such monies will be
required to pay the redemption price of the Prior Bonds.

 

The
Trustee, with the consent of the Company, shall be authorized to sell any
investment when necessary to make the payments to be made from the funds and
accounts therein.  All earnings on and
income from monies in said funds and accounts (other than the Project Fund)
created hereby shall be considered to be Revenues and shall be held in the
respective account in the Bond Fund for use and application as are all other
monies deposited in such accounts.  The
Trustee shall, in the statement required by Section 11.07, set forth the
Investment Securities held separately in, and the earnings realized on
investment for, each fund and account hereunder.  The Trustee shall not be liable for any depreciation in the value
of the Investment Securities acquired hereunder or any loss suffered in
connection with any investment of funds made by it in accordance herewith,
including, without limitation, any loss suffered in connection with the sale of
any investment pursuant hereto.

 

The
Trustee may make any such investments through its own investment department
upon written direction of the Company.

 

All
Investment Securities shall constitute a part of the respective fund and
accounts therein from which the investment in Investment Securities was made.

 

91

 

ARTICLE X

 

PARTICULAR
COVENANTS OF THE AUTHORITY

 

SECTION 10.01.         Payment of Principal of and Interest
and Redemption Premium on Bonds.  The
Authority will promptly pay solely from the Note Payments and other monies held
by the Trustee and available therefor, the principal of, and the interest on,
every Bond issued under and secured by the Indenture and any premium required
to be paid for the retirement of said Bonds by redemption, at the places, on
the dates and in the manner specified in this Indenture and in said Bonds
according to the true intent and meaning thereof, subject, however, to the
provisions of Section 2.02.3.

 

SECTION 10.02.         Performance of Covenants.  The Authority will faithfully perform at all
times all covenants, undertakings, stipulations and provisions contained in the
Indenture, in any and every Bond and in all proceedings of the Authority
pertaining thereto.

 

SECTION 10.03.         Further Instruments.  The Authority will from time to time execute
and deliver such further instruments and take such further action as may be
reasonable and as may be required to carry out the purpose of the Indenture;
provided, however, that no such instruments or actions shall pledge the credit
of the Authority or the State of New York or the taxing power of the State of
New York or otherwise be inconsistent with the provisions of Section 2.02.3.

 

SECTION 10.04.         Inspection of Project Books.  All books and documents in the possession of
the Authority relating to the Project or the Participation Agreement shall at
all times be open to inspection by such accountants or other agents as the
Trustee or the Bond Insurer may from time to time designate.

 

SECTION 10.05.         No Extension of Time of Payment of
Interest.  In order to prevent any
accumulation of claims for interest after maturity, the Authority will not
directly or indirectly extend or assent to the extension of the time of payment
of any claims for interest on, any of the Bonds and will not directly or
indirectly be a party to or approve any such arrangement by purchasing such
claims for interest or in any other manner. 
In case any such claim for interest shall be extended in violation
hereof, such claim for interest shall not be entitled, in case of any default
hereunder, to the benefit or security of the Indenture except subject to the
prior payment in full of the principal of, and premium, if any, on, all Bonds
issued and outstanding hereunder, and of all claims for interest which shall
not have been so extended or funded.

 

SECTION 10.06.         Trustee’s, Auction Agent’s,
Remarketing Agent’s, Broker-Dealers’, Registrar and Paying Agent’s and Indexing
Agent’s Fees, Charges and Expenses. 
Pursuant to the provisions of Section 4.02 of the Participation
Agreement, the Company has agreed to pay the fees and the expenses (including,
in the case of the Trustee, the Registrar and Paying Agent and the Remarketing
Agents, the reasonable fees and expenses of counsel and accountants) of the
Trustee, the Registrar and Paying Agent, Indexing Agent, Remarketing Agents and
in the case of Auction Rate Bonds, the Auction Agent and Broker-Dealers, in the

 

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amounts set forth more fully therein, and the
Authority shall have no liability for the payment of any fees or expenses of
the Trustee, the Registrar and Paying Agent, Indexing Agent, Remarketing Agents
and in the case of Auction Rate Bonds, the Auction Agent and Broker-Dealers.

 

SECTION 10.07.         Agreement of the State of New York.  In accordance with the provisions of
subdivision 11 of Section 1860 of the Act, the Authority, on behalf of the
State of New York, does hereby pledge to and agree with the Bondholders that
the State of New York will not limit or alter the rights and powers vested by
the Act in the Authority to fulfill the terms of any contract made with
Bondholders, or in any way impair the rights and remedies of such Bondholders,
until the Bonds, together with the premium and interest thereon, with (to the
extent permitted by law) interest on any unpaid installments of interest, and
all costs and expenses in connection with any action or proceeding by or on
behalf of such Bondholders, are fully met and discharged.

 

SECTION 10.08.         Recording and Filing.  Pursuant to the Participation Agreement, the
Company covenants that it will cause all financing statements related to this
Indenture and all supplements thereto and the Participation Agreement and all
supplements thereto, as well as such other security agreements, financing
statements and all supplements thereto and other instruments as may be required
from time to time to be kept, to be recorded and filed in such manner and in
such places as may from time to time be required by law in order to preserve
and protect fully the security of Holders and the rights of the Trustee
hereunder, and to take or cause to be taken any and all other action necessary
to perfect the security interest created by this Indenture.  The Company is obligated under Section 5.08
of the Participation Agreement to file all such financing statements and other
security agreements.  The Trustee is
hereby authorized to file all financing statements in the event that the
Company does not file them.

 

SECTION 10.09.         Rights Under the Participation
Agreement and the Note.  The
Participation Agreement, a duly executed counterpart of which has been filed
with the Trustee, sets forth the covenants and obligations of the Authority and
the Company and reference is hereby made to the same for a detailed statement
of said covenants and obligations of the Company thereunder.  Subsequent to the issuance of Bonds and
prior to their payment in full or provision for payment thereof in accordance
with the provisions hereof, neither the Participation Agreement nor the Note
may be effectively amended, changed, modified, altered or terminated except in
accordance with the provisions of Article XIV hereof.  The Authority agrees that the Trustee, in its name or in the name
of the Authority, may enforce all rights of the Authority and all obligations
of the Company under and pursuant to the Participation Agreement and the Note
for and on behalf of the Holders, whether or not the Authority is in default
hereunder.  The Note heretofore
delivered to the Trustee evidences the obligations of the Company to make
certain specified payments under the Participation Agreement.  Nothing herein contained shall be construed
to prevent the Authority from enforcing directly any or all of its rights to
administrative compensation or indemnification under the Participation
Agreement.

 

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ARTICLE XI

 

CONCERNING
THE TRUSTEE;
APPOINTMENT OF

REGISTRAR AND PAYING AGENT, REMARKETING AGENTS,

AUCTION AGENT AND INDEXING AGENT

 

SECTION 11.01.         Appointment of Trustee.  The Bank of New York is hereby appointed the
Trustee hereunder and by the execution of this Indenture accepts such
appointment and without further act, deed or conveyance, shall be fully vested
with all the estate, properties, rights, powers, trusts, duties and obligations
of the Trustee hereunder.

 

The
Trustee shall set up suitable accounts for the deposit of the Note Payments and
for the payment of the Bonds and the interest thereon and for all other
payments provided or required by this Indenture, including, without limiting
the generality of any of the foregoing, setting up of the Funds created by
Articles VIII and IX.

 

SECTION 11.02.         Indemnification of Trustee as
Condition for Remedial Action.  The
Trustee shall be under no obligation to institute any suit, or to take any
remedial proceeding under this Indenture, or to enter any appearance or in any
way defend in any suit in which it may be made defendant, or to take any steps
in the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder, until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements, and against all liability; the Trustee may,
nevertheless, begin suit, or appear in and defend suit, or do anything else in
its judgment proper to be done by it as such Trustee, without indemnity, and in
such case the Trustee shall be reimbursed from the Additional Payments required
to be made pursuant to the Participation Agreement for all costs and expenses,
outlays and counsel fees and other reasonable disbursements incurred in
connection therewith.  If the Company
shall fail to make such reimbursement, the Trustee may reimburse itself from
any monies in its possession under the provisions of this Indenture and shall
be entitled to a preference over the Bonds; provided, however, that the
proceeds of a Support Facility or of remarketing of Bonds shall be applied
solely as set forth elsewhere herein and in such Support Facility and shall not
be applied to the reimbursement set forth in this Section 11.02.  Notwithstanding the foregoing, the Trustee
shall make all payments of principal of and premium, if any, and interest on
the Bonds then Outstanding when due, when called for redemption or when
declared to be immediately due and payable pursuant to this Indenture and of
the Purchase Price of the Bonds in accordance with this Indenture.

 

SECTION 11.03.         Trustee Not Liable for Failure of
the Authority or Company to Act. 
The Trustee shall not be liable or responsible because of the failure of
the Authority or the Company or any of their employees or agents to make any
collections or deposits or to perform
any act herein required of the Authority or the Company.  The Trustee shall not be responsible for the
application of any of the proceeds of the Bonds or any other monies deposited
with it and paid out, withdrawn or transferred hereunder if such application,
payment, withdrawal or transfer shall be made in accordance with the provisions
of this Indenture.  The immunities and
exemptions from liability of the Trustee hereunder shall extend to its
directors, officers, employees and agents.

 

94

 

SECTION 11.04.         Certain Duties and Responsibilities
of the Trustee.  (a) Except during
the continuance of an Event of Default specified in Section 12.01 of which the
Trustee has been notified or is deemed to have notice as provided in Section
11.08,

 

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

 

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

 

(b)           In
case an Event of Default specified in Section 12.01 has occurred and is
continuing of which the Trustee has been notified or is deemed to have notice
as provided in Section 11.08, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill in such exercise, as a prudent person would exercise or use under the circumstances
in the conduct of his or her own affairs.

 

(c)           None of the provisions of this
Indenture shall be construed to relieve the Trustee from liability for
negligent action, negligent failure to act, or willful misconduct, except that

 

(1)           this Subsection (c) shall not be construed to limit the
effect of Subsection (a) of this Section;

 

(2)           the Trustee shall not be liable for any error of judgment
made in good faith by any one of its officers, unless it shall be proved that
the Trustee was negligent;

 

(3)           in the absence of bad faith on its part, the Trustee shall
be protected and shall incur no liability in acting or proceeding or in not
acting or not proceeding upon any resolution, order, notice, telegram, request,
consent, waiver, certificate, statement, affidavit, voucher requisition, bond
or other paper or document which the Trustee shall believe to be genuine and to
have been adopted or signed by the proper board or person or to have been
prepared and furnished pursuant to any of the provisions of this Indenture, or
upon the written opinion of any attorney, engineer, accountant or other expert
believed by the Trustee to be qualified in relation to the subject matter, and
the Trustee shall be under no duty to make any investigation or inquiry as to
any statements contained or matters referred to in any such instrument but may
accept and rely upon the same as conclusive evidence of the truth and accuracy
of such statements;

 

95

 

(4)           the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in aggregate principal
amount of the Outstanding Bonds 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 the provisions
of this Indenture; and

 

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

 

(d)           Notwithstanding anything contained
elsewhere in this Indenture, the Trustee shall have the right to reasonably
require, in respect of the payment or withdrawal of any monies or the taking of
any action whatsoever within the purview of this Indenture, any showings,
certificates, opinions, appraisals or other information, or corporate action or
evidence thereof, in addition to that required by the terms hereof as a
condition of such action by the Trustee.

 

(e)           The Trustee may execute any of the
trusts or powers hereof and perform any of its duties by or through attorneys,
agents or receivers, and shall not be responsible for any negligence or
misconduct on the part of any such attorney, agent or receiver appointed by it
if the Trustee shall have exercised due care and diligence in appointing or
selecting such person, and shall be entitled to advice of counsel concerning
all matters of the trusts hereof and the duties hereunder, and may in all cases
pay such reasonable compensation to all such attorneys, agents and receivers as
may reasonably be employed in connection with the trusts hereof. The Trustee
may act upon the opinion or advice of any attorney or attorneys (who may be the
attorney or attorneys for the Authority or the Company), approved by the
Trustee in the exercise of reasonable care, and the Trustee shall not be
responsible for any loss or damage resulting from any action or nonaction in
good faith in reliance upon such opinion or advice.

 

(f)            Whenever in the administration of
this Indenture the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, conclusively rely upon a certificate of an
Authorized Company Representative or an Authorized Officer.

 

(g)           The Trustee shall not be accountable
for the use by the Company of any proceeds of the Bonds authenticated or
delivered hereunder.

 

(h)           The Trustee shall not be required to
give any bonds or surety in respect of the execution of its trusts and powers
hereunder.

 

(i)            The Trustee may treat and deem the
Holder of any Bonds as set forth in the books of the registry hereunder as the
absolute owner thereof.

 

96

 

(j)            Notwithstanding any other provision
of this Indenture, in determining whether the rights of the Holders will be
adversely affected by any action taken pursuant to the terms and provisions of
this Indenture, the Trustee shall consider the effect on the Holders as if
there were no Policies.

 

(k)           The Trustee shall furnish to the Bond
Insurer, upon request, such information concerning the subseries of the Bonds
to which such Policy applies as it may reasonably request.

