AMENDMENT NO. 1 dated as of July 15, 2000,
   to the Rights Agreement dated as of June 28, 1990,
as amended and restated as of April 28, 1998 (the "Rights Agreement"),
  between IPALCO ENTERPRISES, INC. (the "Corporation")
      and FIRST CHICAGO TRUST COMPANY OF NEW YORK,
          as Rights Agent (the "Rights Agent").

     Pursuant to the terms of the Rights Agreement and in
accordance with Section 27 thereof, the following actions
are hereby taken prior to executing the Share Exchange
Agreement referred to below:

     Section 1.  Amendments to Rights Agreement.  The
Rights Agreement is hereby amended as follows:

     (a)  The definition of "Acquiring Person" in Section 1(a)
of the Rights Agreement is amended to add the following
sentence at the end thereof:

          "Notwithstanding anything in this Agreement to
          the contrary, none of The AES Corporation or
          any Affiliate or Associate of The AES
          Corporation shall be deemed to be an Acquiring
          Person, either individually or collectively,
          solely by virtue of (i) the announcement of the
          Share Exchange (as such term is defined in the
          Share Exchange Agreement), (ii) the acquisition
          of Common Shares pursuant to the Share
          Exchange, (iii) the execution of the Share
          Exchange Agreement or (iv) the consummation of
          the Share Exchange or of the other transactions
          contemplated by the Share Exchange Agreement."

     (b)  The following definition shall be added to Section 1
of the Rights Agreement:

               "(s) "Share Exchange Agreement" shall mean
               the Agreement and Plan of Share Exchange
               dated as of July 15, 2000, between The AES
               Corporation and the Corporation."

     (c)  Section 1(h) of the Rights Agreement is amended to
add the following sentence at the end thereof:

          "Notwithstanding anything in this Agreement to
          the contrary, a Distribution Date shall not be
          deemed to have occurred solely as the result of
          (i) the announcement of the Share Exchange,
          (ii) the acquisition of Common Shares pursuant
          to the Share Exchange, (iii) the execution of
          the Share Exchange Agreement or (iv) the
          consummation of the Share Exchange or of the
          other transactions contemplated by the Share
          Exchange Agreement."; and

     (d)  The following sentence shall be added to the end of
Section 11(a)(iii):

          "From and after the Effective Time, as defined
          in the Share Exchange Agreement, any Rights
          that are or were acquired or beneficially owned
          by The AES Corporation or any Associate or
          Affiliate of The AES Corporation shall become
          null and void."

     Section 2.  Full Force and Effect.  Except as
expressly amended hereby, the Rights Agreement shall
continue in full force and effect in accordance with the
provisions thereof on the date hereof.

     Section 3.  Governing Law.  This Amendment shall be
governed by and construed in accordance with the law of
the State of Indiana applicable to contracts to be made
and performed entirely within such State.

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

                              IPALCO ENTERPRISES, INC.,



                              By:  /s/ John R. Hodowal
                                   John R. Hodowal
                                   Chairman of the Board and
                                   President


                              FIRST CHICAGO TRUST COMPANY
                              OF NEW YORK, as Rights
                              Agent,


                              By:
                                   Name:
                                   Title: