Common use of Conditions to Defeasance Clause in Contracts

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds covenant defeasance option only if: (a) the The Issuer has irrevocably deposited deposits or caused causes to be irrevocably deposited in trust with the Indenture Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders (ithe “defeasance trust”) cash and/or (ii) pursuant to an irrevocable trust and security agreement in form and substance satisfactory to the Trustee, money or U.S. Government Obligations which through Obligations, or a combination thereof, sufficient for the scheduled payments payment of principal of and interest in respect thereof in accordance with their terms are in an amount sufficient on all the Notes to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueMaturity or redemption; (b) the The Issuer delivers to the Indenture Trustee a certificate from a nationally an internationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal of and interest on the Notes when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will and after payment of all federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee shall provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will shall be sufficient to pay in respect principal of and interest on all the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest Notes when due and (iii) all other sums payable hereunder by at Maturity or on redemption, as the Issuer with respect to the Recovery Bondscase may be; (c) in the case of the Legal Defeasance Option, ninety-five (95) 123 calendar days pass after the deposit is made in accordance with the terms of Section 8.02(a) and during the ninetysuch 123-five (95)-day day period no Default or Event of Default specified in Section 5.01(a)(v) or (vi6.01(g) occurs which is continuing at the end of the period; (d) no Default or Event of Default has occurred and is continuing on the day date of such deposit and after giving effect thereto; (e) the deposit does not constitute a default or event of default under any other agreement binding on the Issuer; (f) The Issuer delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is not qualified as, a regulated investment company under the U.S. Investment Company Act of 1940, as amended; (g) The Issuer delivers to the Trustee Opinions of Counsel stating that, under Brazilian law, Holders (other than Brazilian persons) shall not recognize gain for Brazilian tax purposes and payments from the defeasance trust to any such Holder shall not be subject to withholding payments under Brazilian law; (h) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer shall have delivered delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer recognized standing with respect to U.S. federal income tax matters stating that (i) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, Indenture there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal deposit and defeasance and will shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal deposit and defeasance had not occurred; (fi) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer shall have delivered delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer recognized standing with respect to U.S. federal income tax matters to the effect that the Holders of the Recovery Bonds will shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (gj) the Issuer delivers to the Indenture Trustee an Officer’s Opinion of Counsel, in form and substance reasonably satisfactory to Trustee, to the effect that, after the passage of 123 calendar days following the deposit, the trust funds shall not be subject to any applicable bankruptcy, insolvency, reorganization or similar law affecting creditors’ rights generally; and (k) the Issuer delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds to the extent Notes as contemplated by this Article IV 8 have been complied with; (h) . Before or after a deposit, the Issuer delivers may make arrangements satisfactory to the Indenture Trustee an Opinion for the redemption of Counsel of external counsel of the Issuer to the effect that (i) in Notes at a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid future date in accordance with the provisions of this Indenture and the Series SupplementArticle 3.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E SCE (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E SCE (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E SCE (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E SCE (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E SCE or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise (a) Provided no Event of Default shall have occurred and remain uncured, Borrower shall have the Legal right at any time after the Release Date to voluntarily defease the entire Loan or a portion thereof (subject to the limitations set forth in SECTION 13.1 and herein) and obtain a release of the lien of the Mortgages (or in the case of a partial Defeasance, the Mortgage encumbering such released Property) by providing Lender with the Defeasance Option or Collateral (hereinafter, a "DEFEASANCE EVENT"), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or Borrower shall provide Lender not less than thirty (30) days notice (or such shorter period of time if permitted by Lender in its sole discretion) specifying a date (the "DEFEASANCE DATE") on which the Defeasance Event is to occur; (ii) U.S. Government Obligations which through the scheduled Borrower shall pay to Lender (A) all payments of principal and interest due on the Loan to and including the Defeasance Date, and (B) all other sums, then due under the Note, this Agreement, the Mortgages and the other Loan Documents; (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of SECTIONS 2.5.2 and 2.5.3 hereof; (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect thereof of the Defeasance Collateral Account and the Defeasance Collateral; (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in accordance with their terms are commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (A) Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral, (B) if a Securitization has occurred, the REMIC Trust formed pursuant to such Securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of Section 860D of the Code as a result of a Defeasance Event pursuant to this SECTION 2.5, (C) the Defeasance Event will not result in a deemed exchange for purposes of the Code and will not adversely affect the status of the Note as indebtedness for federal income tax purposes, (D) delivery of the Defeasance Collateral and the grant of a security interest therein to Lender shall not constitute an amount sufficient to pay principal, interest avoidable preference under Section 547 of the Bankruptcy Code or applicable state law and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (E) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower; (bvi) the Issuer delivers Borrower shall deliver to Lender a Rating Confirmation as to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsEvent; (cvii) Borrower shall deliver an Officer's Certificate certifying that the requirements set forth in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in this Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.5 have been satisfied; (dviii) no Default has occurred and is continuing on the day Borrower shall deliver a certificate of such deposit and after giving effect thereto; a "Big Five" accounting firm (e"Approved Accounting Firm") in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect certifying that the Holders of the Recovery Bonds Defeasance Collateral will not recognize income, gain generate monthly amounts equal to or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other greater than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Scheduled Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.Payments;

Conditions to Defeasance. (a) The Issuer may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option its covenant defeasance option, in each case, with respect to Recovery Bonds the Securities only if: (ai) the Issuer has irrevocably deposited or caused to be irrevocably deposited deposits in trust with the Indenture Trustee (i) cash and/or (ii) in U.S. Dollars, U.S. Government Obligations which through the scheduled payments of principal and interest in respect or a combination thereof in accordance with their terms are in an amount sufficient or U.S. Government Obligations, the principal of and the interest on which will be sufficient, or a combination thereof sufficient, to pay principal, interest the principal of and premium, premium (if any, ) and interest on the Recovery Bonds not therefore delivered Securities when due at maturity or redemption, as the case may be, including interest thereon to maturity or such redemption date; provided that upon any redemption that requires the payment of the Make-Whole Premium, the amount deposited shall be sufficient for purposes of this Indenture to the Indenture extent that an amount is deposited with the Trustee for cancellation and all other sums payable hereunder by the Issuer with respect equal to the Recovery Bonds when scheduled Make-Whole Premium calculated as of the date of the notice of redemption, with any deficit as of the date of the redemption only required to be paid and deposited with the Trustee on or prior to discharge the entire indebtedness on date of the Recovery Bonds when dueredemption; (bii) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule thereforprincipal, (ii) premium, if any, and interest when due and on all the Securities to maturity or redemption, as the case may be; provided that upon any redemption that requires the payment of the Make-Whole Premium the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the Make-Whole Premium calculated as of the date of the notice of redemption, with any deficit as of the date of the redemption only required to be deposited with the Trustee on or prior to the date of the redemption; (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 123 days pass after the deposit is made and during the ninety123-five (95)-day day period no Default specified in Section 5.01(a)(v6.01(f) or (vig) with respect to the Issuer occurs which is continuing at the end of the period; (div) no Default has occurred and is continuing the deposit does not constitute a default under any other agreement binding on the day of such deposit and after giving effect theretoIssuer; (ev) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i1) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii2) since the date of execution of this Indenture, Indenture there has been a change in the applicable federal Federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal Federal income tax purposes as a result of such legal deposit and defeasance and will be subject to federal Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal deposit and defeasance had not occurred, provided that such Opinion of Counsel shall not be required by this clause (v) if all the Securities not theretofore delivered to the Trustee for cancellation (x) have become due and payable or (y) will become due and payable at their Stated Maturity within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer; (fvi) such exercise does not impair the right of any Holder to receive payment of principal, premium, if any, and interest on such Holder’s Securities on or after the due dates therefore or to institute suit for the enforcement of any payment on or with respect to such Holder’s Securities; (vii) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal Federal income tax purposes as a result of such covenant deposit and defeasance and will be subject to federal Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant deposit and defeasance had not occurred;; and (gviii) the Issuer delivers to the Indenture Trustee an Officer’s Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds Securities to the extent be so defeased and discharged as contemplated by this Article IV 8 have been complied with;. (hb) Before or after a deposit, the Issuer delivers may make arrangements satisfactory to the Indenture Trustee an Opinion for the redemption of Counsel of external counsel of the Issuer to the effect that (i) in such Securities at a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid future date in accordance with the provisions of this Indenture and the Series SupplementArticle 3.

Conditions to Defeasance. (a) The Issuer Company may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds its covenant defeasance option only if: (ai) the Issuer has Company irrevocably deposited or caused to be irrevocably deposited deposits in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are money in an amount sufficient or U.S. Government Obligations, the principal of and interest on which shall be sufficient, or a combination thereof sufficient, to pay principalthe principal of, interest and premium, premium (if any, ) and interest on the Recovery Bonds not therefore Securities when due at maturity or redemption, as the case may be, including interest thereon to maturity or such redemption date; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Section 8.02 to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with the Trustee on or prior to the date of redemption (it being understood that any defeasance shall be subject to the condition subsequent that such deficit is in fact paid). Any Applicable Premium Deficit shall be set forth in an Officers’ Certificate delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by simultaneously with the Issuer with respect to the Recovery Bonds when scheduled to deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be paid and to discharge the entire indebtedness on the Recovery Bonds when dueapplied toward such redemption; (bii) the Issuer Company delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will shall provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will shall be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule thereforprincipal, (ii) premium, if any, and interest when due and on all the Securities to maturity or redemption, as the case may be; (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit is made and during the ninety91-five (95)-day day period no Default specified in Section 5.01(a)(v6.01(h) or (vii) with respect to the Company occurs which is continuing at the end of the period; (div) no Default has occurred the deposit does not constitute a default under any other agreement binding on the Company and is continuing on the day of such deposit and after giving effect theretonot prohibited by Article 10; (ev) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer Company shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (iA) the Issuer Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (iiB) since the date of execution of this Indenture, Indenture there has been a change in the applicable federal U.S. Federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will shall not recognize income, gain or loss for federal U.S. Federal income tax purposes as a result of such deposit and legal defeasance and will shall be subject to federal U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and legal defeasance had not occurred; (fvi) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer Company shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will shall not recognize income, gain or loss for federal U.S. Federal income tax purposes as a result of such deposit and covenant defeasance and will shall be subject to federal U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred;; and (gvii) the Issuer Company delivers to the Indenture Trustee an Officer’s Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds to the extent Securities as contemplated by this Article IV 8 have been complied with;. (hb) Before or after a deposit, the Issuer delivers Company may make arrangements satisfactory to the Indenture Trustee an Opinion for the redemption of Counsel of external counsel of the Issuer to the effect that (i) in Securities at a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid future date in accordance with the provisions of this Indenture and the Series SupplementArticle 3.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Environmental Trust Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Environmental Trust Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Environmental Trust Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Environmental Trust Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Environmental Trust Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Environmental Trust Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Environmental Trust Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Environmental Trust Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Environmental Trust Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Wisconsin Electric (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Wisconsin Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Wisconsin Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Wisconsin Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Wisconsin Electric or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Environmental Trust Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrowers shall have the Legal right on any Payment Date after the Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (a "DEFEASANCE EVENT"), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a1) Borrowers shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the Issuer has irrevocably deposited or caused "DEFEASANCE DATE") on which the Defeasance Event is to be irrevocably deposited in trust occur. (2) Borrowers shall pay to Lender (A) all payments of Principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement and the other Loan Documents; (3) Borrowers shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the Indenture Trustee provisions of subsections (b) and (c) of this Section 2.3.3; (4) Borrowers shall execute and deliver to Lender a Security Agreement in respect of the Defeasance Collateral Account and the Defeasance Collateral; (5) Borrowers shall deliver to Lender an opinion of counsel for Borrowers that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (i) cash and/or Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral, (ii) U.S. Government Obligations which through if a securitization has occurred, the scheduled payments REMIC Trust formed pursuant to such securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of principal Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance Event will not result in a deemed exchange for purposes of the Code and will not adversely affect the status of the Note as indebtedness for federal income tax purposes, (iv) delivery of the Defeasance Collateral and the grant of a security interest in respect thereof in accordance with their terms are in therein to Lender shall not constitute an amount sufficient to pay principal, interest avoidable preference under Section 547 of the Bankruptcy Code or applicable state law and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (v) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower; (b6) the Issuer delivers Borrowers shall deliver to Lender a Rating Comfort Letter as to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsEvent; (c7) Borrowers shall deliver an Officer's Certificate certifying that the requirements set forth in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in this Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.3.3 have been satisfied; (d) no Default has occurred and is continuing on 8) Borrowers shall deliver a certificate of a "big four" or other nationally recognized public accounting firm acceptable to Lender certifying that the day of such deposit and after giving effect theretoDefeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments; (e9) in the case of an exercise of the Legal Defeasance Option, the Issuer Borrowers shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or deliver such other Affiliatecertificates, opinions, documents and instruments as Lender may reasonably request; and (i10) Borrowers shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender's reasonable attorneys' fees and expenses and Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of fees and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementexpenses.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right after the Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (a “Defeasance Event”), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the “Defeasance Date”) on which the Defeasance Event is to occur. (ii) U.S. Government Obligations which through the scheduled Borrower shall pay to Lender (A) all payments of principal Principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement and the other Loan Documents; (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of subsections (b) and (c) of this Section 2.3.3; (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect thereof of the Defeasance Collateral Account and the Defeasance Collateral; (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in accordance with their terms are commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (A) Lender has a legal and valid perfected first priority security interest in an amount sufficient to pay principalthe Defeasance Collateral Account and the Defeasance Collateral, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (B) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower; (bvi) if required by any Rating Agency, Borrower shall deliver to Lender and the Issuer delivers Rating Agencies a Rating Comfort Letter as to the Indenture Trustee Defeasance Event; (vii) Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in this Section 2.3.3 have been satisfied; (viii) Borrower shall deliver a certificate from of a nationally recognized public accounting firm acceptable to Lender certifying that (A) the Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments, (B) the revenue from the Defeasance Collateral will be applied within four (4) months of Independent registered public accountants expressing receipt towards payments of Debt Service, (C) the securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (D) the interest income to Borrower (or the Successor Borrower, if applicable) from the Defeasance Collateral will not in any tax year exceed the interest expense associated with the defeased Loan; (ix) Borrower shall deliver such other certificates, opinions, documents and instruments as Lender may reasonably request; (x) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and Rating Agency fees and expenses, (xi) if a securitization has occurred, Lender shall have received an opinion of its opinion counsel that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that the payments REMIC Trust formed pursuant to such securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of principal and interest when due and without reinvestment Section 860D of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts Code as a result of a Defeasance Event pursuant to this Section 2.3.3, and (but, in the case of the Legal Defeasance Option only, not more than such amountsxii) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer All conditions with respect to the Recovery Bonds; (c) in the case defeasance of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition Approved Mezzanine Loan shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementsatisfied.

