INDENTURE OF TRUST

Indenture Agreement

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CELLU TISSUE HOLDINGS, INC. | NORWEST BANK WISCONSIN, N.A | CITY OF LADYSMITH, WISCONSIN

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Title: INDENTURE OF TRUST
Governing Law: Wisconsin Date: 3/27/2007

Exhibit 10.6

INDENTURE OF TRUST

Dated as of March 1, 1998

From

CITY OF LADYSMITH, WISCONSIN
as Grantor

NORWEST BANK WISCONSIN, N.A.

Milwaukee, Wisconsin
as Trustee

Relating To:

$27,000,000

CITY OF LADYSMITH, WISCONSIN

VARIABLE RATE DEMAND SOLID WASTE DISPOSAL FACILITY
REVENUE BONDS,

SERIES 1998 (CITYFOREST CORPORATION PROJECT)

TABLE OF CONTENTS

Parties and Recitals			1
Granting Clauses			2

ARTICLE I DEFINITIONS AND USE OF PHRASES
Section 101		Definitions	3
Section 102		Use of Phrases; Rules of Construction	14

ARTICLE II GENERAL PROVISIONS RELATING TO THE BONDS
Section 201	Creation of Bonds for Issuance		15
Section 202	Parity		16
Section 203	Bonds to be Limited Obligations of Issuer		16
Section 204	Execution of Bonds		16
Section 205	Authentication		16
Section 206	Form of Bonds		17
Section 207	Provision for Registration, Transfer and Exchange of Bonds		17
Section 208	Persons Treated as Owners		19
Section 209	Manner of Payment of Bonds		19
Section 210	Mutilated, Lost, Stolen or Destroyed Bonds		19
Section 211	Designation of Bond Registrar and Paying Agents		20
Section 212	Disposition of Bonds Upon Payment; Safe-keeping of Bonds Surrendered for Exchange		20
Section 213	Nonpresentment of Bonds		20
Section 214	Delivery of Bonds		20

ARTICLE III TERMS OF THE BONDS
Section 301	Maturity		21
Section 302	Interest on the Bonds		21
Section 303	Purchase of Bonds Upon Demand		26
Section 304	Mandatory Tender of Bonds for Purchase		27
Section 305	Purchase of Tendered Bonds		28
Section 306	Bond Purchase Account		28
Section 307	Treatment of Untendered Bond Certificates		30
Section 308	Remarketing of Tendered Bonds		30
Section 309	Remarketing of Pledged Bonds		31
Section 310	Concerning the Remarketing Agent		32

ARTICLE IV REDEMPTION OF BONDS PRIOR TO MATURITY
Section 401	Limitation of Redemptions Prior to Maturity		32
Section 402	Notice and Effect of Redemption		33
Section 403	Selection of Bonds for Redemption; Manner of Effecting Partial Redemptions of Particular Bonds		33
Section 404	Optional Redemption of Bonds at Election of the Borrower		34

Section 405	Optional Redemption of Bonds Upon Occurrence of Certain Extraordinary Events	35
Section 406	Mandatory Redemption of Bonds Upon Determination of Taxability or Expiration of Credit Facility	36
Section 407	Mandatory Purchase of Bonds Relating to Debt Service Reserve Fund	37

ARTICLE V REPRESENTATIONS AND COVENANTS OF ISSUER
Section 501	Payment of Principal and Interest	37
Section 502	Performance of Covenants; Authority	37
Section 503	Instruments of Further Assurance	38
Section 504	Inspection of Books	38
Section 505	Rights Under Loan Agreement and Other Documents	38
Section 506	Tax-Exempt Status of Bonds	38

ARTICLE VI CUSTODY AND APPLICATION OF PROCEEDS OF BONDS
Section 601	Application of Proceeds of Bonds	39
Section 602	Cost of Issuance Fund	39
Section 603	Construction Fund	39
Section 604	Surplus Construction Fund	40
Section 605	Debt Service Reserve Fund	41

ARTICLE VII REVENUES AND FUNDS
Section 701	Source of Payment	42
Section 702	Pledged Revenues	42
Section 703	Bond Fund	42
Section 704	Redemption Fund	44
Section 705	Trust Funds Held in Trust	44
Section 706	Credit Facility Reimbursement Account	44

ARTICLE VIII INVESTMENTS
Section 801	Permitted Investment of Trust Funds	45
Section 802	Arbitrage	45
Section 803	Rebate of Certain Arbitrage Profits	46

ARTICLE IX DISCHARGE
Section 901	Discharge	46

ARTICLE X DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDOWNERS
Section 1001	Defaults; Events of Default	48
Section 1002	Acceleration	49
Section 1003	Remedies	49
Section 1004	Right of Bondowners to Direct Proceedings	50
Section 1005	Waiver of Certain Rights	51
Section 1006	Application of Moneys	51

Section 1007	Remedies Vested in Trustee	53
Section 1008	Rights and Remedies of Bondowners	53
Section 1009	Termination of Proceedings	53
Section 1010	Waivers of Events of Default	54
Section 1011	Opportunity to Cure Defaults by Issuer	54
Section 1012	Certain Notices to Borrower	54

ARTICLE XI THE TRUSTEE
Section 1101	Acceptance of Trusts	54
Section 1102	Specific Duty of Trustee to File Continuation Statements	57
Section 1103	Notice to Bondowners if Default Occurs	57
Section 1104	Intervention by Trustee	57
Section 1105	Successor Trustee	58
Section 1106	Resignation by Trustee	58
Section 1107	Removal of Trustee	58
Section 1108	Appointment of Successor Trustee by Bondowners; Temporary Trustee	58
Section 1109	Concerning Any Successor Trustee	59
Section 1110	Appointment of Co-Trustee	59
Section 1111	Acquisition of Conflicting Interests by Trustee	60
Section 1112	Requirement of a Corporate Trustee	61
Section 1113	Trustee’s Fees	61

ARTICLE XII CONCERNING THE CREDIT FACILITY
Section 1201	Trustee to Draw on Credit Facility	62
Section 1202	Requirements Regarding Credit Facility and Substitute Credit Facility	63
Section 1203	References to Credit Facility Provider After Expiration or Default of Credit Facility	65
Section 1204	References to Eligible Funds and Preference Opinion After Expiration of Credit Facility	65
Section 1205	Option of Credit Facility Provider to Purchase Bonds in Lieu of Redemption or Upon Acceleration	65
Section 1206	Disclaimer of FDIC Insurance	65

ARTICLE XIII SUPPLEMENTAL INDENTURES
Section 1301	Amendments and Supplements Without Bondowners’ Consent	66
Section 1302	Amendments With Bondowners’ Consent	66
Section 1303	Consent of Borrower and Credit Facility Provider	67

ARTICLE XIV AMENDMENT OF LOAN AGREEMENT, PROMISSORY NOTE AND CREDIT FACILITY
Section 1401	Amendments Not Requiring Consent of Bondowners	67
Section 1402	Amendments Requiring Consent of Bondowners	67
Section 1403	Consent of Borrower and Credit Facility Provider	68

iii

ARTICLE XV FORM OF BONDS
Section 1501	General Matters	68
Section 1502	Form of Bond Prior to the Conversion Date	68
Section 1503	Form of Bond On or After Conversion Date	77
Section 1504	Additional Matters Appearing on Bonds	85

ARTICLE XVI MISCELLANEOUS
Section 1601	Consent of Bondowners	86
Section 1602	Limitation of Rights	86
Section 1603	Severability	86
Section 1604	Notices	86
Section 1605	Payments Due on Saturdays, Sundays and Holidays	87
Section 1606	Captions	87
Section 1607	Counterparts	87
Section 1608	Governing Law	87

INDENTURE OF TRUST

THIS INDENTURE OF TRUST, dated as of March 1, 1998, between the CITY OF LADYSMITH, WISCONSIN, a political subdivision and body corporate and politic created under the laws of the State of Wisconsin (the “Issuer”), and NORWEST BANK WISCONSIN, N.A., a national banking association, duly organized, existing and authorized to accept and execute trusts of the character herein set out by virtue of the laws of the United States, with its principal corporate trust office located in Milwaukee, Wisconsin, as trustee (the “Trustee”);

W I T N E S S E T H :

WHEREAS, the Issuer is authorized pursuant to the provisions of the laws of the State of Wisconsin, including specifically, but without limitation, Section 66.521, Wisconsin Statutes (the “Act”), to issue its revenue bonds to finance or refinance all or any part of the construction, equipping, reequipping, acquisition, purchase, installation, reconstruction, rebuilding, rehabilitation, improving, supplementing, replacing, maintaining, repairing, enlarging, extending or remodelling of qualified projects and the improvement of sites therefor; and

WHEREAS, the Issuer has agreed to issue its Variable Rate Demand Solid Waste Disposal Facility Revenue Bonds, Series 1998 (CityForest Corporation Project) in the aggregate principal amount of $27,000,000 (the “Bonds”), and to lend the proceeds of the sale of the Bonds to CityForest Corporation (the “Borrower”), to enable the Borrower to finance the acquisition, construction and equipping of a solid waste disposal facility (the “Project”) located in the territory of the Issuer; and

WHEREAS, the Issuer and the Borrower will enter into a Loan Agreement, dated as of March 1, 1998 (the “Loan Agreement”), pursuant to which the Issuer will agree to lend the proceeds of the Bonds to the Borrower and the Borrower will agree to make payments sufficient to pay the principal and Purchase Price (as hereinafter defined) of, and redemption premium, if any, and interest on, the Bonds as the same become due and payable and to pay administrative expenses in connection with the Bonds; and

WHEREAS, as security for the payment of the Bonds issued pursuant to this Indenture, the Issuer has agreed to assign and pledge to the Trustee, the Trust Estate (as hereinafter defined); and

WHEREAS, Union Bank of California, N.A. (the “Bank”), will issue a Credit Facility (as hereinafter defined) in favor of the Trustee, for the account of the Borrower, obligating the Bank, as Credit Facility Provider to pay to the Trustee during the periods described herein, upon request and in accordance with the terms thereof, the amounts described therein for the purpose of making certain payments on or with respect to the Bonds (other than Bonds

registered in the name of the Borrower or the Bank, which Bonds shall not be entitled to any benefit of the Credit Facility); and

WHEREAS, all things necessary to make the Bonds, when authenticated by the Trustee as in this Indenture provided, the legal valid and binding limited obligations of the Issuer according to the import thereof, and to constitute this Indenture a valid pledge and assignment of the Trust Estate (as hereinafter defined) have been done and performed;

GRANTING CLAUSES

NOW, THEREFORE, in consideration of the premises, the acceptance by the Trustee of the trusts hereby created, and the purchase and acceptance of delivery of the Bonds by the purchaser(s) thereof, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and to secure the payment of the principal or Purchase Price of, premium, if any, and interest on all Bonds issued and Outstanding under this Indenture according to their tenor and effect, and to secure the performance and observance by the Issuer of all the covenants contained in the Bonds and in this Indenture, the Issuer does hereby pledge, assign, grant a security interest in and confirm unto the Trustee, all and singular the properties, revenues and rights hereinafter described, whether now owned or hereafter acquired, and the proceeds thereof (collectively called the “Trust Estate”), to wit:

1. All right, title and interest of the Issuer in and to the Promissory Note;

2. All right, title and interest of the Issuer in, to and under the Loan Agreement and the right to receive revenues and payments from the Borrower thereunder;

3. All right, title and interest of the Issuer in and to the Pledged Revenues;

4. All right, title and interest (if any) of the Issuer in and to the Credit Facility;

5. All right, title and interest of the Issuer in and to the Trust Funds and the cash, securities and investments of which they are comprised (excluding the Credit Facility Reimbursement Account and subject, however, to the rights of the Credit Facility Provider with respect to the Debt Service Reserve Fund); and

6. All property which by the express provisions of this Indenture is required to be subjected to the lien hereof, and any additional property that may from time to time hereafter be made subject to the lien hereof by the Issuer or by anyone on its behalf;

IN TRUST, for the equal and ratable benefit and security of the Bondowners without preference, priority or distinction as to lien or otherwise of any particular Bond over

any other Bond, except as otherwise expressly provided herein and subject to the rights of the Bondholders and Credit Facility Provider;

PROVIDED, HOWEVER, that the Issuer reserves the right to enforce the Unassigned Rights in its own name and for its own account; and

PROVIDED, FURTHER, HOWEVER, that if the Issuer shall pay, cause to be paid or provide for the payment of the principal of, premium, if any, and interest on the Bonds in accordance with Article IX of this Indenture, and shall make all required “rebate” payments to the United States Treasury in accordance with Section 803 of this Indenture, and if the Issuer shall promptly, faithfully and strictly keep, perform and observe all of its representations, covenants and agreements contained in this Indenture, then in such event this Indenture and the rights hereby granted (excepting Bondowners’ rights theretofore vested) shall cease, terminate and be void, otherwise to remain in full force and effect upon the trusts and subject to the conditions hereinafter set forth.

All Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all Trust Funds, revenues and income hereby pledged are to be dealt with and disposed of under and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective Owners from time to time of the Bonds, as follows, THAT IS TO SAY:

ARTICLE I

DEFINITIONS AND USE OF PHRASES

Section 101 Definitions . As used in this Indenture and the recitals hereto, the following terms and phrases shall have the following meanings.

“ Act ” means Section 66.521 of the Wisconsin Statutes, as amended from time to time.

“ Adjusted Interest Rate ” means, with respect to each Reset Period and Bonds of each stated maturity, the interest rate determined and certified to the Trustee by the Remarketing Agent as provided in Section 302(b)(iv) or Section 302(c)(iv), as the case may be.

“ Alternate Paying Agent ” means any bank or trust company designated by the Issuer at the written request of the Borrower as an alternate or co-paying agent in respect of the Bonds.

“ Authorized Denomination ” means $100,000 or any multiple of $5,000 in excess thereof provided that after the Conversion Date such term shall mean $5000 or any multiple thereof.

“ Authorized Officers of the Borrower ” means the President or any Vice President of the Borrower.

“ Bankruptcy Condition ” means (i) the filing of a petition in bankruptcy by or against the Borrower or the Issuer as debtor under the United States Bankruptcy Code, 11 U.S.C. Sections 101 et seq ., or (ii) the commencement or continuance of other judicial proceedings with respect to the Borrower or the Issuer as debtor under similar or successor federal or state bankruptcy, reorganization or insolvency laws.

“ Beneficial Owner ” means, with respect to a Bond which is held in Book Entry Form, the person who owns the Beneficial Ownership Interest therein, as evidenced to the satisfaction of the Trustee.

“ Beneficial Ownership Interest ” means the right to receive payments and notices with respect to Bonds which are held by the Depository under a Book Entry System and for which the Depository does not, pursuant to the Letter of Representations, act on behalf of the Beneficial Owner in connection with the optional or mandatory tender of Bonds pursuant to Section 303 or Section 304 hereof.

“ Bond Amount ” means $27,000,000.

“ Bond Counsel ” means Independent Counsel whose legal and tax opinion on municipal bond issues is nationally recognized.

“ Bond Fund ” means the Trust Fund described in Section 703 of this Indenture.

“ Bond Purchase Account ” means the trust account described in Section 306 of this Indenture.

“ Bond Register ” means the registration books maintained by the Trustee pursuant to Section 207 of this Indenture.

“ Bondowners ” and “ Owners ” (when used with reference to Bonds) means, at the time or times of determination, the persons who are registered owners of Bonds.

“ Bonds ” means the Issuer’s Variable Rate Demand Solid Waste Disposal Facility Revenue Bonds, Series 1998 (CityForest Corporation Project) issued under this Indenture in the aggregate principal amount of the Bond Amount.

“ Book Entry Form ” or “ Book Entry System ” means, with respect to the Bonds, a form or system, as applicable, under which (i) the ownership of beneficial interests in the Bonds may be transferred only through book entry and (ii) physical Bond certificates in fully registered form are registered only in the name of a Depository or its nominee as Owner, with the physical Bond certificates “immobilized” in the custody of the Depository.

“ Borrower ” means CityForest Corporation, a Minnesota corporation, and any successor, surviving, resulting or transferee entity as provided in Sections 7.07, 7.09 and 11.02 of the Loan Agreement.

“ Borrower’s Address ” means the address which the Borrower designates for the delivery of notices hereunder. Until changed by notice from the Borrower to the Issuer, the Credit Facility Provider, the Remarketing Agent and the Trustee, the Borrower’s Address shall be:

CityForest Corporation
1215 East Worden Avenue
Ladysmith, Wisconsin 54848
Attention: President
Telephone: (715) 532-5541
Telecopy: (715) 532-5542

“ Borrower’s Certificate ” means a certificate signed on behalf of the Borrower by Authorized Officers of the Borrower.

“ Borrower’s Payments Account ” means the Borrower’s Payments Account of the Bond Fund described in Section 703 of this Indenture.

“ Borrower’s Representative ” means the person or, in his or her absence, the alternate person, designated in a Borrower’s Certificate (containing specimen signatures of each such person) as a person authorized to execute and deliver Requisitions, Conversion Notices and Reset Notices and to give Trust Fund investment directions on behalf of the Borrower.

“ Business Day ” means a day (a) other than a Saturday, Sunday or legal holiday on which banks located in the city in which the Trustee’s Principal Office is located, the city in which the Credit Facility Provider’s principal office is located or the city in which the Remarketing Agent’s principal office is located, are required or authorized to remain closed and (b) on which neither the New York Stock Exchange nor the Federal Reserve Banks are closed.

“ Calculation Period ” means, while the Bonds bear interest at the Variable Rate, the period from Wednesday of each week (whether or not a Business Day) or any Proposed Conversion Date through and including the earlier of (i) the following Tuesday (whether or not a Business Day) or (ii) the day immediately preceding a Proposed Conversion Date.

“ Chief Municipal Official ” means the person at the time incumbent in the office of Mayor of the Issuer or, in the event of the death, disability or absence of such person, the person duly authorized and legally empowered to perform the duties of such office in such event.

“ Clerk ” means the person at the time incumbent in the office of Clerk of the Issuer or, in the event of the death, disability or absence of such person, the person duly authorized and legally empowered to perform the duties of such office in such event.

“ Completion Date ” means the completion date of the Project as determined in accordance with Section 3.05 of the Loan Agreement.

“ Construction Fund ” means the Trust Fund described in Section 603 of this Indenture.

“ Continuing Disclosure Agreement ” means the Continuing Disclosure Agreement, dated as of the Effective Date, between the Borrower and the Trustee, as amended from time to time.

“ Cost of Issuance Deposit Amount : means $540,000.

“ Cost of Issuance Fund ” means the Trust Fund described in Section 602 of this Indenture.

“ Conversion Date ” means the date on which the interest rate on the Bonds is converted from the Variable Rate to the Adjusted Interest Rate as provided in Section 302(b) of this Indenture.

“ Conversion Notice ” means a notice in the form of Exhibit B to the Loan Agreement from the Borrower to the Trustee, the Issuer, the Remarketing Agent, the Rating Agency and the Credit Facility Provider designating a Proposed Conversion Date, as provided in Section 302(b)(i) of this Indenture.

“ Credit Facility ” means any letter of credit (or, on or after the Conversion Date, any standby purchase agreement, guaranty, bond insurance policy or similar credit enhancement instrument, meeting the requirements of Section 1202 of this Indenture) or any Substitute Credit Facility. The initial Credit Facility is Irrevocable Letter of Credit, No. 306S231063 issued by Union Bank of California, N.A. in the original stated amount of $27,258,905 on the date of original issuance and delivery of the Bonds.

“ Credit Facility Account ” means the Credit Facility Account of the Bond Fund described in Section 703 of this Indenture.

“ Credit Facility Expiration Date ” means the stated expiry of a Credit Facility in accordance with the terms thereof and Section 1202 of this Indenture.

“ Credit Facility Provider ” means any bank, savings and loan association, insurance company or other regulated financial institution which issues a Credit Facility in accordance with Article XII of this Indenture. The initial Credit Facility Provider is Union Bank of California, N.A., Los Angeles, California.

“ Credit Facility Provider’s Address ” means the address which the Credit Facility Provider designates for the delivery of notices hereunder. Until changed by notice from the Credit Facility Provider to the Issuer, the Remarketing Agent, the Rating Agency, the Trustee and the Borrower, the Credit Facility Provider’s Address shall be:

Union Bank of California, N.A.
495 South Figueroa Street, 15 th Floor
Los Angeles, California 90071
Attention: Vicente Bendanillo, Jr.
Telephone: (213) 236-6198
Telecopy: (213) 236-4096

“ Credit Facility Reimbursement Account ” means the account created pursuant to Section 706 of this Indenture.

“ Credit Facility Reimbursement Agreement ” means the agreement between the Borrower and the Credit Facility Provider pursuant to which the Credit Facility is issued and, with respect to the initial Credit Facility, means the Reimbursement Agreement, dated as of the Effective Date, between the Borrower and Union Bank of California, N.A., as amended from time to time.

“ Credit Facility Substitution Date ” means each date designated as such in accordance with Section 1202 of this Indenture.

“ Debt Service Reserve Fund ” shall have the meaning set forth in Article VI hereof.

“ Debt Service Reserve Fund Requirement ” shall mean initially $1,000,000 and thereafter (i) while a Credit Facility is in effect, an amount in excess thereof established by a written certificate provided to the Trustee signed by the Borrower and the Credit Facility Provider, provided, that such amount shall not exceed the Maximum Debt Service Reserve Amount, and, provided, further, that such certification shall contain such certifications of the Credit Facility Provider acceptable to Bond Counsel (expressed in a written opinion to be provided to the Trustee, that increasing such amount will not adversely affect the exclusion from gross income of interest on the Bonds) or (ii) if no Credit Facility is in effect, and if the Borrower has not elected to liquidate the Debt Service Reserve Fund in accordance with Section 407 hereof, an amount equal to the lesser of the amount of the Debt Service Reserve Fund on the Conversion Date or the Maximum Debt Service Reserve Amount.

“ Depository ” means any securities depository that is a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, operating and maintaining, with its participants or otherwise, a Book Entry System to record ownership of beneficial interests in the Bonds, and to effect transfers of the Bonds, in Book

Entry Form, and includes and means initially The Depository Trust Company (a limited purpose trust company), New York, New York.

“ Determination Date ” means (i) with respect to each Calculation Period commencing on a Wednesday, the Tuesday immediately preceding the commencement of such Calculation Period or, if such Tuesday is not a Business Day, the next preceding Business Day, and (ii) with respect to each Calculation Period commencing on a Proposed Conversion Date, such Proposed Conversion Date.

“ Determination of Taxability ” means the occurrence of any of the following:

(a) the filing of a Borrower’s Certificate with the Trustee asserting or indicating by its terms to the satisfaction of the Trustee that an Event of Taxability has occurred;

(b) notification to the Trustee that an authorized officer or official of the Internal Revenue Service has issued a statutory notice of deficiency or document of similar import to the effect that an Event of Taxability has occurred; or

(c) notification to the Trustee from any Bondowner or former Bondowner to the effect that the Internal Revenue Service has assessed as includable in the gross income of such Bondowner or former Bondowner interest on a Bond due to the occurrence of any Event of Taxability;

(d) provided, however, that in respect of clauses (b) and (c) above, a Determination of Taxability shall not be deemed to have occurred unless and until the Borrower has been notified of the allegation that an Event of Taxability and a Determination of Taxability have occurred and the Borrower has failed within 90 days following such notice either (i) to have the allegation that an Event of Taxability has occurred rescinded by the Internal Revenue Service or the Bondowner or the former Bondowner who made such allegation, as the case may be, or (ii) to obtain an opinion of Bond Counsel acceptable to the Trustee to the effect that no Event of Taxability has occurred.

“ Effective Date ” means March 1, 1998.

“ Eligible Funds ” means (i) any amounts (including investment earnings) in the Credit Facility Account, the Debt Service Reserve Fund or the Bond Purchase Account, and (ii) other amounts (including investment earnings) in the Bond Fund or the Redemption Fund with respect to which the Trustee has received a Preference Opinion.

“ Event of Default ” means any of the events designated as such in Section 1001 of this Indenture.

“ Event of Taxability ” means the circumstance of interest paid or payable on any Bond becoming includable for federal income tax purposes (other than for purposes of

computing alternative minimum taxes) in the gross income of any Bondowner (other than a Bondowner who is a “substantial user” of the Project or “related person” within the meaning of Section 147(a) of the Internal Revenue Code) as a consequence of any act, omission or event whatsoever; provided, however, that a change in the Internal Revenue Code enacted after the date of issuance of the Bonds which results in interest on borrowings by state and local governments generally being included in gross income shall not be an Event of Taxability.

“ Final Maturity Date ” means March 1, 2028.

“ Government Obligations ” means direct, full faith and credit obligations of the United States of America.

“ Indenture ” means this Indenture of Trust from the Issuer to the Trustee, dated as of the Effective Date, under which the Bonds are issued, as amended from time to time by Supplemental Indentures.

“ Independent Counsel ” means any attorney or firm of attorneys who or which shall be acceptable to the Trustee and who or which is not an employee of the Borrower or the Issuer.

“ Initial Debt Service Reserve Fund Deposit ” means $1,000,000.

“ Interest Payment Date ” means each date on which interest is stated to be due on any Bond.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time.

“ Issuer ” means the City of Ladysmith, Wisconsin, a municipal corporation and political subdivision of the State of Wisconsin, and any successor political subdivision of the State of Wisconsin having jurisdiction over the Project.

“ Issuer’s Address ” means the address which the Issuer designates for the delivery of notices hereunder. Until changed by notice from the Issuer to the Borrower, the Credit Facility Provider, the Remarketing Agent, the Rating Agency and the Trustee, the Issuer’s Address shall be:

City of Ladysmith, Wisconsin
120 Minor Avenue West
P.O. Box 431
Ladysmith, Wisconsin 54848
Attention: Clerk
Telephone (215) 532-2600
Telecopy: (215) 532-2620

“ Issuer’s Governing Body ” means the Common Council of the Issuer.

“ Letter of Representations ” means the agreement between the Issuer and the Depository that sets forth the manner of making and processing payments, giving notices and other procedures relating to the Depository’s Book Entry System. The initial Letter of Representations is the Blanket Letter of Representations from the Issuer to DTC.

“ Loan Agreement ” means the Loan Agreement, dated as of the Effective Date, between the Issuer and the Borrower, as amended from time to time in accordance with Section 11.01 of the Loan Agreement and Article XIV of this Indenture.

“ Mandatory Tender Date ” means each date on which all Bonds are required to be tendered for purchase pursuant to Section 304 hereof.

“ Maximum Debt Service Reserve Amount ” means the lesser of (i) 10% of the stated principal amount of the Bonds, (ii) maximum annual debt service on the Bonds, or (iii) 125% of average annual debt service on the Bonds. The amounts for (ii) and (iii) above may be established by assuming the Bonds are level debt service fixed rate bonds with an interest rate comparable to similar fixed rate bonds established on the date of issuance of the Bonds by a certificate of the Remarketing Agent.

“ Optional Tender Date ” means the date specified in a Purchase Demand as the date on which the Owner or Beneficial Owner of the Bond(s) (or portions thereof) described therein is demanding purchase of such Bond(s) (or portions thereof) or the Beneficial Ownership Interest therein, which date must be a Business Day not less than seven days after receipt by the Trustee of such Purchase Demand.

“ Outstanding Bonds ” and “ Outstanding ”, when used with reference to Bonds, means all Bonds which have been authenticated and delivered by the Trustee under this Indenture, except:

(i) Bonds or portions thereof canceled by the Trustee or delivered to the Trustee for cancellation;

(ii) Bonds in lieu of which other Bonds have been authenticated and delivered in accordance with Sections 206, 207, 210, 306, 309 and 403 of this Indenture; and

(iii) Bonds which are not deemed to be Outstanding in accordance with the provisions of Sections 213, 307 and 901 of this Indenture.

“ Plant Complex ” means the land, building(s), improvements, fixtures and major equipment located in the Issuer’s jurisdiction from time to time, with which the Project Enterprise will be conducted and of which the Project forms a part.

“ Pledged Bonds ” means Bonds or Beneficial Ownership Interests therein, purchased with the proceeds of a draw under the Credit Facility pursuant to Section 1201(d) hereof and not remarketed by the Remarketing Agent.

“ Pledged Revenues ” means all revenues and income derived by or for the account of the Issuer from or for the account of the Borrower pursuant to the terms of the Loan Agreement, the Promissory Note and this Indenture, including, without limitation (i) all amounts derived pursuant to the Credit Facility, (ii) all cash and securities held from time to time in the Trust Funds (except the Debt Service Reserve Fund when it is held by the Credit Facility Provider), and the investment earnings thereon, and (iii) all payments by the Borrower on the Promissory Note or pursuant to Section 7.02 of the Loan Agreement; but excluding any amounts derived by the Issuer for its own account pursuant to the enforcement of Unassigned Rights.

“ Preference Opinion ” means an opinion of Bond Counsel addressed to the Trustee stating in effect that the use of the funds to which the opinion relates for the purchase of Bonds or for the payment of the principal of, premium, if any, or interest on the Bonds, as the case may be, will not, upon the occurrence of a Bankruptcy Condition on or after the date of such opinion, constitute a preference payment under the United States Bankruptcy Code (taking into account the “insider” provisions thereof) or a payment of similar import (that is, a payment subject to disgorgement upon the occurrence of certain bankruptcy events) under the then applicable Federal and State bankruptcy, insolvency and reorganization laws.

“ Principal Payment Date ” means the Final Maturity Date and, during any Reset Period, each March 1.

“ Project ” means the project of the Borrower described in Exhibit A to the Loan Agreement which has been or is to be acquired, constructed and installed in the Issuer’s jurisdiction in accordance with the Project Plans and Specifications.

“ Project Enterprise ” means the business of manufacturing paper and tissue products utilizing solid waste.

“ Project Plans and Specifications ” means the Borrower’s architectural and engineering drawings and other plans and specifications for the Project, as amended from time to time in accordance with Section 3.04 of the Loan Agreement.

“ Promissory Note ” means the Borrower’s promissory note in the form of Exhibit A to the Loan Agreement, dated the date of issuance of the Bonds, issued in the principal amount of the Bond Amount payable to the order of the Issuer.

“ Proposed Conversion Date ” shall mean the date identified in a Conversion Notice properly delivered by the Borrower pursuant to Section 302(b)(i) hereof as the date on which the interest rate on the Bonds is to be converted from the Variable Rate to the Adjusted Interest Rate.

“ Purchase Demand ” means a written demand by an Owner or a Beneficial Owner of a Bond, meeting the requirements of Section 303 hereof, that such Bond or the Beneficial Ownership Interest therein be purchased on the date specified therein.

“ Qualified Investments ” means such of the following as at the time of determination are permitted investments under the Act: (i) Government Obligations, (ii) securities as to which the timely payment of both principal and interest are unconditionally guaranteed by the United States of America, (iii) obligations of any of the following: Banks for Cooperatives, Federal Land Banks, Federal Home Loan Banks, Federal Intermediate Credit Banks and Federal National Mortgage Association, (iv) interest-bearing accounts, time deposits and certificates of deposit issued by any bank, trust company or national banking association (including the Trustee and any affiliate of the Trustee) which has capital, surplus and undivided profits in excess of $10,000,000, but in no event shall the amount invested at any one time, in interest-bearing accounts, time deposits and certificates of deposit issued by any one bank, trust company or national banking association equal or exceed 20% of the capital, surplus and undivided profits of such bank, trust company or national banking association, (v) commercial paper issued by domestic corporations which is rated not less than P-l by the Rating Agency (or an equivalent rating from another national rating agency), (vi) any fund or other pooling arrangement which exclusively purchases and holds the investments itemized in (i) through (v) above or repurchase agreements fully collateralized by such investments, and (vii) at any time while a Credit Facility is in effect, any other investment approved in writing by the Credit Facility Provider; provided, however, that if the conditions of any investment rating assigned or to be assigned to the Bonds require an exclusion of or limitation on any of the foregoing, the term “Qualified Investments” shall conform to such conditions.

“ Rating Agency ” means Moody’s Investors Service, Inc., or any successor thereto (if at the time maintaining a rating on the Bonds), and any other national rating service maintaining a rating on the Bonds.

“ Rebate Account ” means the special account described in Section 803(b).

“ Record Date ” means (i) with respect to each regularly scheduled Interest Payment Date occurring on or before the Conversion Date, and with respect to any redemption date that is not a regularly scheduled Interest Payment Date, the day (whether or not a Business Day) immediately preceding such Interest Payment Date or redemption date, as the case may be and (ii) with respect to each regularly scheduled Interest Payment Date occurring after the Conversion Date, the 15th day (whether or not a Business Day) of the calendar month next preceding such Interest Payment Date.

“ Redemption Fund ” means the Trust Fund described in Section 704 of this Indenture.

“ Remarketing Agent ” means Lehman Brothers Inc. and any successor institution serving as Remarketing Agent pursuant to Section 310 of this Indenture.

“ Remarketing Agent’s Address ” means the address or office which the Remarketing Agent designates for the delivery of notices or payments hereunder. Until changed by notice from the Remarketing Agent to the Credit Facility Provider, the Borrower, the Issuer and the Trustee, the Remarketing Agent’s Address shall be:

Lehman Brothers Inc.
Three World Financial Center, 20 th Floor
New York, New York 10285
Attn: Frank Murphy
Telephone: (212) 528-1022
Telecopy: (212) 526-2129

“ Required Substitution ” shall have the meaning assigned such term in Section 1202 of this Indenture.

“ Requisite Consent of Bondowners ” means the affirmative written consent of Bondowners owning in aggregate not less than a majority in principal amount of the Bonds (other than Bonds owned by the Borrower or any “related person” as defined in Section 147(a) of the Internal Revenue Code) at the time Outstanding.

“ Requisition ” means a requisition of the Borrower substantially in the form of Exhibit C to the Loan Agreement.

“ Reset Date ” means the March 1 next following the scheduled termination date of each Reset Period.

“ Reset Notice ” means a written notice, substantially in the form of Exhibit C to the Loan Agreement, from the Borrower to the Trustee, the Remarketing Agent, the Rating Agency, the Issuer and the Credit Facility Provider, establishing a new Reset Period as provided in Section 302(c)(ii) hereof.

“ Reset Period ” means (i) the period from the Conversion Date through and including the February 28 specified in the Conversion Notice as the termination date of the first Reset Period and (ii) each period thereafter from and including the next March 1 through and including the February 28 specified in the Reset Notice as the termination date for such Reset Period; provided that, if the conditions set forth in Section 302(b)(vi) to the establishment of the succeeding Reset Period are not satisfied as of the Reset Date, the then current Reset Period shall not terminate, and the next Reset Period shall not commence, until the date as of which such conditions are satisfied.

“ Substitute Credit Facility ” shall have the meaning assigned to such term in Section 1202 of this Indenture.

“ Supplemental Indenture ” means any supplement to or amendment of this Indenture entered into in accordance with Article VIII of this Indenture.

“ Surplus Construction Fund ” means the Trust Fund described in Section 604 of this Indenture.

“ Tender Date ” means a Mandatory Tender Date or Optional Tender Date.

“ Tendered Bonds ” means Bonds tendered or required to be tendered for purchase in accordance with Section 305 of this Indenture.

“ Trust Funds ” means the trust funds administered by the Trustee under this Indenture other than the Bond Purchase Account, the Rebate Account and the segregated trust accounts described in Sections 213, 307 and 309 of this Indenture.

“ Trustee ” means Norwest Bank Wisconsin, N.A., Milwaukee, Wisconsin, and any successor banking corporation, banking association or trust company at the time serving as corporate trustee under this Indenture.

“ Trustee’s Address ” and “Trustee’s Principal Office” means the address or office which the Trustee designates for the delivery of notices or payments hereunder or under the Loan Agreement. Until changed by notice from the Trustee to the Borrower, the Credit Facility Provider, the Remarketing Agent, the Rating Agency and the Issuer, the Trustee’s Address and Principal Office is:

Norwest Bank Wisconsin, N.A.
Suite 1200
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Corporate Trust
Telephone: (414) 224-7489
Telecopy: (414) 224-3747

“ Unassigned Rights ” means the Borrower’s obligations to the Issuer under Sections 3.08, 7.03 and 11.09 of the Loan Agreement.

“ Untendered Bonds ” means Bonds which are required to be tendered for purchase in accordance with the provisions of Section 305 of this Indenture but which in fact are not delivered to the Trustee on or before the applicable Tender Date.

“ Variable Rate ” means the interest rate borne by the Bonds from time to time prior to the Conversion Date, if any, determined in accordance with Section 302(a) of this Indenture.

Section 102 Use of Phrases; Rules of Construction . The following provisions shall be applied wherever appropriate herein:

“ Herein ”, “ hereby ”, “ hereunder ”, “ hereof ” and other equivalent words refer to this Indenture as an entirety and not solely to the particular portion of this Indenture in which any such word is used.

The definitions set forth in Section 101 hereof shall be deemed applicable whether the words defined are herein used in the singular or the plural.

Wherever used herein, any pronoun or pronouns shall be deemed to include both the singular and plural and to cover all genders.

Unless otherwise provided, any determinations or reports hereunder which require the application of accounting concepts or principles shall be made in accordance with generally accepted accounting principles.

ARTICLE II

GENERAL PROVISIONS RELATING TO THE BONDS

Section 201 Creation of Bonds for Issuance . There is hereby created for issuance an issue of Bonds to be designated:

CITY OF LADYSMITH, WISCONSIN
VARIABLE RATE DEMAND SOLID WASTE DISPOSAL FACILITY
REVENUE BONDS,
SERIES 1998 (CITYFOREST CORPORATION PROJECT)

provided, that on or after the Conversion Date, the Bonds shall be designated:

CITY OF LADYSMITH, WISCONSIN
SOLID WASTE DISPOSAL FACILITY REVENUE BONDS, SERIES 1998
(CITYFOREST CORPORATION PROJECT)

The Bonds shall be issued in the aggregate principal amount of Twenty-Seven Million Dollars ($27,000,000), and the maximum aggregate principal amount of Bonds that may be Outstanding at any one time is hereby expressly limited to such amount.

The Bonds shall be numbered in such manner as the Trustee shall deem appropriate, provided that each particular Bond shall have a different identifying number. The Bonds shall be issuable in the form of typewritten, lithographed, printed or engraved fully registered Bonds in Authorized Denominations.

The Bonds shall mature and bear interest as provided in Sections 301 and 302 of this Indenture. The Bonds shall specify, as their original issue date, the date of their original issuance and delivery. Each particular Bond shall be dated, as its registration date, the date of its authentication. Bonds authenticated prior to the first Interest Payment Date shall bear

interest from the original issue date. Bonds authenticated on or after the first Interest Payment Date applicable thereto shall bear interest from the Interest Payment Date next preceding the date of their authentication unless the date of such authentication is an Interest Payment Date to which interest has been fully paid or provided for, in which case they shall bear interest from such Interest Payment Date. If interest on the Bonds shall be in default, such Bonds shall bear interest from the date to which interest on such Bonds has been paid in full or, if no interest has been paid, then from the date of their original authentication and delivery.

Section 202 Parity . This Indenture is for the equal and ratable benefit and security of all Bonds issued hereunder. All Bonds shall be of equal rank, and no Bondowner shall be accorded a preference or priority over any other Bondowner except as expressly authorized or provided herein.

Section 203 Bonds to be Limited Obligations of Issuer . In accordance with the Act, the Bonds shall be limited obligations of the Issuer payable by it solely from the Pledged Revenues. The Bonds shall not constitute a debt or obligation of the Issuer, the county in which it is located, the State of Wisconsin or any political subdivision thereof within the meaning of any State of Wisconsin constitutional provision or statutory limitation and shall not be a charge against their general credit or taxing powers.

Section 204 Execution of Bonds . The Bonds shall be executed on behalf of the Issuer by its Chief Municipal Official under the official seal, if any, of the Issuer attested by its Clerk. The signatures of the Chief Municipal Official and the Clerk on the Bonds may be manual or facsimile. The official seal of the Issuer on the Bonds may be actually impressed or imprinted or may be reproduced thereon by facsimile.

Bonds bearing the manual or facsimile signatures of the persons who were the Chief Municipal Official and the Clerk at the time of the execution thereof shall be valid and sufficient for all purposes notwithstanding that such persons or either of them have ceased to hold such offices prior to the authentication and delivery of the Bonds or did not hold such offices at the date of the Bonds. For this purpose a Bond executed by facsimile signature shall be deemed to have been executed on the date of the printing thereof.

Section 205 Authentication . The Trustee is hereby appointed as a fiscal agent of the Issuer for purposes of authenticating the Bonds. From time to time after the execution and delivery of this Indenture, the Issuer may deliver executed Bonds to the Trustee for authentication, and the Trustee shall authenticate and deliver such Bonds as provided in this Indenture and not otherwise.

No Bond shall be entitled to any benefit under this Indenture or be valid for any purpose unless there appears on such Bond a certificate of authentication substantially in the form set forth in Sections 1502 or 1503 hereof, as appropriate, executed on behalf of the Trustee with the manual signature of an authorized signatory of the Trustee. Such certificate of authentication executed as aforesaid on a Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture.

Section 206 Form of Bonds . The Bonds shall be issuable only as fully registered Bonds substantially in the form set forth in Section 1502 (in the case of Bonds authenticated prior to the Conversion Date) or 1503 (in the case of Bonds authenticated on or after the Conversion Date) of this Indenture.

Pending the preparation of definitive Bonds, the Issuer may execute and the Trustee shall authenticate and deliver typewritten Bonds which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any Authorized Denomination, substantially of the tenor of the definitive Bonds in lieu of which they are issued, in fully registered form, with such appropriate insertions, omissions, substitutions and other variations as the Chief Municipal Official and Clerk may determine, as evidenced by their manual signing of such Bonds. If temporary Bonds are issued, the Trustee will cause definitive Bonds to be prepared without unreasonable delay. After the preparation of definitive Bonds, the temporary Bonds shall be exchangeable for definitive Bonds upon surrender of the temporary Bonds at the Trustee’s Principal Office without charge to the Bondowner. Upon surrender for cancellation of any one or more temporary Bonds, the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Bonds of Authorized Denominations. Until so exchanged the temporary Bonds shall in all respects be entitled to the same benefits under this Indenture as definitive Bonds, and the principal of, premium, if any, and interest thereon, when and as payable, shall be paid to the Owners of the temporary Bonds.

Section 207 Provision for Registration, Transfer and Exchange of Bonds . The Bonds are issuable only as fully registered bonds and, except as hereinafter provided, registered in the name of the Depository or its nominee, which shall be considered to be the Bondowner for all purposes of this Indenture, including, without limitation, payment by the Issuer of principal or purchase price of, premium, if any, and interest on the Bonds, and receipt of notices and exercise of rights of Bondowners. There shall be a single temporary Bond for each maturity which shall be immobilized in the custody of the Depository (or the Trustee as custodian for the Depository) with the beneficial owners having no right to receive the Bonds in the form of physical securities or certificates. Ownership of beneficial interests in the Bonds shall be shown by book entry on the Book Entry System maintained and operated by the Depository, and transfers of ownership of beneficial interests shall be made only by Depository and, if applicable, its participants, by book entry, the Issuer having no responsibility therefor. The Bonds as such shall not be transferable or exchangeable, except for transfer to another Depository or to another nominee of a Depository, without further action by the Trustee.