 

(l)            The
Trustee shall provide to the Bond Insurer (attention:  Surveillance Department), a copy of any notice to be given to the
registered owners of the related subseries of Bonds, including, without
limitation, notice of any redemption of or defeasance of the Bonds, and any
certificate rendered pursuant to this Indenture relating to the security for
the Bonds.

 

(m)          The
Trustee shall notify the Bond Insurer of any failure of the Company to provide
relevant notices, certificates or other information pursuant to the terms
hereof or of the Participation Agreement.

 

(n)           Notwithstanding any other provision
of this Indenture, the Trustee shall immediately notify the Bond Insurer if at
any time there are insufficient moneys to make any payments of principal and/or
interest as required and immediately upon the occurrence of any Event of
Default hereunder

 

SECTION 11.05.         Limitations on Obligations and
Responsibilities of Trustee.  The
Trustee shall be under no obligation to effect or maintain insurance or to
renew any policies of insurance or to inquire as to the sufficiency of any
policies of insurance carried by the Company, or to report, or make or file
claims or proof of loss for, any loss or damage insured against or which may
occur, or to keep itself informed or advised as to the payment of any taxes or
assessments, or to require any such payment to be made.  The Trustee, except as to the acceptance of
the trusts by its execution of this Indenture and the performance of its
responsibilities hereunder, shall have no responsibility in respect of the
validity, sufficiency, due execution or acknowledgment of this Indenture, or in
respect of the validity of the Bonds or the due execution or issuance thereof.  The Trustee shall be under no obligation to
see that any duties herein or in the Participation Agreement, the Remarketing
Agreement, the Auction Agency Agreement, the Broker-Dealer Agreement or any Support Facility imposed upon the
Authority, the Company, the issuer of any Support Facility, or any party other
than itself in its capacity as Trustee, or any covenants herein contained on
the part of any party other than itself in its capacity as Trustee to be
performed, shall be done or performed, and the Trustee shall be under no
obligation for failure to see that any such duties or covenants are so done or
performed.

 

SECTION 11.06.         Compensation and Indemnification of
Trustee.  The Company has agreed in
the Participation Agreement (1) to pay to the Trustee from time to time such
compensation for all services rendered by it hereunder or shall from time to
time be agreed

 

97

 

in writing (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust); (2) except
as otherwise expressly provided herein, to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and (3) to indemnify the
Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.

 

SECTION 11.07.         Statements from Trustee.  It shall be the duty of the Trustee, on or
about the fifteenth (15th) day of each month, and at such other reasonable time
or times as may be determined by the Authority or the Company, to file with the
Authority, upon the written request thereof, and the Company a statement
setting forth in respect of the preceding calendar month:

 

(a)           the amount withdrawn or transferred
by it and the amount received by it and held on account of each Fund under the
provisions of this Indenture;

 

(b)           the amount on deposit with it at the
end of such calendar month to the credit of each such Fund or Account;

 

(c)           a monthly account of reconciliation
and income which includes a brief description of all obligations held by it as
an investment of monies in each such Fund or Account;

 

(d)           the amount applied to the redemption
of the Bonds under the provisions of Article V and Section 9.03 and the amount
of the Bonds remaining Outstanding; and

 

(e)           any other information which the
Authority or the Company may reasonably request.

 

All
records and files pertaining to the Bonds and the Company in the custody of the
Trustee shall be open at all reasonable times upon prior notice to the
inspection of the Authority, the Company and their agents and representatives.

 

SECTION 11.08.         Notice
of Default.  Except upon the
happening of any Event of Default specified in clauses (a) through (d),
inclusive, of Section 12.01, the Trustee shall not be obliged to take notice or
be deemed to have notice of any Event of Default hereunder, unless a
Responsible Officer of the Trustee shall have actual knowledge thereof or be specifically
notified in writing of such Event of Default by the issuer of any Support
Facility, any Remarketing Agent, the Auction Agent or the Holders of not less
than twenty-five percent (25%) in aggregate principal amount of the Bonds
Outstanding and such written notice shall state that it is a “notice of
default.”

 

98

 

SECTION 11.09.         Trustee
May Deal in Bonds.  The bank or
trust company acting as Trustee under this Indenture, and its directors,
officers, employees or agents, may in good faith buy, sell, own, hold and deal
in the Bonds issued under and secured by this Indenture, and may join in the
capacity of a Holder of a Bond in any action which any Holder of a Bond may be
entitled to take with like effect as if such bank or trust company were not the
Trustee under this Indenture.

 

SECTION 11.10.         Trustee
Not Responsible For Recitals.  The
recitals, statements and representations contained herein and in the Bonds
shall be taken and construed as made by and on the part of the Authority, and
not by the Trustee, and the Trustee assumes, and shall be under, no
responsibility for the correctness of the same or for the recording or
re-recording or filing or refiling of the Indenture or any supplements thereto
or any instruments of further assurance (including financing statements) except
as otherwise provided herein.  The
Trustee makes no representations as to the value of any property pledged
hereunder to the payment of Bonds or as to the title of the Authority or the
Company thereto or as to the validity, sufficiency or adequacy of the security
afforded thereby or hereby or as to the validity of this Indenture, the Note,
the Participation Agreement, any Support Facility or of the Bonds.

 

SECTION 11.11.         Qualification
of the Trustee.  There shall at all
times be a Trustee hereunder which shall be a trust company or bank in good
standing located in or incorporated under the laws of the State of New York,
duly authorized to exercise trust powers and subject to examination by Federal
or State authority, and having reported capital and surplus of not less than
$75,000,000.  The Trustee hereunder
shall not be required to maintain, and any successor Trustee shall not be
required to have, an office in the city in which the principal corporate trust
office of the initial Trustee hereunder is located.

 

If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 11.11, it shall resign immediately in the manner and
with the effect specified in Section 11.12.

 

SECTION 11.12.         Resignation
and Removal of Trustee.

 

(a)           No resignation or removal of the
Trustee and no appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Trustee under Section 11.13.

 

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

 

(c)           The Trustee may be removed at any
time by demand of the Holders of a majority in principal amount of the Bonds
then Outstanding, signed in person by such Holders or by their attorneys, legal
representatives or agents and delivered to such

 

99

 

Trustee,
the Authority and the Company (such demand to be effective only when received
by the Trustee, the Authority and the Company).

 

(d)           If at any time:

 

(1)          the Trustee shall cease to be eligible under Section 11.11
and shall fail to resign after written request by the Authority or by a Holder
who shall have been a bona fide Holder for at least six months,

 

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

 

(3)          the Trustee shall breach any trust or obligation hereunder,

 

then,
in any such case, (i) the Authority may remove, and the Company or the Bond
Insurer may direct the Authority to remove, the Trustee, or (ii) any Holder who
has been a bona fide Holder for at least six months may, on behalf of herself
and all other similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor.

 

(e)           If the Trustee shall resign, be
removed or become incapable of acting, or if a vacancy shall occur in the
office of the Trustee for any cause, the Authority shall promptly appoint a
successor; the Company or the issuer of any Support Facility or both of them,
having the right to request the appointment of a particular qualified
institution as such successor.  Within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee may be appointed by an instrument or
concurrent instruments in writing executed by the Holders of a majority in
principal amount of the Bonds then Outstanding delivered to the Authority and
the retiring Trustee, and, upon such delivery, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the
Authority.

 

(f)            The Authority shall give notice to
the Trustee, the Bond Insurer, the Company, the applicable Remarketing Agents,
the Registrar and Paying Agent, the Auction Agent and the Bondholders of each
resignation and each removal of a Trustee and each appointment of a successor Trustee
in the manner set forth in Section 17.03 with respect to Bondholders and
Section 17.09 with respect to the Company, the Bond Insurer, the Auction Agent
and the applicable Remarketing Agents. Each notice shall include the name and
address of the Principal Corporate Trust Office of the successor Trustee.

 

(g)           The Trustee at any time other than
during the continuance of an Event of Default and for any reason may be removed
by an instrument in writing, executed by an Authorized Officer, appointing a
successor, filed with the Trustee so removed.

 

100

 

SECTION 11.13.         Successor
Trustee.  Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor,
and also to the Authority and the Company, an instrument in writing accepting
such appointment hereunder, and thereupon such successor Trustee, without any
further act, shall become fully vested with all the rights, immunities, powers
and trusts and subject to all the duties and obligations, of its predecessor;
but such predecessor shall, nevertheless, on written request of its successor
or of the Authority and upon payment of expenses, charges and other
disbursements of such predecessor which are payable pursuant to the provisions
of Sections 11.02 and 11.06, execute and deliver an instrument transferring to
such successor Trustee all the rights, immunities, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all property
and monies held by it hereunder to its successor, subject, nevertheless, to its
first lien and preference provided for in Sections 11.02 and 11.06.  Should any instrument in writing from the
Authority be required by any successor Trustee for more fully vesting in such
Trustee the rights, immunities, powers and trusts hereby vested or intended to
be vested in the predecessor Trustee, any such instrument in writing shall and
will, on request, be executed, acknowledged and delivered by the Authority.

 

Every
successor Trustee appointed pursuant to this Section shall be a trust company
or bank in good standing located in or incorporated under the laws of the State
of New York, duly authorized to exercise trust powers and subject to
examination by Federal or State authority, having a reported capital and
surplus of not less than $75,000,000.

 

Notwithstanding
any of the foregoing provisions of this Article, any bank or trust company
having power to perform the duties and execute the trusts of this Indenture and
otherwise qualified to act as Trustee hereunder with or into which the bank or
trust company acting as Trustee may be converted, merged or consolidated, or to
which the corporate trust business assets as a whole or substantially as a
whole of such bank or trust company may be sold, shall be deemed the successor
of the Trustee.

 

SECTION 11.14.         Appointment
of Remarketing Agents.  Citigroup
Global Markets Inc., J.P. Morgan Securities Inc., Morgan Stanley & Co.
Incorporated and Banc One Capital Markets, Inc. are hereby appointed by the
Authority as the initial Remarketing Agents to serve as such under the terms
and provisions hereof and of the Market Agent Agreements for the Series 2004A-1
Bonds, the Series 2004A-2 Bonds, the Series 2004A-3 Bonds and the Series
2004A-4 Bonds, respectively, and of any successor Remarketing Agreement.  The Remarketing Agent for any subseries,
including any successor appointed pursuant hereto, shall be a member of the
National Association of Securities Dealers, Inc. having capitalization of at
least $25,000,000, and be authorized by law to perform all the duties imposed
upon it by this Indenture, the Bond Purchase Trust Agreement and the
Remarketing Agreement.  The Remarketing
Agent for any subseries of Bonds may be removed at any time by the Authority,
upon thirty (30) days’ notice, acting at the written direction of the Company
by an instrument signed by the Authority and filed with the Trustee, the
Registrar and Paying Agent, the Remarketing Agent and the Company.  If there shall not be at least one Remarketing
Agent serving as such for any subseries of Bonds following the effective date
of a proposed removal of a Remarketing Agent for such subseries, no such
removal shall take effect until the appointment of a successor Remarketing
Agent for such subseries of Bonds.  The
Remarketing

 

101

 

Agent for any subseries of Bonds may resign upon 30
days’ written notice delivered to the Company, the Authority, the Trustee, the
Registrar and Paying Agent and the Bond Insurer or any other issuer of any
Support Facility.  The Company shall use
its best efforts to cause the Authority to appoint a successor Remarketing
Agent that is a qualified institution, effective as of the effectiveness of any
such resignation or removal.  Each
successor Remarketing Agent shall be a qualified institution selected and
appointed by the Authority, upon the written request and with the approval of
the Company and the Bond Insurer.  If
there shall be more than one Remarketing Agent serving as such for a subseries
of Bonds, the Authority, at the request of the Company, shall designate one
such Remarketing Agent as “Remarketing Representative” to act on behalf of all
Remarketing Agents for such subseries, and each other Remarketing Agent shall
agree in writing to accept the determinations of such Remarketing
Representative.

 

SECTION 11.15.         Appointment
of Registrar and Paying Agent.  The
Bank of New York in New York, New York is hereby appointed by the Authority to
serve as the Registrar and Paying Agent hereunder.  The Company shall have the right to request the appointment of an
institution meeting the requirements of Section 11.19 to serve as successor
thereto in the event of the removal or resignation of such Registrar and Paying
Agent.

 

The
Trustee hereby appoints any Registrar and Paying Agent appointed hereunder as
authenticating agent.

 

SECTION 11.16.         General
Provisions Regarding Registrar and Paying Agent.