Conditions to Defeasance. The Note Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds of Notes only if: (a) the Note Issuer has irrevocably deposited deposits or caused causes to be irrevocably deposited in trust with the Indenture Note Trustee (i) cash and/or (ii) or U.S. Government Obligations which through for the scheduled payments payment of principal of and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered each such Note to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueScheduled Maturity Date, Optional Redemption Date or Mandatory Redemption Date therefor, as applicable; (b) the Note Issuer delivers to the Indenture Note Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds Notes (i) subject to clause (ii), principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due if to be redeemed, the Optional Redemption Price or Mandatory Redemption Price, as applicable, therefor on the related Optional Redemption Date or Mandatory Redemption Date, as applicable and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bondsinterest when due; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit is made and during the ninety91-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (vif) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Note Issuer shall have delivered to the Indenture Note Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Note Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Note Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds Notes will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Note Issuer shall have delivered to the Indenture Note Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds Notes will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;; and (g) the Note Issuer delivers to the Indenture Note Trustee an Officer’s 's Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds Notes to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers . Before or after a deposit pursuant to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations the Note Issuer may make arrangements satisfactory to the Indenture Note Trustee shall terminate any obligation for the redemption of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid Notes at a future date in accordance with the provisions of this Indenture and the Series Supplement.Article X.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Securitization Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitization Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitization Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitization Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Consumers Energy (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Consumers Energy or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitization Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Storm Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Storm Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and On-going Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Storm Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Storm Recovery Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) On-going Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Storm Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Storm Recovery Bonds of such Series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Duke Energy Progress (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Duke Energy Progress (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Duke Energy Progress (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Duke Energy Progress (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Duke Energy Progress or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Storm Recovery Bonds of such Series shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. (a) The Issuer may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option its covenant defeasance option, in each case, with respect to Recovery Bonds the Securities only if: (ai) the Issuer has irrevocably deposited or caused to be irrevocably deposited deposits in trust with the Indenture Trustee (i) cash and/or (ii) in U.S. Dollars, U.S. Government Obligations which through the scheduled payments of principal and interest in respect or a combination thereof in accordance with their terms are in an amount sufficient or U.S. Government Obligations, the principal of and the interest on which will be sufficient, or a combination thereof sufficient, to pay principal, interest the principal of and premium, premium (if any, ) and interest on the Recovery Bonds not therefore delivered Securities when due at maturity or redemption, as the case may be, including interest thereon to maturity or such redemption date; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the Indenture extent that an amount is deposited with the Trustee for cancellation and all other sums payable hereunder by the Issuer with respect equal to the Recovery Bonds when scheduled Applicable Premium calculated as of the date of the notice of redemption, with any deficit as of the date of the redemption only required to be paid and deposited with the Trustee on or prior to discharge the entire indebtedness on date of the Recovery Bonds when dueredemption; (bii) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule thereforprincipal, (ii) premium, if any, and interest when due and on all the Securities to maturity or redemption, as the case may be; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any deficit as of the date of the redemption only required to be deposited with the Trustee on or prior to the date of the redemption; (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 123 days pass after the deposit is made and during the ninety123-five (95)-day day period no Default specified in Section 5.01(a)(v6.01(f) or (vig) with respect to the Issuer occurs which is continuing at the end of the period; (div) no Default has occurred and is continuing the deposit does not constitute a default under any other agreement binding on the day of such deposit and after giving effect theretoIssuer; (ev) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i1) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii2) since the date of execution of this Indenture, Indenture there has been a change in the applicable federal Federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal Federal income tax purposes as a result of such legal deposit and defeasance and will be subject to federal Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal deposit and defeasance had not occurred, provided that such Opinion of Counsel shall not be required by this clause (v) if all the Securities not theretofore delivered to the Trustee for cancellation (x) have become due and payable or (y) will become due and payable at their Stated Maturity within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer; (fvi) such exercise does not impair the right of any Holder to receive payment of principal, premium, if any, and interest on such Holder’s Securities on or after the due dates therefore or to institute suit for the enforcement of any payment on or with respect to such Holder’s Securities; (vii) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal Federal income tax purposes as a result of such covenant deposit and defeasance and will be subject to federal Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant deposit and defeasance had not occurred;; and (gviii) the Issuer delivers to the Indenture Trustee an Officer’s Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds Securities to the extent be so defeased and discharged as contemplated by this Article IV 8 have been complied with;. (hb) Before or after a deposit, the Issuer delivers may make arrangements satisfactory to the Indenture Trustee an Opinion for the redemption of Counsel of external counsel of the Issuer to the effect that (i) in such Securities at a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid future date in accordance with the provisions of this Indenture and the Series SupplementArticle 3.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery of the Energy Transition Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Energy Transition Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Energy Transition Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Energy Transition Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Energy Transition Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Energy Transition Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Energy Transition Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Energy Transition Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Public Service Company of New Mexico (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Public Service Company of New Mexico (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Public Service Company of New Mexico (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Public Service Company of New Mexico (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Public Service Company of New Mexico or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Energy Transition Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Note Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds of Notes only if: (a) the Note Issuer has irrevocably deposited deposits or caused causes to be irrevocably deposited in trust with the Indenture Note Trustee (i) cash and/or (ii) or U.S. Government Obligations which through for the scheduled payments payment of principal of and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered each such Note to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueScheduled Maturity Date, Optional Redemption Date or Mandatory Redemption Date therefor, as applicable; (b) the Note Issuer delivers to the Indenture Note Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds Notes (i) subject to clause (ii), principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due if to be redeemed, the Optional Redemption Price or Mandatory Redemption Price, as applicable, therefor on the related Optional Redemption Date or Mandatory Redemption Date, as applicable and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bondsinterest when due; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit is made and during the ninety91-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Note Issuer shall have delivered to the Indenture Note Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Note Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Note Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds Notes will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Note Issuer shall have delivered to the Indenture Note Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds Notes will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;; and (g) the Note Issuer delivers to the Indenture Note Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds Notes to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers . Before or after a deposit pursuant to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations the Note Issuer may make arrangements satisfactory to the Indenture Note Trustee shall terminate any obligation for the redemption of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid Notes at a future date in accordance with the provisions of this Indenture and the Series Supplement.Article X.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Storm Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Storm Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Storm Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Storm Recovery Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Cleco Power (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Cleco Power (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Cleco Power (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Cleco Power (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Cleco Power or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Storm Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right on any Payment Date after the Lockout Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage and a release of Borrower's and Guarantor's obligations under the other Loan Documents and the Master Lease (other than (i) those obligations which are expressly stated to survive the payment in full of the Loan and (ii) the Security Agreement) by providing Lender with the Defeasance Option or Collateral (a "Defeasance Event"), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a1) Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the Issuer has irrevocably deposited or caused "Defeasance Date") on which the Defeasance Event is expected to be irrevocably deposited in trust with the Indenture Trustee occur. (i2) cash and/or Borrower shall pay to Lender (iiA) U.S. Government Obligations which through the scheduled all payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, due on the Recovery Bonds not therefore delivered Loan to and including the Indenture Trustee for cancellation Defeasance Date and (B) all other sums payable hereunder by sums, then due under the Issuer with respect to Notes, this Agreement and the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueother Loan Documents; (3) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of subsections (b) the Issuer delivers and (c) of this Section 2.3.3; (4) Borrower shall execute and deliver to the Indenture Trustee Lender a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay Security Agreement in respect of the Recovery Bonds (i) principal in accordance with Defeasance Collateral Account and the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsDefeasance Collateral; (c5) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in the case of the Legal Defeasance Optioncommercial lending transactions and subject only to customary qualifications, ninety-five (95) days pass after the deposit is made assumptions and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case exceptions opining to the effect that, among other things, that (i) Lender has a legal and based thereon such opinion shall confirm thatvalid perfected security interest in the Defeasance Collateral Account and the Defeasance Collateral, (ii) if a securitization has occurred, the Holders REMIC Trust formed pursuant to such securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of Section 860D of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes Code solely as a result of such legal defeasance a Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance Event will not result in a significant modification and will not be subject an exchange of the Note for purposes of Section 1001 of the Code and the Treasury Regulations thereunder, (iv) delivery of the Defeasance Collateral and the grant of a security interest therein to federal income tax on Lender shall not constitute an avoidable preference under Section 547 of the same amounts, in Bankruptcy Code or applicable state law and (v) a non-consolidation opinion with respect to the same manner and at the same times as would have been the case Successor Borrower (if such legal defeasance had not occurredany); (f6) in Borrower shall deliver to Lender and the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered Rating Agencies a Rating Comfort Letter as to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurredDefeasance Event; (g7) the Issuer delivers to the Indenture Trustee Borrower shall deliver an Officer’s 's Certificate and an Opinion of Counsel of external counsel to certifying that the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by requirements set forth in this Article IV Section 2.3.3 have been complied withsatisfied; (h) the Issuer delivers 8) Borrower shall deliver an agreed upon procedures letter from a "big four" or other nationally recognized public accounting firm that would be acceptable to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E prudent lender (or any of its Affiliates, other accounting firm that is reputable and experienced in preparing such procedure letters and reports and would be reasonably acceptable to a prudent lender) verifying that the Defeasance Collateral will generate monthly amounts equal to or greater than the Issuer) is the debtorScheduled Defeasance Payments, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E revenue from the Defeasance Collateral will be applied within four months of receipt towards payments of Debt Service, (iii) the securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (iv) the interest income to Borrower (or the Successor Borrower, if applicable) from the Defeasance Collateral will not in any of its Affiliates, other than tax year materially exceed the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities interest expense associated with the assets and liabilities of PG&E or defeased Loan; (9) Borrower shall deliver such other Affiliatecertificates, opinions, documents and instruments as a prudent lender may reasonably request; and (i10) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender's reasonable attorneys' fees and expenses and Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of fees and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementexpenses.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Securitization Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitization Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitization Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitization Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent Covenant Defeasance Option, as applicable, contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E DTE Electric (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in property of the bankruptcy estate of PG&E DTE Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E DTE Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E DTE Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E DTE Electric or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitization Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to any of the Storm Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Storm Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Storm Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Storm Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the such Storm Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five ninety‑five (95) days pass after the deposit is made and during the ninety-five ninety‑five (95)-day 95) day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Storm Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer to the effect that the Holders of the Storm Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external Independent counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E ENO (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E ENO (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E ENO (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E ENO (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E ENO or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the such Storm Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer Provided no Event of Default has occurred and is continuing, at any time after the earlier of the date which is (y) two (2) years after the “startup day,” within the meaning of Section 860G(a)(9) of the Code, for the REMIC Trust established in connection with the last Securitization involving any portion of the Loan or (z) four (4) years after the date hereof, and before the Open Prepayment Date, Borrower may exercise cause the Legal Defeasance Option or release of the Covenant Defeasance Option with respect to Recovery Bonds only if:Property from the Lien of the Mortgage and the other Loan Documents upon the satisfaction of the following conditions (collectively, a “Defeasance”): (a) Unless otherwise agreed by Lender in writing, not less than thirty (30) days prior written notice shall be given to Lender specifying a date (the Issuer has irrevocably deposited or caused “Release Date”) on which the Defeasance Collateral is to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient delivered, such Release Date to pay principal, interest and premium, if any, occur only on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when duea Monthly Payment Date; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal all accrued and unpaid interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by due under the Issuer with respect Loan Documents up to the Recovery Bonds;Release Date, including, without limitation, all costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation), shall be paid in full on or prior to the Release Date; and (c) Borrower shall deliver to Lender on or prior to the Release Date: (i) an amount equal to that which is sufficient to purchase U.S. Obligations that provide for payments (A) on or prior to, but as close as possible to and including, all successive scheduled Monthly Payment Dates after the Release Date through the Stated Maturity Date and (B) in amounts equal to or greater than the case Monthly Debt Service Payment through and including the Stated Maturity Date together with payment in full of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end Outstanding Principal Balance as of the periodStated Maturity Date (the “Defeasance Collateral”), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance reasonably satisfactory to Lender (including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of Lender in conformity with all applicable state and federal laws governing granting of such security interests; (dii) no Default has occurred a pledge and is continuing on security agreement, in form and substance satisfactory to Lender in its reasonable discretion, creating a first priority security interest in favor of Lender in the day of such deposit and Defeasance Collateral (the “Defeasance Security Agreement”), which shall provide, among other things, that any excess received by Lender from the Defeasance Collateral over the amounts payable by Borrower hereunder shall be refunded to Borrower promptly after giving effect theretoeach Monthly Payment Date; (eiii) a certificate of Borrower certifying that all of the requirements set forth in this Section 2.6 have been satisfied; (iv) one or more opinions of counsel, for Borrower or another Person involved in the case Defeasance in form and substance and delivered by counsel reasonably satisfactory to Lender and satisfactory to the Rating Agencies in their sole discretion stating, among other things, that (A) Lender has a perfected first priority security interest in the Defeasance Collateral and that the Defeasance Security Agreement is enforceable against Borrower in accordance with its terms and (B) that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of an exercise Section 860D of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes Code as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurreddefeasance; (fv) in the case of an exercise of the Covenant Defeasance Option, the Issuer Borrower shall have delivered deliver to Lender a Rating Agency Confirmation as to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurredDefeasance; (gvi) a certificate from a firm of independent public accountants acceptable to Lender certifying that the Issuer delivers Defeasance Collateral is sufficient to satisfy the Indenture Trustee an Officer’s Certificate and an Opinion provisions of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied withSection 2.6.1(c)(i) above; (hvii) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliatecertificates, documents or instruments as Lender may reasonably require; and (iviii) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance In connection with the provisions conditions set forth in Section 2.6.1(c) above, Borrower hereby appoints Lender as its agent and attorney in fact for the purpose of this Indenture and using the Series Supplementamounts delivered pursuant to Section 2.6.1(c)(i) above to purchase the Defeasance Collateral.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Securitization Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitization Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitization Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitization Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E Consumers Energy (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in property of the bankruptcy estate of PG&E Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Consumers Energy or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitization Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Phase-In-Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Phase-In-Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and other Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Phase-In-Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Phase-In-Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Phase-In-Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) other Financing Costs and all other sums payable hereunder by the Issuer with respect to the Phase-In-Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Phase-In-Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Phase-In-Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E OPCo (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E OPCo (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E OPCo (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E OPCo (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E OPCo or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Phase-In-Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Storm Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Storm Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Storm Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Storm Recovery Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Storm Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Storm Recovery Bonds of such Series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Duke Energy Progress (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Duke Energy Progress (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Duke Energy Progress (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Duke Energy Progress (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Duke Energy Progress or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Storm Recovery Bonds of such Series shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Storm Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Storm Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Storm Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Storm Recovery Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Storm Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Storm Recovery Bonds of such Series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Duke Energy Carolinas (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Duke Energy Carolinas (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Duke Energy Carolinas (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Duke Energy Carolinas (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Duke Energy Carolinas or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Storm Recovery Bonds of such Series shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds its covenant defeasance option only if: (a1) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust deposits with the Indenture Trustee (i) Trustee, in trust, for the benefit of the Holders, cash and/or (ii) in U.S. dollars, U.S. Government Obligations which through Obligations, or a combination of cash in U.S. dollars and U.S. Government Obligations, in amounts as will be sufficient, in the scheduled payments opinion of principal and interest in respect thereof in accordance with their terms are in an amount sufficient accounting, appraisal or investment banking firm of national standing, to pay principalthe principal of, interest and premium, if any, and interest, if any, due on the Recovery Bonds not therefore outstanding Notes on the Stated Maturity or on the applicable Redemption Date, as the case may be, and the Issuer must specify whether the Notes are being defeased to Stated Maturity or to a particular Redemption Date (provided that if such redemption is made as provided in the sixth paragraph of paragraph 5 of the Notes, (x) the amount of cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, that must be irrevocably deposited will be determined using an assumed Applicable Premium calculated as of the date of such deposit and (y) the depositor must irrevocably deposit or cause to be deposited the Applicable Premium Deficit in trust on the Redemption Date as necessary to pay the Applicable Premium as determined on such date (it being understood that any defeasance shall be subject to the condition subsequent that such Applicable Premium Deficit is in fact paid); provided any Applicable Premium Deficit shall be set forth in an Officers’ Certificate delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by simultaneously with the Issuer with respect to deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption; provided, further, that the Recovery Bonds when scheduled to be Trustee shall have no liability whatsoever in the event that such Applicable Premium Deficit is not in fact paid and to discharge the entire indebtedness on the Recovery Bonds when dueafter any defeasance); (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c2) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Optionlegal defeasance, the Issuer shall have has delivered to the Indenture Trustee an Opinion of Counsel of external counsel of (subject to customary assumptions and exclusions) reasonably acceptable to the Issuer stating Trustee confirming that (ia) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (iib) since the date of execution of this IndentureIssue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall Opinion of Counsel will confirm that, the Holders of the Recovery Bonds respective outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f3) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance, the Issuer shall have has delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer (subject to customary assumptions and exclusions) reasonably acceptable to the effect Trustee confirming that the Holders of the Recovery Bonds respective outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit (and any similar concurrent deposit relating to other Indebtedness), and the grant of any Lien securing such borrowings); (5) such legal defeasance or covenant defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture and the agreements governing any other Indebtedness being defeased, discharged or replaced) to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries are bound; (6) the Issuer delivers must deliver to the Indenture Trustee an Officer’s Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders of the respective outstanding Notes over the creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding creditors of the Issuer or others; and (7) the Issuer must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel (which Opinion of external counsel Counsel may be subject to the Issuercustomary assumptions and exclusions), each stating that all conditions precedent relating to the satisfaction and discharge of legal defeasance or the Recovery Bonds to the extent contemplated by this Article IV covenant defeasance have been complied with; (h) ; provided, that the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer required by this clause (7) with respect to a legal defeasance need not be delivered if all Notes not theretofore delivered to the effect that Trustee for cancellation (ix) in a case have become due and payable or (y) will become due and payable at their Stated Maturity within one year or may be called for redemption within one year under arrangements satisfactory to the Bankruptcy Code in which PG&E (or any Trustee for the giving of its Affiliates, other than notice of redemption by the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be Trustee in the bankruptcy estate of PG&E (or any of its Affiliatesname, other than and at the Issuerexpense, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Transition Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Transition Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Transition Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Transition Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Transition Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Transition Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Transition Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Transition Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Transition Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E TCC (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E TCC or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Transition Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to any Series of the Nuclear Asset-Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Nuclear Asset-Recovery Bonds of such Series not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Nuclear Asset-Recovery Bonds of such Series when scheduled to be paid and to discharge the entire indebtedness on the Nuclear Asset-Recovery Bonds of such Series when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Nuclear Asset-Recovery Bonds of such Series (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Nuclear Asset-Recovery BondsBonds of such Series; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Nuclear Asset-Recovery Bonds of such Series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Nuclear Asset-Recovery Bonds of such Series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Duke Energy Florida (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Duke Energy Florida (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Duke Energy Florida (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Duke Energy Florida (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Duke Energy Florida or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the applicable Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Nuclear Asset-Recovery Bonds of such Series shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Securitization Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee or the Securities Intermediary (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitization Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitization Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitization Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E CEI South (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys cash or U.S. Government Obligations would not be in the bankruptcy estate of PG&E CEI South (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E CEI South (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E CEI South (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E CEI South or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitization Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Securitized Utility Tariff Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principalprincipal of, interest and premium, if any, and interest on the Recovery Securitized Utility Tariff Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitized Utility Tariff Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitized Utility Tariff Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E Atmos Energy (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Atmos Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Atmos Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Atmos Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Atmos Energy or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitized Utility Tariff Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Securitized Utility Tariff Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitized Utility Tariff Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitized Utility Tariff Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitized Utility Tariff Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E KGS (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys cash or U.S. Government Obligations would not be in the bankruptcy estate of PG&E KGS (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E KGS (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E KGS (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E KGS or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitized Utility Tariff Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Deferred Fuel Cost Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient sufficient, without reinvestment, to pay principal, interest and premium, if any, on the Recovery Deferred Fuel Cost Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Deferred Fuel Cost Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Deferred Fuel Cost Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Deferred Fuel Cost Bonds (i) all principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) all interest when due and (iii) Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Deferred Fuel Cost Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Deferred Fuel Cost Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Deferred Fuel Cost Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E VEPCO (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E VEPCO (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E VEPCO (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E VEPCO (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E VEPCO or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement Supplemental Indenture or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Deferred Fuel Cost Bonds shall have been paid in accordance with the provisions of this Indenture and the Series SupplementIndenture.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery System Restoration Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery System Restoration Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery System Restoration Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery System Restoration Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery System Restoration Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery System Restoration Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery System Restoration Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery System Restoration Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery System Restoration Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E AEP Texas (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E AEP Texas (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E AEP Texas (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E AEP Texas (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E AEP Texas or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery System Restoration Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Securitized Utility Tariff Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitized Utility Tariff Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitized Utility Tariff Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitized Utility Tariff Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Securitized Utility Tariff Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Securitized Utility Tariff Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Securitized Utility Tariff Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E Liberty (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Liberty (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Liberty (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Liberty (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Liberty or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitized Utility Tariff Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Consumer Rate Relief Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Consumer Rate Relief Bonds not therefore delivered to the Indenture Trustee for cancellation and other Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Consumer Rate Relief Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Consumer Rate Relief Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Consumer Rate Relief Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) other Ongoing Financing Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Consumer Rate Relief Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Consumer Rate Relief Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Consumer Rate Relief Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied withIV; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E APCo (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E APCo (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E APCo (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E APCo (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E APCo or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Consumer Rate Relief Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Securitized Utility Tariff Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitized Utility Tariff Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitized Utility Tariff Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitized Utility Tariff Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Securitized Utility Tariff Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Securitized Utility Tariff Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Securitized Utility Tariff Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E Evergy Missouri West (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Evergy Missouri West (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Evergy Missouri West (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Evergy Missouri West (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Evergy Missouri West or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitized Utility Tariff Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery any of the System Restoration Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery System Restoration Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery System Restoration Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery System Restoration Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery System Restoration Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery such System Restoration Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery System Restoration Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer to the effect that the Holders of the Recovery System Restoration Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery System Restoration Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external Independent counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E ETI (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E ETI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E ETI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E ETI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E ETI or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery System Restoration Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right after the Release Date and prior to the Permitted Open Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage by providing the Defeasance Option or Collateral (a "Defeasance Event"), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or Borrower shall give Lender not less than thirty (30) days prior written notice specifying a date (the "Defeasance Date") on which the Defeasance Event is to occur. (ii) U.S. Government Obligations which through the scheduled Borrower shall pay to Lender (A) all payments of principal Principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, due on the Recovery Bonds not therefore delivered Loan to and including the Indenture Trustee for cancellation Defeasance Date and (B) all other sums payable hereunder by sums, then due under the Issuer with respect to Note, this Agreement and the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueother Loan Documents; (iii) Borrower shall, at Lender's option, either (A) deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of subsections (b) and (c) of this Section 2.3.3 or (B) pay to Lender the Issuer delivers amount required to purchase the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (butDefeasance Collateral, in which case Lender shall purchase the case of Defeasance Collateral and deposit the Legal Defeasance Option only, not more than such amountsCollateral into the Defeasance Collateral Account; (iv) as will be sufficient Borrower shall execute and deliver to pay Lender a Security Agreement in respect of the Recovery Bonds (i) principal in accordance with Defeasance Collateral Account and the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsDefeasance Collateral; (cv) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (A) Lender has a legal and valid perfected first priority security interest in the case Defeasance Collateral Account and the Defeasance Collateral, and (B) if a Securitization has occurred, the REMIC Trust formed pursuant to such Securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of Section 860D of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes Code as a result of such legal defeasance and will be subject a Defeasance Event pursuant to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurredthis Section 2.3.3; (fvi) in Borrower shall deliver to Lender and the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered Rating Agencies a Rating Comfort Letter as to the Indenture Trustee an Opinion Defeasance Event (if required pursuant to a Pooling and Servicing Agreement from and after the occurrence of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurredSecondary Market Transaction); (gvii) the Issuer delivers to the Indenture Trustee Borrower shall deliver an Officer’s 's Certificate and an Opinion of Counsel of external counsel to certifying that the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by requirements set forth in this Article IV Section 2.3.3 have been complied withsatisfied; (hviii) Borrower shall deliver a certificate of a nationally recognized public accounting firm acceptable to Lender certifying that (A) the Issuer delivers Defeasance Collateral will generate monthly amounts equal to or greater than the Indenture Trustee an Opinion Scheduled Defeasance Payments, (B) the revenue from the Defeasance Collateral will be applied within four (4) months of Counsel receipt towards payments of external counsel of Debt Service, (C) the Issuer securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (D) the effect that (i) in a case under the Bankruptcy Code in which PG&E interest income to O Borrower (or the Successor Borrower, if applicable) from the Defeasance Collateral will not in any of its Affiliates, other than tax year exceed the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities interest expense associated with the assets and liabilities of PG&E or defeased Loan; (ix) Borrower shall deliver such other Affiliatecertificates, opinions, documents and instruments as Lender may reasonably request; and (ix) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender's reasonable attorneys' fees and expenses and, if a Securitization has occurred, Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of fees and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.expenses:

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery any Series of Rate Stabilization Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery such Rate Stabilization Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery such Rate Stabilization Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery such Rate Stabilization Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Rate Stabilization Bonds of such Series (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery such Rate Stabilization Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Rate Stabilization Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Rate Stabilization Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Rate Stabilization Bonds of such Series to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E BGE (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E BGE (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E BGE (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E BGE (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E BGE or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the related Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery such Rate Stabilization Bonds shall have been paid redeemed in accordance with the provisions of this Indenture and the related Series Supplement.

Conditions to Defeasance. The Issuer Company may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds its covenant defeasance option only if: (ai) the Issuer has Company shall irrevocably deposited or caused to be irrevocably deposited in trust deposit with the Indenture Trustee (i) cash and/or (ii) Trustee, in trust, for the benefit of the Holders, U.S. dollars or U.S. Government Obligations, or a combination of U.S. dollars and U.S. Government Obligations, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants in the event a deposit of U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient is made, to pay principalthe principal of, or interest and premium, if any, on the Recovery Bonds not therefore outstanding Notes issued hereunder on the Stated Maturity or on the applicable Redemption Date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular Redemption Date; provided that, with respect to any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of the Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with the Trustee on or prior to the date of redemption. Any Applicable Premium Deficit shall be set forth in an Officer’s Certificate delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by simultaneously with the Issuer with respect to the Recovery Bonds when scheduled to deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be paid and to discharge the entire indebtedness on the Recovery Bonds when dueapplied toward such redemption; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Optionlegal defeasance, the Issuer shall have Company has delivered to the Indenture Trustee an Opinion of Counsel of external counsel of reasonably acceptable to the Issuer Trustee stating that that, subject to customary assumptions and exclusions, (ia) the Issuer Company has received from, or there has been published by, the U.S. Internal Revenue Service a ruling, ruling or (iib) since the date of execution of this IndentureIssue Date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (fiii) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance, the Issuer shall have Company has delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer reasonably acceptable to the effect that Trustee stating that, subject to customary assumptions and exclusions, the Holders of the Recovery Bonds will respective outstanding Notes shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (giv) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowings); (v) the Issuer delivers Company shall deliver to the Indenture Trustee an Officer’s Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (vi) the Company shall deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of external counsel Counsel may be subject to the Issuercustomary assumptions and exclusions), each stating that all conditions precedent relating to the satisfaction and discharge of legal defeasance or the Recovery Bonds to covenant defeasance, as the extent contemplated by this Article IV case may be, have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds their covenant defeasance option only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited deposits in trust with the Indenture Trustee (i) Trustee, for the benefit of the Holders, cash and/or (ii) in U.S. Dollars, Government Obligations which through or a combination thereof, sufficient, as confirmed, certified or attested by an Independent Financial Advisor, without consideration of any reinvestment of interest, for the scheduled payments payment of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest of and premium, if any, and interest on the Recovery Bonds not therefore Notes to maturity or redemption; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any deficit as of the date of redemption (any such amount, the “Applicable Premium Deficit”) only required to be irrevocably deposited with the Trustee on or prior to the date of redemption. Any Applicable Premium Deficit shall be set forth in an Officers’ Certificate delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by simultaneously with the Issuer with respect to the Recovery Bonds when scheduled to deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be paid and to discharge the entire indebtedness on the Recovery Bonds when dueapplied toward such redemption; (b) no Default or Event of Default has occurred and is continuing on the date of the deposit and after giving effect thereto (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Debt and, in each case, the granting of Liens in connection therewith), and the deposit shall not result in a breach or violation of, or constitute a default under, the Credit Agreement or any other material agreement or material instrument (other than this Indenture) to which the Issuer delivers to the Indenture Trustee or any Guarantor is a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder party or by which the Issuer with respect to the Recovery Bondsor any Guarantor is bound; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer shall have delivered delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i1) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii2) since the date of execution of this Indenture, Issue Date there has been a change in the applicable federal income tax law, to the effect, in either case to the effect case, that, and based thereon such opinion the Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal the defeasance had not occurred; (fd) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer shall have delivered delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such that covenant defeasance had not occurred; (ge) the Issuer delivers to the Indenture Trustee an Officer’s Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent legal defeasance or covenant defeasance, as applicable, as contemplated by this Article IV 8, have been complied with;; and (hf) the Issuer delivers irrevocable instructions to the Indenture Trustee an Opinion of Counsel of external counsel to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be (which instructions may be contained in the Officers’ Certificate referred to in clause (e) above). Simultaneous with a deposit, the Issuer may make arrangements satisfactory to the effect that (i) in Trustee for the redemption of Notes at a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid future date in accordance with the provisions of this Indenture and the Series SupplementArticle 3.

Conditions to Defeasance. The Issuer may exercise the its Legal Defeasance Option option or the its Covenant Defeasance Option with respect to Recovery Bonds option only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited deposits in trust with in the Indenture Trustee Defeasance/Redemption Account any one or any combination of (i) cash and/or money, (ii) obligations of, and supported by the full faith and credit of, the U.S. Government (“U.S. Government Obligations”) or (iii) obligations of corporate issuers (“Corporate Obligations”) (provided that any such Corporate Obligations which through are rated AA+ or higher by Standard & Poor’s and Aa2 or higher by Moody’s at such time and shall not have a maturity of longer than three years from the scheduled payments date of defeasance) for the payment of all principal or Redemption Price, and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, (A) on the Recovery Bonds not therefore delivered Securities or any class or subclass of Securities being defeased, in the case of Legal Defeasance, or (B) on all of the Securities in the case of Covenant Defeasance, in either case, to maturity or redemption, as the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when duecase may be; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations or the Corporate Obligations plus any deposited cash money without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds principal and interest when due (i) principal on each class or subclass of Securities being defeased, in accordance with the Expected Amortization Schedule thereforcase of Legal Defeasance, or (ii) interest when due and (iii) on all other sums payable hereunder by of the Issuer with respect Securities in the case of Covenant Defeasance, in either case, to maturity or redemption, as the Recovery Bondscase may be; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit described in clause (a) above is made and during the ninety91-five (95)-day day period no Event of Default specified in Section 5.01(a)(v4.01(e) or (vif) hereof with respect to the Issuer occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing the deposit described in clause (a) above does not constitute a default under any other agreement binding on the day of such deposit and after giving effect theretoIssuer; (e) the Issuer delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit described in clause (a) does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940, as amended; (f) in the case of an exercise of the Legal Defeasance Optionoption, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, Indenture there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, that the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance Legal Defeasance had not occurred; (fg) in the case of an exercise of the Covenant Defeasance Optionoption, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance Covenant Defeasance had not occurred; (gh) if the related Securities are then listed on any securities exchange, the Issuer delivers to the Trustee an Opinion of Counsel to the effect that such deposit, defeasance and discharge will not cause such Securities to be delisted; (i) a Rating Agency Confirmation and the prior written consent of each of the Policy Provider and the Initial Credit Facility Provider is obtained relating to the defeasance contemplated by this Section 12.02; (j) in the case of a Legal Defeasance only, the Policy shall be terminated and surrendered to the Policy Provider for cancellation; (k) all amounts due and owing to the Policy Provider and the Initial Credit Facility Provider have been paid (or provided for under Section 12.02(a)); and (l) the Issuer delivers to the Indenture Trustee an Opinion of Counsel and an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have such defeasance has been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementsatisfied.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right on any Payment Date after the Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (a “Defeasance Event”), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (ai) Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the Issuer has irrevocably deposited or caused “Defeasance Date”) on which the Defeasance Event is to be irrevocably deposited in trust occur. (ii) Borrower shall pay to Lender (A) all payments of Principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement and the other Loan Documents; (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the Indenture Trustee provisions of subsections (b) and (c) of this Section 2.3.3; (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect of the Defeasance Collateral Account and the Defeasance Collateral; (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (i) cash and/or Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral, (ii) U.S. Government Obligations which through if a Securitization has occurred, the scheduled payments REMIC Trust formed pursuant to such Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of principal Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance Event will not result in a significant modification and will not be an exchange of the Note for purposes of Section 1001 of the Code and the Treasury Regulations thereunder, (iv) delivery of the Defeasance Collateral and the grant of a security interest in respect thereof in accordance with their terms are in an amount sufficient therein to pay principal, interest Lender shall not constitute a voidable preference under Section 547 of the Bankruptcy Code or applicable state law and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (v) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower; (bvi) if required by any Rating Agency, Borrower shall deliver to Lender and the Issuer delivers Rating Agencies a Rating Comfort Letter as to the Indenture Trustee Defeasance Event; (vii) Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in this Section 2.3.3 have been satisfied; (viii) Borrower shall deliver a certificate from of a nationally recognized public accounting firm acceptable to Lender certifying that (A) the Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments, (B) the revenue from the Defeasance Collateral will be applied within four (4) months of Independent registered public accountants expressing its opinion that the receipt towards payments of principal Debt Service, (C) the securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (D) the interest when due and without reinvestment of income to Borrower (or the deposited U.S. Government Obligations plus Successor Borrower, if applicable) from the Defeasance Collateral will not in any deposited cash without investment will provide cash at such times and in such amounts (but, in tax year exceed the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance interest expense associated with the Expected Amortization Schedule therefordefeased Loan; (ix) Borrower shall deliver such other certificates, opinions, documents and instruments as Lender may reasonably request; (iix) interest when due Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and Rating Agency fees and expenses; and (iiixi) all other sums payable hereunder by the Issuer All conditions with respect to the Recovery Bonds; defeasance of the Approved Mezzanine Loan, if any (c) as set forth in the case of the Legal Defeasance Option, ninety-five (95Approved Mezzanine Loan Documents) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementsatisfied.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery any Series of Transition Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery such Transition Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery such Transition Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery such Transition Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Transition Bonds of such Series (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery such Transition Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Transition Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Transition Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Transition Bonds of such Series to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E TCC (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E TCC or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the related Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery such Transition Bonds shall have been paid redeemed in accordance with the provisions of this Indenture and the related Series Supplement.

