Document:

AIRTRAN HOLDINGS, INC.

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

BETWEEN

AIRTRAN HOLDINGS, INC. AND

JOSEPH B. LEONARD

This Employment Agreement (henceforth the "Agreement") effective as of 7th day of September, 2004 (the "Effective Date") by and between JOSEPH B. LEONARD (henceforth the "Executive") and AIRTRAN HOLDINGS, INC., a Nevada corporation (henceforth the "Company").

RECITALS
WHEREAS, the non-management members of the Company's Board of Directors (henceforth the "Board") believe the Executive to be the best qualified individual to protect and enhance the best interests of the Company and its stockholders and that entering into this Agreement to ensure the Executive's continued and long-term employment with the Company is in the best interests of the Company and its stockholders; and

WHEREAS, the Board recognizes that, as in the case of many publicly-held corporations, the possibility of a change of control may exist and that the uncertainty and questions which such possibility may raise among management may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, the Board has determined that in the event of that contingency, it is imperative to be able to rely on management's continuance and in particular, the leadership of the Executive and that appropriate steps should be taken to secure that essential service; and

WHEREAS, the Board and the Executive also desire to provide for a change of status for the Executive during the term of this Agreement in order to  maintain the Executive's continuing services; and

WHEREAS, the Executive and the Company now desire to enter into this Agreement;

NOW, THEREFORE, for and in consideration of the premises and mutual covenants and promises contained herein, the Company and the Executive agree as follows:

 

 

 

CONTRACT TERMS

1.DEFINITIONS
1.1"Affiliate" means any Person directly or indirectly controlling or controlled by or under the direct or indirect common control with such Person. For purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise.

1.2"Affiliated Company" means:

1.3A member of a controlled group of corporations of which the Company is a member or;
1.3.1An unincorporated trade or business which is under common control with the Company as determined in accordance with Section 414(c) of the Internal Revenue Code of 1986, as amended (henceforth the "Code") and regulations issued thereunder.

1.3.2For purposes hereof, a "controlled group of corporations" shall mean a controlled group of corporations as defined in Section 1563(a) of the Code determined without regard to Section 1563(a)(4) and (e)(3)(C) of the Code.

1.4A "Change of Control" will be deemed to have occurred in the event that, after the Effective Date, any of the following events shall have occurred:
1.4.1Any Person, or Persons acting together that would constitute a "group" (a "Group"), for purposes of Section 13(d) of the Securities Exchange Act of 1934 as from time to time amended, together with any Affiliates or Related Persons thereof (other than any employee stock ownership plan), beneficially owns 20% or more of the total voting power of all classes of Voting Stock of the Company;

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1.4.2Any Person or Group, together with any Affiliates or Related Persons thereof, succeeds in having a sufficient number of its nominees elected to the Board of Directors of the Company such that such nominees, when added to any existing director remaining on the Board of Directors of the Company after such election who is an Affiliate or Related Person of such Person or Group, will constitute a majority of the Board of the Company;

1.4.3There occurs any transaction, or series of related transactions, and the beneficial owners of the Voting Stock of the Company immediately prior to such transaction (or series) do not, immediately after such transaction (or series) beneficially own Voting Stock representing more than 50% of the voting power of all classes of Voting Stock of the Company (or in the case of a transaction (or series) in which another entity becomes a successor to the Company, of the successor entity); or,

1.4.4The Company shall cease to own a majority of the capital stock of its operating subsidiaries; 

1.5"Disability" shall mean the permanent and total inability by reason of mental or physical infirmity or both, of the Executive to perform the work customarily assigned to him. Additionally, a medical doctor, selected or approved by the Board must advise the Board that it is either not possible to determine when such Disability will terminate or that it appears probable that such Disability will be permanent during the remainder of the Executive's lifetime. If the Company secures an "own occupation" disability policy to cover its liability pursuant to this Agreement, such definition in the policy shall be deemed to control.

1.6"Notice of Termination" means a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated.

1.7"Normal Retirement Date" means a date selected on written notice to the Company by the Executive in accordance with Company policy. 

1.8"Person" means any individual, corporation, partnership, trust, joint venture or other legal entity holding, or acquiring Voting Stock of the Company.