If any Depository determines not to continue to act as a Depository for the Bonds for use in a Book Entry System, the Trustee shall attempt to have established a securities depository/book entry system relationship with another qualified Depository under this Indenture. If the Trustee does not or is unable to do so, the Issuer and the Trustee, after the Trustee has made provision for notification of the beneficial owners by the then Depository, shall permit withdrawal of the Bonds from the Depository, and authenticate and deliver Bond certificates in fully registered form (in Authorized Denominations) to the assigns

of the Depository or its nominee, all at the cost and expense (including costs of printing definitive Bonds) of the Borrower.

If the Bonds are not in a Book Entry System, the Trustee shall cause a register (herein sometimes referred to as the “Bond Register”) to be kept at the Trustee’s Principal Office for the purpose of providing for the registration and transfer of Bonds in accordance with the provisions of this Section and such reasonable additional regulations as the Trustee may prescribe. Subject to such regulations, any Bondowner may cause its address on the Bond Register to be changed by giving written notice to the Trustee. At reasonable times and under reasonable regulations established by the Trustee, the Bond Register may be inspected and copied by the Borrower, the Credit Facility Provider, the Remarketing Agent, the Issuer or by Owners (or a designated representative thereof) of 10% or more in aggregate principal amount of Bonds then Outstanding, the authority of such designated representative to be evidenced to the satisfaction of the Trustee.

Subject to the foregoing provisions regarding the maintenance of a Book Entry System for the Bonds, each Bond shall be fully negotiable. A Bond may be transferred only by a written assignment duly executed by the Bondowner or by such Owner’s duly authorized legal representative. Upon presentation and surrender of the Bond together with said executed form of assignment at the Trustee’s Principal Office, the Trustee shall, subject to the limitations contained in the last paragraph of this Section 207, register the transfer in the Bond Register; provided, however, that the Trustee shall have no obligation to register the transfer unless the executed assignment shall be satisfactory to it in form and substance. Upon registration of the transfer of a Bond, the Trustee shall cancel the surrendered Bond and the Issuer shall issue, and the Trustee shall authenticate, one or more new Bonds of Authorized Denominations of the same maturity and interest rate and in the same aggregate principal amount as the surrendered Bond.

Subject to the foregoing provisions regarding the maintenance of a Book Entry System for the Bonds, and to the limitations contained in the last paragraph of this Section 207, Bonds may be exchanged at the Trustee’s Principal Office for a like aggregate principal amount of Bonds of the same maturity and interest rate in other Authorized Denominations. Each Bond surrendered for exchange shall be accompanied by a written assignment in form and substance satisfactory to the Trustee and duly executed by the Bondowner or by such Owner’s duly authorized legal representative. The Issuer shall issue and the Trustee shall authenticate such new Bonds as shall be required to accomplish exchanges as aforesaid.

The Bondowner requesting any registration of transfer or exchange of Bonds shall pay with respect thereto any resulting tax or governmental charge. All such payments shall be conditions precedent to the exercise of the Bondowner’s rights of registration of transfer or exchange.

All registrations of transfer and exchanges of Bonds shall be accomplished in such manner that no increase or decrease in interest payable on the Bonds results therefrom.

Except in connection with a purchase of Bonds pursuant to Section 305 of this Indenture, the Trustee shall not be required to register the transfer of or to exchange any Bond (i) after the receipt by the Trustee of a Purchase Demand with respect thereto and through the corresponding Optional Tender Date, (ii) after the Trustee has given notice of a Mandatory Tender Date and through the Mandatory Tender Date, (iii) during the fifteen days prior to the mailing of any notice of redemption, or (iv) after such Bond has been selected for redemption. Upon registration of the transfer of any Bond that has been called for redemption, the Trustee shall promptly give notice of redemption to the transferee in the manner provided in Section 402 hereof.

Section 208 Persons Treated as Owners . The Issuer, the Trustee and any Alternate Paying Agent may treat the person in whose name any Bond is registered (who, in the case of a Book Entry System, shall be the Depository) as the absolute owner of such Bond for the purpose of receiving payment of the principal of, premium, if any, and interest thereon and for all other purposes whatsoever (except as otherwise specifically provided herein with respect to Beneficial Owners), whether or not such Bond is overdue and irrespective of any actual, implied or imputed notice to the contrary.

Section 209 Manner of Payment of Bonds . The principal of and premium, if any, on each Bond shall be payable to the Owner of such Bond as shown on the Bond Register on the date of payment, upon presentation and surrender at the Trustee’s Principal Office. The interest on any Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid by check drawn by the Trustee payable to the order of the person in whose name that Bond is registered as of the close of business on the Record Date for such interest and mailed to such person at the address shown on the Bond Register.

The principal of, premium, if any, and interest on all Bonds shall be paid in lawful money of the United States of America.

Notwithstanding the foregoing, while the Bonds are in a Book Entry System, payments shall be made as provided in the Letter of Representations.

Section 210 Mutilated, Lost, Stolen or Destroyed Bonds . In the event any Bond is mutilated, lost, stolen or destroyed, the Issuer shall execute and the Trustee shall authenticate a new Bond of like date, maturity, interest rate and denomination as the Bond mutilated, lost, stolen or destroyed. In the case of any lost, stolen or destroyed Bond, there shall first be furnished to the Issuer and the Trustee evidence of such loss, theft or destruction satisfactory to the Issuer and the Trustee, together with indemnity satisfactory to them. In the case of any mutilated Bond, such Bond shall be surrendered to the Trustee. In the event any such Bond shall have matured, the Trustee instead of issuing a substitute Bond may pay the same without surrender thereof. The Issuer and the Trustee may charge the Owner of such Bond with their reasonable fees and expenses in this connection.

Section 211 Designation of Bond Registrar and Paying Agents . The Trustee shall be the Bond registrar and a paying agent for and in respect of all Bonds. At the written request of the Borrower, the Issuer may also designate one or more Alternate Paying Agents.

Section 212 Disposition of Bonds Upon Payment; Safe-keeping of Bonds Surrendered for Exchange . All Bonds fully paid, fully redeemed or purchased by the Trustee or any Alternate Paying Agent for cancellation under the provisions of this Indenture shall be canceled when such final payment, redemption or purchase is made, and such canceled Bonds shall be delivered to the Trustee. Bonds surrendered to the Trustee for exchange or transfer in accordance with Section 207 hereof, temporary Bonds surrendered for exchange in accordance with Section 206 hereof, and mutilated Bonds surrendered for exchange in accordance with Section 210 hereof, Bonds surrendered for partial redemption in accordance with Section 403 hereof, Bonds tendered for purchase and purchased in accordance with Section 305 hereof, and Pledged Bonds delivered by the Credit Facility Provider upon remarketing in accordance with Section 309 hereof shall be canceled by the Trustee. All canceled Bonds shall be destroyed by the Trustee by cremation, shredding or other suitable means, and the Trustee shall execute a certificate of destruction in duplicate describing the Bonds so destroyed and one executed certificate shall be filed with the Issuer and the other executed certificate shall be retained by the Trustee.

Section 213 Nonpresentment of Bonds . In the event any Bond shall not be presented for payment when the principal thereof becomes due, either at stated maturity or on the date fixed for redemption thereof, if Eligible Funds sufficient to pay such Bond shall be held by the Trustee for the benefit of the Owner thereof, all liability of the Issuer to the Owner thereof for the payment of such Bond shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such Eligible Funds in a segregated trust account without liability for interest thereon, for the benefit of the Owner of such Bond who shall thereafter be restricted exclusively to such account for any claim of whatever nature on such person’s part under this Indenture or on or with respect to said Bond. Such cash in such segregated trust account shall thereafter no longer be considered Pledged Revenues and any such Bond shall no longer be deemed Outstanding under this Indenture.

After any such funds have been held in such segregated trust account for four years, the Trustee shall certify the amount thereof and the identifying numbers of the particular Bonds whose Owners have a claim thereagainst (which Owners shall also be identified, if known) and deliver such certificate and such cash to the Borrower. Thereafter such Owners shall have an unsecured claim against the Borrower in respect of payment of such unpresented Bonds, and shall have no further claim whatever against the Issuer, the Trustee or the Credit Facility Provider in respect thereof.

Section 214 Delivery of Bonds . Upon the execution and delivery of this Indenture, the Issuer shall issue and execute and deliver the Bonds to the Trustee, and the Trustee shall authenticate such Bonds and deliver them to the purchaser(s) as may be directed by the Issuer.

Prior to the delivery of the Bonds by the Trustee there shall be filed with the Trustee:

(a) a certified copy of the resolution(s) of the Issuer’s Governing Body authorizing the issuance of the Bonds and the execution and delivery of the Loan Agreement and this Indenture;

(b) original executed counterparts of the Loan Agreement, this Indenture and the Remarketing Agreement;

(d) the original executed Credit Facility;

(e) a request and authorization to the Trustee, executed on behalf of the Issuer by its Chief Municipal Official or Clerk, to deliver the Bonds to the purchaser(s) therein identified, in the form and amount requested upon payment to the Trustee, for the account of the Issuer, of a specified sum.

ARTICLE III

TERMS OF THE BONDS

Section 301 Maturity . Subject to the provisions of this section providing for assignment of stated maturities on and after the Conversion Date, the Bonds shall mature on the Final Maturity Date. The Bonds shall be subject to prior redemption as provided in Article VI hereof and to optional and mandatory purchase as provided in Sections 303 and 304 hereof.

Upon the receipt of a Conversion Notice, the Trustee shall, in accordance with the instruction of the Remarketing Agent, assign stated maturity dates to the Bonds, to be effective on the Conversion Date, as hereinafter described. Upon receipt of a Reset Notice, the Trustee shall, in accordance with the instructions of the Remarketing Agent, assign stated maturity dates to the Bonds, to be effective on the related Reset Date, as hereinafter described. Stated maturity dates of each March 1 occurring during the applicable Reset Period shall be assigned, such that the principal amount of Bonds to mature on each such March 1 is equal to the quotient (rounded down, if necessary, to the nearest multiple of $100,000) obtained by dividing the aggregate principal amount of Bonds Outstanding on the Conversion Date or Reset Date, as the case may be, by the number of March 1’s occurring from (but not including) the Conversion Date or Reset Date, as the case may be, through and including the Final Maturity Date. After the Conversion Date, the Bond certificates shall specify the maturity dates so assigned and no particular Bond certificate may cover more than one such stated maturity date.