Conditions to Defeasance. (a) The Issuer Company may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds its covenant defeasance option only if: (ai) the Issuer has Company irrevocably deposited or caused to be irrevocably deposited deposits in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are money in an amount sufficient or U.S. Government Obligations, the principal of and interest on which shall be sufficient, or a combination thereof sufficient, to pay principalthe principal of, and premium (if any), interest and premium, Additional Interest (if any), on the Recovery Bonds not therefore Securities when due at maturity or redemption, as the case may be, including interest thereon to maturity or such redemption date; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Section 8.02 to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with the Trustee on or prior to the date of redemption (it being understood that any defeasance shall be subject to the condition subsequent that such deficit is in fact paid). Any Applicable Premium Deficit shall be set forth in an Officers’ Certificate delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by simultaneously with the Issuer with respect to the Recovery Bonds when scheduled to deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be paid and to discharge the entire indebtedness on the Recovery Bonds when dueapplied toward such redemption; (bii) the Issuer Company delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will shall provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will shall be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule thereforprincipal, (ii) premium, if any, interest and Additional Interest, if any, when due and on all the Securities to maturity or redemption, as the case may be; (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit is made and during the ninety91-five (95)-day day period no Default specified in Section 5.01(a)(v6.01(h) or (vii) with respect to the Company occurs which is continuing at the end of the period; (div) no Default has occurred the deposit does not constitute a default under any other agreement binding on the Company and is continuing on the day of such deposit and after giving effect theretonot prohibited by Article 10; (ev) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer Company shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (iA) the Issuer Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (iiB) since the date of execution of this Indenture, Indenture there has been a change in the applicable federal U.S. Federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will shall not recognize income, gain or loss for federal U.S. Federal income tax purposes as a result of such deposit and legal defeasance and will shall be subject to federal U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and legal defeasance had not occurred; (fvi) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer Company shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will shall not recognize income, gain or loss for federal U.S. Federal income tax purposes as a result of such deposit and covenant defeasance and will shall be subject to federal U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred;; and (gvii) the Issuer Company delivers to the Indenture Trustee an Officer’s Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds to the extent Securities as contemplated by this Article IV 8 have been complied with;. (hb) Before or after a deposit, the Issuer delivers Company may make arrangements satisfactory to the Indenture Trustee an Opinion for the redemption of Counsel of external counsel of the Issuer to the effect that (i) in Securities at a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid future date in accordance with the provisions of this Indenture and the Series SupplementArticle 3.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Rate Reduction Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Rate Reduction Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Transaction Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Rate Reduction Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Rate Reduction Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Rate Reduction Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) Ongoing Transaction Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Rate Reduction Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 95 days pass after the deposit is made and during the ninety95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which that is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of to the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Rate Reduction Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of to the Issuer to the effect that the Holders of the Recovery Rate Reduction Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent contemplated Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV have been complied with;IV; and (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E PSNH (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E PSNH (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E PSNH (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E PSNH (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E PSNH or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Rate Reduction Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds covenant defeasance option only if: (a) the The Issuer has irrevocably deposited deposits or caused causes to be irrevocably deposited in trust with the Indenture Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders (ithe “defeasance trust”) cash and/or (ii) pursuant to an irrevocable trust and security agreement in form and substance satisfactory to the Trustee, money or U.S. Government Obligations which through Obligations, or a combination thereof, sufficient for the scheduled payments payment of principal of and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on all the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds Notes when scheduled to be paid and to discharge the entire indebtedness due on the Recovery Bonds when duea Redemption Date; (b) the The Issuer delivers to the Indenture Trustee a certificate from a nationally an internationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal of and interest on the Notes when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will and after payment of all federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee shall provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will shall be sufficient to pay in respect principal of and interest on all the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest Notes when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bondson a Redemption Date, declaration of acceleration or otherwise; (c) in the case of the Legal Defeasance Option, ninety-five (95) 123 calendar days pass after the deposit is made in accordance with the terms of Section 8.02(a) and during the ninetysuch 123-five (95)-day day period no Default or Event of Default specified in Section 5.01(a)(v) or (vi6.01(g) occurs which is continuing at the end of the period; (d) no Default or Event of Default has occurred and is continuing on the day date of such deposit and after giving effect thereto; (e) the deposit does not constitute a default or event of default under any other agreement binding on the Issuer; (f) The Issuer delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is not qualified as, a regulated investment company under the U.S. Investment Company Act of 1940, as amended; (g) The Issuer delivers to the Trustee Opinions of Counsel stating that, under Brazilian law, Holders (other than Brazilian persons) shall not recognize gain for Brazilian tax purposes and payments from the defeasance trust to any such Holder shall not be subject to withholding payments under Brazilian law; (h) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer shall have delivered delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer recognized standing with respect to U.S. federal income tax matters stating that (i) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, Indenture there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal deposit and defeasance and will shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal deposit and defeasance had not occurred; (fi) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer shall have delivered delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer recognized standing with respect to U.S. federal income tax matters to the effect that the Holders of the Recovery Bonds will shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (gj) the Issuer delivers to the Indenture Trustee an Officer’s Opinion of Counsel, in form and substance reasonably satisfactory to Trustee, to the effect that, after the passage of 123 calendar days following the deposit, the trust funds shall not be subject to any applicable bankruptcy, insolvency, reorganization or similar law affecting creditors’ rights generally; and (k) the Issuer delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds to the extent Notes as contemplated by this Article IV 8 have been complied with; (h) . Before or after a deposit, the Issuer delivers may make arrangements satisfactory to the Indenture Trustee an Opinion for the redemption of Counsel of external counsel of the Issuer to the effect that (i) in Notes at a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid future date in accordance with the provisions of this Indenture and the Series SupplementArticle 3.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to any of the Investment Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Investment Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Investment Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Investment Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Investment Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the such Investment Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day 95) day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Investment Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer to the effect that the Holders of the Investment Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerOpinion, each stating that all conditions precedent to the satisfaction and discharge of the Investment Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external Independent counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E ELL (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E ELL (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E ELL (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E ELL (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E ELL or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the such Investment Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right on any Payment Date after the Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (a "DEFEASANCE EVENT"), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a1) Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the Issuer has irrevocably deposited or caused "DEFEASANCE DATE") on which the Defeasance Event is to be irrevocably deposited in trust occur. (2) Borrower shall pay to Lender (A) all payments of Principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement and the other Loan Documents; (3) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the Indenture Trustee provisions of subsections (b) and (c) of this Section 2.3.3; (4) Borrower shall execute and deliver to Lender a Security Agreement in respect of the Defeasance Collateral Account and the Defeasance Collateral; (5) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (i) cash and/or Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral, (ii) U.S. Government Obligations which through if a securitization has occurred, the scheduled payments REMIC Trust formed pursuant to such securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of principal Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance Event will not result in a significant modification and will not be an exchange of the Note for purposes of Section 1001 of the Code and the Treasury Regulations thereunder, (iv) delivery of the Defeasance Collateral and the grant of a security interest in respect thereof in accordance with their terms are in therein to Lender will not constitute an amount sufficient to pay principal, interest avoidable preference under Section 547 of the Bankruptcy Code or applicable state law and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (v) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower; (b6) the Issuer delivers Borrower shall deliver to Lender a Rating Comfort Letter as to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsEvent; (c7) Borrower shall deliver an Officer's Certificate certifying that the requirements set forth in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in this Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.3.3 have been satisfied; (d) no Default has occurred and is continuing on 8) Borrower shall deliver a certificate of a "big four" or other nationally recognized public accounting firm acceptable to Lender certifying that the day of such deposit and after giving effect theretoDefeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments; (e9) in the case of an exercise of the Legal Defeasance Option, the Issuer Borrower shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or deliver such other Affiliatecertificates, opinions, documents and instruments as Lender may reasonably request; and (i10) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender's reasonable attorneys' fees and expenses and Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of fees and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementexpenses.

Conditions to Defeasance. The Issuer may exercise following shall be the Legal conditions to application of Section 13.1 to the Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds only ifSenior Notes: (a1) the Issuer has The Company shall irrevocably have deposited or caused to be irrevocably deposited with the Trustee (or another trustee that satisfies the requirements contemplated by Section 6.1 and agree to comply with the provisions of this Article XIII applicable to it) as trust funds in trust with for the Indenture Trustee purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Defeasance Senior Notes, (iA) cash and/or money in an amount in Dollars, (iiB) U.S. Government Obligations which that through the scheduled payments payment of principal and interest in respect thereof in accordance with their terms are will provide, not later than one day before the due date of any payment, money in an amount sufficient to pay principalin Dollars, interest and premiumor (C) a combination thereof, if anyin each case sufficient, on in the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from opinion of a nationally recognized firm of Independent registered independent public accountants expressing its opinion that expressed in a written certification thereof delivered to the payments Trustee, to pay and discharge, and which shall be applied by the Trustee (or any such other qualifying Trustee) to pay and discharge, one hundred percent (100%) of the principal and amount of the Defeasance Senior Notes on June 30, 2011 (the “Defeasance Maturity Date”) plus interest when on the Defeasance Senior Notes due and without reinvestment of payable on the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times Interest Payment Dates occurring prior to and in such amounts (butincluding the Defeasance Maturity Date and Breakage Costs, in the case of the Legal Defeasance Option onlyif any, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal less Breakage Gains, if any, in accordance with the Expected Amortization Schedule therefor, (ii) interest when due terms of this Indenture and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds;Defeasance Senior Notes. (c2) Such Defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act. (3) Such Defeasance shall not result in the case trust arising from such deposit constituting an “investment company” within the meaning of the Legal Defeasance OptionInvestment Company Act of 1940, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) unless such trust shall be qualified or (vi) occurs which is continuing at the end of the period;exempt from regulation thereunder. (d4) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer The Company shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent with respect to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV such Defeasance have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right on any Payment Date after the Defeasance Option or Release Date and prior to the Covenant Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage and a release of Borrower’s and Guarantor’s obligations under the other Loan Documents (other than (i) those obligations which are expressly stated to survive the payment in full of the Loan and (ii) the Security Agreement) by providing Lender with the Defeasance Option with respect Collateral (a “Defeasance Event”), subject to Recovery Bonds only ifthe satisfaction of the following conditions precedent: (a1) Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the Issuer has irrevocably deposited or caused “Defeasance Date”) on which the Defeasance Event is expected to be irrevocably deposited in trust occur. (2) Borrower shall pay to Lender (A) all payments of interest due on the Loan to and including the Defeasance Date and (B) all other sums then due under the Note, this Agreement and the other Loan Documents; (3) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the Indenture Trustee provisions of subsections (b) and (c) of this Section 2.3.3; (4) Borrower shall execute and deliver to Lender a Security Agreement in respect of the Defeasance Collateral Account and the Defeasance Collateral; (5) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining to the effect that, among other things, that (i) cash and/or Lender has a legal and valid perfected security interest in the Defeasance Collateral Account and the Defeasance Collateral, (ii) U.S. Government Obligations which through if a securitization has occurred, the scheduled payments REMIC Trust formed pursuant to such securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of principal Section 860D of the Code solely as a result of a Defeasance Event pursuant to this Section 2.3.3 and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (iii) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower (if any); (b6) Borrower shall deliver to Lender and the Issuer delivers Rating Agencies a Rating Comfort Letter as to the Indenture Trustee Defeasance Event (if required pursuant to a certificate Pooling and Servicing Agreement from and after the occurrence of a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsSecuritization); (c7) Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in this Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.3.3 have been satisfied; (d) no Default has occurred and is continuing on the day 8) Borrower shall deliver a certificate of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered a “big four” or other nationally recognized public accounting firm reasonably acceptable to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating Lender certifying that (i) the Issuer has received fromDefeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date revenue from the Defeasance Collateral will be applied within four (4) months of execution receipt towards payments of this IndentureDebt Service, there has been a change in (iii) the applicable federal securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (iv) the interest income tax lawto Borrower (or the Successor Borrower, in either case to if applicable) from the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds Defeasance Collateral will not recognize income, gain or loss for federal income in any tax purposes as a result of such legal defeasance and will be subject to federal income tax on year materially exceed the same amounts, in interest expense associated with the same manner and at the same times as would have been the case if such legal defeasance had not occurreddefeased Loan; (f9) in the case of an exercise of the Covenant Defeasance OptionBorrower shall deliver such other certificates, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize incomeopinions, gain or loss for federal income tax purposes documents and instruments as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliateprudent lender may reasonably request; and (i10) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of fees and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementexpenses.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right on any Payment Date after the Release Date and prior to the Fixed Rate Loan Permitted Prepayment Date to voluntarily defease the entire amount of the Fixed Rate Principal and, if the Floating Rate Loan has been paid in full, to obtain a release of the Lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (a “Defeasance Event”), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (ai) Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the Issuer has irrevocably deposited or caused “Defeasance Date”) on which the Defeasance Event is to be irrevocably deposited in trust occur. (ii) Borrower shall pay to Lender (A) all payments of Fixed Rate Principal and interest due on the Fixed Rate Loan to and including the Defeasance Date and (B) all other sums, then due under the Notes, this Agreement and the other Loan Documents; (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the Indenture Trustee provisions of subsections (b) and (c) of this Section 2.3.3; (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect of the Defeasance Collateral Account and the Defeasance Collateral; (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (i) cash and/or Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral, (ii) U.S. Government Obligations which through if a Securitization has occurred, the scheduled payments REMIC Trust formed pursuant to such Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of principal Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance Event will not result in a significant modification and will not be an exchange of the Fixed Rate Note for purposes of Section 1001 of the Code and the Treasury Regulations thereunder, (iv) delivery of the Defeasance Collateral and the grant of a security interest in respect thereof in accordance with their terms are in an amount sufficient therein to pay principal, interest Lender shall not constitute a voidable preference under Section 547 of the Bankruptcy Code or applicable state law and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (v) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower; (bvi) Borrower shall deliver to Lender and the Issuer delivers Rating Agencies a Rating Comfort Letter as to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsEvent; (cvii) Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in this Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.3.3 have been satisfied; (dviii) no Default has occurred and is continuing on the day Borrower shall deliver a certificate of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered a “big four” or other nationally recognized public accounting firm acceptable to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating Lender certifying that (i) the Issuer has received fromDefeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date revenue from the Defeasance Collateral will be applied within four (4) months of execution receipt towards payments of this IndentureDebt Service on the Fixed Rate Loan, there has been a change in (iii) the applicable federal securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (iv) the interest income tax lawto Borrower (or the Successor Borrower, in either case to if applicable) from the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds Defeasance Collateral will not recognize income, gain or loss for federal income in any tax purposes as a result of such legal defeasance and will be subject to federal income tax on year exceed the same amounts, in interest expense associated with the same manner and at the same times as would have been the case if such legal defeasance had not occurreddefeased Fixed Rate Loan; (fix) in the case of an exercise of the Covenant Defeasance OptionBorrower shall deliver such other certificates, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize incomeopinions, gain or loss for federal income tax purposes documents and instruments as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurredLender may reasonably request; (gx) the Issuer delivers to the Indenture Trustee an Officer’s Certificate Borrower shall pay all costs and an Opinion expenses of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) Lender incurred in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities connection with the assets Defeasance Event, including Lender’s reasonable attorneys’ fees and liabilities of PG&E or such other Affiliate; expenses and Rating Agency fees and expenses, and (ixi) the Rating Agency Condition Borrower shall have been satisfied with respect to repaid the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid Floating Rate Loan in accordance with the provisions of this Indenture and the Series Supplementfull.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds only ifTHE ISSUER MAY EXERCISE THE LEGAL DEFEASANCE OPTION OR THE COVENANT DEFEASANCE OPTION WITH RESPECT TO ANY OF THE STORM RECOVERY BONDS ONLY IF: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Storm Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Storm Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Storm Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Storm Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the such Storm Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day 95) day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Storm Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer to the effect that the Holders of the Storm Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Storm Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external Independent counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E EAI (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E EAI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E EAI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E EAI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E EAI or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the such Storm Recovery Bonds shall have been paid redeemed in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise (a) Provided no Event of Default shall have occurred and remain uncured, Borrower shall have the Legal right at any time after the Release Date and prior to Permitted Prepayment Date to voluntarily defease the entire Loan and obtain a release of the lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (hereinafter, a “Defeasance Event”), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or Borrower shall provide Lender not less than thirty (30) days notice (or such shorter period of time if permitted by Lender in its sole discretion) specifying a date (the “Defeasance Date”) on which the Defeasance Event is to occur; (ii) U.S. Government Obligations which through the scheduled Borrower shall pay to Lender (A) all payments of principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement, the Mortgage and the other Loan Documents; (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of Sections 2.5.2 and 2.5.3 hereof; (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect thereof of the Defeasance Collateral Account and the Defeasance Collateral; (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in accordance with their terms are commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (A) Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral, (B) if a Securitization has occurred, the REMIC Trust formed pursuant to such Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.5, (C) the Defeasance Event will not result in a deemed exchange for purposes of the Code and will not adversely affect the status of the Note as indebtedness for federal income tax purposes, (D) delivery of the Defeasance Collateral and the grant of a security interest therein to Lender shall not constitute an amount sufficient to pay principal, interest avoidable preference under Section 547 of the Bankruptcy Code or applicable state law and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (E) a non-consolidation opinion with respect to the Recovery Bonds when scheduled Successor Borrower, (vi) Borrower shall deliver to be paid Lender a Rating Agency Confirmation as to the Defeasance Event; (vii) Borrower shall deliver an Officer’s Certificate certifying that the requirements set forth in this Section 2.5 have been satisfied; (viii) Borrower shall deliver a certificate of a “Big Four” or other nationally recognized public accounting firm acceptable to Lender certifying that the Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments; (ix) Borrower shall deliver such other certificates, opinions, documents and to discharge instruments as Lender may reasonably request; and (x) Borrower shall pay all costs and expenses of Lender incurred in connection with the entire indebtedness on the Recovery Bonds when due;Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and Rating Agency fees and expenses. (b) If Borrower has elected to defease the Issuer delivers Note and the requirements of this Section 2.5 have been satisfied, the Property shall be released from the lien of the Mortgage and the Defeasance Collateral pledged pursuant to the Indenture Trustee a certificate from a nationally recognized firm Security Agreement shall be the sole source of Independent registered public accountants expressing its opinion that collateral securing the payments of principal and interest when due and without reinvestment Note. In connection with the release of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at Lien, Borrower shall submit to Lender, not less than fifteen (15) days prior to the Defeasance Date (or such times shorter time as is acceptable to Lender in its sole discretion), a release of Lien (and related Loan Documents) for execution by Lender. Such release shall be in such amounts (but, a form appropriate in the case of jurisdiction in which the Legal Defeasance Option onlyProperty is located. In addition, not more than Borrower shall provide all other documentation Lender reasonably requires to be delivered by Borrower in connection with such amounts) as will be sufficient release, together with an Officer’s Certificate certifying to pay in respect of the Recovery Bonds Borrower’s actual knowledge that such documentation (i) principal is in compliance with all Legal Requirements, and (ii) will effect such release in accordance with the Expected Amortization Schedule thereforterms of this Agreement. Borrower shall pay all costs, (ii) interest when due taxes and (iii) all other sums payable hereunder by expenses association with the Issuer with respect to the Recovery Bonds; (c) in the case release of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end lien of the period; (d) Mortgage, including Lender’s reasonable attorneys’ fees. Except as set forth in this Section 2.5 or in connection with a prepayment of the Debt in full described in and permitted by Section 2.4.1 and Section 2.4.2, no Default has occurred and is continuing repayment, prepayment or defeasance of all or any portion of the Note shall cause, give rise to a right to require, or otherwise result in, the release of the lien of the Mortgage on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series SupplementProperty.

Conditions to Defeasance. The Issuer AK Steel may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds its covenant defeasance option only if: (a) the Issuer has AK Steel irrevocably deposited or caused to be irrevocably deposited deposits in trust (the "defeasance trust") with the Indenture Trustee (i) cash and/or (ii) money or U.S. Government Obligations which through for the scheduled payments payment of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principalof, interest and premium, if any, and interest on the Recovery Bonds not therefore delivered Securities to maturity or redemption, as the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when duecase may be; (b) the Issuer AK Steel delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal principal, premium, if any, and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option legal defeasance option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule thereforprincipal, (ii) premium, if any, and interest when due and (iii) on all other sums payable hereunder by the Issuer with respect Securities to maturity or redemption, as the Recovery Bondscase may be; (c) in the case of the Legal Defeasance Option, ninety-five (95) 123 days pass after the deposit is made and during the ninety123-five (95)-day day period no Default specified in Section 5.01(a)(vsubsection (h) or (vii) of Section 6.1 hereof with respect to AK Steel occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day date of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered deposit does not constitute a default under any other agreement binding on AK Steel; (f) AK Steel delivers to the Indenture Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of external counsel 1940, as amended; (g) in the case of the Issuer legal defeasance option, AK Steel delivers to the Trustee an Opinion of Counsel stating that (i) the Issuer AK Steel has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the first date of execution of this Indenture, on which the Securities were originally issued there has been a change in the applicable federal Federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds Securityholders will not recognize income, gain or loss for federal Federal income tax purposes as a result of such legal defeasance and will be subject to federal Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (fh) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer shall have delivered AK Steel delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds Securityholders will not recognize income, gain or loss for federal Federal income tax purposes as a result of such covenant defeasance and will be subject to federal Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;; and (gi) the Issuer AK Steel delivers to the Indenture Trustee an Officer’s Officers' Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds to the extent Securities as contemplated by this Article IV 8 have been complied with; (h) the Issuer delivers . Before or after a deposit, AK Steel may make arrangements satisfactory to the Indenture Trustee an Opinion for the redemption of Counsel of external counsel of the Issuer to the effect that (i) in Securities at a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid future date in accordance with the provisions of this Indenture and the Series SupplementArticle 3 hereof.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery any Series of Transition Bonds only if: (a) : the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery such Transition Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery such Transition Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery such Transition Bonds when due; (b) the due;the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Transition Bonds of such Series (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in such Transition Bonds;in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no period;no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in thereto;in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Transition Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in occurred;in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external Independent tax counsel of the Issuer to the effect that the Holders of the Recovery Transition Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the occurred;the Issuer delivers to the Indenture Trustee an Officer’s 's Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Transition Bonds of such Series to the extent contemplated by this Article IV have been complied with; (h) ; the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external Independent counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E EGSI (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E EGSI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E EGSI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E EGSI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s 's assets and liabilities with the assets and liabilities of PG&E EGSI or such other Affiliate; and (i) the andthe Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the related Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery such Transition Bonds shall have been paid redeemed in accordance with the provisions of this Indenture and the related Series Supplement.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery the Securitization Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitization Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitization Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitization Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Recovery Securitization Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v5.01(e) or (viSection 5.01(f) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of Legal Defeasance Option or the Recovery Bonds to the extent Covenant Defeasance Option, as applicable, contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that that: (i) in a case under the Bankruptcy Code in which PG&E DTE Electric (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in property of the bankruptcy estate of PG&E DTE Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E DTE Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E DTE Electric (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E DTE Electric or such other Affiliateaffiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitization Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise So long as no Event of Default has occurred and remains outstanding, following the Legal Permitted Release Date, Borrower shall have the right at any time after the Defeasance Option or Lockout Expiration Date and prior to the Covenant Open Prepayment Commencement Date, to voluntarily defease the entire Loan and obtain a release of the Lien of the Security Instrument (a “Defeasance Option with respect Event”), subject to Recovery Bonds only ifthe satisfaction of the following conditions precedent: (a) Borrower shall provide Lender not less than thirty (30) days’ prior notice (or such shorter period of time if permitted by Lender in its sole discretion) specifying the Issuer has irrevocably deposited or caused Business Day (the “Defeasance Date”) on which the Defeasance Event is to be irrevocably deposited in trust with occur. Notwithstanding the Indenture Trustee foregoing, Borrower may withdraw its notice of defeasance tendered pursuant to this Section 2.5.1(a) no later than two (i2) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered Business Days prior to the Indenture Trustee for cancellation proposed Defeasance Date set forth in such notice to Lender; provided, however, that Borrower shall pay all out-of-pocket costs, fees and all other sums payable hereunder expenses (including, but not limited to, reasonable attorneys’ fees and disbursements) incurred by Lender in connection with actions taken as a result of its receipt of the Issuer with respect to notice of defeasance and the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when duerevocation thereof; (b) the Issuer delivers Borrower shall pay to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds Lender (i) principal in accordance with if the Expected Amortization Schedule thereforDefeasance Date is a Monthly Payment Date, the Monthly Debt Service Payment Amount due on the Defeasance Date and (ii) interest when due and (iii) all other sums due and payable hereunder by under this Agreement, the Issuer with respect to Note and the Recovery Bondsother Loan Documents; (c) in Borrower shall deposit the case applicable Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made Sections 2.5.2 and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.5.3 hereof; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect theretoIntentionally Omitted; (e) Borrower shall execute and deliver to Lender a Defeasance Security Agreement in the case of an exercise respect of the Legal Defeasance Option, Collateral Account and the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurredDefeasance Collateral; (f) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (i) Borrower has legally and validly transferred and assigned the Defeasance Collateral and all rights and obligations under the Note to Successor Borrower, (ii) Lender has a legal and valid perfected first priority security interest in the case of an exercise Defeasance Collateral Account and the Defeasance Collateral, (iii) if a Securitization has occurred, the Securitization Vehicle formed in connection with such Securitization will not fail to maintain its status as a Securitization Vehicle as a result of the Covenant Defeasance OptionEvent, (iv) the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel Defeasance Event will not result in a deemed exchange for purposes of the Issuer to Code and will not adversely affect the effect that the Holders status of the Recovery Bonds will not recognize income, gain or loss Note as indebtedness for federal income tax purposes as purposes, and (v) the delivery of the Defeasance Collateral and the grant of a result of such covenant defeasance and will be subject to federal income tax on the same amounts, security interest in the same manner Defeasance Collateral Account and at the same times as would have been Defeasance Collateral to Lender shall not constitute an avoidable preference under Section 547 of the case if such covenant defeasance had not occurredU.S. Bankruptcy Code or any other Bankruptcy Law; (g) If required by the Issuer delivers Rating Agencies, Borrower shall deliver to Lender a bankruptcy non-consolidation opinion with respect to Successor Borrower reasonably acceptable to Lender and acceptable to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied withRating Agencies in their sole discretion; (h) the Issuer delivers Borrower shall deliver to Lender a Rating Agency Confirmation as to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that Defeasance Event; (i) in Borrower shall deliver a case under certificate of a “big four” or other nationally recognized public accounting firm reasonably acceptable to Lender certifying that the Bankruptcy Code in which PG&E (Defeasance Collateral will generate amounts equal to or any of its Affiliates, other greater than the Issuerapplicable Scheduled Defeasance Payment on or prior to each corresponding Monthly Payment Date or other scheduled payment date; (j) is the debtorBorrower shall deliver such other certificates, the court would hold opinions, documents and instruments as Lender may reasonably request; (k) Borrower shall deliver an Officer’s Certificate certifying that the deposited moneys or U.S. Government Obligations would not be requirements set forth in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliatethis Section 2.5 have been satisfied; and (l) Borrower shall pay all fees, costs and expenses incurred by Lender in connection with the Defeasance Event or otherwise required to accomplish the agreements set forth in this Section 2.5, including (i) reasonable attorneys’ fees and expenses, (ii) the fees, costs and expenses of the Rating Agency Condition shall have been satisfied with respect to the exercise of Agencies, (iii) any Legal Defeasance Option revenue, documentary stamp or Covenant Defeasance Option. Notwithstanding intangible taxes or any other provision of this Section 4.02, no delivery of moneys tax or U.S. Government Obligations to charge due in connection with the Indenture Trustee shall terminate any obligation transfer of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if anyNote, and interest on (iv) the Recovery Bonds shall have been paid in accordance fees, costs and expenses of Servicer and any Trustee. Simultaneously with the provisions of this Indenture notice described in Section 2.5.1(a) above, Borrower shall deliver to Lender an amount reasonably determined by Lender to be sufficient to pay such fees, costs and the Series Supplementexpenses, which amount may be used by Lender to pay such fees, costs and expenses if a proposed Defeasance Event does not occur.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right on any Payment Date after the Lockout Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage and a release of Borrower’s and Guarantor’s obligations under the other Loan Documents (other than (i) those obligations which are expressly stated to survive the payment in full of the Loan and (ii) the Security Agreement) by providing Lender with the Defeasance Option or Collateral (a “Defeasance Event”), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a1) Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the Issuer has irrevocably deposited or caused “Defeasance Date”) on which the Defeasance Event is expected to be irrevocably deposited in trust with the Indenture Trustee occur. (i2) cash and/or Borrower shall pay to Lender (iiA) U.S. Government Obligations which through the scheduled all payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, due on the Recovery Bonds not therefore delivered Loan to and including the Indenture Trustee for cancellation Defeasance Date and (B) all other sums payable hereunder by then due under the Issuer with respect to Note, this Agreement and the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueother Loan Documents; (3) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of subsections (b) the Issuer delivers and (c) of this Section 2.3.3; (4) Borrower shall execute and deliver to the Indenture Trustee Lender a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay Security Agreement in respect of the Recovery Bonds (i) principal in accordance with Defeasance Collateral Account and the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsDefeasance Collateral; (c5) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in the case of the Legal Defeasance Optioncommercial lending transactions and subject only to customary qualifications, ninety-five (95) days pass after the deposit is made assumptions and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case exceptions opining to the effect that, among other things, that (i) Lender has a legal and based thereon such opinion shall confirm thatvalid perfected security interest in the Defeasance Collateral Account and the Defeasance Collateral, (ii) if a securitization has occurred, the Holders REMIC Trust formed pursuant to such securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes Code solely as a result of such legal defeasance a Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance Event will not result in a significant modification and will not be subject an exchange of the Note for purposes of Section 1001 of the Code and the Treasury Regulations thereunder, (iv) delivery of the Defeasance Collateral and the grant of a security interest therein to federal income tax on Lender shall not constitute an avoidable preference under Section 547 of the same amounts, in Bankruptcy Code or applicable state law and (v) a non-consolidation opinion with respect to the same manner and at the same times as would have been the case Successor Borrower (if such legal defeasance had not occurredany); (f6) in Borrower shall deliver to Lender and the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered Rating Agencies a Rating Comfort Letter as to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurredDefeasance Event; (g7) the Issuer delivers to the Indenture Trustee Borrower shall deliver an Officer’s Certificate and an Opinion of Counsel of external counsel to certifying that the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by requirements set forth in this Article IV Section 2.3.3 have been complied withsatisfied; (h) the Issuer delivers 8) Borrower shall deliver an agreed upon procedures letter from a “big four” or other nationally recognized public accounting firm that would be acceptable to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E prudent lender (or any of its Affiliates, other accounting firm that is reputable and experienced in preparing such procedure letters and reports and would be reasonably acceptable to a prudent lender) verifying that the Defeasance Collateral will generate monthly amounts equal to or greater than the Issuer) is the debtorScheduled Defeasance Payments, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E revenue from the Defeasance Collateral will be applied within four months of receipt towards payments of Debt Service, (iii) the securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (iv) the interest income to Borrower (or the Successor Borrower, if applicable) from the Defeasance Collateral will not in any of its Affiliates, other than tax year materially exceed the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities interest expense associated with the assets and liabilities of PG&E or defeased Loan; (9) Borrower shall deliver such other Affiliatecertificates, opinions, documents and instruments as a prudent lender may reasonably request; and (i10) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of fees and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementexpenses.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Securitized Utility Tariff Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an aggregate amount sufficient to pay principal, interest and premium, if any, on the Recovery Securitized Utility Tariff Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Securitized Utility Tariff Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Securitized Utility Tariff Bonds (i) principal in accordance with the Expected Amortization Sinking Fund Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Securitized Utility Tariff Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Securitized Utility Tariff Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Securitized Utility Tariff Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Securitized Utility Tariff Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E Ameren Missouri (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E Ameren Missouri (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E Ameren Missouri (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E Ameren Missouri (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E Ameren Missouri or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Securitized Utility Tariff Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

Conditions to Defeasance. The Issuer may exercise the its Legal Defeasance Option option or the its Covenant Defeasance Option with respect to Recovery Bonds option only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited deposits in trust with in the Indenture Trustee Defeasance/Redemption Account any one or any combination of (i) cash and/or money, (ii) obligations of, and supported by the full faith and credit of, the U.S. Government ("U.S. Government Obligations") or (iii) obligations of corporate issuers ("Corporate Obligations") (provided that any such Corporate Obligations which through are rated AA+ or higher by Standard & Poor's and Aa2 or higher by Moody's at such time and shall not have a maturity of longer than three years from the scheduled payments date of defeasance) for the payment of all principal or Redemption Price, and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, (A) on the Recovery Bonds not therefore delivered Securities or any class or subclass of Securities being defeased, in the case of Legal Defeasance, or (B) on all of the Securities in the case of Covenant Defeasance, in either case, to maturity or redemption, as the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when duecase may be; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations or the Corporate Obligations plus any deposited cash money without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds principal and interest when due (i) principal on each class or subclass of Securities being defeased, in accordance with the Expected Amortization Schedule thereforcase of Legal Defeasance, or (ii) interest when due and (iii) on all other sums payable hereunder by of the Issuer with respect Securities in the case of Covenant Defeasance, in either case, to maturity or redemption, as the Recovery Bondscase may be; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit described in clause (a) above is made and during the ninety91-five (95)-day day period no Event of Default specified in Section 5.01(a)(v4.01(e) or (vif) hereof with respect to the Issuer occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing the deposit described in clause (a) above does not constitute a default under any other agreement binding on the day of such deposit and after giving effect theretoIssuer; (e) the Issuer delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit described in clause (a) does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940, as amended; (f) in the case of an exercise of the Legal Defeasance Optionoption, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, Indenture there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, that the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance Legal Defeasance had not occurred; (fg) in the case of an exercise of the Covenant Defeasance Optionoption, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance Covenant Defeasance had not occurred; (gh) if the related Securities are then listed on any securities exchange, the Issuer delivers to the Trustee an Opinion of Counsel to the effect that such deposit, defeasance and discharge will not cause such Securities to be delisted; (i) a Rating Agency Confirmation and the prior written consent of each of the Policy Provider and the Initial Credit Facility Provider is obtained relating to the defeasance contemplated by this Section 12.02; (j) in the case of a Legal Defeasance only, the Policy shall be terminated and surrendered to the Policy Provider for cancellation; (k) all amounts due and owing to the Policy Provider and the Initial Credit Facility Provider have been paid (or provided for under Section 12.02(a)); and (l) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating and an Officer's Certificate that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have such defeasance has been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementsatisfied.

Conditions to Defeasance. The Issuer may exercise (a) Provided no Event of Default shall have occurred and remain uncured, Borrower shall have the Legal right at any time after the Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire Loan and obtain a release of the lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (hereinafter, a "Defeasance Event"), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or Borrower shall provide Lender not less than thirty (30) days notice (or such shorter period of time if permitted by Lender in its sole discretion) specifying a date (the "Defeasance Date") on which the Defeasance Event is to occur; (ii) U.S. Government Obligations which through the scheduled Borrower shall pay to Lender (A) all payments of principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement, the Mortgage and the other Loan Documents; (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of Sections 2.5.2 and 2.5.3 hereof; (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect thereof of the Defeasance Collateral Account and the Defeasance Collateral; (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in accordance with their terms are commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (A) Lender has a valid perfected first priority security interest in an amount sufficient the Defeasance Collateral Account and the Defeasance Collateral, (B) if a Securitization has occurred, the REMIC Trust formed pursuant to pay principal, interest such Securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.5 and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (C) a non-consolidation opinion with respect to the Recovery Bonds when scheduled Successor Borrower; (vi) Borrower shall deliver to be paid Lender a Rating Agency Confirmation as to the Defeasance Event; (vii) Borrower shall deliver an Officer's Certificate certifying that the requirements set forth in this Section 2.5 have been satisfied; (viii) Borrower shall deliver a certificate of a "Big Four" or other nationally recognized public accounting firm acceptable to Lender certifying that the Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments; (ix) Borrower shall deliver such other certificates, opinions, documents and to discharge instruments as Lender may reasonably request; and (x) Borrower shall pay all costs and expenses of Lender incurred in connection with the entire indebtedness on the Recovery Bonds when due;Defeasance Event, including Lender's reasonable attorneys' fees and expenses and Rating Agency fees and expenses. (b) If Borrower has elected to defease the Issuer delivers Note and the requirements of this Section 2.5 have been satisfied, the Property shall be released from the lien of the Mortgage and the Defeasance Collateral pledged pursuant to the Indenture Trustee a certificate from a nationally recognized firm Security Agreement shall be the sole source of Independent registered public accountants expressing its opinion that collateral securing the payments of principal and interest when due and without reinvestment Note. In connection with the release of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at Lien, Borrower shall submit to Lender, not less than thirty (30) days prior to the Defeasance Date (or such times shorter time as is acceptable to Lender in its sole discretion), a release of Lien (and related Loan Documents) for execution by Lender. Such release shall be in such amounts (but, a form appropriate in the case jurisdiction in which the Property is located and that contains standard provisions protecting the rights of the Legal Defeasance Option onlyreleasing lender. In addition, not more than Borrower shall provide all other documentation Lender reasonably requires to be delivered by Borrower in connection with such amounts) as will be sufficient to pay in respect of the Recovery Bonds release, together with an Officer's Certificate certifying that such documentation (i) principal is in compliance with all Legal Requirements, and (ii) will effect such release in accordance with the Expected Amortization Schedule thereforterms of this Agreement. Borrower shall pay all costs, (ii) interest when due taxes and (iii) all other sums payable hereunder by expenses associated with the Issuer with respect to the Recovery Bonds; (c) in the case release of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end lien of the period; (d) Mortgage, including Lender's reasonable attorneys' fees. Except as set forth in this Section 2.5, no Default has occurred and is continuing repayment, prepayment or defeasance of all or any portion of the Note shall cause, give rise to a right to require, or otherwise result in, the release of the lien of the Mortgage on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series SupplementProperty.

