FIRST MODIFICATION OF CREDIT AGREEMENT

	This First Modification of Credit Agreement ("FirstModification") is made and entered into on May 18, 2005, and effective as ofMay 19, 2005, by and between **Indianapolis Power & Light Company,**anIndiana corporation ("Borrower"), **The Huntington National Bank,**a nationalbanking association in its capacity as contractual representative for itself andthe other Lenders (the "Agent"), and the Lenders shown on the execution pages ofthis First Modification (the "Lenders"):

RECITALS

	WHEREAS, on May 20, 2004, Borrower executed that certain CreditAgreement in favor of the Lenders identified therein, and Agent, pursuant to whichLenders agreed to extend certain credit facilities to Borrower (hereinafter the"Credit Agreement");

	WHEREAS, pursuant to the Credit Agreement, Lenders extendedcertain Loans to Borrower consisting of Revolving Loans in the aggregate amount ofForty-Five Million Dollars ($45,000,000.00) and a Swing Line Loan of Ten MillionDollars ($10,000,000.00);

	WHEREAS, to evidence the Revolving Loans, Borrower executed theRevolving Notes in favor of the Lenders in the amount of their respective RevolvingLoan Commitments, and the Swing Line Note in favor of the Swing Line Bank;

	

	WHEREAS, the Notes mature on May 19, 2005, and Borrower hasrequested that the maturity of the Notes be extended, and that certainmodifications be made to the terms and covenants of the Credit Agreement;

	WHEREAS, Lenders have agreed to the extension of the maturityof the Notes and the additional amendments to the Credit Agreement pursuant to theterms of this First Modification; 

	

	NOW THEREFORE, in consideration of the foregoing recitals, andthe mutual agreements contained herein and for other good and valuableconsiderations, the receipt and sufficiency of which are hereby acknowledged, theparties hereto agree that the Credit Agreement is modified and amended asfollows.

Accuracy Of Recitals
.  Borrower acknowledges theaccuracy of the Recitals, stated above.

Definitions
.  Unless otherwise specifically definedherein, capitalized terms shall have the respective meanings ascribed to them inthe Recitals or the Credit Agreement.

Modification Of Credit Agreement Definitions
.  Thedefinitions in the Agreement, including those specifically found in Article I,Section 1.1, captioned "Definitions," are amended as follows:

	
Agreement
.  The definition of "Agreement"means the Credit Agreement, as amended by this First Modification.

IURC Order
.  The definition of "IURC Order"is amended to read as follows:

"IURC Order" shall mean the Order issued by theIndiana Utility Regulatory Commission on February 12, 2003 in connection with CauseNo. 42292, as such Order may be amended, supplemented, or replaced by a subsequentorder."

Maturity Date
.  The definition of "Maturity Date" isamended by replacing the reference to "May 19, 2005" with "May 18,2006."

Permitted Short-Term Indebtedness
.  A new definition of"Permitted Short-Term Indebtedness" is hereby added asfollows:

"'Permitted Short-Term Indebtedness' means Indebtednessincurred by Borrower in the form of unsecured loan(s) with a principal amount notexceeding Fifty Million Dollars ($50,000,000.00) at any one time, a maturity equalto or less than one (1) year, and terms substantially similar to the terms of thisCredit Agreement; provided that (1) at the time of such incurrence no Event ofDefault or Unmatured Event of Default has occurred and is continuing or wouldresult from such incurrence, including, without limitation, compliance on a proforma basis by Borrower of the financial covenants contained in Article VIII, and(2) within three (3) Business Days of the time of such incurrence, Borrower shallprovide Agent with written notice of its entering into such Indebtedness, whichnotice shall include a summary of the material terms and conditions thereof."

Modification of Negative Covenants
.  The CreditAgreement is hereby further amended by modifying Article VI, Section 6.1 asfollows:

The word "and" is deleted from Section 6.1(h);

Section 6.1 (i) is amended to read as follows:

	"(i)	any Permitted Refinancing Indebtedness;and"
Section 6.1 is further amended by adding a new sub-section (j)as follows:

"(j)	any Permitted Short-Term Indebtedness."

Modification of Schedules
.  Schedules 4.3, 5.10, 6.1 and6.2 to the Credit Agreement are hereby amended and restated as set forth in Exhibit3 to this First Modification.