 

(a)           The Registrar and Paying Agent shall:

 

(i)            hold
all Bonds delivered to it for purchase hereunder in trust for the benefit of
the respective Bondholders which shall have so delivered such Bonds until
monies representing the purchase price of such Bonds shall have been delivered
to or for the account of or to the order of such Holders and deliver said Bonds
in accordance with the provisions of this Indenture;

 

(ii)           hold
all monies delivered to it for the purchase of Bonds, in trust for the benefit
of the person or entity who has delivered such monies until the Bonds purchased
with such monies have been delivered to or for the account of such person or
entity as provided in this Indenture;

 

(iii)          maintain
the books of registry and keep such books and records as shall be consistent
with prudent industry practice and make such books and records available for
inspection by the Trustee, the Remarketing Agent, the Authority and the Company
at all reasonable times;

 

(iv)          perform
the duties and undertake the obligations assigned to them in Sections 7.02
through 7.06;

 

(b)           The Registrar and Paying Agent may
deem and treat the Holder of any Bonds as set forth in the books of registry
hereunder as the absolute owner thereof;

 

102

 

(c)           The Registrar and Paying Agent may in
good faith hold any other form of indebtedness issued by the Authority or any
security issued by the Company, or any affiliate of the Company; own, accept or
negotiate any drafts, bills of exchange, acceptances or obligations thereof;
and make disbursements therefor and enter into any commercial or business
arrangement therewith; all without any liability on the part of such Registrar
and Paying Agent for any real or apparent conflict of interest by reason of any
such actions; and

 

(d)           The Registrar and Paying Agent agrees
to cooperate with the Trustee and the Company in preparing and conveying
information necessary for drawings under any Support Facility.  To the extent that any other certificate to
be submitted by the Trustee to an issuer of a Support Facility in connection
with a drawing under the Support Facility requires the Trustee to state that
the Registrar and Paying Agent has certified certain information to the
Trustee, the Registrar and Paying Agent agrees to provide such certification to
the Trustee to the extent such information is known to it.

 

SECTION 11.17.         Payment
of Registrar and Paying Agent; Indemnification.  The Authority will cause the Company to agree in the
Participation Agreement to pay all reasonable fees, charges and expenses of the
Registrar and Paying Agent for acting under and pursuant to this
Indenture.  In addition, the Authority
will cause the Company to agree in the Participation Agreement to indemnify the
Registrar and Paying Agent and its directors, officers and employees against
and save them harmless from any and all losses, costs, charges, expenses,
judgments and liabilities incurred while carrying out the transactions
contemplated by this Indenture, except that said indemnity does not apply to
the extent that they are caused by the negligent action, negligent failure to
act or willful misconduct of the Registrar and Paying Agent or its directors,
officers, employees or agents.

 

SECTION 11.18.         Registrar
and Paying Agent’s Performance; Duty of Care.  The duties and obligations of the Registrar and Paying Agent
shall be determined solely by the provisions of this Indenture.  None of the provisions of this Indenture
shall be construed to relieve the Registrar and Paying Agent from liability for
negligent action, negligent failure to act or willful misconduct, except that
(a) the Registrar and Paying Agent shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Indenture, and, in the absence of bad faith on the part of the Registrar
and Paying Agent, the Registrar and Paying Agent may conclusively rely, as to
the truth of the statements expressed therein, upon any document furnished to
the Registrar and Paying Agent and conforming to the requirements of this
Indenture and the Registrar and Paying Agent may conclusively rely and shall be
protected in acting upon any document believed by it to be genuine and to have
been signed or presented by the proper party or parties, provided that, in the
case of any such document which by any provision of this Indenture is
specifically required to be furnished to the Registrar and Paying Agent, the
Registrar and Paying Agent shall be under a duty to examine the same to
determine whether or not it conforms to the requirements of this Indenture, and
(b) no provisions of this Indenture shall require the Registrar and Paying
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder.  The Registrar and Paying Agent may act upon
the opinion or advice of any attorney or attorneys (who may be the attorney or
attorneys for the Authority or the Company),

 

103

 

approved
by the Trustee in the exercise of reasonable care, and the Registrar and Paying
Agent shall not be responsible for any loss or damage resulting from any action
or nonaction in good faith in reliance upon such opinion or advice.

 

SECTION 11.19.         Qualifications
of Registrar and Paying Agent.  The
Registrar and Paying Agent, including any successor appointed pursuant to this
Indenture, shall be a bank duly organized under the laws of the United States
of America or any State or territory thereof, having a combined capital and
unimpaired surplus of at least $50,000,000 and authorized by law to exercise
trust powers and perform all the duties imposed upon it by this Indenture.  Unless the Bonds bear an Auction Rate, or a
Fixed Rate, the Registrar and Paying Agent shall have an office or agency in
New York, New York capable of performing its obligations hereunder.

 

SECTION 11.20.         Resignation
or Removal of Registrar and Paying Agent and Successor to Registrar and Paying
Agent; Termination of Registrar and Paying Agent’s Obligations.  The Registrar and Paying Agent may at any
time resign and be discharged of the duties and obligations created hereunder
and under the Bond Purchase Trust Agreement by giving at least sixty days’
notice to the Authority, the Company, the Trustee, the Bond Insurer and the
Remarketing Agent.  The Registrar and
Paying Agent may be removed at any time upon and pursuant to the request of the
Company by an instrument, signed by the Authority and filed with the Trustee,
the Bond Insurer and the Registrar and Paying Agent and the Company, provided
that such removal shall not take effect until the appointment of a successor
Registrar and Paying Agent.  The
Authority at the request of the Company shall appoint a successor Registrar and
Paying Agent effective as of the effectiveness of any such resignation or
removal.  Each successor Registrar and
Paying Agent shall be a qualified institution selected by the Company and, so
long as a Support Facility is in effect, reasonably acceptable to the issuer of
a Support Facility, and approved and appointed by the Authority.

 

In
the event of the resignation or removal of the Registrar and Paying Agent, the
Registrar and Paying Agent shall pay over and deliver any monies and Bonds held
by it in such capacity to its successor or, if there is no successor, to the
Trustee.  In the event that there is no
successor to the Registrar and Paying Agent on the effective date of its
resignation, the entity acting as Trustee shall perform the functions of the
Registrar and Paying Agent; provided that monies held by the Trustee pursuant
to this paragraph shall not be deemed to be held by the Trustee in its capacity
as Trustee.

 

SECTION 11.21.         Appointment
of Auction Agent; Qualifications of Auction Agent, Resignation; Removal.  The Authority hereby appoints The Bank of
New York to serve as the Auction Agent for the Bonds.  The Auction Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least 90 days’
notice, or, if it has not been paid, 30 days’ notice, to the Trustee, the
Company, the Authority, and to the Remarketing Agent.  During the Auction Rate Period, the Auction Agent may be removed
at any time by the Authority acting at the request of the Company by an
instrument signed by the Authority and filed with the Company, the Auction
Agent, the Bond Insurer, the Remarketing Agent and the Registrar and Paying
Agent upon at least 90 days’ notice.  No
resignation or removal of the Auction Agent shall take effect until the
appointment of a

 

104

 

successor Auction Agent.  During any Auction Rate Period, an Authorized Officer of the
Authority shall appoint a successor Auction Agent with the consent of the
Company and the Bond Insurer.  The
Company shall evidence its consent to such appointment by entering into an
Auction Agency Agreement with the Auction Agent.  The Auction Agent shall be (a) a bank or trust company duly
organized under the laws of the United States of America or any State or
territory thereof having its principal place of business in the Borough of
Manhattan, in The City of New York and having a combined capital stock, surplus
and undivided profits of at least $25,000,000 or (b) a member of the National
Association of Securities Dealers, Inc., having a capitalization of at least
$25,000,000 and, in either case, authorized by law to perform all the duties
imposed upon it under the Auction Agency Agreement.

 

If
the Auction Agent shall fail to determine, or for any reason fail to timely
provide, a rate of interest pursuant to the Auction Procedures for three
consecutive Auction Periods, the Authority shall use its best efforts to remove
the then-existing Auction Agent and appoint a successor Auction Agent in
accordance with this Indenture and the then-existing Auction Agency Agreement.

 

SECTION 11.22.         Appointment
of Broker-Dealers.   On the Closing
Date, the Company appointed, subject to the consent of the Authority, Citigroup
Global Markets Inc., J.P. Morgan Securities Inc., Morgan Stanley & Co.
Incorporated and Banc One Capital Markets, Inc. as the initial lead
Broker-Dealers for the Series 2004A-1 Bonds, the Series 2004A-2 Bonds, the
Series 2004A-3 Bonds and the Series 2004A-4 Bonds, respectively.   The Authority hereby consents to such
appointment of Citigroup Global Markets Inc., Morgan Stanley & Co.
Incorporated, J.P. Morgan Securities Inc. and Banc One Capital Markets,
Inc.  On or prior to a subsequent Change
in the Interest Rate Mode to an Auction Rate Period with respect to a
subseries, the Company with the consent of the Authority shall appoint an
initial Broker-Dealer for such subseries. After the Closing Date or a Change in
the Interest Rate Mode to an Auction Rate Period, as the case may be, the
Company may select, with the consent of the Auction Agent, the Authority and
the initial lead Broker-Dealer or any successor, from time to time, one or more
additional persons to serve as Broker-Dealers under Broker-Dealer
Agreements.  Notwithstanding anything in
this Indenture or the Auction Agency Agreement to the contrary, the Authority
may substitute any Broker-Dealer for a subseries with a new Broker-Dealer in a
written direction, provided at the request of the Company, to the Auction Agent
and to the Broker-Dealer to be substituted at any time not less than 30 days in
advance of the date of substitution.

 

SECTION 11.23.         Appointment
of Additional Paying Agents; Each Paying Agent to Hold Money in Trust.  The Authority may at the request of the
Company appoint an additional Paying Agent or Paying Agents for the Bonds.  Each such Paying Agent shall hold in trust
subject to the provisions of the Indenture for the benefit of the Holders all
sums held by such Paying Agent for the payment of the principal of, premium, if
any, and interest on the Bonds.  Any
such Paying Agent may be any person or corporation authorized to perform such
functions, including to the extent permitted by law, the Company.

 

SECTION 11.24.         Appointment
and Duties of Indexing Agents.  The
Authority hereby appoints Kenny Information Systems, Inc. as Indexing Agent for
the Bonds

 

105

 

for the purpose of calculating each rate index
defined in Section 1.01. The Authority may, with the approval of the Company,
appoint additional or successor Indexing Agents, subject to the conditions set
forth in this Section.  There may be
separate Indexing Agents for the purpose of calculating each rate index defined
in Section 1.01.  The Indexing Agent
shall designate to the Trustee its principal office and signify its acceptance
of the duties and obligations imposed upon it hereunder by a written instrument
of acceptance delivered to the Authority, the Trustee, the Company and the
Remarketing Agent under which the Indexing Agent will agree, particularly:

 

(a)           to compute the Daily Rate Index, the
Commercial Paper Rate Index, the Weekly Rate Index, the Monthly Rate Index, the
Semi-annual Rate Index, the Term Rate Index or the Fixed Rate Index, as the
case may be, pursuant to and in accordance with Section 3.01, and to give
notice to the Trustee, the Registrar and Paying Agent, the Remarketing Agent
and the Company of such rate index on the date of the computation thereof in
accordance with Section 3.01; and

 

(b)           to keep such books and records as
shall be consistent with prudent industry practice and to make such books and
records available for inspection by the Authority, the Trustee, the Registrar
and Paying Agent, the Remarketing Agent and the Company at all reasonable
times.

 

The
Indexing Agent will perform the duties provided for in Section 3.01.  Whenever the Indexing Agent makes a
computation under that Section, it will promptly notify the Trustee, the
Registrar and Paying Agent, the Authority, the Remarketing Agent (and during
any Auction Rate Period, the Auction Agent), and the Company of the results and
date of computation.  The Indexing Agent
will keep adequate records pertaining to the performance of its duties and
allow the Trustee, the Bond Insurer, Registrar and Paying Agent, the Authority,  the Remarketing Agent and the Company (and,
if appropriate, the Auction Agent) to inspect the records at reasonable times.

 

SECTION 11.25.         Qualifications
of Indexing Agents.  Each Indexing
Agent shall be a commercial bank, a member of the National Association of
Securities Dealers, Inc. or a nationally recognized municipal securities
evaluation service authorized by law to perform all the duties imposed upon it
by the Indenture.  Any Indexing Agent
may at any time resign and be discharged of the duties and obligations created by
the Indenture by giving at least sixty (60) days’ notice to the Authority, the
Company, the Remarketing Agent and the Trustee.  The Indexing Agent may be removed at any time, at the written
direction of the Company, by an instrument, signed by the Authority, filed with
the Company, the Indexing Agent, the Remarketing Agent, the Trustee, the Bond
Insurer, the Registrar and Paying Agent and the issuer of a Support Facility,
if any.

 

106

 

ARTICLE
XII

 

EVENTS
OF DEFAULT; REMEDIES UPON

OCCURRENCE THEREOF

 

SECTION 12.01.         Events
of Default.  Each of the following
is hereby defined as and declared to be and shall constitute an “Event of
Default”:

 

(a)           Payment of the principal of and
premium, if any, on any Bond (whether by maturity, proceedings for redemption,
purchase in accordance with Article V hereof or the Remarketing Agreement, or
otherwise) shall not be made when the same shall become due and payable; or

 

(b)           Payment of any installment of
interest on any Bond shall not be made when the same shall become due and
payable and such nonpayment shall continue for one (1) Business Day; or

 

(c)           Receipt by the Trustee of written
notice from the Bond Insurer of the occurrence and continuance of an event of
default under the agreement entered into with the Company in connection with
the issuance of a Policy directing the Trustee to declare an Event of Default;
or

 

(d)           The Authority shall fail in the due
and punctual performance of any of the covenants, conditions, agreements,
provisions or obligations, other than as set forth in (a) and (b) above,
contained in the Bonds or in this Indenture or in any Supplemental Indenture on
the part of the Authority to be performed, and such failure shall continue for
ninety (90) days after written notice specifying such failure and requiring the
same to be remedied shall have been given to the Authority, the Company, the
Governor, the Comptroller and the Attorney General of the State of New York, by
the Trustee or to the Trustee, the Authority and the Company by the Bond Insurer
or by the Holders of not less than twenty-five percent (25%) in aggregate
principal amount of the Bonds then Outstanding as provided for in Section
12.08; provided that if any such failure shall be such that it cannot be cured
or corrected within such ninety (90) day period, it shall not constitute an
Event of Default hereunder if curative or corrective action is instituted
within such period and diligently pursued until the failure of performance is
cured or corrected; or

 

(e)           The occurrence of an event of default
as defined in Section 7.01 of the Participation Agreement.

 

SECTION 12.02.         Notice
to Holders and Others Upon Occurrence of an Event of Default or a Payment
Default.   1.  The Trustee shall give notice to the
Bondholders of all Events of Default within sixty (60) days after the Trustee
has been notified thereof or is deemed to have notice thereof as provided in
Section 11.08, unless the Event of Default shall have been cured before the
giving of such notice or unless the Trustee shall deem it in the best interest
of the Holders to defer or withhold notice under this Section; provided,
however, that if a notice of

 

107

 

an Event of Default is given to any Bondholder, the
Trustee shall concurrently therewith cause a copy to be provided to all
beneficial owners.

 

2.          So long as ownership
of the Auction Rate Bonds is maintained in book-entry form by the Securities
Depository, upon the occurrence of an Event of Default, the Trustee shall
immediately send a notice thereof in substantially the form required by the
Auction Agency Agreement to the Auction Agent and to the registered Holders of
each series of Bonds by telecopy or similar means.

 

3.          So long as the
ownership of the Auction Rate Bonds is maintained in book-entry form by the
Securities Depository, the Trustee shall immediately send a notice in
substantially the form required by the Auction Agency Agreement to the Auction
Agent and to the registered Holders of each series of Bonds by telecopy or similar
means if an Event of Default has been cured or waived in accordance with this
Article XII.

 

4.          Upon the occurrence of
a Payment Default, or in the event such Payment Default is cured, the Trustee
shall give the Auction Agent the notices referred to in paragraph 7 of Section
6.04 hereof.

 

SECTION 12.03.         Declaration
of Principal and Interest As Due. 
Upon the occurrence and continuation of any Event of Default, of which
the Trustee has been notified or is deemed to have notice as provided in
Section 11.08, then and in every case the Trustee, by a notice in writing to
the Authority, the Company and (to addresses then specified by the Authority)
the Governor, the Comptroller and the Attorney General of the State of New
York, may with the written consent of the Bond Insurer (such consent, however,
not being required if a Bond Insurer Default has occurred and is continuing),
and shall, unless a Bond Insurer Default has occurred and is continuing, upon
the written request or direction of the Bond Insurer, or, if a Bond Insurer
Default has occurred and is continuing, upon the written request or direction
of the Holders of not less then twenty-five percent (25%) in principal amount
of the Bonds then Outstanding (determined in accordance with the provisions of
Section 13.03) shall, declare the principal of and accrued interest on all the
Bonds then Outstanding (if not then due and payable) to be due and payable
immediately, and upon such declaration the same shall become due and be
immediately due and payable, anything contained in the Bonds or in this
Indenture to the contrary notwithstanding. 
If, however, at any time after the principal of the Bonds shall have
been so declared to be due and payable, and before the entry of final judgment
or decree in any suit, action or proceeding instituted on account of such Event
of Default, or before the completion of the enforcement of any other remedy
under this Indenture, monies shall have accumulated in the Bond Fund sufficient
to pay the principal of and any premium (or redemption price) on all Bonds (or
portions of the principal amount thereof) then or theretofore required to be
redeemed pursuant to any provisions of this Indenture (excluding principal not
then due except by reason of the aforesaid declaration) and all arrears of
interest and interest then due, if any, upon Bonds then Outstanding and if the
fees, compensation, expenses, disbursements, advances and liabilities of the
Trustee and all other amounts then payable by the Company under the
Participation Agreement and the Note shall have been paid or a sum sufficient
to pay the same shall have been deposited with the Trustee, and every other
Event of Default known to the Trustee in the observance or performance of any
covenant, condition or

 

108

 

agreement contained in the Bonds or in this
Indenture (other than default in the payment of the principal of such Bonds
then due only because of a declaration under this Section) shall have been
remedied to the satisfaction of the Trustee or, the Company shall be taking, or
shall be causing to be taken, appropriate action in good faith to effect its
cure, then and in every such case the Trustee may with the written consent of
the Bond Insurer, unless a Bond Insurer Default has occurred and is continuing,
and shall upon the written request of the Bond Insurer, unless a Bond Insurer
Default has occurred and is continuing, or, if a Bond Insurer Default has
occurred and is continuing, upon the written request or direction of the Holders
of not less than a majority in principal amount of the Bonds (determined in
accordance with the provisions of Section 13.03) then Outstanding shall, by
written notice to the Authority, rescind and annul such declaration and its
consequences; provided, however, that notwithstanding any such rescission and
annulment during an Auction Rate Period, the Bonds shall continue to bear
interest at the Overdue Rate for the applicable period of time determined
pursuant to Article III.  No such
rescission or annulment pursuant to the next preceding sentence shall extend to
or affect any subsequent default or impair any right consequent thereto.

 

SECTION 12.04.         Action
by Trustee Upon Occurrence of Event of Default.  Subject to Section 6.05, upon the occurrence and continuation of
an Event of Default the Trustee (i) for and on behalf of the Holders of the
Bonds, shall have the same rights hereunder which are possessed by any Holders
of the Bonds; (ii) shall be authorized to proceed, in its own name and as
trustee of an express trust; (iii) may pursue any available remedy by action at
law or suit in equity to enforce the payment of the principal of and interest
and premium, if any, on the Bonds; (iv) may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of such Trustee and of the Bondholders allowed in any judicial
proceedings relative to the Company, its creditors, its property or the Bonds;
and (v) may, and upon the written request or direction of the Bond Insurer,
unless a Bond Insurer Default has occurred and is continuing, or Holders of not
less than twenty-five percent (25%) in principal amount of the Bonds then
Outstanding (determined in accordance with the provisions of Section 13.03),
with, so long as no Bond Insurer Default has occurred and is continuing, the
prior written consent of the Bond Insurer, shall proceed to protect and enforce
all rights of the Holders and the Trustee under and as permitted by this
Indenture and the laws of the State of New York, by such means or appropriate
judicial proceedings as shall be suitable or deemed by it most effective in the
premises, including the appointment of temporary trustees and any actions,
suits or special proceedings at law or in equity or in bankruptcy or by
proceedings in the office of any board or officer having jurisdiction, or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture, or in aid of execution of any power granted in
this Indenture or to enforce any other legal or equitable right or remedy
vested in the Holders of the Bonds or the Trustee by this Indenture or by such
laws, or for the appointment of a receiver. 
All rights of action (including the right to file proofs of claim) under
this Indenture or under any of the Bonds may be enforced by the Trustee without
the possession of any of the Bonds or the production thereof in any trial or
other proceedings relating thereto. Any such suit or proceeding instituted by
the Trustee shall be brought in its name and as trustee of an express trust
without the necessity of joining as plaintiffs or defendants any Holders of the
Bonds, and any recovery or judgment shall be for the equal benefit of the
Holders of the Outstanding Bonds.

 

109

 

In
the enforcement of any remedy under this Indenture the Trustee shall be
entitled to sue for, enforce payment of and receive any and all amounts, then
or during any Event of Default becoming, and at any time remaining, due from
the Company and unpaid under the Participation Agreement and the Note for
principal, premium, interest or otherwise under any of the provisions of this
Indenture or of the Bonds, with interest on overdue payments if such interest
then is permitted by the laws of the State of New York, together with any and
all costs and expenses of collection and of all proceedings hereunder and under
such Bonds, without prejudice to any other right or remedy of the Trustee or of
the Holders, and to recover and enforce judgment or decree against the Company
which is in default of its respective obligations under the Participation
Agreement and the Note, but solely as provided herein and in such Bonds, for
any portion of such amounts remaining unpaid, with interest, costs and
expenses, and to collect in any manner provided by law, the monies adjudged or
decreed to be payable. Any such judgment shall be recovered by the Trustee, in
its own name and as trustee of an express trust.

 

SECTION 12.05.         Powers
of Trustee With Respect to Participation Agreement and Other Agreements.  If the payments required to be paid to the
Trustee under the Participation Agreement and the Note or other agreement
pledged and assigned hereunder, as the case may be, are not paid when due or
upon the happening and continuance of an Event of Default set forth in clause
(a) or (b) of Section 12.01, 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 all payments due and
unpaid under the Participation Agreement and the Note or other agreement, as
the case may be, and required to be paid to the Trustee and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Company or the obligor under any
other agreement, as the case may be, and collect in the manner provided by law
out of the property of the Company or such obligor wherever situated, the monies
adjudged or decreed to be payable.

 

In
case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company under the Participation Agreement or an obligor
under any other agreement pledged and assigned hereunder, as the case may be,
under the Federal Bankruptcy Act or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company
under the Participation Agreement and the Note or an obligor under any other
agreement pledged and assigned hereunder, as the case may be, the Trustee,
regardless of whether the principal of the Bonds shall then be due and payable
as therein expressed or by declaration or otherwise and regardless of whether
the Trustee shall have made any demand pursuant to the power vested in it by
this Indenture, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount owing and unpaid under the Participation Agreement and the Note by the
Company or under such other agreement by such obligor, as the case may be, 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, 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 its negligence or bad faith) and of the
Holders allowed in any such judicial proceedings relative to the Company or
other obligor, as the case may be, or to the creditors or

 

110

 

property
of the Company or other obligor, as the case may be, and to collect and receive
any monies or other property payable or deliverable on such claims, and to
distribute in accordance with the provisions hereof all amounts received with
respect to the claims of the Holders and of the Trustee on their behalf, and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Trustee.

 

Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holders any plan of
reorganization, arrangement, adjustment or composition of the Authority or the
Company affecting the Bonds or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holders in any
such proceeding.  In the event of any
such reorganization, arrangement, adjustment, composition or liquidation, the
Bond Insurer shall have the right to vote on behalf of all Holders who hold
Bonds covered by the Policy applicable to such Bonds unless a Bond Insurer
Default has occurred and is continuing.

 

The
provisions of this Section shall not be construed as in any way limiting the
powers of the Trustee, with respect to defaults by the Authority or by the
Company under the Participation Agreement and the Note, or an obligor under any
other agreement pledged and assigned hereunder, as the case may be, whether
such powers be expressly or implicitly granted to the Trustee elsewhere in this
Indenture or in the Participation Agreement or the Note or other agreement, as
the case may be, or as a denial that the Trustee has any such other powers, but
the powers granted to the Trustee by this Section shall be supplemental,
additional and cumulative to all other powers possessed by the Trustee with
respect to defaults under this Indenture or under the Participation Agreement,
the Note or other agreement pledged and assigned hereunder, as the case may be.

 

SECTION 12.06.         Disposition
of Monies in Event of Insufficiencies in Funds and Accounts.  All monies (other than proceeds of any
Support Facility) received by the Trustee pursuant to any right given or action
taken under the provisions of this Article, after payment of the costs and
expenses of the proceedings resulting in the collection of such monies and of
the expenses, fees and advances incurred or made by the Trustee hereunder,
shall be deposited in the Bond Fund. If at any time the monies in the Bond Fund
shall not be sufficient to pay the interest or principal or premium, if any (or
the redemption price), of the Bonds as the same become due and payable (whether
at maturity or upon proceedings for the redemption thereof or by acceleration
or otherwise), the monies in such fund, together with any other monies then
available or thereafter becoming available for such purpose, whether through
the exercise of the remedies provided for in this Article XII or otherwise,
shall be applied as follows:

 

(a)           Unless the principal of all the Bonds
shall have become due and payable or shall have been declared due and payable
pursuant to the provisions of Section 12.03, all such monies shall be applied:

 

First: to the payment to the
persons entitled thereto of all installments of interest then due, in the order
of the maturity of the installments of such interest, and if the amount
available shall not be sufficient to pay in full any particular installment,
then to

 

111

 

the payment ratably, according to the amounts due on
such installment, to the persons entitled thereto, without any discrimination
or preference; and

 

Second: to the payment of
the premium, if any, on and the principal of the Bonds, to the purchase and
retirement of Bonds and to the redemption of Bonds, all in accordance with the
provisions of this Indenture.

 

(b)           If the principal of all the Bonds
shall have become due and payable or shall have been declared due and payable
pursuant to the provisions of Section 12.03, all such monies shall be applied
to the payment of the principal and interest then due and unpaid, with interest
on such principal as aforesaid, 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 Bond over any other Bond,
according to the amounts due respectively for principal and interest, to the
persons entitled thereto without any discrimination or preference except as to
any difference in the respective rates of interest specified in the Bonds.

 

(c)           If the principal of all the Bonds
shall have been declared due and payable pursuant to the provisions of Section
12.03, and if such declaration shall thereafter have been rescinded and
annulled pursuant to the provisions of such Section 12.03, then, subject to the
provisions of subparagraph (b) above of this paragraph in the event that the
principal of all the Bonds shall later become due and payable or be declared
due and payable pursuant to the provisions of Section 12.03, the monies then
held in the Bond Fund shall be applied to the payment of the principal of and
premium (or redemption price) on all matured Bonds and all Bonds (or portions
of the principal amount thereof) then or theretofore required to be redeemed
pursuant to any provisions of this Indenture (excluding principal not then due
except by reason of such declaration) and all arrears of interest and interest
then due, if any, upon all Bonds then Outstanding, and any monies thereafter
deposited in the Bond Fund shall be applied in accordance with the provisions
of Article IX.

 

Whenever
monies are to be applied by the Trustee pursuant to the provisions of
subparagraphs (a) and (b) of this Section, (i) such monies shall be applied by
the Trustee at such times, and from time to time, as the Trustee in its sole
discretion shall determine, having due regard to the amount of such monies
available for application and the likelihood of additional monies becoming
available for such application in the future; (ii) the deposit of such monies,
in trust for the proper purpose, shall constitute proper application by the
Trustee; and (iii) the Trustee shall incur no liability whatsoever to the
Authority, to any Holder or to any other person for any delay in applying any
such monies, so long as the Trustee acts with reasonable diligence, having due
regard to the circumstances, and ultimately applies the same in accordance with
such provisions of this Indenture as may be applicable at the time of
application by the Trustee. Whenever the Trustee shall exercise such discretion
in applying such monies, it shall fix the date (which shall be an Interest
Payment Date unless the Trustee shall deem another date more suitable) upon
which such application is to be made and upon such date interest on the amounts
of principal to be paid on such date shall cease to accrue. The Trustee shall
give such notice as it may deem appropriate of the fixing of any such date, and
shall not be required to make payment

 

112

 

to
the Holder of any unpaid Bond until such Bond shall be surrendered to the
Trustee for appropriate endorsement, or for cancellation if fully paid.

 

SECTION 12.07.         Effect
of Delay or Omission; Waiver of Default; Direction of Remedial Proceedings by
the Holders.  No delay or omission
of the Trustee or of any Holder of the Bonds to exercise any right or power
accruing upon any default or Event of Default shall impair any such right or
power or shall be construed to be a waiver of any such default or acquiescence
therein.

 

Anything
in this Indenture to the contrary notwithstanding, but subject to Section 6.05,
the Holders of not less than a majority in principal amount of the Bonds at the
time Outstanding (determined in accordance with the provisions of Section
13.03) with, so long as the no Bond Insurer Default has occurred and is
continuing, the prior written consent of the Bond Insurer shall be authorized
and empowered and have the right, by an instrument or concurrent instruments in
writing delivered to the Trustee on behalf of the Holders of the Bonds then
Outstanding to consent to the waiver of any Event of Default or its
consequences, and the Trustee shall waive any Event of Default and its
consequences upon the written request of the Holders of such majority with the
prior written consent of the Bond Insurer, so long as no Bond Insurer Default
has occurred and is continuing; provided, however, that there shall not be
waived (i) any default in payment of principal or premium when due or (ii) any
default in payment when due of interest unless, in either case, prior to such
waiver all arrears in principal, premium, if any, and interest, with additional
interest, to the extent permitted by law, at the rate then borne by the Bonds
(which, in the case of a Payment Default with respect to Auction Rate Bonds
shall be the Overdue Rate), and all fees and expenses of the Trustee shall have
been paid or provided for; provided, however, that notwithstanding any such
waiver, any Auction Rate Bonds shall continue to bear interest at the Overdue
Rate until such Payment Default is cured. 
No such waiver shall extend to or affect any other existing or
subsequent default or Event of Default or impair any rights or remedies
consequent thereon.

 

Anything
in this Indenture to the contrary notwithstanding, but subject to Section 6.05,
the Holders of not less than twenty-five percent (25%) in principal amount of
the Bonds at the time Outstanding (determined in accordance with the provisions
of Section 13.03) with, so long as no Bond Insurer Default has occurred and is
continuing, the prior written consent of the Bond Insurer shall be authorized
and empowered and have the right, by an instrument or concurrent instruments in
writing delivered to the Trustee to direct the time and method of conducting
any proceeding for any remedy to enforce the payment of the Bonds to be taken
by the Trustee or available to the Trustee or available to the Holders of the
Bonds, or exercising any trust or power conferred upon the Trustee hereunder
provided: (1) such direction shall not be in conflict with any rule of law or
with this Indenture or expose the Trustee to personal liability, or be unduly
prejudicial to Holders not joining therein, and (2) the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.

 

SECTION 12.08.         Suits
or Actions by Holders; Any Holder May Enforce Overdue Payment of His or Her
Bond or Interest Thereon.  No Holder
of any of the Bonds shall have any right to institute any suit, action or
proceeding in equity or at law for the execution of any trust hereunder or for
any other remedy hereunder unless there shall have occurred an Event

 

113

 

of Default of which the Trustee has been notified or
is deemed to have notice as provided in Section 11.08, and such Holder
previously shall have given to the Trustee written notice of the Event of
Default on account of which such suit, action or proceeding is to be
instituted, and unless also the Holders of not less than twenty-five percent
(25%) in principal amount of the Bonds then Outstanding, with the consent of
the Bond Insurer, so long as no Bond Insurer Default has occurred and is
continuing, shall have made written request of the Trustee after the right to
exercise such powers or right of action, as the case may be, shall have
accrued, and shall have afforded the Trustee a period of 60 days either to
proceed to exercise the powers hereinabove granted or to institute such action,
suit or proceeding in its or their name, the Trustee shall have been
indemnified by Holders against the costs, expenses and liabilities to be
incurred in compliance with such request, and shall not have received an
inconsistent direction from the Bond Insurer, so long as no Bond Insurer
Default has occurred and is continuing, or from the Holders of not less than
twenty-five percent (25%) in principal amount of the Bonds and the Trustee
shall have refused or neglected to comply with such request within a reasonable
time.  It is understood and intended
that no one or more Holders of the Bonds hereby secured shall have any right in
any manner whatever by the action of such Holder or Holders to affect, disturb
or prejudice the security of this Indenture, or to enforce any right hereunder
except in the manner herein provided; that all proceedings at law or in equity
shall be instituted, had and maintained in the manner herein provided and for
the benefit of all Holders of such Outstanding Bonds; and that any individual
rights of action or other right given to one or more of such Holders by law are
restricted by this Indenture to the rights and remedies herein provided.
Notwithstanding the foregoing and subject to Section 11.02, the Trustee shall
be under no obligation to exercise any of the rights or powers vested in it by
this Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction.  The rights of any Holder under this Section
12.08 are subject to the rights of the Bond Insurer under Section 6.05.

 

Notwithstanding
any other provision of this Indenture, the right of any Holder of a Bond to
receive payment of the principal of, premium, if any, and interest on such
Bond, on or after the respective due dates expressed in such Bond, 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, except that no Holder of any such Bond shall have the right to
institute any such suit, if and to the extent that the institution or
prosecution thereof or the entry of judgment therein would, under applicable
law, result in the surrender, impairment, waiver, or loss of the lien of this
Indenture.

 

SECTION 12.09.         Remedies
Not Exclusive.  No remedy by the
terms of this Indenture conferred upon or reserved to the Trustee, the Bond
Insurer or the Holders of the Bonds is intended to be exclusive of any other
remedy so conferred or reserved or to be exclusive of other remedies now or
hereafter existing at law or in equity or by statute, and each and every such
remedy shall be cumulative and shall be in addition to any other remedy given
hereunder to the Trustee, the Bond Insurer or to the Holders of the Bonds or
now or hereafter existing at law or in equity or by statute. Every such right,
power and remedy given hereunder or by law or in equity or by statute may be
exercised from time to time and as often as may be deemed expedient.

 

114

 

SECTION 12.10.         Effect
of Abandonment of Proceedings on Default. 
In case any proceeding taken by the Trustee or the Holders of the Bonds
on account of any Event of Default shall have been discontinued or abandoned
for any reason, then and in every such case the Authority, the Trustee and the
Holders shall be restored to their former positions and rights hereunder,
respectively, and all rights, remedies, powers and duties of the Trustee shall
continue as though no such proceeding had been taken.

 

SECTION 12.11.         Interest
on Overdue Amounts.  To the extent
permitted by law all amounts which are due and payable but which have not been
so paid under this Indenture shall bear interest at the then current rate of
interest on the Bonds until paid; provided, however, that upon the occurrence
of a Payment Default during any Auction Rate Period all amounts which are due
and owing but unpaid hereunder shall bear interest at the Overdue Rate until
paid.

 

115

 

ARTICLE
XIII

 

EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND

OWNERSHIP OF BONDS; EXCLUSION OF BONDS

OWNED BY THE AUTHORITY OR THE COMPANY

 

SECTION 13.01.         Execution
of Requests, Directions and Consents and Other Instruments and Proof of Same;
Ownership of Bonds and Proof of Same. 
Any request, direction, consent or other instrument required by this
Indenture to be signed or executed by Holders of Bonds may be signed or
executed by such Holders in person or by agent or agents duly appointed in
writing, and may be in any number of concurrent writings of substantially
similar tenor. Proof of the execution of any such request, direction, consent
or other instrument or of a writing appointing any such agent, and of the holding
or ownership of Bonds, shall be sufficient for any purpose of this Indenture
and shall be conclusive in favor of the Trustee hereunder with regard to any
action taken by it under such request, direction, consent or other instrument
or of a writing appointing any such agent, if made in the following manner:

 

(a)           the fact and date of the execution by
any person of any such request, direction, consent or other instrument in
writing may be proved in any reasonable manner which the Trustee deems sufficient;

 

(b)           the ownership of Bonds shall be
proved by the books of registry kept under the provisions of this Indenture.

 

Any
request, direction, consent or vote of the Holder of any Bond shall bind and be
conclusive upon the Holder of such Bond giving such request, direction or
consent or casting such vote and upon every future Holder of the same Bond in
respect of anything done or suffered to be done by the Trustee or otherwise, or
by the Holders of other Bonds, in pursuance of such request, direction, consent
or vote, and whether or not such future Holder has knowledge of or information
as to such request, direction, consent or vote; provided that any request,
direction, consent or vote of the Holder of a Bond required by any of the
provisions hereof may be revoked by the Holder giving such request, direction,
consent or vote or by a subsequent Holder if such revocation in writing is
filed with the Trustee, prior to the time when the request, direction, consent
or vote of the percentage of the Holders of the Bonds required by such
provision shall have been given and action taken by the Trustee or otherwise,
or by the Holders of other Bonds, under authority of such request, direction,
consent or vote.

 

The
payment of or on account of principal to or upon the order of the person in
whose name the Bonds shall at the time be registered on said books of registry
and the payment of interest to or upon the order of any person in whose name
the Bonds shall at the time be registered on said books of registry, shall be valid
and effectual fully to satisfy and discharge all liability hereunder or upon
the Bonds to the extent of the sum or sums so paid.

 

The
Authority at the request of the Company may establish a record date for the
taking of any action by the Holders.

 

116

 

SECTION 13.02.         Meetings
of Holders.  The Trustee or the
Holders of not less than twenty percent (20%) in principal amount of the Bonds
then Outstanding may at any time call a meeting of the Holders of the Bonds for
the purpose of the consenting to, the approving, the requesting, or the
directing by the Holders of the Bonds of any action required to be consented to
or approved by them hereunder or which they may request or direct hereunder to
be taken, or for the making by the Holders of any appointments they may make
hereunder, or for the purpose of taking any other action which the Holders may
take hereunder, or for any other purpose concerning the payment and security of
the Bonds hereunder. Every such meeting shall be held at such place in The City
of New York, State of New York, as may be specified in the notice calling such
meeting. Written notice of such meeting, stating the place and time of the
meeting and in general terms the business to be submitted, shall be mailed to
the Holders whose names and addresses then appear upon the books of registry by
the Registrar and Paying Agent or the Holders calling such meeting, not less
than 20 days nor more than 60 days before such meeting. Any meeting of Holders
shall, however, be valid without notice if the Holders of all Bonds then
Outstanding are present in person or by proxy or if notice is waived before or
within 30 days after the meeting by those not so present.

 

Attendance
and voting by Holders at meetings thereof may be in person or by proxy. Holders
of Bonds may, by an instrument in writing under their hands, appoint any person
or persons, with full power of substitution, as their proxy to attend and vote
at any meeting for them.