Section 302 Interest on the Bonds . (a) Prior to the Conversion Date, if any, the Bonds shall bear interest at the Variable Rate determined from time to time in accordance with the provisions of this Section 302(a), payable on the first Business Day

of each month, commencing March, 1998, on each Mandatory Tender Date, and at maturity. From the date of issuance of the Bonds through and including March 31, 1998 the Variable Rate shall be equal to 3.80% per annum. Thereafter, the Variable Rate for each Calculation Period shall be determined on the Determination Date with respect thereto and shall be the lesser of (i) 10% per annum, or (ii) the minimum rate of interest which, in the judgment of the Remarketing Agent, under prevailing market conditions, taking into account the current rates for tax-exempt securities comparable in length of interest rate adjustment periods, liquidity, security and creditworthiness to the Bonds, would enable the Bonds to be sold at a price of par, plus accrued interest, if any, on the Determination Date. The Remarketing Agent shall determine the Variable Rate for each Calculation Period on the corresponding Determination Date, and shall notify the Trustee of such determination on such date by telephone, promptly, confirmed in writing, or by facsimile. In the event that the Remarketing Agent shall fail for any reason to determine, and notify the Trustee of, the Variable Rate for any Calculation Period, the Variable Rate for such Calculation Period shall be equal to the Variable Rate in effect immediately prior to the commencement of such Calculation Period.

Interest accruing at the Variable Rate shall be computed on the basis of a 365 or 366-day year, as the case may be, and the actual number of days elapsed.

(b) From and after the Conversion Date, if any, the Bonds of each stated maturity shall bear interest during each Reset Period at the Adjusted Interest Rate with respect thereto, payable on the first day of February and August of each year, commencing the first such date which is at least 30 days after the Conversion Date, and at maturity. Interest accruing at the Adjusted Interest Rates shall be calculated on the basis of a 360-day year comprised of twelve 30-day months. The interest rate on the Bonds may be converted to the Adjusted Interest Rates as follows:

(i) The Borrower may designate any Business Day (except as provided in paragraph (xii) below) as a Proposed Conversion Date by delivering to the Trustee, the Remarketing Agent, the Issuer, the Rating Agency and the Credit Facility Provider a Conversion Notice not less than 45 days, nor more than 60 days, prior to the Proposed Conversion Date (unless a shorter notice shall be acceptable to the Trustee). Such Conversion Notice shall (a) specify the Proposed Conversion Date and the termination date of the first Reset Period (which must be a February 28), (b) request the establishment of an Adjusted Interest Rate for the Bonds of each stated maturity to be in effect during such Reset Period, (c) provide the notice described in Section 407 and state whether or not a Credit Facility will be in effect during such Reset Period and (i) if so, describe such Credit Facility and identify the Credit Facility Provider, and (ii) if not, include the written consent of the current Credit Facility Provider to such conversion, (d) be accompanied by a written opinion of Bond Counsel, addressed to the Trustee, the Issuer and the Remarketing Agent, to the effect that the conversion of the interest rate on the Bonds to the Adjusted Interest

Rates is permitted by the Act and this Indenture and that such conversion and the delivery of the Credit Facility, if any, described in clause (c) above will not (upon satisfaction of such conditions as may be set forth therein) result in interest on the Bonds being included in gross income for federal income tax purposes, and (e) be accompanied by a written undertaking of the Remarketing Agent to calculate the principal amounts of Bonds to mature on each Principal Payment Date, establish the Adjusted Interest Rates for Bonds maturing on each Principal Payment Date and remarket the Bonds on the Proposed Conversion Date.

(ii) Upon receipt of a Conversion Notice, the Trustee shall determine whether such Conversion Notice complies with paragraph (i) above, and shall notify the Remarketing Agent, the Credit Facility Provider and the Borrower of such determination. If the Conversion Notice does comply with said paragraph (i), the Trustee shall also notify the Bondowners of the mandatory tender on the Proposed Conversion Date as provided in Section 304 hereof.

(iii) The Borrower or, if no Credit Facility will be in effect during the First Reset Period, the current Credit Facility Provider, may rescind the Conversion Notice by delivering to the Trustee and the Remarketing Agent, no later than eight days prior to the Proposed Conversion Date, a notice stating that the Borrower or the Credit Facility Provider, as the case may be wishes to rescind the Conversion Notice and have the Bonds continue to bear interest at the Variable Rate on and after the Proposed Conversion Date.

(iv) Upon receipt of notice from the Trustee under paragraph (ii) above, and unless the Remarketing Agent shall have received notice from the Borrower under paragraph (iii) above, the Remarketing Agent shall, no later than seven days prior to the Proposed Conversion Date, determine the principal amount of Bonds to mature on each Principal Payment Date (as provided in Section 301) and the respective Adjusted Interest Rates and shall notify the Trustee of such determinations on such date by telephone, promptly confirmed in writing, or by facsimile. The Adjusted Interest Rate for Bonds of each stated maturity to be in effect during the first Reset Period shall be the lesser of (a) 20% per annum, or (b) the minimum rate of interest which, in the judgment of the Remarketing Agent, under prevailing market conditions, taking into account the current rates for tax-exempt securities comparable in term, security and creditworthiness to such Bonds, would enable such Bonds to be sold at a price of par on the Proposed Conversion Date.

(v) On the Proposed Conversion Date, the Borrower shall cause to be delivered: (a) to the Trustee, the Credit Facility, if any, described in paragraph (i)(c) above, together with all other items required by Section 1202 hereof and (b) to the Trustee and the Remarketing Agent, a written opinion of Bond Counsel, dated the Proposed Conversion Date, to the effect that the conversion

of the interest rate on the Bonds to the Adjusted Interest Rate and the delivery of the Credit Facility, if any, described in clause (a) above, will not result in an Event of Taxability.

(vi) If all of the requirements of paragraphs (i), (ii), (iv) and (v) above are met, if the Borrower has not rescinded the Conversion Notice pursuant to paragraph (iii) above, and if by 11:00 a.m., New York, New York time, on the Proposed Conversion Date the Remarketing Agent has successfully remarketed all of the Bonds at the Adjusted Interest Rates and the proceeds of such remarketing are available in the Bond Purchase Account pursuant to Section 306, the Proposed Conversion Date shall be the Conversion Date and the Bonds shall bear interest at the respective Adjusted Interest Rates during the first Reset Period. If the Borrower rescinds the Conversion Notice pursuant to paragraph (iii) above, if for any reason the Remarketing Agent fails to determine and notify the Trustee of the Adjusted Interest Rates as described in paragraph (iv) above, if the Borrower fails to cause to be delivered the Credit Facility, if any, and opinion of Bond Counsel as described in paragraph (v) above, or if the Remarketing Agent has not successfully remarketed all of the Bonds and caused the proceeds thereof to be available in the Bond Purchase Account by 11:00 a.m., New York, New York time, on the Proposed Conversion Date, the Proposed Conversion Date shall not be the Conversion Date and the Bonds shall continue to bear interest at the Variable Rate.

(vii) Notwithstanding the foregoing, no Proposed Conversion Date shall be established on a day that is during the thirty-five days immediately preceding a Principal Payment Date.

Interest accruing at the Adjusted Interest Rates shall be calculated on the basis of a 360-day year comprising twelve 30-day months.

(c) Following the first Reset Period, the Adjusted Interest Rates shall be established for each succeeding Reset Period as follows:

(i) At least 45 days, but not more than 60 days, prior to each Reset Date, the Trustee shall send a notice to the Borrower and the Remarketing Agent, setting forth: (i) the Reset Date, and (ii) that a Reset Notice is due not later than 25 days before the Reset Date. The Trustee shall also notify the Bondholders of the mandatory tender on the Reset Date as provided in Section 304 hereof.

(ii) Not later than 25 days prior to each Reset Date, the Borrower shall deliver to the Trustee, the Remarketing Agent, the Issuer, the Rating Agency and the Credit Facility Provider a Reset Notice with respect to the Reset Period commencing on such Reset Date, which shall (a) specify the termination date of such Reset Period, which date must always be a February 28, (b) request

the establishment of an Adjusted Interest Rate for the Bonds of each stated maturity to be in effect during such Reset Period, (c) state whether or not a Credit Facility will be in effect during such Reset Period and if so, describe such Credit Facility and identify the Credit Facility Provider, and (d) be accompanied by a written opinion of Bond Counsel, addressed to the Trustee, the Issuer and the Remarketing Agent, to the effect that the establishment of the new Adjusted Interest Rates is permitted by the Act and this Indenture and that such establishment and the delivery of the Credit Facility, if any, described in clause (c) above will not (upon satisfaction of such conditions as may be set forth therein) result in interest on the Bonds being included in gross income for federal income tax purposes.

(iii) If the Borrower delivers to the Trustee a document purporting to be a Reset Notice, the Trustee shall as promptly as possible determine whether it is proper and sufficient as a Reset Notice pursuant to this Indenture, and promptly notify the Borrower, the Credit Facility Provider and the Remarketing Agent of such determination.

(iv) On the last Business Day which is at least seven days prior to the Reset Date (or on an earlier day selected by the Remarketing Agent with the consent of the Borrower), the Remarketing Agent shall determine the principal amount of Bonds to mature on each Principal Payment Date (as provided in Section 301) and the respective Adjusted Interest Rates, and shall notify the Trustee of such determination on such date by telephone, promptly confirmed in writing, or by facsimile. The Adjusted Interest Rate for Bonds of each stated maturity to be in effect during the Reset Period commencing on such Reset Date shall be the lesser of (a) 20% per annum, or (b) the minimum rate of interest which, in the judgment of the Remarketing Agent, under prevailing market conditions, taking into account the current rates for tax-exempt securities comparable in term, security and creditworthiness to such Bonds, would enable such Bonds to be sold at a price of par on the Reset Date (or, in the case of a Reset Date that is not a Business Day, at a price of par plus accrued interest on the next succeeding Business Day).

(v) On the Reset Date (or, if the Reset Date is not a Business Day, on the next succeeding Business Day), the Borrower shall cause to be delivered: (a) to the Trustee, the Credit Facility, if any, described in paragraph (ii)(c) above, together with all other items required by Section 1202 hereof and (b) to the Trustee and the Remarketing Agent, a written opinion of Bond Counsel, dated the date of delivery thereof, to the effect that the establishment of the new Adjusted Interest Rate and the delivery of the Credit Facility, if any, described in clause (a) above, will not result in an Event of Taxability.

(vi) It is a condition to the establishment of any Reset Period and the Adjusted Interest Rates with respect thereto that (a) the Borrower shall have

delivered to the Trustee a Reset Notice in proper form, (b) the Remarketing Agent shall have determined the Adjusted Interest Rates to be in effect during such period, (c) the Borrower shall have delivered the Credit Facility, if any, and the opinion of Bond Counsel described in paragraph (v) above, and (d) by 11:00 a.m., New York, New York time, on the Reset Date (or, if the Reset Date is not a Business Day, on the next succeeding Business Day), the Remarketing Agent shall have successfully remarketed all of the Bonds at the new Adjusted Interest Rates and the proceeds of such remarketing shall be available in the Bond Purchase Account pursuant to Section 306. In the event such conditions have not been satisfied as of the Reset Date (or, if the Reset Date is not a Business Day, as of the next succeeding Business Day), the next Reset Period shall not commence, and the new Adjusted Interest Rates and stated maturity dates assigned pursuant to Section 301 shall not become effective, until such time, if any, as such conditions are satisfied. On any Business Day thereafter upon which each such condition has been satisfied (provided that the Remarketing Agent may have established different Adjusted Interest Rates and the Bonds shall have been remarketed in accordance with Section 309), the next Reset Period shall commence. No failure to satisfy such conditions shall affect the requirement for mandatory tender of Bonds on the Reset Date (or, if the Reset Date is not a Business Day, on the next succeeding Business Day) or the right of the Bondowners to have their Bonds purchased on such date; provided that no remarketing of Bonds pursuant to Sections 308 or 309 shall be effective until all such conditions have been satisfied.

(vii) To the extent permitted by law, overdue principal, premium, if any, and interest shall bear interest at the same rate as was borne by the Bonds on the due date of the payment that is delinquent.

Section 303 Purchase of Bonds Upon Demand . While the Bonds bear interest at the Variable Rate, any Bond or the Beneficial Ownership Interest therein (other than a Pledged Bond), or any portion thereof in an Authorized Denomination, shall be purchased by the Trustee, on behalf of the Borrower, but only from the funds available therefor in the Bond Purchase Account, at a purchase price equal to 100% of the principal amount thereof, plus accrued interest to the Optional Tender Date, upon the demand of the Owner or Beneficial Owner thereof as provided in this Section 303. The Owner or Beneficial Owner, as the case may be, of a Bond may demand purchase of such Bond or the Beneficial Ownership Interest therein, on any Business Day which is at least seven days after delivery to the Trustee, at its Principal Office, by 11:00 a.m., New York, New York time, on a Business Day of a Purchase Demand. Delivery of a Purchase Demand shall be irrevocable and shall bind the Owner or Beneficial Owner, as the case may be, to tender his, her or its Bonds or Beneficial Ownership Interests for purchase on the Optional Tender Date as provided in Section 305 hereof. The Purchase Demand shall (i) state the name and taxpayer identification number of the Owner or Beneficial Owner, as the case may be, (ii) identify the Bond(s) or portion(s) thereof which are to be purchased, or the Beneficial Ownership Interests in which are to be purchased, by CUSIP number, Bond number(s) and principal amount(s), (iii) state the Optional Tender Date on

which the purchase of such Bond(s), or Beneficial Ownership Interest(s) (or portions thereof) is being demanded, which must be a Business Day not less than seven days after receipt by the Trustee, at or before 11:00 a.m., New York, New York time, on a Business Day, of such Purchase Demand, (iv) acknowledge that such demand is irrevocable, and (v) in the case of a Beneficial Owner, (a) be submitted to the Trustee through a participant in the Depository, (b) be accompanied by evidence satisfactory to the Trustee of such participant’s position in the Bonds at the Depository and of such Beneficial Owner’s Beneficial Ownership Interest in the Bonds, and (c) contain irrevocable authorization for such participant to transfer the Beneficial Ownership Interest on the Optional Tender Date. The determination by the Trustee as to whether a Purchase Demand has been properly delivered pursuant to this Section 303 shall be conclusive and binding upon the Owners or Beneficial Owners of the Bonds. g

Section 304 Mandatory Tender of Bonds for Purchase . All Bonds or the Beneficial Ownership Interests therein (other than Pledged Bonds) shall be subject to mandatory tender for purchase in accordance with Section 305 hereof on:

(a) prior to the Conversion Date, the first Business Day of the month in which the Credit Facility Expiration Date is to occur unless, at least 45 days prior to such first Business Day of the month, the Borrower shall have caused to be delivered to the Trustee a Substitute Credit Facility meeting the requirements of Section 1202 hereof or an amendment to the Credit Facility extending the Credit Facility Expiration Date by at least the lesser of one year or the period ending on the fifteenth day of the month in which the Final Maturity Date is to occur;

(b) on the Business Day that the Credit Facility Provider shall have delivered a certificate to the Trustee stating that an “Event of Default” (as defined therein) has occurred under the Credit Facility Reimbursement Agreement and demanding a mandatory tender for purchase of all of the Outstanding Bonds;

(d) prior to the Conversion Date, two Business Days prior to the effective date of any Substitute Credit Facility (other than a Required Substitution); and

(e) each Reset Date.

The Trustee shall give notice of each Mandatory Tender Date in the same manner as notice of redemption of Bonds pursuant to Section 402 hereof. Such notice shall (i) identify the Bonds by name, CUSIP number, date of issue and maturity date, (ii) state the Mandatory Tender Date, (iii) state that all Bonds (or Beneficial Ownership Interests, as the case may be) are subject to mandatory tender for purchase at a purchase price equal to 100% of the principal amount thereof, plus accrued interest to the Mandatory Tender Date, (iv) state that, if moneys are available and on hand with the Trustee on the Mandatory Tender Date (or, if the Mandatory Tender Date is not a Business Day, on the next succeeding Business Day), all Bonds (or Beneficial Ownership Interests, as the case may be) shall be deemed tendered, whether or not so tendered, and that on and after the Mandatory Tender Date, the Owner (or

Beneficial Owner) shall have no further rights in such Bond other than the right to receive the purchase price thereof upon presentation of such Bond to the Trustee on any Business Day on or after the Mandatory Tender Date (or upon the transfer of such Beneficial Ownership Interest as directed by the Trustee) and (v) in the case of a mandatory tender of Bonds, state the place where Bonds may be presented for purchase.

Section 305 Purchase of Tendered Bonds . All Bonds or Beneficial Ownership Interests, as the case may be (other than Pledged Bonds), with respect to which the Owners or Beneficial Owners, as the case may be, thereof have delivered Purchase Demands pursuant to Section 303 shall be purchased on an Optional Tender Date, and all Bonds or Beneficial Ownership Interests, as the case may be (other than Pledged Bonds), shall be purchased on each Mandatory Tender Date (or, if the Mandatory Tender Date is not a Business Day, on the next succeeding Business Day), at a purchase price equal to 100% of the principal amount thereof, plus accrued interest to the Tender Date (or, if the Tender Date is not a Business Day, to the next succeeding Business Day), from moneys available therefor in the Bond Purchase Account. Provided that Eligible Funds are available to the Trustee to pay the purchase price thereof and as set forth in Section 306:

(a) in the case of the tender of Bonds:

(i) all Tendered Bonds shall be deemed tendered, whether or not actually tendered, on the Tender Date;

(ii) interest accruing on the Tendered Bonds on and after the Tender Date shall cease to be payable to the former Owners of such Tendered Bonds, who shall have no further interest or rights in such Bonds, except the right to receive payment of the purchase price thereof, exclusively from moneys held by the Trustee for such purpose upon presentation of such Bonds to the Trustee at its Principal Office on any Business Day on or after the Tender Date; and

(iii) the Trustee shall authenticate and deliver Bonds to the new Owners thereof as provided in Section 306 hereof; and

(b) in the case of the tender of Beneficial Ownership Interests, the Beneficial Owner shall be obligated to cause the transfer of such Beneficial Ownership Interest on the records of the Depository, as directed by the Trustee.

Section 306 Bond Purchase Account . There is hereby created by the Issuer and ordered established with the Trustee a trust account to be designated with the names of the Issuer and the Borrower and the label “Bond Purchase Account”. There shall be deposited into the Bond Purchase Account, when and as received by the Trustee (i) all funds received from the Remarketing Agent on a Tender Date for the purchase of Tendered Bonds (or Beneficial Ownership Interests therein) in accordance with Section 308 of this Indenture, (ii) all funds received from the Credit Facility Provider pursuant to a draw made by the Trustee under Section 1201(d) hereof; and (iii) any other funds deposited therein by or on behalf of the Borrower if accompanied with a Preference Opinion with respect thereto. No other funds shall

be accepted by the Trustee for deposit into the Bond Purchase Account. Notwithstanding the foregoing, any funds received from the Remarketing Agent representing accrued interest on Tendered Bonds (or Beneficial Ownership Interests therein) with respect to a Reset Date that is not a Business Day shall be deposited to the Bond Fund and used to pay or reimburse the Credit Facility Provider for the payment of the interest on the Bonds on the next Interest Payment Date.

Funds in the Bond Purchase Account shall be held in trust for the account of the respective owners of such funds at the time of the deposit thereof into the Bond Purchase Account until such funds are applied by the Trustee on the Tender Date to pay the purchase price of Tendered Bonds or Beneficial Ownership Interests. Such funds may be invested only in Government Obligations maturing no later than the date(s) on which such funds are expected to be needed for the purposes of the Bond Purchase Account.

Funds for the payment of such purchase price shall be derived from the following sources in the following order:

First. first, from proceeds of the remarketing of Bonds (or Beneficial Ownership Interests) by the Remarketing Agent as described in Section 308 hereof;

Second. second, from proceeds of a draw on the Credit Facility pursuant to Section 1201(d) hereof; and

Third. third, from any other funds in the Bond Purchase Account.

Each Tendered Bond delivered to the Trustee pursuant to Section 305 of this Indenture shall be held in trust in the Bond Purchase Account for the account of such Owner until the purchase price shall have been paid in full to the Owner of such Tendered Bond. Upon payment in full of the purchase price of a Tendered Bond or Beneficial Ownership Interest from the Bond Purchase Account, the Tendered Bond or Beneficial Ownership Interest, as the case may be, shall (a) in the case of Bonds purchased with proceeds of the remarketing thereof, be registered and delivered by the Trustee as directed by the Remarketing Agent, (b) in the case of Beneficial Ownership Interests purchased with the proceeds of the remarketing thereof, be recorded on the records of the Depository as directed by the Trustee pursuant to instructions from the Remarketing Agent, (c) in the case of Bonds purchased with the proceeds of a draw on the Credit Facility, be registered in the name of the Credit Facility Provider and held by the Trustee, except as otherwise provided in the Credit Facility Reimbursement Agreement, (d) in the case of Beneficial Ownership Interests purchased with the proceeds of a draw on the Credit Facility, be recorded on the records of the Depository as directed by the Trustee pursuant to instructions from the Credit Facility Provider, (e) in the case of Bonds purchased with other funds in the Bond Purchase Account, be registered and delivered by the Trustee as directed by the Borrower and (f) in the case of Beneficial Ownership Interests purchased with other funds in the Bond Purchase Account, be recorded on the records of the Depository as directed by the Trustee pursuant to instructions of the Borrower.

Section 307 Treatment of Untendered Bond Certificates . Untendered Bonds shall cease to bear interest on the Tender Date if funds sufficient to pay the purchase price or redemption price, as the case may be, of an Untendered Bond (including any accrued and unpaid interest) shall be held by the Trustee in the Bond Purchase Account. All liability of the Issuer to the Owner thereof for the payment of such Untendered Bond shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such funds in a separate segregated trust account, without liability for interest thereon, for the benefit of the owner of such Untendered Bond who shall thereafter be restricted exclusively to such account for any claim of whatever nature on such person’s part under this Indenture or on or with respect to such Bond. Such funds in such segregated trust account shall not be considered Pledged Revenues, and such Untendered Bonds shall not be deemed to be Outstanding under this Indenture.