Conditions to Acceptance of First Modification
.  Agent'sand Lenders' respective obligations under this First Modification are conditionedupon the satisfaction of the following conditions Borrower on or before the date ofexecution hereof (the "
Modification Closing Date
"):

No Default
.  No Event of Default or Unmatured Event ofDefault has occurred or is continuing under the Credit Agreement.

Loan Documents
.    The Borrower shall have executed anddelivered to the Agent with sufficient copies for the Lenders all of the followingdocuments (which shall be collectively deemed incorporated into the definition of"Loan Documents" in the Credit Agreement), all of which must be satisfactory to theAgent, the Lenders, the Agent's counsel and the Lender's counsel in form, substanceand execution:

First Modification
.  This First Modification dulyexecuted by the Borrower.

First Modification to Revolving Notes
.  A modificationto each of the Revolving Notes duly executed by the Borrower substantially in theform of Exhibit 1 to this First Modification.

First Modification to
Swing Loan Note
.  Amodification to the Swing Loan Note duly executed by the Borrower substantially inthe form of Exhibit 2 to this First Modification.

Capitalization, Etc.
  The corporate and capitalstructure of Borrower, the certificate or articles of incorporation and by-laws ofBorrower, and the terms, conditions, amounts and holders of all equity, debt andother indebtedness, obligations and liabilities of each of them, shall be notunsatisfactory to the Lenders.

Fees, Expenses, Etc.
  All reasonable fees and othercompensation required to be paid to the Agent and the Lenders pursuant hereto orpursuant to any other written agreement on or prior to the Modification ClosingDate, including any commitment or Agent fees, shall have been paid orreceived.

Legal Opinions
.  The Agent shall have received, with anexecuted counterpart for each Lender, opinions addressed to the Agent and eachLender, dated the Modification Closing Date, of counsel to Borrower (which may bein-house corporate counsel of Borrower) as to such matters as may be requested byAgent and in form and substance satisfactory to Agent and its counsel.

Additional Matters
.  The Agent shall have received suchother certificates, opinions, documents and instruments as may be requested by anyLender. All corporate and other proceedings, and all documents, instruments andother matters in connection with the transactions contemplated by this Agreementand the other Loan Documents shall be satisfactory in form and substance to Agentand each Lender.

Adverse Changes
.  No material adverse change in thefinancial condition or affairs of the Borrower, as determined in any Lender's soleand complete discretion, shall have occurred since December 31, 2004.

Litigation
.  No litigation or governmental proceedingshall have been instituted against the Borrower or any of its officers orshareholders since the Closing Date which in the discretion of the Agent or anyLender reasonably exercised, materially adversely affects the financial conditionor continued operation of the Borrower.

Representations and Warranties
.  The representations andwarranties made by the Borrower in Article V of the Credit Agreement (other thanSection 5.23), as the same are modified by this First Modification, shall be trueand correct in all material respects on the Modification Closing Date as if made onand as of such date, both before and after giving effect to the Loans requested tobe made on such date.

Incorporation of this First Amendment
.  The CreditAgreement is modified to provide that it shall be an Event of Default if Borrowershall fail to comply with any of the covenants of Borrower in this FirstModification or if any representation or warranty by Borrower herein is materiallyincomplete, incorrect, or misleading as of the date hereof.  

Modification of Loan Documents
.  Each of the LoanDocuments not otherwise expressly modified herein are hereby deemed modified andamended in a manner consistent with the Credit Agreement, as amended by this FirstModification, and any reference in the Loan Documents to any of the Loan Documentsshall be a reference to such document as modified by this FirstModification.

Ratification Of Loan Documents
.  Borrower herebyratifies and affirms the Credit Agreement and other Loan Documents, and except asmodified herein shall remain in full force and effect according to the originalterms thereof.

Cooperation
.  Borrower shall execute, deliver, andprovide to Agent such additional agreements, documents, and instruments asreasonably required by Lenders to effectuate the intent of this FirstModification.

Effective Date Of First Modification
.  Lenders shallnot be bound by this First Modification until (i) Agent and all of the Lenders haveexecuted and delivered this First Modification, and (ii) Borrower has performed allof its obligations under this First Modification to be performed prior to orcontemporaneously with the execution and delivery of this First Modification.

Integration, Entire Agreement, Change, Discharge,Termination, Or Waiver
.  The Loan Documents as modified herein contain thecomplete understanding and agreement of Borrower and Lenders with respect to theLoans and supersede all prior representations, warranties, agreement, arrangements,understandings, and negotiations.  No provision of the Loan Documents as modifiedherein may be changed, discharged, supplemented, terminated, or waived except in awriting signed by the parties thereto.