 

Persons
named by the Trustee, or elected by the Holders of a majority in principal
amount of the Bonds represented at the meeting in person or by proxy in the
event the Trustee is not represented at such meeting, shall act as temporary
chairman and temporary secretary of any meeting of Holders. A permanent
chairman and a permanent secretary of such meeting shall be elected by the
Holders of a majority in principal amount of the Bonds represented at such
meeting in person or by proxy. The permanent chairman of the meeting shall appoint
two (2) inspectors of votes who shall count all votes cast at such meeting,
except votes on the election of chairman and secretary as aforesaid, and who
shall make and file with the secretary of the meeting and the Trustee their
verified report of all such votes cast at the meeting.

 

The
Holders of not less than the principal amount of the Bonds required by the
provisions hereof to consent to, approve, request or direct any action to be
taken at a meeting of Holders, or required by the provisions hereof to make any
appointments to be made at such meeting, or required by the provisions hereof
to take any other action to be taken at such meeting, must be present at such
meeting in person or by proxy in order to constitute a quorum for the
transaction of such business.  Less than
a quorum, however, shall have power to adjourn the meeting from time to time
without notice of such adjournment other than the announcement thereof at the
meeting; provided, however, that if such meeting is adjourned by less than a
quorum for more than ten (10) days, notice of such adjournment shall be given
by the Trustee at least five (5) days prior to the adjourned date of the
meeting.

 

Any
Holder of a Bond shall be entitled in person or by proxy to attend and vote at
such meeting as Holder of the Bond or Bonds registered in his or her name
without producing

 

117

 

such Bond or Bonds. Such persons and their
proxies shall, if required, produce such proof of personal identity as shall be
satisfactory to the Secretary of the meeting.

 

All
proxies presented at such meeting shall be delivered to the Inspector of Votes
and filed with the Secretary of the meeting. The right of a proxy for a Holder
to attend the meeting and act and vote thereat may be proved (subject to the
Trustee’s right to require additional proof) by a written proxy executed by
such Holder as aforesaid.

 

The
officers or nominees of the Trustee may be present or represented at such
meeting and take part therein, but shall not be entitled to vote thereat,
except for such officers or nominees who are Holders or proxies for Holders
(including the Trustee).

 

The
vote at any such meeting of the Holder of any Bond, or his or her proxy,
entitled to vote thereat shall be binding upon such Holder and upon every
subsequent Holder of such Bond (whether or not such subsequent Holder has
notice thereof).

 

SECTION 13.03.         Exclusion
of Bonds Held by or for the Authority, the Company and of Bonds No Longer
Deemed Outstanding Hereunder.  In determining
whether the Holders of the requisite aggregate principal amount of Bonds have
concurred in any demand, request, direction, consent, vote or waiver under this
Indenture, any Bonds which are owned by or on behalf of or for the account of
the Authority, the Company and, except for the purposes of Section 15.01, any
Bonds which are deemed no longer Outstanding hereunder shall be disregarded and
not included for the purpose of any such determination, and such Bonds shall
not be entitled to vote upon, consent to or concur in any action provided in
this Indenture, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such demand, request, direction, consent,
vote or waiver only Bonds which a Responsible Officer of the Trustee knows are
owned as aforesaid shall be disregarded. The Trustee may require each Holder of
a Bond or Bonds, before such Holder’s demand, request, direction, consent, vote
or waiver shall be deemed effective, to reveal if the Bonds as to which such
demand, request, direction, consent, vote or waiver is made, granted, cast or
given are disqualified as provided in this Section.

 

118

 

ARTICLE
XIV

 

AMENDING AND SUPPLEMENTING THE INDENTURE,

THE PARTICIPATION AGREEMENT, THE REMARKETING AGREEMENT, AUCTION AGENCY
AGREEMENT, BROKER-DEALER AGREEMENTS,

BOND PURCHASE TRUST AGREEMENT

 

SECTION 14.01.         Amending
and Supplementing Indenture Without Consent of Holders.  The Authority and the Trustee, from time to
time and at any time and without the consent or concurrence of any Holder, may
enter into a Supplemental Indenture, (i) to make any changes, modifications,
amendments or deletions to this Indenture that may be required to permit the
Indenture to be qualified under the Trust Indenture Act of 1939 of the United
States of America or (ii) for any one or more of the following purposes:

 

(a)           (x)            to
make any changes or corrections in this Indenture or any Supplemental Indenture
as to which the Authority shall have been advised by counsel that the same are
required for the purpose of curing or correcting any ambiguity or defective or
inconsistent provision or omission or mistake or manifest error contained in
this Indenture or Supplemental Indenture, or (y) to insert in this Indenture
such provisions clarifying matters or questions arising under this Indenture as
are necessary or desirable if such provisions shall not materially and
adversely affect the rights of the Holders;

 

(b)           to add additional covenants and agreements
of the Authority for the purpose of further securing the payment of the Bonds;

 

(c)           to surrender any right, power or
privilege reserved to or conferred upon the Authority by the terms of this
Indenture;

 

(d)           to confirm as further assurance any
lien, pledge or charge, or the subjection to any lien, pledge or charge,
created or to be created by the provisions of this Indenture or any
Supplemental Indenture;

 

(e)           to grant to or confer upon the
Holders any additional rights, remedies, powers, authority or security that
lawfully may be granted to or conferred upon them, or to grant to or to confer
upon the Trustee for the benefit of the Holders any additional rights, duties,
remedies, power or authority;

 

(f)            to provide for the issuance of Bonds
in book entry or coupon form, if at the time permitted by applicable law;

 

(g)           to provide for the substitution of
rating agencies;

 

(h)           to provide for any new administrative
or procedural provisions made necessary or desirable by the issuance of a
Support Facility or an Alternate Support Facility, other credit, liquidity or
support facility, including, but not limited to, any amendment necessary to
obtain a rating on the Bonds based upon such facility; and

 

119

 

(i)            to modify, amend or supplement the
Indenture in such manner as to permit the qualification of the Bonds for
deposit with a Securities Depository, and, in connection therewith, if they so
determine, to add to the Indenture, such other terms, conditions and provisions
as may be required to permit such qualification.

 

No
Supplemental Indenture shall be entered into unless in the Opinion of Bond
Counsel which shall be delivered to the Trustee (which opinion may be combined
with the opinion required by Section 14.04) the execution of such Supplemental
Indenture is permitted by the foregoing provisions of this Section and the
provisions of such Supplemental Indenture do not materially and adversely
affect the rights of the Holders of the Bonds and the Trustee may rely on any
such opinion.

 

SECTION 14.02.         Amending
and Supplementing Indenture with Consent of Holders.  With the consent of the Holders of a
majority in principal amount of the Bonds then Outstanding and, so long as no
Bond Insurer Default has occurred and is continuing, the Bond Insurer, the
Authority and the Trustee from time to time and at any time may enter into a
Supplemental Indenture for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, this Indenture, or
modifying or amending the rights and obligations of the Authority hereunder, or
modifying or amending in any manner the rights of the Holders; provided that,
without the specific consent of the Holders of all Bonds Outstanding which
would be affected thereby and the Bond Insurer, so long as no Bond Insurer
Default has occurred and is continuing, no Supplemental Indenture amending or
supplementing the provisions hereof shall: (a) change the fixed maturity date
for the payment of the principal of any Bond, or the dates for the payment of
interest thereon or the terms of the purchase or redemption thereof, or reduce
the principal amount of any Bond or the rate of interest thereon or the method
of calculating the same except as otherwise provided in this Indenture; or (b)
reduce the aforesaid percentage of Bonds, the Holders of which are required to
consent to any Supplemental Indenture amending or supplementing the provisions
of this Indenture; or (c) give to any Bond any preference over any other Bond
secured hereby; or (d) authorize the creation of any pledge of payments under
the Participation Agreement or Note Payments prior or superior to the pledge of
a lien and charge thereon assigned herein for the payment of the Bonds; or (e)
effect any change in the purchase or redemption provisions relating to the
Bonds; or (f) deprive any Holders in any material respect of the security
afforded by this Indenture. A modification or amendment of the provisions of
Article IX hereof with respect to the Bond Fund or any other Funds or Accounts
established thereby shall not be deemed a change in the terms of payment;
provided that no such modification or amendment shall, except upon the consent
of the Bond Insurer and the Holders of all Bonds Outstanding affected thereby,
reduce the amount or amounts required to be deposited in the Bond Fund. Nothing
in this paragraph contained, however, shall be construed as making necessary
the approval of the Holders of the execution of any Supplemental Indenture
authorized by the provisions of Section 14.01.

 

The
proof of the giving of any consent by any Holder required by this Section and
of the holding of the Bonds for the purpose of giving consents shall be made in
accordance with the provisions of Article XIII. It shall not be necessary that
the consent of the Holders approve the particular form of wording of the
proposed supplemental amendment or supplement, but it shall be sufficient if
such consent approves the substance of the proposed amendment or

 

120

 

supplement.
After the Holders of the required percentage of Bonds shall have filed their
consents to the amending or supplementing hereof pursuant to this Section, the
Authority shall mail a copy of a notice of such consent, postage prepaid, to
each Holder at his or her address as it appears upon the books of registry and
to the Trustee. Nothing in this paragraph contained, however, shall be
construed as requiring the giving of notice of any amending or supplementing of
this Indenture authorized by this Section. A record of the consents shall be
filed with the Trustee, and shall be proof of the matters therein stated until
the contrary is proved. No action or proceeding to set aside or invalidate such
Supplemental Indenture or any of the proceedings for its adoption shall be
instituted or maintained unless such action or proceeding is commenced within
sixty (60) days after the mailing of the notice required by this paragraph.

 

Notwithstanding
anything in this Indenture to the contrary, the consent of the Holders of the
required amount of Bonds shall be deemed given with respect to a Supplemental
Indenture if:

 

(a)           (i) the Supplemental Indenture takes
effect on a date on which all of the Bonds that are affected by such Supplemental
Indenture are subject to mandatory tender for purchase in accordance with this
Indenture, (ii) any modification or amendment effected thereby is consented to
in writing by the Remarketing Agent, if any, for such Bonds on or prior to such
effective date and (iii) the Bonds so tendered are purchased;

 

(b)           (i) not less than 30 days before the
effective date of the Supplemental Indenture, the Trustee sends a notice of the
proposed modification or amendment to the Holders of the Bonds that are
affected by such Supplemental Indenture and the Holders of such Bonds have the
right to tender their Bonds for purchase pursuant to Section 5.03 hereof before
such effective date, (ii) the Remarketing Agent, if any, for such Bonds
consents in writing to the proposed modification or amendment on or prior to
such effective date and (iii) the Bonds so tendered are purchased; or

 

(c)           (i) not less than 30 days before the
Auction Date for the Auction Period during which any modification or amendment
to this Indenture shall become effective, the Trustee sends a notice of the
proposed modification or amendment to the Holders of the Auction Rate Bonds
that are affected by such modification or amendment, (ii) the Auction Rate
determined for such Auction Rate Bonds at the Auction immediately preceding the
effective date of the modification or amendment is a Winning Bid Rate, and
(iii) any modification or amendment effected thereby is consented to in writing
by the Broker-Dealer(s) for such Bonds on or prior to such effective date and
is disclosed in the official statement or other disclosure document delivered
by the Broker-Dealer(s) to Potential Holders prior to the Auction immediately
preceding such effective date; provided, however, that, notwithstanding
anything to the contrary in this Indenture, any Auction Rate Bonds that are not
the subject of a specific Hold Order or Bid shall be deemed to be subject to a
Sell Order at the Auction immediately preceding such effective date.

 

SECTION 14.03.         Notation
upon Bonds; New Bonds Issued upon Amendments.  The Bonds delivered after the effective date of any action taken
as provided in

 

121

 

this Article, if any, may and shall if required by
the Trustee bear a notation as to such action, by endorsement or otherwise and
in form approved by the Authority. In that case, upon demand of any Holder at
such effective date and upon presentation of Bonds at the Principal Corporate
Trust Office of the Trustee or other transfer agent or registrar hereunder for
such Bonds, and at such additional offices, if any, as the Authority may select
and designate for that purpose, a suitable notation shall be made on the Bonds.

 

SECTION 14.04.         Effectiveness
of Supplemental Indentures.  Upon
the execution pursuant to this Article by the Authority and the Trustee of any
Supplemental Indenture amending or supplementing the provisions of this
Indenture and the delivery to the Trustee of an Opinion of Bond Counsel that
such Supplemental Indenture is permitted by the provisions of this Article XIV
and has been duly executed in accordance with the provisions hereof and
applicable law and that the provisions thereof are valid (upon which opinion
the Trustee, subject to the provisions of Section 11.04, shall be fully
protected in relying), or upon such later date as may be specified in such
Supplemental Indenture, (i) this Indenture and the Bonds shall be modified and
amended in accordance with such Supplemental Indenture; (ii) the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Authority, the Trustee, and the Holders shall thereafter be
determined, exercised and enforced under this Indenture subject in all respects
to such modifications and amendments; and (iii) all of the terms and conditions
of any such Supplemental Indenture shall be a part of the terms and conditions
of the Bonds and of this Indenture for any and all purposes.

 

SECTION 14.05.         Supplemental
Indenture Affecting Support Facility Provider.  No Supplemental Indenture affecting the rights or obligations of
the Support Facility Issuer which takes effect while any Support Facility is in
effect may, so long as the Support Facility Issuer is not in default under the
Support Facility and no event of the type described in (b) through (g) of the
definition of Bond Insurer Default contained herein shall have occurred and be
continuing in respect to the Support Facility Issuer, be entered into by the
Authority and the Trustee or be consented to by the Holders without written
consent of each Support Facility Issuer.

 

SECTION 14.06.         Supplemental
Participation Agreements Not Requiring the Consent of the Holders.  The Authority and the Company may, with the
written consent of the Trustee but without notice to or consent of any Holder,
from time to time and at any time, agree to such supplemental agreements
supplementing the Participation Agreement or amendments to the Participation
Agreement as shall not be inconsistent with the terms and provisions of the
Participation Agreement or this Indenture and, in the opinion of the Authority,
shall not be detrimental to the interests of the Holders (which Supplemental
Participation Agreements shall thereafter form a part of the Participation
Agreement):

 

(a)           to cure any ambiguity or formal
defect or omission in the Participation Agreement or in any supplemental
agreement;

 

(b)           to grant to or confer upon the
Trustee for the benefit of the Holders any additional rights, remedies, powers,
authority or security that may lawfully be granted to or conferred upon the
Holders or the Trustee;

 

122

 

(c)           to provide for any new
administrative, security or procedural provisions necessitated by the issuance
of an Alternate Support Facility; or

 

(d)           to provide for or add any further
changes or corrections that are necessary or desirable to comply with any
Supplemental Indenture entered into pursuant to Section 14.01;

 

provided
that no such Supplemental Participation Agreement which takes effect while a
Support Facility is in effect shall, so long as the Support Facility Issuer is
not in default under the Support Facility, be effective prior to the receipt by
such parties of the written consent of each Support Facility Issuer.

 

SECTION 14.07.         Notice
and Consent for Supplemental Participation Agreements Requiring the Consent of
the Holders.  Except for
Supplemental Participation Agreements or amendments provided for in Section
14.06, neither the Authority nor the Trustee shall agree or consent, as the
case may be, to any Supplemental Participation Agreement or amendment to the
Participation Agreement unless notice of the proposed execution of such
Supplemental Participation Agreement or amendment shall have been given and the
Holders, and, so long as no Bond Insurer Default has occurred and is
continuing, the Bond Insurer shall have consented to and approved the execution
thereof in the same manner and form as provided for in Section 14.02 in the
case of Supplemental Indentures; provided that no such Supplemental
Participation Agreement which materially and adversely affects any issuer of a
Support Facility (so long as such Support Facility is in effect) shall be
effective prior to the receipt by such parties of the written consent of the
issuer of such Support Facility, so long as the Support Facility Issuer is not
in default under the Support Facility and no event of the type described in (b)
through (g) of the definition of Bond Insurer Default contained herein shall
have occurred and be continuing in respect of the Support Facility Issuer.

 

Notwithstanding
anything in this Indenture to the contrary, the consent of the Holders of the
required amount of Bonds shall be deemed given with respect to any Supplemental
Participation Agreement or amendment to the Participation Agreement if:

 

(a)           (i) the Supplemental Participation
Agreement or amendment to the Participation Agreement takes effect on a date on
which all of the Bonds that are affected by such Supplemental Participation
Agreement or amendment to the Participation Agreement are subject to mandatory
tender for purchase in accordance with this Indenture, (ii) any modification or
amendment effected thereby is consented to in writing by the Remarketing Agent,
if any, for such Bonds on or prior to such effective date  and (iii) the Bonds so tendered are
purchased;

 

(b)           (i) not less than 30 days before the
effective date of the Supplemental Participation Agreement or amendment to the
Participation Agreement, the Trustee sends a notice of the proposed
modification or amendment to the Holders of the Bonds that are affected by such
modification or amendment and the Holders of such Bonds have the right to
tender their Bonds for purchase pursuant to Section 5.03 hereof before such
effective date, (ii) the Remarketing Agent, if any, for such Bonds consents in
writing to

 

123

 

the
proposed modification or amendment on or prior to such effective date and (iii)
the Bonds so tendered are purchased; or

 

(c)           (i) not less than 30 days before the
Auction Date for the Auction Period during which any modification or amendment
to the Participation Agreement shall become effective, the Trustee sends a
notice of the proposed modification or amendment to the Holders of the Auction
Rate Bonds that are affected by such modification or amendment, (ii) the
Auction Rate determined for such Auction Rate Bonds at the Auction immediately
preceding the effective date of the modification or amendment is a Winning Bid
Rate, and (iii) any modification or amendment effected thereby is consented to
in writing by the Broker-Dealer(s) for such Bonds on or prior to such effective
date and is disclosed in the official statement or other disclosure document
delivered by the Broker-Dealer(s) to Potential Holders prior to the Auction
immediately preceding such effective date; provided, however, that,
notwithstanding anything to the contrary in this Indenture, any Auction Rate
Bonds that are not the subject of a specific Hold Order or Bid shall be deemed
to be subject to a Sell Order at the Auction immediately preceding such
effective date.

 

SECTION 14.08.         Effectiveness
of Supplemental Participation Agreement. 
Upon the execution pursuant to this Article and of applicable law by the
Authority and the Company of any Supplemental Participation Agreement amending
or supplementing the provisions of the Participation Agreement and the delivery
to the Trustee of an Opinion of Bond Counsel that such Supplemental
Participation Agreement is in due form, has been duly executed in accordance
with the provisions hereof and applicable law and that the provisions thereof
are valid (upon which opinion the Trustee, subject to the provisions of Section
11.04, shall be fully protected in relying), or upon such later date as may be
specified in such Supplemental Participation Agreement, (i) the Participation
Agreement shall be modified and amended in accordance with such Supplemental
Participation Agreement; (ii) the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Authority and the Company
shall thereafter be determined, exercised and enforced thereunder subject in
all respects to such modifications and amendments; and (iii) all of the terms
and conditions of any such Supplemental Participation Agreement shall be a part
of the terms and conditions thereof for any and all purposes.

 

SECTION 14.09.         Amending
and Supplementing the Remarketing Agreement, Auction Agency Agreement,
Broker-Dealer Agreements or Bond Purchase Trust Agreement.  Amendments of or supplements to the
Remarketing Agreement, the Auction Agency Agreement, any Broker-Dealer
Agreement or the Bond Purchase Trust Agreement shall be made only in accordance
with the terms thereof.

 

SECTION 14.10.         Supplemental
Participation Agreement Affecting Support Facility Provider.  No Supplemental Participation Agreement or
amendments to the Participation Agreement affecting the rights or obligations
of the Support Facility Issuer which take effect while any Support Facility is
in effect may, so long as the Support Facility Issuer is not in default under
the Support Facility and no event of the type described in (b) through (g) of
the definition of Bond Insurer Default contained herein shall have occurred in
respect to the

 

124

 

Support Facility Issuer, be entered into by the
Authority or be consented to by the Holders without written consent of each
Support Facility Issuer.

 

125

 

ARTICLE
XV

 

DEFEASANCE;
MONEYS HELD FOR PAYMENT OF

DEFEASED BONDS

 

SECTION 15.01.         Discharge
of Liens and Pledges; Bonds No Longer Deemed to be Outstanding Hereunder.  Bonds purchased pursuant to Section 5.03,
5.04, 5.08 or 5.09 shall continue to be Outstanding hereunder until such Bonds
shall be cancelled in accordance with Section 5.15 or paid at maturity or
redeemed pursuant to Article V or otherwise defeased. The obligations of the
Authority under this Indenture and the liens, pledges, charges, trusts,
covenants and agreements of the Authority, herein made or provided for, shall
be, subject to the terms of Section 15.02, fully discharged and satisfied as to
the Bonds or portion thereof and the Bonds shall no longer be deemed to be
Outstanding hereunder:

 

(a)           when the Bonds shall have been
cancelled, or shall have been surrendered for cancellation and are subject to
cancellation, or shall have been redeemed by the Trustee from monies held by it
under this Indenture; or

 

(b)           if the Bonds have not been cancelled
or so surrendered for cancellation or subject to cancellation, or so redeemed,
when (1) payment of the principal of and premium, if any, on the Bonds, plus
interest on such principal to the due date thereof (whether such due date be by
reason of maturity or upon redemption or prepayment, or otherwise) and of any
Purchase Price which is or may become due on such Bonds either (i) shall have
been made or caused to be made in accordance with the terms thereof, or (ii)
shall have been provided for by irrevocably depositing with the Trustee in
trust, and irrevocably appropriating and setting aside exclusively for such
payments (A) monies sufficient to make such payment, or (B) Governmental
Obligations maturing as to principal and interest in such amounts and at such
times as will insure the availability of sufficient and timely monies to make
such payments when due, or (C) a combination of both such monies and
Governmental Obligations, whichever the Authority deems to be in its best
interest, (2) there shall have been delivered to the Trustee (x) a letter
addressed to the Trustee from a nationally recognized firm of independent
public accountants verifying the mathematical accuracy of the sufficiency of
the deposit made pursuant to (1)(ii) above, (y) an Opinion of Bond Counsel to
the effect that upon the provision of payment on the Bonds as described in
(1)(ii) above, the Bonds are no longer deemed to be Outstanding under the
Indenture and (z) in the case of Bonds bearing interest at a Daily Rate, a
Weekly Rate, an Auction Rate, a Monthly Rate and a Semi-annual Rate, written
confirmation  from S&P, if the Bonds
are then rated by S&P, to the effect that the deposit made pursuant to
(1)(ii) above will not, by itself, result in a reduction or withdrawal of its
short-term or long-term rating of the Bonds below the rating category of
S&P then in effect with respect to the Bonds, and (3) all necessary and
proper fees, compensation and expenses of the Trustee pertaining to the Bonds
or portion thereof with respect to which such deposit is made, shall have been
paid or the payment thereof provided to the satisfaction of the Trustee.

 

126

 

At
such time as the Bonds shall be deemed to be no longer Outstanding hereunder,
as aforesaid, such Bonds shall cease to accrue interest from the due date
thereof (whether such due date occurs by reason of maturity, or upon redemption
or prepayment or otherwise) and, except for the purposes of any such payment
from such monies or Governmental Obligations and except, in the case of Auction
Rate Bonds, to the extent provided in the definition of Outstanding in Article
I shall no longer be secured by or entitled to the benefits of this Indenture.

 

Any
such monies so deposited with the Trustee as provided in this Section may at
the written direction of the Company also be invested and reinvested in
Governmental Obligations, maturing in the amounts and times as hereinbefore set
forth, and all income from all Governmental Obligations in the hands of the
Trustee pursuant to this Section which is not required for the payment of the
Bonds and interest thereon with respect to which such monies shall have been so
deposited shall be paid to the Company or if any Bonds are then Outstanding, be
deposited in the Bond Fund and credited to the Principal Account as and when
realized and collected, for use and application as are other monies credited to
such Account.

 

Anything
in Article XV to the contrary notwithstanding, if monies or Governmental
Obligations have been deposited or set aside with the Trustee pursuant to this
Section for the payment of the Bonds, the Bonds shall be deemed to have been
paid in full.  No amendment to the
provisions of this Article shall be made without the consent of the Bond
Insurer, so long as no Bond Insurer Default has occurred and is continuing, and
the Holders of the Bonds affected thereby.

 

The
Trustee shall promptly surrender any Support Facility (if appropriate for the
type of instrument or instruments then serving as Support Facility) to the
issuer of such Support Facility for cancellation or shall otherwise take
appropriate action to terminate the Support Facility following any such
defeasance.

 

Notwithstanding
anything herein to the contrary, in the event that the principal and/or
interest due on the Bonds shall be paid by the Bond Insurer pursuant to a
Policy, the Bonds to which such Policy relates shall remain Outstanding for all
purposes, not be defeased or otherwise satisfied and not be considered paid by
the Authority or Company, and the assignment and pledge of the Trust Estate and
all covenants, agreements and other obligations of the Authority and Company to
the Holders shall continue to exist and shall run to the benefit of the Bond
Insurer, and the Bond Insurer shall be subrogated to the rights of such
Holders.

 

SECTION 15.02.         Release
of Indenture, Termination of Right, Title and Interest of Trustee.  When the Bonds shall be deemed to be paid in
accordance with the provisions of Section 15.01, then and in the case all
right, title and interest of the Trustee under this Indenture shall thereupon
cease, determine and become void, and the Trustee in such case shall release
this Indenture, shall execute such documents to evidence such release as may be
reasonably required by the Authority and furnish the Authority with the same,
and shall turn over to the Company any surplus monies and balances remaining in
any of the Funds and Accounts created in or held under this Indenture, other
than monies and Governmental Obligations held by it pursuant to Section 15.01
or the provisions of Section 15.03 for the

 

127

 

redemption, payment or prepayment of the Bonds;
otherwise, this Indenture shall be, continue and remain in full force and
effect.

 

Notwithstanding
the satisfaction and discharge of this Indenture, the rights of the Trustee and
the Registrar and Paying Agent under Sections 11.02, 11.06 and 11.17 shall
survive defeasance of the Bonds hereunder.