After any such funds have been held in such segregated trust account for four years, the Trustee shall certify the amount thereof and the identifying numbers of the particular Bonds whose Owners have a claim there against (which Owners shall also be identified, if known) and deliver such certificate and such funds to the Borrower. Thereafter such Owners shall have an unsecured claim against the Borrower in respect of payment of such Untendered Bonds, and shall have no further claim whatever against the Issuer or the Trustee in respect thereof.

Section 308 Remarketing of Tendered Bonds . Upon receipt of a Purchase Demand, the Trustee shall notify the Remarketing Agent by telephone, promptly confirmed in writing, or by facsimile, of the principal amount of Bonds or Beneficial Ownership Interests to be purchased on the Optional Tender Date.

Upon being notified by the Trustee of its receipt of a Purchase Demand, the Remarketing Agent shall attempt to remarket the Bonds or Beneficial Ownership Interests described in such Purchase Demand in accordance with this Section 308, and the Remarketing Agent shall attempt to remarket all Bonds on each Mandatory Tender Date in accordance with this Section; provided, however, that if the Borrower notifies the Remarketing Agent of a principal amount of Tendered Bonds or Beneficial Ownership Interests which the Remarketing Agent shall not remarket, then the Remarketing Agent shall not attempt to remarket the principal amount of the Bonds or Beneficial Ownership Interests so identified.

The Remarketing Agent shall use its best efforts to solicit purchases of the Tendered Bonds or Beneficial Ownership Interests at a price of par plus accrued interest on each Tender Date (or, in the case of a Reset Date that is not a Business Day, on the next succeeding Business Day); provided that the Remarketing Agent shall not settle any remarketing of Bonds at the Adjusted Interest Rate on a Proposed Conversion Date or any remarketing of Bonds on a Reset Date unless all of the conditions set forth in Section 302(b)(vi) or 302(c)(vi), as the case may be, have been satisfied. The Remarketing Agent shall pay the purchase price received by it (for any Tendered Bonds or Beneficial Ownership Interests so remarketed) to the Trustee for deposit in the Bond Purchase Account prior to 11:00 a.m., New York, New York time, on the Tender Date. No funds so deposited shall

have been furnished by the Borrower or the Issuer or any person who is an insider to the Borrower or the Issuer, respectively, within the meaning of the United States Bankruptcy Code. Upon request of the Borrower or the Credit Facility Provider from time to time, the Remarketing Agent shall advise the requesting party of the status of the remarketing effort and the Trustee shall advise the requesting party of the balance held by it in the Bond Purchase Account.

The Remarketing Agent shall have the right to, but shall not be obligated to, purchase Bonds or Beneficial Ownership Interests therein (including Pledged Bonds) for its own account to the same extent as if it were not the Remarketing Agent hereunder, and the purchase price paid by the Remarketing Agent for Tendered Bonds or Beneficial Ownership Interests shall be considered proceeds of the remarketing of such Tendered Bonds or Beneficial Ownership Interests, as the case may be.

Section 309 Remarketing of Pledged Bonds . The Remarketing Agent shall continue to use its best efforts to solicit purchases of Pledged Bonds at a price of par plus accrued interest on any Business Day; provided that (i) no Pledged Bonds shall be remarketed for any Reset Period unless the conditions set forth in Section 302(c)(vi) have been satisfied, and (ii) if the Credit Facility Provider notifies the Remarketing Agent of a principal amount of Pledged Bonds which the Remarketing Agent shall not remarket, then the Remarketing Agent shall not attempt to remarket the principal amount of Pledged Bonds so identified. If the Remarketing Agent shall identify a purchaser for Pledged Bonds, it shall notify the Borrower, the Trustee and the Credit Facility Provider, and the Trustee shall establish a separate, segregated account (the “Pledged Bond Account”) to be used only for the purchase of such Pledged Bonds. Upon the deposit into the Pledged Bond Account of the amount, if any, required under the Credit Facility Reimbursement Agreement to be paid to the Credit Facility Provider, together with the proceeds of the remarketing, to cause the release of the Pledged Bonds, the Remarketing Agent shall cause to be deposited into the Pledged Bond Account any proceeds it receives from such remarketing.

On the Business Day fixed for such remarketing, provided that funds sufficient for the payment of the purchase price of the Pledged Bonds to be remarketed, together with any additional amount required pursuant to the Credit Facility Reimbursement Agreement for the release of the Pledged Bonds, are on deposit in the Pledged Bond Account:

(a) the Trustee shall authenticate and deliver Bonds to the new Owners thereof as directed by the Remarketing Agent or the Beneficial Ownership Interest shall be transferred on the records of the Depositary, as appropriate; provided that Pledged Bonds remarketed by the Remarketing Agent shall not be delivered to the purchasers (i) until the Trustee has received written notice from the Credit Facility Provider that the Credit Facility has been reinstated in an amount equal to the purchase price paid by the Trustee from Credit Facility proceeds (unless the Credit Facility provides for automatic reinstatement upon such remarketing), and (ii) if a Bond (or Beneficial Ownership Interest) has been a Pledged Bond for a period of 30 days or more, unless the Trustee has been provided with an opinion of Bond Counsel to the effect that the status of such

Bond (or Beneficial Ownership Interest) as a Pledged Bond has not adversely affected the exclusion of interest on such Bond from gross income for federal tax purposes; and

(b) the monies held in the Pledged Bond Account with respect to such Pledged Bonds shall be paid to the Credit Facility Provider, to the extent required by the Credit Facility Reimbursement Agreement, and thereafter to the order of the Borrower.

Section 310 Concerning the Remarketing Agent . The Remarketing Agent shall be a member of the National Association of Securities Dealers, Inc. and authorized by law to perform the functions of the Remarketing Agent as described in this Indenture. The Trustee shall cooperate with the Remarketing Agent in the performance of its duties. The Remarketing Agent may resign upon not less than 60 days prior written notice to the Issuer, the Trustee, the Credit Facility Provider, the Rating Agency and the Borrower and may be removed by the Borrower upon not less than 60 days prior written notice to the Issuer, the Trustee, the Rating Agency, the Credit Facility Provider and the Remarketing Agent. In case the Remarketing Agent shall resign or be removed, the Borrower shall appoint a successor Remarketing Agent meeting the requirements of this Section 310. The successor Remarketing Agent shall evidence its acceptance of its duties hereunder by a writing delivered to the Trustee and the Credit Facility Provider. If the current Remarketing Agent’s resignation is effective prior to the appointment of a successor, the Trustee shall assume the duties thereof until a successor is appointed.

The Remarketing Agent’s duty to remarket Tendered Bonds (or Beneficial Ownership Interests) and Pledged Bonds pursuant to this Indenture (unless it shall agree otherwise in writing) shall be a “best efforts” undertaking on its part and shall not obligate it to purchase Bonds (or Beneficial Ownership Interests) for its own account or to advance funds for the account of any of its customers or prospective purchasers of Bonds (or Beneficial Ownership Interests). The Borrower shall, at its expense, furnish the Remarketing Agent with a prospectus meeting the requirements of applicable state and federal securities laws as a condition precedent to the institution by the Borrower of the remarketing described in Sections 308 and 309. The Remarketing Agent’s compensation for remarketing shall be fixed by agreement between the Borrower and the Remarketing Agent within the range of customary charges by investment bankers for similar services and shall be paid by the Borrower.

ARTICLE IV

REDEMPTION OF BONDS PRIOR TO MATURITY

Section 401 Limitation of Redemptions Prior to Maturity . No Bond may be called for redemption prior to its stated maturity except as provided in this Article IV; provided, however, that nothing herein shall be deemed to limit the right of acceleration of Bond maturities upon the occurrence of an Event of Default.

Section 402 Notice and Effect of Redemption . The Trustee shall give notice of the call for any redemption of Bonds prior to maturity by mailing a copy of the redemption notice by first class mail not less than 30 nor more than 60 days prior to the redemption date to the Owner of each Bond to be redeemed at the address shown on the Bond Register; provided, however, that failure to give any such notice as aforesaid or any defect therein with respect to any particular Bond shall not affect the validity of any proceedings for the redemption of any other Bond. A copy of all notices of redemption shall also be sent to the Rating Agency when sent to owners of Bonds, provided that any failure to provide such notice shall not affect the validity of any redemption.

In the case of optional redemption under Sections 404 or 405 of this Indenture, the required notice of redemption shall not be given until the Trustee has received (i) the written consent of the Credit Facility Provider, and (ii) in the case of redemption at a premium which is not provided for by the Credit Facility, Eligible Funds in an amount necessary to pay when due the premium, if any, on the Bonds to be redeemed.

Each redemption notice shall (a) identify the Bonds to be redeemed by name, CUSIP number, date of issue, interest rate and maturity date and, if only a portion of the Bonds are to be redeemed, the certificate numbers and the respective principal amounts to be redeemed, (b) identify the redemption date, (c) state the redemption price, (d) state that interest on the Bonds or the portions thereof called for redemption will (unless such Bonds are purchased in lieu of redemption pursuant to Section 1205 hereof) cease to accrue from and after the redemption date if funds sufficient for their redemption and available for the purpose are on deposit with the Trustee on the redemption date, and (e) state that payment for the Bonds will be made on the redemption date at the principal trust office of the Trustee during normal business hours upon the surrender of the Bonds to be redeemed.

Notice of redemption having been given as aforesaid, the Bonds so called for redemption, together with the premium, if any and accrued interest thereon, shall become due and payable on the redemption date. If pursuant to this Indenture the Trustee shall hold Eligible Funds which are available and sufficient in amount to pay the principal of and premium, if any, on the Bonds or portions thereof thus called for redemption and to pay the interest thereon to the redemption date, such Bonds or portions thereof shall (unless such Bonds are purchased in lieu of redemption pursuant to Section 1205 hereof) cease to bear interest from and after said redemption date; provided that funds available for the payment of the redemption premium payable pursuant to Section 406 hereof need not be Eligible Funds.

Section 403 Selection of Bonds for Redemption; Manner of Effecting Partial Redemptions of Particular Bonds . If less than all Bonds are to be redeemed pursuant to the provisions of Section 404 hereof, the particular Bonds or portions thereof to be redeemed shall be selected by the Trustee in the inverse order of their stated maturities and within a stated maturity by lot or by such other random means as the Trustee shall determine in its discretion; provided, however, that Pledged Bonds shall be redeemed first and until all of the Pledged Bonds have been redeemed, no other Bonds shall be redeemed. Any such means of selecting

Bonds for redemption shall provide for the possibility of partial redemption of any Bond of a denomination greater than the smallest Authorized Denomination.

Particular Bonds may be redeemed only in multiples of the smallest Authorized Denomination (hereinafter called a “Unit”). In t

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