Binding Effect
.  The Loan Documents as modified hereinshall be binding upon and shall inure to the benefit of Borrower, Agent and Lendersand their successors and assigns and the executors, legal administrators, personalrepresentatives, heirs, devisees, and beneficiaries of Borrower, provided, however,Borrower may not assign any of its right or delegate any of its obligation underthe Loan Documents and any purported assignment or delegation shall bevoid.

Choice Of Law
.  This First Modification shall begoverned by and construed in accordance with the laws of the State of Indianawithout giving effect to conflicts of law principles.

Not A Novation
.  This First Modification is amodification only and not a novation.  Except for the above quoted modifications,the Notes, the Credit Agreement, all other Loan Documents, and all the terms andconditions thereof, shall be and remain in full force and effect with the changesherein deemed to be incorporated therein and Borrower has no defenses, set-offs,claims, counterclaims or causes of action of any kind or nature with respect to anyof the Loan Documents or the Indebtedness.

Counterparts
.  This First Modification may be executedin two or more counterparts and when so executed each counterpart shall constitutean original of this First Modification which taken together shall be one and thesame agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

	The foregoing First Modification of Credit Agreement ishereby agreed to and acknowledged by Borrower on the date set forth by thesignature of its authorized officer, but effective as of May 19, 2005.

						BORROWER:

						I**NDIANAPOLIS POWER & LIGHT
						COMPANY, an Indiana corporation

 

						By:							
						Connie R. Horwitz,Treasurer			
							(printed name and title)

						

						Date:________________________________

 

 
**LENDERS' ACCEPTANCE

	The foregoing First Modification of Credit Agreement is herebyagreed to and acknowledged by Lenders and Agent on the date set forth by theirrespective signatures, but effective as of May 19, 2005.

 

						**THE HUNTINGTON NATIONAL BANK**, a

						national banking corporation, as Agent, asLender

						and as Swing Line Bank

 

						By:							
													
							(printed name and title)

						Date:_______________________________

 

 

						**U.S. BANK NATIONAL ASSOCIATION**,a

						national banking association, as Lender

 

						By:							
													
							(printed name and title)

						Date:________________________________

 

						**FIFTH THIRD BANK (CENTRAL INDIANA)**,							a Michigan banking corporation, as Lender

 

						By:							
													
							(printed name and title)

						Date:_________________________________

 

 

 

 

 

 
**EXHIBIT 1

FIRST MODIFICATION TO REVOLVING NOTE

 **
	This Agreement is made and entered into effective as of May19, 2005 ("Effective Date") by and between **INDIANAPOLIS POWER & LIGHTCOMPANY** ("Borrower") and ____________ ("Lender").
**WITNESSETH:**
	WHEREAS, on May 20, 2004, Borrower executed a promissory noteto Lender in the original principal amount of ______________________ and 00/100thsDollars ($___,000,000.00) (the "Revolving Note"); 

	WHEREAS, said Revolving Note arises out of that certain CreditAgreement by and between Borrower, Lender and Agent, originally dated May 20, 2004,as the same may be amended or restated from time to time (the "CreditAgreement");

	WHEREAS, as of the effective date of this First Modification toRevolving Note, Borrower, Lender and Agent are entering into a First Modificationto Credit Agreement providing for amendments to the Credit Agreement, including anextension to the Maturity Date of the Revolving Note; 

	NOW THEREFORE, by mutual agreement of the parties and in mutualconsideration of the agreements contained herein and for other good and valuableconsiderations, the receipt and sufficiency of which are hereby acknowledged, theparties hereto agree that the Revolving Note is modified as follows.

ACCURACY OF RECITALS
.

Borrower acknowledges the accuracy of the Recitals, statedabove.

DEFINITIONS
.  

Unless otherwise defined, all capitalized terms used in thisFirst Modification to Revolving Note shall have the meanings given to them in theCredit Agreement, as amended.

MODIFICATION OF REVOLVING NOTE
.

The maturity date of the Revolving Note is changed from May 19,2005, to May 18, 2006.  

RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL
.

Borrower ratifies and affirms the Loan Documents andacknowledges they shall remain in full force and effect as modifiedherein.

EXECUTION AND DELIVERY OF AGREEMENT BY LENDER
.