Conditions to Defeasance. The Issuer may exercise the its Legal Defeasance Option option or the its Covenant Defeasance Option with respect to Recovery Bonds option only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited deposits in trust with in the Indenture Trustee Defeasance/Redemption Account any one or any combination of (i) cash and/or money, (ii) obligations of, and supported by the full faith and credit of, the U.S. Government ("U.S. Government Obligations") or (iii) obligations of corporate issuers ("Corporate Obligations") (provided that any such Corporate Obligations which through are rated AA+ or higher by Standard & Poor's and Aa2 or higher by Moody's at such time and shall not have a maturity of longer than three years from the scheduled payments date of defeasance) for the payment of all principal or Redemption Price, and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, (A) on the Recovery Bonds not therefore delivered Securities or any class or subclass of Securities being defeased, in the case of Legal Defeasance, or (B) on all of the Securities in the case of Covenant Defeasance, in either case, to maturity or redemption, as the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when duecase may be; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations or the Corporate Obligations plus any deposited cash money without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds principal and interest when due (i) principal on each class or subclass of Securities being defeased, in accordance with the Expected Amortization Schedule thereforcase of Legal Defeasance, or (ii) interest when due and (iii) on all other sums payable hereunder by of the Issuer with respect Securities in the case of Covenant Defeasance, in either case, to maturity or redemption, as the Recovery Bondscase may be; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit described in clause (a) above is made and during the ninety91-five (95)-day day period no Event of Default specified in Section 5.01(a)(v4.01(e) or (vif) hereof with respect to the Issuer occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing the deposit described in clause (a) above does not constitute a default under any other agreement binding on the day of such deposit and after giving effect theretoIssuer; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the trust resulting from the deposit described in clause (ia) in does not constitute, or is qualified as, a case regulated investment company under the Bankruptcy Code in which PG&E (or any Investment Company Act of its Affiliates1940, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.amended;

Conditions to Defeasance. The Issuer Borrower may exercise cause a Release or a Partial Release upon the Legal Defeasance Option or satisfaction of the Covenant Defeasance Option with respect to Recovery Bonds only if:following conditions (all as reasonably approved by Lender): (aA) no Event or Default shall exist under any of the Issuer has irrevocably deposited or caused Loan Documents; (B) not less than thirty (30) days (but not more than ninety (90) days) prior written notice shall be given to Lender specifying a date (such date being on a Payment Due Date) on which the Defeasance Collateral (as hereinafter defined) is to be irrevocably deposited in trust with delivered (the Indenture Trustee “Release Date”); (iC) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal all accrued and unpaid interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by due under the Issuer with respect Note, this Loan Agreement and under the other Loan Documents up to the Recovery Bonds when scheduled Release Date including, without limitation, all fees, costs and expenses incurred by Lender and its agents in connection with such release (including, without limitation, reasonable legal fees and expenses for the review and preparation of the Defeasance Pledge Agreement (as defined below) and of the other materials described in Section 2.05(b)(ii)(D) below and any related documentation, and any servicing fees, Rating Agency fees or other costs related to such release), shall be paid and in full on or prior to discharge the entire indebtedness on the Recovery Bonds when dueRelease Date; (bD) the Issuer delivers Borrower shall deliver to Lender on or prior to the Indenture Trustee a certificate from a nationally recognized Release Date: a. The Defeasance Collateral which meets all requirements of subsection 2.05(b)(iii) below and is owned by Borrower, free and clear of all liens and claims of third-parties. b. A written certification of an independent certified public accounting firm of Independent registered public accountants expressing its opinion (reasonably acceptable to Lender), confirming that the payments Defeasance Collateral will (y) in the event of principal and interest when due and without reinvestment Defeasance of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such entire Loan generate amounts sufficient to make all Scheduled Debt Payments as they fall due under the Note, including full payment due on the Note on the Maturity Date or (but, z) in the case event of partial Defeasance generate amounts sufficient to make scheduled Debt Payments as they fall due under the Defeasance Note including full payment on such Defeasance Note on the Maturity Date. c. Lender’s form of a pledge and security agreement (“Defeasance Pledge Agreement”) and financing statements which pledge and create a first priority security interest in the Defeasance Collateral in favor of Lender. d. Confirmation in writing from Lender’s custodian that it has received all of the Legal Defeasance Option onlyCollateral for the account and benefit of Lender. e. A written certification from Borrower which confirms that, not more than such amountsfollowing Defeasance, Borrower continues to satisfy the “single purpose entity” requirements of this Loan Agreement. f. Such legal opinions given by Borrower’s or Lender’s counsel (which counsel must be reasonably acceptable to Lender) as will be sufficient Lender may require to pay in respect of the Recovery Bonds confirm (i) principal that the Defeasance Collateral and the proceeds thereof have been validly pledged to Lender, that the Defeasance Pledge Agreement and other Loan Documents after the Defeasance are enforceable against Borrower in accordance with the Expected Amortization Schedule therefor, (ii) respective terms and Lender has a perfected first priority security interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance OptionCollateral, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (of a bankruptcy proceeding or similar occurrence with respect to Borrower, none of the Defeasance Collateral nor any proceeds thereof will be property of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case Borrower’s estate under the Bankruptcy Code, the court would not disregard the separate legal existence Section 541 of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code or any similar statute and the grant of security interest therein to Lender shall not constitute an avoidable preference under Section 547 of the Issuer’s assets Bankruptcy Code or applicable state law, (iii) the release of the lien of the Security Instrument and liabilities the pledge of Defeasance Collateral will not directly or indirectly result in or cause any REMIC that then holds the Note to fail to maintain its status as a REMIC and (iv) the defeasance will not cause any REMIC to be an investment company under the Investment Company Act of 1940. g. Forms of all documents necessary to release the Property or, in the case of partial Defeasance, the Release Property from the liens created by the Security Instrument and related UCC financing statements (collectively, “Release Instruments”), each in appropriate form required by the state in which the Property or, in the case of partial Defeasance, the Release Property is located. h. Such other certificates, confirmations, documents or instruments as Lender reasonably deems necessary in connection with the assets and liabilities of PG&E or such other Affiliate; andDefeasance, including, without limitation, a Rating Confirmation. (iE) Borrower shall satisfy the Rating Agency Condition shall have been satisfied with respect to the exercise requirements of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement10.03 hereof.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery any Series of Transition Bonds only if: (a) the Issuer has irrevocably deposited deposits or caused causes to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) or U.S. Government Obligations which through for the scheduled payments payment of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest Principal of and premium, if any, and Interest on the Recovery such Series of Transition Bonds not therefore delivered to the Indenture Trustee for cancellation Expected Payment Date or Redemption Date therefor, as applicable, and all other sums amounts due and payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled hereunder, such deposit to be paid and to discharge made in the entire indebtedness on the Recovery Bonds when dueDefeasance Subaccount for such Series of Transition Bonds; (b) the deposit in the Defeasance Subaccount pursuant to subsection (a) of this Section 4.02 constitutes proceeds from a refunding of the Transition Bonds; (c) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants accounting firm expressing its opinion that the payments of principal Principal and interest Interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Transition Bonds of such Series (i) principal subject to clause (ii), Principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due if such Series is to be redeemed, the Redemption Price therefor on the Redemption Date therefor and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsInterest when due; (cd) in the case of the Legal Defeasance Option, ninety-five (95) the expiration of 95 days pass after the deposit is made and during the ninetysuch 95-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is shall have occurred and be continuing at the end of the period; provided, however, that in determining whether a default under Section 5.01(v) has occurred, the requirement that the decree or order shall remain unstayed and in effect for 90 days shall be disregarded; (de) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (ef) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered delivers to the Indenture Trustee an Issuer Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Transition Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of such legal defeasance Legal Defeasance Option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance Legal Defeasance had not occurred; (fg) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered delivers to the Indenture Trustee an Issuer Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Transition Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of such covenant defeasance Covenant Defeasance Option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance Covenant Defeasance had not occurred; (gh) the Issuer delivers to the Indenture Trustee an Issuer Officer’s 's Certificate and an Issuer Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Transition Bonds of such Series to the extent contemplated by this Article IV have been complied with; (hi) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E CenterPoint Houston (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys cash or U.S. Government Obligations government obligations would not be in the bankruptcy estate of PG&E CenterPoint Houston (or any of its Affiliates, other than the Issuer, that deposited the moneys cash or U.S. Government Obligationsgovernment obligations); and (ii) in the event PG&E CenterPoint Houston (or any of its Affiliates, other than the Issuer, that deposited the moneys cash or U.S. Government Obligations) government obligations), were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E CenterPoint Houston (or any of its Affiliates, other than the Issuer, that deposited the moneys cash or U.S. Government Obligationsgovernment obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s 's assets and liabilities with the assets and liabilities of PG&E CenterPoint Houston (or such any of its Affiliates, other Affiliate; than the Issuer, that deposited the cash or U.S. government obligations), and (ij) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.024.02 to the contrary, no delivery of moneys cash or U.S. Government Obligations to the Indenture Trustee under this Section shall terminate any obligation obligations of the Issuer to the Indenture Trustee under this Indenture or with respect to any Transition Bonds which are to be redeemed prior to the Series Supplement or any obligation of the Issuer to apply Expected Final Payment Date therefor until such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Transition Bonds shall have been paid irrevocably called or designated for redemption on a date thereafter on which such Transition Bonds may be redeemed in accordance with the provisions of this Indenture and proper notice of such redemption shall have been given in accordance with the Series Supplementprovisions of this Indenture or the Issuer shall have given the Trustee, in form satisfactory to the Trustee, irrevocable written instructions to give, in the manner and at the times prescribed herein, notice of redemption of such Series.

Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds only if: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments Provided no Event of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when due; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing continuing, at any time after the date which is the earlier of: (A) two (2) years after the “startup day,” within the meaning of Section 860G(a)(9) of the Code, of the final “real estate mortgage investment conduit,” established within the meaning of Section 860D of the Code, that holds any note that evidences all or any portion of the Loan or (B) three (3) years after the date hereof (the “Defeasance Lockout Expiration Date”), Borrower may cause the release of the Property (in whole but not in part) from the Lien of the Mortgage and the other Loan Documents upon the satisfaction of the following conditions: (i) not less than thirty (30) days prior written notice shall be given to Lender specifying a date (the “Release Date”) on which the day of Defeasance Collateral is to be delivered, such deposit and after giving effect theretoRelease Date to occur only on a Monthly Payment Date; (eii) all accrued and unpaid interest and all other sums due under the Note and under the other Loan Documents up to the Release Date, including, without limitation, all reasonable costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the reasonable fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation), shall be paid in full on or prior to the Release Date; and (iii) Borrower shall deliver to Lender on or prior to the Release Date: (A) an amount equal to that which is sufficient to purchase U.S. Obligations that provide for payments (1) on or prior to, but as close as possible to and including, all successive scheduled Monthly Payment Dates after the Release Date through the Open Prepayment Date, and (2) in amounts equal to or greater than the case of an exercise Monthly Debt Service Payment Amount through and including the Open Prepayment Date together with payment in full of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel Outstanding Principal Balance as of the Issuer stating Open Prepayment Date (the “Defeasance Collateral”), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance wholly satisfactory to Lender (including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of the Lender in conformity with all applicable state and federal laws governing granting of such security interests; (B) a pledge and security agreement, in form and substance satisfactory to Lender in its sole discretion, creating a first priority security interest in favor of Lender in the Defeasance Collateral (the “Defeasance Security Agreement”), which shall provide, among other things, that any payments generated by the Defeasance Collateral shall be paid directly to Lender and applied by Lender in satisfaction of all amounts then due and payable hereunder and any excess received by Lender from the Defeasance Collateral over the amounts payable by Borrower hereunder or under the Note shall be refunded to Borrower promptly after each Monthly Payment Date; (C) a certificate of Borrower certifying that all of the requirements set forth in this Section 2.4.2 have been satisfied; (D) an opinion of counsel for Borrower in form and substance and delivered by counsel satisfactory to Lender in its sole discretion stating, among other things, that (i1) the Issuer Lender has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change perfected first priority security interest in the applicable federal income tax law, Defeasance Collateral and that the Defeasance Security Agreement is enforceable against Borrower in either case accordance with its terms; and (2) that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the effect that, and based thereon such opinion shall confirm that, the Holders meaning of Section 860D of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes Code as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurreddefeasance; (fE) in the case of an exercise of the Covenant Defeasance Optionat Lender’s request, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain a Rating Agency Confirmation from each applicable Rating Agency or loss for federal income tax purposes each such Rating Agency as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurredis required by Lender; (gF) a certificate from a firm of independent public accountants acceptable to Lender certifying that the Issuer delivers Defeasance Collateral is sufficient to satisfy the Indenture Trustee an Officer’s Certificate and an Opinion provisions of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied withSection 2.4.2(a)(iii)(A) above; (hG) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliatecertificates, documents or instruments as Lender may reasonably require; and (iH) in connection with the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of conditions set forth above in this Section 4.022.4.2(a)(iii), no delivery Borrower hereby appoints Lender as its agent and attorney in fact for the purpose of moneys or U.S. Government Obligations using the amounts delivered pursuant to Section 2.4.2(a)(iii)(A) above to purchase the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series SupplementDefeasance Collateral.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default has occurred and is continuing, at any time after the Legal date which is the earlier of: (A) two (2) years after the “startup day,” within the meaning of Section 860G(a)(9) of the Code, of the final “real estate mortgage investment conduit,” established within the meaning of Section 860D of the Code, that holds any note that evidences all or any portion of the Loan or (B) three (3) years after the date hereof (the “Defeasance Option or Lockout Expiration Date”), Borrowers shall have the Covenant Defeasance Option right to voluntarily defease the entire amount of the Principal (a “Full Defeasance”) or, in connection with respect a Property release pursuant to Recovery Bonds only ifSection 2.5.2, a portion of the Principal (a “Partial Defeasance”) upon the satisfaction of the following conditions: (ai) not less than sixty (60) days prior written notice shall be given to Lender specifying a date (the Issuer has irrevocably deposited or caused “Release Date”) on which the Defeasance Collateral is to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or delivered, such Release Date to occur only on a Monthly Payment Date; (ii) U.S. Government Obligations which through the scheduled payments of principal all accrued and unpaid interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder due under the Note and under the other Loan Documents up to the Release Date, including, without limitation, all out-of-pocket costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the reasonable fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation), shall be paid in full on or prior to the Release Date; and (iii) Borrowers shall deliver to Lender on or prior to the Release Date: (A) the Defeasance Collateral, each of which shall be duly endorsed by the Issuer holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance wholly satisfactory to Lender (including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of the Lender in conformity with respect to the Recovery Bonds when scheduled to be paid all applicable state and to discharge the entire indebtedness on the Recovery Bonds when duefederal laws governing granting of such security interests; (bB) a pledge and security agreement, in form and substance satisfactory to Lender in its reasonable discretion, creating a first priority security interest in favor of Lender in the Issuer delivers Defeasance Collateral (the “Defeasance Security Agreement”), which shall provide, among other things, that any payments generated by the Defeasance Collateral shall be paid directly to Lender and applied by Lender in satisfaction of all amounts then due and payable hereunder and any excess received by Lender from the Indenture Trustee Defeasance Collateral over the amounts payable by Borrowers hereunder or under the Note shall be refunded to Borrowers promptly after each Monthly Payment Date; (C) a certificate from of Borrowers certifying that all of the requirements set forth in this Section 2.4.2 have been satisfied; (D) an opinion of counsel for Borrowers in form and substance and delivered by counsel satisfactory to Lender in its reasonable discretion stating, among other things, that (1) Lender has a nationally recognized firm of Independent registered public accountants expressing its opinion perfected first priority security interest in the Defeasance Collateral and that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal Security Agreement is enforceable against Borrowers in accordance with the Expected Amortization Schedule therefor, (ii) interest when due its terms; and (iii2) all other sums payable hereunder by that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the Issuer with respect to meaning of Section 860D of the Recovery BondsCode as a result of such defeasance; (cE) in the case of a Partial Defeasance, the Legal Defeasance Option, ninety-five execution and delivery by Borrowers of all necessary documents to amend and restate the Note and issue two (952) days pass after substitute notes: one having a principal balance equal to the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end defeased portion of the period; original Note (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations“Defeased Note”) and the Issuer so as other having a principal balance equal to order substantive consolidation under the Bankruptcy Code undefeased portion of the Issuer’s assets original Note (the “Undefeased Note”). The Defeased Note and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition Undefeased Note shall have been satisfied with respect terms identical to the exercise terms of the Note, except for the principal balance and a pro rata allocation of the Monthly Debt Service Payment Amount. (After a Partial Defeasance, all references hereunder and in the other Loan Documents to “Note” shall be deemed to mean the Undefeased Note, unless expressly provided to the contrary.) A Defeased Note cannot be the subject of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.further defeasance;

Conditions to Defeasance. (a) The Issuer may exercise the Legal Defeasance Option its legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds its covenant defeasance option only if: (ai) the Issuer has irrevocably deposited or caused to be irrevocably deposited deposits in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are money in an amount sufficient or U.S. Government Obligations, the principal of and interest on which shall be sufficient, or a combination thereof sufficient, to pay principalthe principal of, interest and premium, premium (if any), and interest, on the Recovery Bonds not therefore Notes when due at maturity or redemption, as the case may be, including interest thereon to maturity or such redemption date; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Section 8.02 to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with the Trustee on or prior to the date of redemption (it being understood that any defeasance shall be subject to the condition subsequent that such deficit is in fact paid). Any Applicable Premium Deficit shall be set forth in an Officers’ Certificate delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by simultaneously with the Issuer with respect to the Recovery Bonds when scheduled to deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be paid and to discharge the entire indebtedness on the Recovery Bonds when dueapplied toward such redemption; (bii) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public independent accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will shall provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will shall be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule thereforprincipal, (ii) premium, if any, and interest when due and on all the Notes to maturity or redemption, as the case may be; (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit is made and during the ninety91-five (95)-day day period no Default specified in Section 5.01(a)(v6.01(g) or (vih) with respect to the Issuer occurs which is continuing at the end of the period; (div) no Default has occurred the deposit does not constitute a default under any other agreement binding on the Issuer and is continuing on the day of such deposit and after giving effect theretonot prohibited by Article X; (ev) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (iA) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (iiB) since the date of execution of this Indenture, Indenture there has been a change in the applicable federal U.S. Federal income tax law, in either case to the effect that, and based thereon such opinion Opinion of Counsel shall confirm that, the Holders of the Recovery Bonds will shall not recognize income, gain or loss for federal U.S. Federal income tax purposes as a result of such deposit and legal defeasance and will shall be subject to federal U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and legal defeasance had not occurred; (fvi) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will shall not recognize income, gain or loss for federal U.S. Federal income tax purposes as a result of such deposit and covenant defeasance and will shall be subject to federal U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred;; and (gvii) the Issuer delivers to the Indenture Trustee an Officer’s Officers’ Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds to the extent Notes as contemplated by this Article IV VIII have been complied with; (h) . Notwithstanding the Issuer delivers to foregoing, in the Indenture Trustee case of the legal defeasance option, an Opinion of Counsel of external counsel required by this Section 8.02(a) need not be delivered if all of the Issuer Notes not theretofore delivered to the effect that Trustee for cancellation (ix) in a case have become due and payable or (y) will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Bankruptcy Code in which PG&E (or any Trustee for the giving of its Affiliates, other than notice of redemption by the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be Trustee in the bankruptcy estate of PG&E (or any of its Affiliatesname, other than and at the Issuerexpense, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and. (ib) Before or after a deposit, the Rating Agency Condition shall have been satisfied with respect Issuer may make arrangements satisfactory to the exercise Trustee for the redemption of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid Notes at a future date in accordance with Article III. (c) The Collateral shall be released from the provisions of Liens securing the Notes upon a defeasance in accordance with this Indenture and the Series SupplementSection 8.02.

Conditions to Defeasance. The Issuer Provided no Event of Default has occurred and is continuing, at any time after the earlier of the date which is (y) two (2) years after the “startup day,” within the meaning of Section 860G(a)(9) of the Code, for the REMIC Trust established in connection with the last Securitization involving any portion of the Loan or (z) three (3) years after the date hereof, and before the Open Prepayment Date, Borrower may exercise cause the Legal Defeasance Option or release of the Covenant Defeasance Option with respect to Recovery Bonds only if:Properties from the Lien of the Mortgage and the other Loan Documents upon the satisfaction of the following conditions (collectively, a “Defeasance”): (a) not less than thirty (30) days prior written notice shall be given to Lender specifying a date (the Issuer has irrevocably deposited or caused “Release Date”) on which the Defeasance Collateral is to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which delivered, such Release Date to occur only on a Monthly Payment Date, or if on any other date, Borrower shall pay accrued and unpaid interest through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when duenext occurring Monthly Payment Date; (b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal all accrued and unpaid interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by due under the Issuer with respect Loan Documents up to the Recovery Bonds;Release Date, including, without limitation, all costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation), shall be paid in full on or prior to the Release Date; and (c) Borrower shall deliver to Lender on or prior to the Release Date: (i) an amount equal to that which is sufficient to purchase U.S. Obligations that provide for payments (A) on or prior to, but as close as possible to and including, all successive scheduled Monthly Payment Dates after the Release Date through the Open Prepayment Date and (B) in amounts equal to or greater than the case Monthly Debt Service Payment through and including the Open Prepayment Date together with payment in full of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end Outstanding Principal Balance as of the periodOpen Prepayment Date (the “Defeasance Collateral”), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance reasonably satisfactory to Lender (including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of Lender in conformity with all applicable state and federal laws governing granting of such security interests; (dii) no Default has occurred a pledge and is continuing on security agreement, in form and substance satisfactory to Lender in its sole discretion, creating a first priority security interest in favor of Lender in the day of such deposit and Defeasance Collateral (the “Defeasance Security Agreement”), which shall provide, among other things, that any excess funds received by Lender from the Defeasance Collateral over the amounts payable by Borrower hereunder shall be refunded to Borrower promptly after giving effect theretoeach Monthly Payment Date; (eiii) a certificate of Borrower certifying that all of the requirements set forth in this Section 2.6 have been satisfied; (iv) an opinion of counsel for Borrower in form and substance and delivered by counsel satisfactory to Lender and the Rating Agencies in their sole discretion stating, among other things, that (A) Lender has a perfected first priority security interest in the case Defeasance Collateral and that the Defeasance Security Agreement is enforceable against Borrower in accordance with its terms and (B) that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of an exercise Section 860D of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes Code as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurreddefeasance; (fv) in the case of an exercise of the Covenant Defeasance Option, the Issuer Borrower shall have delivered deliver to Lender a Rating Agency Confirmation as to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurredDefeasance; (gvi) a certificate from a firm of independent public accountants acceptable to Lender certifying that the Issuer delivers Defeasance Collateral is sufficient to satisfy the Indenture Trustee an Officer’s Certificate and an Opinion provisions of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied withSection 2.6.1(c)(i) above; (hvii) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliatecertificates, documents or instruments as Lender may reasonably require; and (iviii) In connection with the Rating Agency Condition shall have been satisfied with respect conditions set forth in Section 2.6.1(c) above, Borrower hereby appoints Lender as its agent and attorney in fact for the purpose of using the amounts delivered pursuant to Section 2.6.1(c)(i) above to purchase the Defeasance Collateral in the event Borrower does not cause such Defeasance Collateral to be purchased pursuant to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementterms hereof.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right on any Payment Date after the Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (a "DEFEASANCE EVENT"), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a1) Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the Issuer has irrevocably deposited or caused "DEFEASANCE Date") on which the Defeasance Event is to be irrevocably deposited in trust occur. (2) Borrower shall pay to Lender (A) all payments of Principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement and the other Loan Documents; (3) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the Indenture Trustee provisions of subsections (b) and (c) of this Section 2.3.3; (4) Borrower shall execute and deliver to Lender a Security Agreement in respect of the Defeasance Collateral Account and the Defeasance Collateral; (5) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (i) cash and/or Lender has a legal and valid perfected first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral, (ii) U.S. Government Obligations which through if a securitization has occurred, the scheduled payments REMIC Trust formed pursuant to such securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of principal Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance Event will not result in a significant modification and will not be an exchange of the Note for purposes of Section 1001 of the Code and the Treasury Regulations thereunder, (iv) delivery of the Defeasance Collateral and the grant of a security interest in respect thereof in accordance with their terms are in therein to Lender will not constitute an amount sufficient to pay principal, interest avoidable preference under Section 547 of the Bankruptcy Code or applicable state law and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (v) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower; (b6) the Issuer delivers Borrower shall deliver to Lender a Rating Comfort Letter as to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsEvent; (c7) Borrower shall deliver an Officer's Certificate certifying that the requirements set forth in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in this Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.3.3 have been satisfied; (d) no Default has occurred and is continuing on 8) Borrower shall deliver a certificate of a "big four" or other nationally recognized public accounting firm acceptable to Lender certifying that the day of such deposit and after giving effect theretoDefeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments; (e9) in the case of an exercise of the Legal Defeasance Option, the Issuer Borrower shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or deliver such other Affiliatecertificates, opinions, documents and instruments as Lender may reasonably request; and (i10) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender's reasonable attorneys' fees and expenses and Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of fees and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementexpenses.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default has occurred and is continuing, at any time after the Legal date which is the earlier of: (A) two (2) years after the “startup day,” within the meaning of Section 860G(a)(9) of the Code, of the final “real estate mortgage investment conduit,” established within the meaning of Section 860D of the Code, that holds any note that evidences all or any portion of the Loan or (B) three (3) years after the date hereof (the “Defeasance Option or Lockout Expiration Date”), Borrowers shall have the Covenant Defeasance Option right to voluntarily defease the entire amount of the Principal (a “Full Defeasance”) or, in connection with respect a Property release pursuant to Recovery Bonds only ifSection 2.5.2, a portion of the Principal (a “Partial Defeasance”) upon the satisfaction of the following conditions: (ai) not less than sixty (60) days prior written notice shall be given to Lender specifying a date (the Issuer has irrevocably deposited or caused “Release Date”) on which the Defeasance Collateral is to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or delivered, such Release Date to occur only on a Monthly Payment Date; (ii) U.S. Government Obligations which through the scheduled payments of principal all accrued and unpaid interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder due under the Note and under the other Loan Documents up to the Release Date, including, without limitation, all out-of-pocket costs and expenses incurred by Lender or its agents in connection with such release (including, without limitation, the reasonable fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement and related documentation), shall be paid in full on or prior to the Release Date; and (iii) Borrowers shall deliver to Lender on or prior to the Release Date: (A) the Defeasance Collateral, each of which shall be duly endorsed by the Issuer holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance wholly satisfactory to Lender (including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of the Lender in conformity with respect to the Recovery Bonds when scheduled to be paid all applicable state and to discharge the entire indebtedness on the Recovery Bonds when duefederal laws governing granting of such security interests; (bB) a pledge and security agreement, in form and substance satisfactory to Lender in its reasonable discretion, creating a first priority security interest in favor of Lender in the Issuer delivers Defeasance Collateral (the “Defeasance Security Agreement”), which shall provide, among other things, that any payments generated by the Defeasance Collateral shall be paid directly to Lender and applied by Lender in satisfaction of all amounts then due and payable hereunder and any excess received by Lender from the Indenture Trustee Defeasance Collateral over the amounts payable by Borrowers hereunder or under the Note shall be refunded to Borrowers promptly after each Monthly Payment Date; (C) a certificate from of Borrowers certifying that all of the requirements set forth in this Section 2.4.2 have been satisfied; Table of Contents (D) an opinion of counsel for Borrowers in form and substance and delivered by counsel satisfactory to Lender in its reasonable discretion stating, among other things, that (1) Lender has a nationally recognized firm of Independent registered public accountants expressing its opinion perfected first priority security interest in the Defeasance Collateral and that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal Security Agreement is enforceable against Borrowers in accordance with the Expected Amortization Schedule therefor, (ii) interest when due its terms; and (iii2) all other sums payable hereunder by that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the Issuer with respect to meaning of Section 860D of the Recovery BondsCode as a result of such defeasance; (cE) in the case of a Partial Defeasance, the Legal Defeasance Option, ninety-five execution and delivery by Borrowers of all necessary documents to amend and restate the Note and issue two (952) days pass after substitute notes: one having a principal balance equal to the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end defeased portion of the period; original Note (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations“Defeased Note”) and the Issuer so as other having a principal balance equal to order substantive consolidation under the Bankruptcy Code undefeased portion of the Issuer’s assets original Note (the “Undefeased Note”). The Defeased Note and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition Undefeased Note shall have been satisfied with respect terms identical to the exercise terms of the Note, except for the principal balance and a pro rata allocation of the Monthly Debt Service Payment Amount. (After a Partial Defeasance, all references hereunder and in the other Loan Documents to “Note” shall be deemed to mean the Undefeased Note, unless expressly provided to the contrary.) A Defeased Note cannot be the subject of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.further defeasance;

Conditions to Defeasance. The Issuer may exercise (a) Provided no Event of Default shall have occurred and remain uncured, Borrower shall have the Legal right at any time after the Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire Loan and obtain a release of the lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (hereinafter, a "Defeasance Event"), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or Borrower shall provide Lender not less than thirty (30) days notice (or such shorter period of time if permitted by Lender in its sole discretion) specifying a date (the "Defeasance Date") on which the Defeasance Event is to occur; (ii) U.S. Government Obligations which through the scheduled Borrower shall pay to Lender (A) all payments of principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement, the Mortgage and the other Loan Documents; (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of Sections 2.5.2 and 2.5.3 hereof; (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect thereof of the Defeasance Collateral Account and the Defeasance Collateral; (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in accordance with their terms are commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (A) Lender has a valid perfected first priority security interest in an amount sufficient the Defeasance Collateral Account and the Defeasance Collateral, (B) if a Securitization has occurred, the REMIC Trust formed pursuant to pay principal, interest such Securitization will not fail to maintain its status as a "real estate mortgage investment conduit" within the meaning of Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.5 and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (C) a non-consolidation opinion with respect to the Recovery Bonds when scheduled Successor Borrower; (vi) Borrower shall deliver to be paid Lender a Rating Agency Confirmation as to the Defeasance Event; (vii) Borrower shall deliver an Officer's Certificate certifying that the requirements set forth in this Section 2.5 have been satisfied; (viii) Borrower shall deliver a certificate of a "Big Four" or other nationally recognized public accounting firm acceptable to Lender certifying that the Defeasance Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance Payments; (ix) Borrower shall deliver such other certificates, opinions, documents and to discharge instruments as Lender may reasonably request based upon the entire indebtedness on then applicable requirements of the Recovery Bonds when due;Rating Agencies; and (x) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender's reasonable attorneys' fees and expenses and Rating Agency fees and expenses. (b) If Borrower has elected to defease the Issuer delivers Note and the requirements of this Section 2.5 have been satisfied, the Property shall be released from the lien of the Mortgage and the Defeasance Collateral pledged pursuant to the Indenture Trustee a certificate from a nationally recognized firm Security Agreement shall be the sole source of Independent registered public accountants expressing its opinion that collateral securing the payments of principal and interest when due and without reinvestment Note. In connection with the release of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at Lien, Borrower shall submit to Lender, not less than thirty (30) days prior to the Defeasance Date (or such times shorter time as is acceptable to Lender in its sole discretion), a release of Lien (and related Loan Documents) for execution by Lender. Such release shall be in such amounts (but, a form appropriate in the case jurisdiction in which the Property is located and that contains standard provisions protecting the rights of the Legal Defeasance Option onlyreleasing lender. In addition, not more than Borrower shall provide all other documentation Lender reasonably requires to be delivered by Borrower in connection with such amounts) as will be sufficient to pay in respect of the Recovery Bonds release, together with an Officer's Certificate certifying that such documentation (i) principal is in compliance with all Legal Requirements, and (ii) will effect such release in accordance with the Expected Amortization Schedule thereforterms of this Agreement. Borrower shall pay all costs, (ii) interest when due taxes and (iii) all other sums payable hereunder by expenses associated with the Issuer with respect to the Recovery Bonds; (c) in the case release of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end lien of the period; (d) Mortgage, including Lender's reasonable attorneys' fees. Except as set forth in this Section 2.5, no Default has occurred and is continuing repayment, prepayment or defeasance of all or any portion of the Note shall cause, give rise to a right to require, or otherwise result in, the release of the lien of the Mortgage on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series SupplementProperty.

Conditions to Defeasance. The Issuer may exercise So long as no Event of Default has occurred and remains outstanding, Borrower shall have the Legal right at any time after the Defeasance Option or Lockout Expiration Date and prior to the Covenant Open Prepayment Commencement Date to voluntarily defease the entire Loan and obtain a release of the Lien of the Security Instrument (a “Defeasance Option with respect Event”), subject to Recovery Bonds only ifthe satisfaction of the following conditions precedent: (a) Borrower shall provide Lender not less than thirty (30) days’ prior notice (or such shorter period of time if permitted by Lender in its sole discretion) specifying a Monthly Payment Date (the Issuer has irrevocably deposited or caused “Defeasance Date”) on which the Defeasance Event is to occur (which notice shall be irrevocably deposited revocable provided Borrower pays all reasonable out-of-pocket costs and expenses incurred by Lender in trust connection with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through anticipated Defeasance Event and as a result of the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when duerevocation thereof); (b) the Issuer delivers Borrower shall pay to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds Lender (i) principal in accordance with the Expected Amortization Schedule therefor, Monthly Debt Service Payment Amount due on the Defeasance Date and (ii) interest when due and (iii) all other sums then due and payable hereunder by under this Agreement, the Issuer with respect to Note and the Recovery Bondsother Loan Documents; (c) in Borrower shall deposit the case applicable Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of the Legal Defeasance OptionSections 2.5.2 and 2.5.3 hereof and, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in if applicable, Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.6.3 hereof; (d) no Default has occurred the Mezzanine Loan shall be simultaneously prepaid or defeased in accordance with the terms and is continuing on conditions of the day of such deposit and after giving effect theretoMezzanine Loan Agreement; (e) Borrower shall execute and deliver to Lender a Defeasance Security Agreement in the case of an exercise respect of the Legal Defeasance Option, Collateral Account and the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurredDefeasance Collateral; (f) Borrower shall deliver to Lender an opinion of counsel that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (i) Borrower has legally and validly transferred and assigned the Defeasance Collateral and all rights and obligations under the Note to Successor Borrower, (ii) Lender has a legal and valid perfected first priority security interest in the case of an exercise Defeasance Collateral Account and the Defeasance Collateral, (iii) if a Securitization has occurred, the Securitization Vehicle formed in connection with such Securitization will not fail to maintain its status as a Securitization Vehicle as a result of the Covenant Defeasance OptionEvent, (iv) the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel Defeasance Event will not result in a deemed exchange for purposes of the Issuer to Code and will not adversely affect the effect that the Holders status of the Recovery Bonds will not recognize income, gain or loss Note as indebtedness for federal income tax purposes as purposes, and (v) the delivery of the Defeasance Collateral and the grant of a result of such covenant defeasance and will be subject to federal income tax on the same amounts, security interest in the same manner Defeasance Collateral Account and at the same times as would have been Defeasance Collateral to Lender shall not constitute an avoidable preference under Section 547 of the case if such covenant defeasance had not occurredU.S. Bankruptcy Code or any other Bankruptcy Law; (g) If required by the Issuer delivers Rating Agencies, Borrower shall deliver to Lender a bankruptcy non-consolidation opinion with respect to Successor Borrower reasonably acceptable to Lender and acceptable to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied withRating Agencies in their sole discretion; (h) the Issuer delivers Lender shall have obtained (at Borrower’s sole cost and expense) a Rating Agency Confirmation as to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that Defeasance Event; (i) in Borrower shall deliver a case under certificate reasonably acceptable to Lender of a “big four” or other public accounting firm reasonably acceptable to Lender certifying that the Bankruptcy Code in which PG&E (Defeasance Collateral will generate amounts equal to or any of its Affiliates, other greater than the Issuerapplicable Scheduled Defeasance Payment on or prior to each corresponding Monthly Payment Date or other scheduled payment date; (j) is the debtorBorrower shall deliver such other certificates, the court would hold opinions, documents and instruments as Lender may reasonably request; (k) Borrower shall deliver an Officer’s Certificate certifying that the deposited moneys or U.S. Government Obligations would not be requirements set forth in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliatethis Section 2.5 have been satisfied; and (l) Borrower shall pay all reasonable out-of-pocket fees, costs and expenses incurred by Lender in connection with the Defeasance Event or otherwise required to accomplish the agreements set forth in this Section 2.5 and, if applicable, Section 2.6.3 hereof, including (i) reasonable attorneys’ fees and expenses, (ii) the fees, costs and expenses of the Rating Agency Condition shall have been satisfied with respect to the exercise of Agencies, (iii) any Legal Defeasance Option revenue, documentary stamp or Covenant Defeasance Option. Notwithstanding intangible taxes or any other provision of this Section 4.02, no delivery of moneys tax or U.S. Government Obligations to charge due in connection with the Indenture Trustee shall terminate any obligation transfer of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if anyNote, and interest on (iv) the Recovery Bonds shall have been paid in accordance fees, costs and expenses of Servicer and any Trustee. Simultaneously with the provisions of this Indenture notice described in Section 2.5.1(a) above, Borrower shall deliver to Lender an amount reasonably determined by Lender to be sufficient to pay such fees, costs and the Series Supplementexpenses, which amount may be used by Lender to pay such fees, costs and expenses if a proposed Defeasance Event does not occur.

Conditions to Defeasance. The Issuer Issuers may exercise the Legal Defeasance Option their legal defeasance option or the Covenant Defeasance Option with respect to Recovery Bonds their covenant defeasance option only if: : (a) the Issuer has Issuers irrevocably deposited or caused to be irrevocably deposited deposit in trust with or as directed by the Indenture Trustee (i) cash and/or (ii) money in U.S. Dollars, U.S. Government Obligations which through or a combination thereof for the scheduled payments payment of principal of and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and (including premium, if any, ) on the Recovery Bonds not therefore Notes to maturity or a Redemption Date permitted under this Indenture; provided, that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with or as directed by the Trustee equal to the Applicable Premium calculated as if the Redemption Date is the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with or as directed by the Trustee on or prior to the Redemption Date. Any Applicable Premium Deficit shall be set forth in an Officer’s 121 Certificate delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect at least two Business Days prior to the Recovery Bonds when scheduled to Redemption Date that confirms that such Applicable Premium Deficit shall be paid and to discharge the entire indebtedness on the Recovery Bonds when due; applied toward such redemption; (b) the Issuer delivers Issuers deliver to the Indenture Trustee a certificate from of a nationally recognized accounting firm of Independent registered public accountants expressing its their opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash money without investment will provide cash at such the times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds principal and interest (iincluding premium, if any) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) on all other sums payable hereunder by the Issuer with respect Notes to maturity or redemption, as the Recovery Bonds; case may be; (c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end Event of the period; (d) no Default has occurred and is continuing on the day date of such the deposit and after giving effect thereto; ; (d) the deposit does not constitute a default under any other material agreement or instrument binding on the Issuers; (e) in the case of an exercise of the Legal Defeasance Optionlegal defeasance option, the Issuer shall have delivered Issuers deliver to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i1) the Issuer Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii2) since the date of execution of this Indenture, Indenture there has been a change in the applicable U.S. federal income tax law, to the effect, in either case to the effect case, that, and based thereon such opinion the Opinion of Counsel shall confirm that, the Holders beneficial owners of the Recovery Bonds Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal the defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal the defeasance had not occurred; ; (f) in the case of an exercise of the Covenant Defeasance Optioncovenant defeasance option, the Issuer shall have delivered Issuers deliver to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders beneficial owners of the Recovery Bonds Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such that covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such that covenant defeasance had not occurred; ; and (g) the Issuer delivers Issuers deliver to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction defeasance and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series SupplementNotes have been complied with as required by this Indenture. In the case of either discharge or defeasance, the Note Guarantees, if any, will terminate. Simultaneous with a deposit, the Issuers may make arrangements satisfactory to the Trustee for the redemption of Notes at a future date in accordance with Article III.

Conditions to Defeasance. The Issuer may exercise Provided no Event of Default shall be continuing, Borrower shall have the Legal right after the Release Date and prior to the Permitted Prepayment Date to voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the Mortgage by providing Lender with the Defeasance Option or Collateral (a “Defeasance Event”), subject to the Covenant Defeasance Option with respect to Recovery Bonds only ifsatisfaction of the following conditions precedent: (a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or Borrower shall give Lender not less than thirty (30) days prior written notice specifying a Payment Date (the “Defeasance Date”) on which the Defeasance Event is to occur. (ii) U.S. Government Obligations which through the scheduled Borrower shall pay to Lender (A) all payments of principal Principal and interest due on the Loan to and including the Defeasance Date and (B) all other sums, then due under the Note, this Agreement and the other Loan Documents; (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of subsections (b) and (c) of this Section 2.3.3; (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect thereof of the Defeasance Collateral Account and the Defeasance Collateral; (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in accordance with their terms are commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (A) Lender has a legal and valid perfected first priority security interest in an amount sufficient the Defeasance Collateral Account and the Defeasance Collateral, (B) if a securitization has occurred, the REMIC Trust formed pursuant to pay principalsuch securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code as a result of a Defeasance Event pursuant to this Section 2.3.3, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer (C) a non-consolidation opinion with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueSuccessor Borrower; (bvi) if required by any Rating Agency, Borrower shall deliver to Lender and the Issuer delivers Rating Agencies a Rating Comfort Letter as to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery BondsEvent; (cvii) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Issuer Borrower shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (g) the Issuer delivers to the Indenture Trustee deliver an Officer’s Certificate and an Opinion of Counsel of external counsel to certifying that the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by requirements set forth in this Article IV Section 2.3.3 have been complied withsatisfied; (hviii) Borrower shall deliver a certificate of a nationally recognized public accounting firm acceptable to Lender certifying that (A) the Issuer delivers Defeasance Collateral will generate monthly amounts equal to or greater than the Indenture Trustee an Opinion Scheduled Defeasance Payments, (B) the revenue from the Defeasance Collateral will be applied within four (4) months of Counsel receipt towards payments of external counsel of Debt Service, (C) the Issuer securities that comprise the Defeasance Collateral are not subject to prepayment, call or early redemption and (D) the effect that (i) in a case under the Bankruptcy Code in which PG&E interest income to Borrower (or the Successor Borrower, if applicable) from the Defeasance Collateral will not in any of its Affiliates, other than tax year exceed the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities interest expense associated with the assets and liabilities of PG&E or defeased Loan; (ix) Borrower shall deliver such other Affiliatecertificates, opinions, documents and instruments as Lender may reasonably request; and (ix) Borrower shall pay all reasonable costs and expenses of Lender incurred in connection with the Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses and Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of fees and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplementexpenses.

Conditions to Defeasance. The Issuer may exercise So long as no Event of Default has occurred and remains outstanding, Borrower shall have the Legal right at any time after the Defeasance Option or Lockout Expiration Date and prior to the Covenant Open Prepayment Commencement Date to voluntarily defease the entire Loan and obtain a release of the Lien of the Security Instrument (a “Defeasance Option with respect Event”), subject to Recovery Bonds only ifthe satisfaction of the following conditions precedent: (a) Borrower shall provide Lender not less than thirty (30) days’ prior notice (or such shorter period of time if permitted by Lender in its sole discretion) specifying a Monthly Payment Date (the Issuer has irrevocably deposited or caused “Defeasance Date”) on which the Defeasance Event is to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueoccur; (b) the Issuer delivers Borrower shall pay to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds Lender (i) principal in accordance with the Expected Amortization Schedule therefor, Monthly Debt Service Payment Amount due on the Defeasance Date and (ii) interest when due and (iii) all other sums due and payable hereunder by under this Agreement, the Issuer with respect to Note and the Recovery Bondsother Loan Documents; (c) in Borrower shall deposit the case applicable Defeasance Collateral into the Defeasance Collateral Account and otherwise comply with the provisions of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made Sections 2.5.2 and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period2.5.3 hereof; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect theretoIntentionally Omitted; (e) Borrower shall execute and deliver to Lender a Defeasance Security Agreement in the case of an exercise respect of the Legal Defeasance Option, Collateral Account and the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurredDefeasance Collateral; (f) Borrower shall deliver to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining, among other things, that (i) Borrower has legally and validly transferred and assigned the Defeasance Collateral and all rights and obligations under the Note to Successor Borrower, (ii) Lender has a legal and valid perfected first priority security interest in the case of an exercise Defeasance Collateral Account and the Defeasance Collateral, (iii) if a Securitization has occurred, the Securitization Vehicle formed in connection with such Securitization will not fail to maintain its status as a Securitization Vehicle as a result of the Covenant Defeasance OptionEvent, (iv) the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel Defeasance Event will not result in a deemed exchange for purposes of the Issuer to Code and will not adversely affect the effect that the Holders status of the Recovery Bonds will not recognize income, gain or loss Note as indebtedness for federal income tax purposes as purposes, and (v) the delivery of the Defeasance Collateral and the grant of a result of such covenant defeasance and will be subject to federal income tax on the same amounts, security interest in the same manner Defeasance Collateral Account and at the same times as would have been Defeasance Collateral to Lender shall not constitute an avoidable preference under Section 547 of the case if such covenant defeasance had not occurredU.S. Bankruptcy Code or any other Bankruptcy Law; (g) If required by the Issuer delivers Rating Agencies, Borrower shall deliver to Lender a bankruptcy non-consolidation opinion with respect to Successor Borrower reasonably acceptable to Lender and acceptable to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied withRating Agencies in their sole discretion; (h) the Issuer delivers Borrower shall deliver to Lender a Rating Agency Confirmation as to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that Defeasance Event; (i) in Borrower shall deliver a case under certificate of a nationally recognized public accounting firm acceptable to Lender certifying that the Bankruptcy Code in which PG&E (Defeasance Collateral will generate amounts equal to or any of its Affiliates, other greater than the Issuerapplicable Scheduled Defeasance Payment on or prior to each corresponding Monthly Payment Date or other scheduled payment date; (j) is the debtorBorrower shall deliver such other certificates, the court would hold opinions, documents and instruments as Lender may reasonably request; (k) Borrower shall deliver an Officer’s Certificate certifying that the deposited moneys or U.S. Government Obligations would not be requirements set forth in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliatethis Section 2.5 have been satisfied; and (l) Borrower shall pay all fees, costs and expenses incurred by Lender in connection with the Defeasance Event or otherwise required to accomplish the agreements set forth in this Section 2.5, including (i) reasonable attorneys’ fees and expenses, (ii) the fees, costs and expenses of the Rating Agency Condition shall have been satisfied with respect to the exercise of Agencies, (iii) any Legal Defeasance Option revenue, documentary stamp or Covenant Defeasance Option. Notwithstanding intangible taxes or any other provision of this Section 4.02, no delivery of moneys tax or U.S. Government Obligations to charge due in connection with the Indenture Trustee shall terminate any obligation transfer of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if anyNote, and interest on (iv) the Recovery Bonds shall have been paid in accordance fees, costs and expenses of Servicer and any Trustee. Simultaneously with the provisions of this Indenture notice described in Section 2.5.1(a) above, Borrower shall deliver to Lender an amount reasonably determined by Lender to be sufficient to pay such fees, costs and the Series Supplementexpenses, which amount may be used by Lender to pay such fees, costs and expenses if a proposed Defeasance Event does not occur.

Conditions to Defeasance. The Note Issuer may exercise the ------------------------ Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds any Series of Notes only if: (a) the Note Issuer has irrevocably deposited deposits or caused causes to be irrevocably deposited in trust with the Indenture Note Trustee (i) cash and/or (ii) or U.S. Government Obligations which through for the scheduled payments payment of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest of and premium, if any, and interest on the Recovery Bonds not therefore delivered such Notes to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when dueScheduled Maturity Dates, Optional Redemption Date or Mandatory Redemption Date therefor, as applicable; (b) the Note Issuer delivers to the Indenture Note Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of on the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds Notes of such Series (i) subject to clause (ii), principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due if such Series is to be redeemed, the Optional Redemption Price or Mandatory Redemption Price, as applicable, therefor on the Optional Redemption Date or Mandatory Redemption Date, as applicable, therefor and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bondsinterest when due; (c) in the case of the Legal Defeasance Option, ninety-five (95) 91 days pass after the deposit is made and during the ninety91-five (95)-day day period no Default specified in Section 5.01(a)(v5.01(v) or (vi) occurs which is continuing at the end of the period; (d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (e) in the case of an exercise of the Legal Defeasance Option, the Note Issuer shall have delivered to the Indenture Note Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Note Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal Federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds Notes of such Series will not recognize income, gain or loss for federal Federal income tax purposes as a result of such legal defeasance and will be subject to federal Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (f) in the case of an exercise of the Covenant Defeasance Option, the Note Issuer shall have delivered to the Indenture Note Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds Notes of such Series will not recognize income, gain or loss for federal Federal income tax purposes as a result of such covenant defeasance and will be subject to federal Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;; and (g) the Note Issuer delivers to the Indenture Note Trustee an Officer’s 's Certificate and an Opinion of Counsel of external counsel to the IssuerCounsel, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds Notes of such Series to the extent contemplated by this Article IV have been complied with; (h) the Issuer delivers . Before or after a deposit pursuant to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and (i) the Rating Agency Condition shall have been satisfied this Section 4.02 with respect to any Series of Notes, the exercise of any Legal Defeasance Option or Covenant Defeasance Option. Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations Note Issuer may make arrangements satisfactory to the Indenture Note Trustee shall terminate any obligation for the redemption of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid Notes at a future date in accordance with the provisions of this Indenture and the Series Supplement.Article X.