 

SECTION 15.03.         Bonds
Not Presented for Payment When Due; Monies Held for the Bonds after Due Date of
Bonds.  Subject to the provisions of
the next sentence of this paragraph, if the Bonds shall not be presented for
payment when the principal thereof shall become due, whether at maturity or at
the date fixed for the redemption thereof, or otherwise, and if monies or
Governmental Obligations shall at such due date be held by the Trustee in trust
for that purpose sufficient and available to pay the principal of and premium,
if any, on the Bonds, together with all interest due on such principal to the
due date thereof or to the date fixed for redemption thereof, all liability of
the Authority and the Company for such payment shall forthwith cease, determine
and be completely discharged, and thereupon it shall be the duty of the Trustee
to hold said monies or Governmental Obligations without liability to the
Holders for interest thereon, in trust for the benefit of the Holders, which
thereafter shall be restricted exclusively to said monies or Governmental
Obligations for any claim of whatever nature on its part on or with respect to
the Bonds, including for any claim for the payment thereof.  Notwithstanding anything to the contrary in
Section 9.04, any monies or Governmental Obligations held by the Trustee for
the Holders after the principal of and premium, if any, and interest on the
Bonds or any portion thereof with respect to which such monies or Governmental
Obligations have been so set aside has become due and payable (whether at
maturity or upon redemption or prepayment or otherwise) shall be either held
uninvested as cash or at the written direction of the Company invested and
reinvested in Governmental Obligations which mature on the next Business Day.
Any such monies or Governmental Obligations held by the Trustee for the Holders
after the principal of and premium, if any, and interest on the Bonds or any
portion thereof with respect to which such monies or Governmental Obligations
have been so set aside has become due and payable (whether at maturity or upon redemption
or prepayment or otherwise) shall be deemed abandoned property when such monies
or Governmental Obligations shall have remained unpaid or undelivered to the
Holder or Holders entitled thereto for three years from the date the principal
of and premium, if any, and interest on the Bonds or any portion thereof has
become due and payable and shall be subject to the laws of the State of New
York relating to disposition of unclaimed property.

 

128

 

ARTICLE
XVI

 

FORM
OF BONDS

AND ENDORSEMENT AND ASSIGNMENT PROVISIONS

 

SECTION 16.01.         Form
of Bonds and Endorsement and Assignment Provisions.  The form of Bond, the form of the
certificate of authentication thereof, the form of endorsement to appear
thereon and the form of assignment thereof shall be substantially in the form
set forth in Appendix A hereto.

 

129

 

ARTICLE
XVII

 

MISCELLANEOUS

 

SECTION 17.01.         Benefits
of Indenture Limited to Authority, Company, Trustee, Registrar and Paying
Agent, Support Facility Issuer, and Auction Agent and Holders of the Bonds.  With the exception of rights or benefits
herein expressly conferred, nothing expressed or mentioned in or to be implied
from this Indenture or the Bonds is intended or should be construed to confer
upon or give to any person other than the Authority, the Company, the Trustee,
the Registrar and Paying Agent, the Bond Insurer and any other Support Facility
Issuer, the Auction Agent and the Holders of the Bonds any legal or equitable
right, remedy or claim under or by reason of or in respect to this Indenture or
any covenant, condition, stipulation, promise, agreement or provision herein
contained.  Unless otherwise expressly
set forth herein, this Indenture and all of the covenants, conditions,
stipulations, promises, agreements and provisions hereof are intended to be and
shall be for and inure to the sole and exclusive benefit of the Authority, the
Company, the Trustee, the Registrar and Paying Agent, the Bond Insurer or any
other Support Facility Issuer, the Auction Agent and the Holders of the Bonds
as herein and therein provided.

 

SECTION 17.02. Indenture
a Contract; Indenture Binding Upon Successors or Assigns of the Authority.  In consideration of the acceptance of the
Bonds by any person who shall hold the same from time to time, each of the
obligations, duties, limitations and restraints imposed by this Indenture upon
the Authority or any employee thereof shall be deemed to be a covenant between
the Authority and every Holder and this Indenture and every provision and
covenant hereof shall be a contract by the Authority with the Holders of the
Bonds issued hereunder to secure the full and final payment of the principal
of, premium, if any, of and the interest on the Bonds executed and delivered
hereunder. The provisions of the Act shall be a contract by the Authority with
the Holders and the duties of the Authority and any employee thereof under the
Act shall be enforceable by the Holders. This Indenture shall be enforceable by
the Holders, by mandamus or other appropriate suit, action or proceeding in any
court of competent jurisdiction. The covenants and agreements herein set forth
to be performed by the Authority and any employee thereof, shall be for the
benefit, security and protection of the Holders.  All the terms, provisions, conditions, covenants, warranties and
agreements contained in this Indenture shall be binding upon the assigns of the
Authority, and shall inure to the benefit of the Trustee, its successors or
substitutes in trust and assigns, and the Holders.

 

SECTION 17.03.         Notice
to Holders of Bonds.  Except as is
otherwise provided in this Indenture, any provision for the mailing of a notice
or other paper to the Holders shall be fully complied with if it is mailed
postage prepaid, to the Holder of the Bonds at such Holder’s address appearing
upon the books of registry kept pursuant to Article VII.  The Trustee shall furnish a copy of any
notice to a Holder upon a request by the Holder that a copy of such notices be
provided directly to the Holder; provided, however, that any failure to provide
such a notice to a Holder shall not effect the validity of the provision of the
notice in the preceding sentence.

 

130

 

SECTION 17.04.         Waiver
of Notice.  Whenever in this
Indenture the giving of notice by mail, publication, or otherwise is required,
the giving of such notice may be waived by the person entitled to receive such
notice, and in any case the giving or receipt of such notice shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.

 

SECTION 17.05.         Effect
of Saturdays, Sundays and Non-Business Days.  Except as otherwise specifically provided herein, whenever this
Indenture requires any action to be taken on a Saturday, Sunday or other day
which is not a Business Day, such action shall be taken on the first Business
Day occurring thereafter. Except as otherwise specifically provided herein,
whenever in this Indenture the time within which any action is required to be
taken or within which any right will lapse or expire shall terminate on a
Saturday, Sunday or other day which is not a Business Day, such time shall
continue to run until midnight on the next succeeding Business Day.

 

SECTION 17.06.         Partial
Invalidity.  If any one or more of
the covenants or agreements or portions thereof provided in this Indenture on
the part of the Authority or the Trustee to be performed should be determined
by a court of competent jurisdiction to be contrary to law, then such covenant
or covenants, or such agreement or agreements, or such portions thereof, shall
be deemed severable from the remaining covenants and agreements or portions
thereof provided in this Indenture and the invalidity thereof shall in no way
affect the validity of the other provisions of this Indenture or of the Bonds,
but the Holders shall retain all the rights and benefits accorded to them
hereunder and under any applicable provisions of law.

 

If
any provisions of this Indenture shall be held or deemed to be or shall, in
fact, be inoperative or unenforceable or invalid in any particular case in any
jurisdiction or jurisdictions or in all jurisdictions, or in all cases because
it conflicts with any constitution or statute or rule of public policy, or for
any other reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable or invalid in any other case
or circumstance, or of rendering any other provision or provisions herein
contained inoperative or unenforceable or invalid to any extent whatsoever.

 

SECTION 17.07.         Law
and Place of Enforcement of Indenture. 
This Indenture shall be construed and interpreted in accordance with the
laws of the State of New York and all suits and actions arising out of this
Indenture shall be instituted in a court of competent jurisdiction in the State
of New York.

 

SECTION 17.08.         Requests,
Approvals and Directions of Authority. 
Whenever in this Indenture a request, approval, direction or other
action is required of the Authority, such request, approval, direction or other
action shall be in the form of and evidenced by a certificate of an Authorized
Officer of the Authority unless otherwise provided herein.

 

SECTION 17.09.         Notices,
Demands; Requests.  Except as
otherwise set forth herein, all notices, demands, directions and requests to be
given to or made hereunder by the Company, the Authority, the Trustee, the
Remarketing Agent, the Auction Agent and the

 

131

 

Registrar and Paying Agent shall be given or made in
writing and shall be deemed to be properly given or made if sent by first class
United States mail, postage prepaid, addressed as follows:

 

	
   

  	
  (a)

  	
   

  	
  As to the Company

  	
   

  	
  4 Irving Place

  New York, New York 10003

  Attention: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
   

  	
  As to the Authority

  	
   

  	
  17 Columbia Circle

  Albany, New York 12203-6399

  Attention: President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
   

  	
  As to the Trustee

  	
   

  	
  101 Barclay Street - 21W

  New York, New York 10286

  Attention: Corporate Trust Trustee Administration

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
   

  	
  As to the Auction Agent

  	
   

  	
  at the address specified
  in the Auction Agency Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
   

  	
  As to the Remarketing
  Agents

  	
   

  	
  at the address specified
  in the applicable Remarketing Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
   

  	
  As to the Registrar and
  Paying Agent

  	
   

  	
  101 Barclay Street - 21W

  New York, New York 10286

  Attention: Corporate Trust Trustee Administration

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
   

  	
  As to the Bond Insurer

  	
   

  	
  1221 Avenue of the
  Americas

  New York, New York 10020

  Attention: Surveillance Department and General Counsel

  

 

Any
such notice, demand, direction or request may also be transmitted to the
appropriate above-mentioned party by telegram, telecopy, telex or similar means
and shall be deemed to be properly given or made at the time of such
transmission if, and only if, such transmission of notice shall be in writing
and sent as specified above.

 

Any
notice, demand, direction or request given or transmitted to the Trustee or the
Authority shall be effective only upon receipt.

 

Any
of such addresses may be changed at any time upon written notice of such change
sent by first-class United States mail, postage prepaid, to the other parties
by the party affecting the change.

 

132

 

If
the Bonds shall be rated by Moody’s, the Trustee shall furnish to Moody’s at 99
Church Street, New York, New York, Attention: Corporate Department Structured
Finance Group or such other office as Moody’s may designate to the Trustee,  if the Bonds shall be rated by S&P, the
Trustee shall furnish to S&P at 55 Water Street, New York, New York 10041,
Attention: Letter of Credit Surveillance Group, and if the Bonds shall be rated
by Fitch, the Trustee shall furnish to Fitch, Inc. at One State Street Plaza, New
York, New York 10004, Attention: Municipal Structured Finance Group (i) a copy
of each amendment to the Indenture, Participation Agreement, Bond Purchase
Trust Agreement, and each Support Facility of which it has knowledge, (ii)
notice of the termination, extension or expiration of any Support Facility,
(iii) notice of the payment of all the Bonds (iv) notice of a Change in the
Interest Rate Mode, and (v) notice of any successor Trustee, Registrar and
Paying Agent or Remarketing Agent; provided, however, that failure by the
Trustee to so notify Moody’s, S&P or Fitch shall not result in any
liability on the part of the Trustee or affect the validity of such documents
or actions.

 

SECTION 17.10.         Effect
of Article and Section Headings and Table of Contents.  The heading or titles of the several
Articles and Sections hereof, and any table of contents appended hereto or to
copies hereof, shall be solely for convenience of reference and shall not
affect the meaning, construction, interpretation or effect of this Indenture.

 

SECTION 17.11.         Indenture
May be Executed in Counterparts; Effectiveness of Indenture.  This Indenture may be simultaneously
executed in counterparts. Each such counterpart so executed shall be deemed to
be an original, and all together shall constitute but one and the same
instrument. This Indenture shall take effect immediately upon the execution and
delivery hereof. Notwithstanding the actual date hereof, for convenience and
purposes of reference this Indenture shall be dated as of January 1, 2004 and
may be cited and referred to as the “Indenture dated as of January 1, 2004”.

 

SECTION 17.12.         Liability
of Authority Limited to Revenues. 
Notwithstanding anything in this Indenture or in the Bonds contained,
the Authority shall not be required to advance any monies derived from any
source other than the Revenues and other assets pledged under this Indenture
for any of the purposes in this Indenture mentioned, whether for the payment of
the principal or redemption price of or interest on the Bonds or for any other
purpose of this Indenture.  Pursuant to
Section 5.09 of the Participation Agreement, the Company has agreed to
indemnify and hold harmless the Authority and the Trustee from all liability
arising hereunder.

 

SECTION 17.13.         Waiver
of Personal Liability.  No member,
officer, agent or employee of the Authority shall be individually or personally
liable for the payment of the principal of or premium, if any, or interest on
the Bonds or be subject to any personal liability or accountability by reason
of the issuance thereof; but nothing herein contained shall relieve any such
member, officer, agent or employee from the performance of any official duty
provided by law or by this Indenture.

 

133

 

[Signature Page of this Indenture Follows]

 

134

 

IN WITNESS WHEREOF, the Authority has caused this
Indenture to be executed by its Acting President, Vice President or Treasurer
and its corporate seal to be hereunto affixed and attested by its Assistant
Secretary, and the Trustee has caused this Indenture to be executed by its
authorized officer, all as of the date first above written.

 

	
   

  	
  NEW YORK
  STATE ENERGY RESEARCH

  AND DEVELOPMENT AUTHORITY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Acting President

  	
   

  
	
   

  	
   

  
	
  (SEAL)

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Assistant Secretary

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  THE BANK OF NEW YORK

  
	
   

  	
   

  	
  as Trustee,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
						

 

 

[Signature Page of Indenture]

 

135

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