Lender shall not be bound by this Agreement until (i) Lenderhas executed and delivered this First Modification to Revolving Note, (ii) Borrowerhas performed all of the obligations of Borrower under the Credit Agreement, asamended, to be performed prior to or contemporaneously with the execution anddelivery of this First Modification to Revolving Credit Note, and (iii) Borrowerhas executed the First Modification to Revolving Note.

COUNTERPART EXECUTION
.

This First Modification to Revolving Note may be executed inone or more counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one and the same document.  Signature pages may bedetached from the counterparts and attached to a single copy of this FirstModification to Revolving Note to physically form one document.

NOT A NOVATION
.

This First Modification to Revolving Note is a modificationonly and not a novation.  Except for the above quoted modifications, the Loan, theLoan Documents, and all the terms and conditions thereof, shall be and remain infull force and effect with the changes herein deemed to be incorporated therein.This First Modification to Revolving Note is to be considered attached to theRevolving Note and made a part thereof.

				**INDIANAPOLIS POWER & LIGHT COMPANY,**
				an Indiana corporation

				By:							
											
					(printed name and title)

				**[LENDER]**
				By:							
											
					(printed name and title)

 

 

 
** 

 

 
**EXHIBIT 2****FIRST MODIFICATION TO SWING LINE NOTE**
	 

This Agreement is made and entered into effective as of May 19,2005 ("Effective Date") by and between **INDIANAPOLIS POWER & LIGHTCOMPANY** ("Borrower") and THE HUNTINGTON NATIONAL BANK, a national bankingassociation ("Lender").
**WITNESSETH:**
	WHEREAS, on May 20, 2004, Borrower executed a promissory noteto Lender in the original principal amount of Ten Million and 00/100ths Dollars($10,000,000.00) (the "Swing Line Note"); 

	WHEREAS, said Swing Line Note arises out of that certain CreditAgreement by and between Borrower, Lender and Agent, originally dated May 20, 2004,as the same may be amended or restated from time to time (the "CreditAgreement");

	WHEREAS, as of the effective date of this First Modification toSwing Line Note, Borrower, Lender and Agent are entering into a First Modificationto Credit Agreement providing for amendments to the Credit Agreement, including anextension to the Maturity Date of the Swing Line Note; 

	NOW THEREFORE, by mutual agreement of the parties and in mutualconsideration of the agreements contained herein and for other good and valuableconsiderations, the receipt and sufficiency of which are hereby acknowledged, theparties hereto agree that the Swing Line Note is modified as follows.

ACCURACY OF RECITALS
.

Borrower acknowledges the accuracy of the Recitals, statedabove.

DEFINITIONS
.  

Unless otherwise defined, all capitalized terms used in thisFirst Modification to Swing Line Note shall have the meanings given to them in theCredit Agreement, as amended.

MODIFICATION OF SWING LINE  NOTE
.

The maturity date of the Swing Line Note is changed from May19, 2005, to May 18, 2006.  

RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL
.

Borrower ratifies and affirms the Loan Documents andacknowledges they shall remain in full force and effect as modifiedherein.

EXECUTION AND DELIVERY OF AGREEMENT BY LENDER
.

Lender shall not be bound by this Agreement until (i) Lenderhas executed and delivered this First Modification to Swing Line Note, (ii)Borrower has performed all of the obligations of Borrower under the CreditAgreement, as amended, to be performed prior to or contemporaneously with theexecution and delivery of this First Modification to Swing Line Credit Note, and(iii) Borrower has executed the First Modification to Swing LineNote.

COUNTERPART EXECUTION
.

This First Modification to Swing Line Note may be executed inone or more counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one and the same document.  Signature pages may bedetached from the counterparts and attached to a single copy of this FirstModification to Swing Line Note to physically form one document.

NOT A NOVATION
.

This First Modification to Swing Line Note is a modificationonly and not a novation.  Except for the above quoted modifications, the Loan, theLoan Documents, and all the terms and conditions thereof, shall be and remain infull force and effect with the changes herein deemed to be incorporated therein.This First Modification to Swing Line Note is to be considered attached to theSwing Line Note and made a part thereof.

				**INDIANAPOLIS POWER & LIGHT COMPANY,**
				an Indiana corporation

 

				By:							
											
					(printed name and title)

 

				**THE HUNTINGTON NATIONAL BANK,
				a national banking association

				By:							
											
					(printed name and title)
**Exhibit 3

 

SCHEDULE 4.3**********