1.9"Related Person" means any Person owning:
1.9.15% or more of the outstanding Common Stock of such Person; or,

1.9.25% or more of the Voting Stock of such Person.

1.10"Termination for Cause" means the termination as a result of a conviction. for a willful violation of any law, rule or regulation (other than traffic violations or similar offenses), that results in a material loss to the Company or one of its

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Affiliates, or a material breach of this Agreement on the part of the Executive that is not cured within ten (10) business days of notification by the Company.

1.11"Voting Stock" means any equity security or series of equity securities, issued by the Company which are entitled to vote for Directors of the Company.

2.TERM 
2.1Term - The term of this Agreement shall commence on the date first noted above, and shall terminate on September 1, 2007 ("Term") unless extended, pursuant to Section 2.2, or modified pursuant to Section 3.2.

2.2Extension - This Agreement shall be automatically extended by one year upon the expiration of the Term or any renewal term, unless the Company or Executive provides 90 days notice before such expiration of the intention to terminate the Agreement ("Extended Term").

3.POSITION AND DUTIES
3.1Executive shall be employed by Company as its Chairman and Chief Executive Officer during the Term of this Agreement except as provided in Section 3.2 below.  Executive shall report directly and solely to Company's Board of Directors ("Board").  The Board agrees to nominate Executive for election to the Board as a member of its slate at each annual meeting of stockholders during the Term and the Extended Term. Executive agrees to serve on the Board if elected.  The duties and responsibilities of Chairman and Chief Executive Officer shall be as defined in the By-Laws of Company in effect as of the date hereof, and shall be without consideration of other positions Executive may hold with the Company.  Executive's services are mutually agreed to be unique.

3.2At the mutual agreement of the Executive and the Board, Executive may resign as Chief Executive Officer but continue to be employed by Company as its Chairman during the remainder of the Term, provided, however, that such resignation shall not for any reason under this Agreement constitute a termination of employment.  During such period following Executive's resignation as Chief Executive Officer (henceforth referred to as the "Post-CEO Period"), Executive shall continue for all purposes of this Agreement to be an executive officer and key employee of Company and shall report directly and solely to the Board. Executive's duties during the Post-CEO Period shall include responsibility for overseeing the implementation of the Company's current and long range business policies and programs and handling such other functions as may be directed from time-to-time by the Board. The Executive, during the Post CEO-Period shall devote such time and effort as may be required for him to discharge his duties hereunder but in no event less than eighty (80) hours per month on average.  During the Post-CEO Period, the Executive shall be provided with such secretarial and other support personnel and general working environment as may be required for him to carry out his duties and responsibilities.

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3.3During Executive's period of service hereunder, Executive agrees to perform such services not inconsistent with his position as shall from time to time be assigned to him by the Company's Board. During the Term, except for Disability, illness and vacation period and except as otherwise provided herein, Executive shall devote his full productive time, attention and energies to the position of Chairman of the Board and Chief Executive Officer.

3.4Executive's expenditure of reasonable amounts of time in connection with outside activities, not competitive with the business of the Company, such as outside directorships or charitable or professional activities shall not be considered in contravention of this Agreement so long as such activities do not materially interfere with his performance of this Agreement . Further, it is understood and agreed by the parties hereto that Executive is entitled to engage in passive and personal investment activities not materially interfering with his performance of this Agreement.

3.5Service as an executive of an Affiliated Company, whether separately compensated or not, shall not be considered in contravention of this Agreement.

4.SALARY
4.1Throughout the Term of this Agreement, the Executive shall receive an annual base salary of at least $450,000.

4.2Upon the Executive's resignation as Chief Executive Officer, and during the Post-CEO Period, the Executive shall receive an annual base salary of at least 70% of the base salary payable to him immediately prior to the commencement of the Post-CEO Period.

4.3The Board (or such committee designated by the Board) shall review the Executive's salary at least annually, at or before the first regularly scheduled Board meeting following the annual stockholders' meeting of each fiscal year. The Board (or the relevant committee) may increase the base salary based upon relevant considerations, including, but not limited to the performance of the Executive and the Company, changes in the cost of living and competitive compensation data.

5.INCENTIVE COMPENSATION
5.1In addition to the salary stated in Section 4 and except as is set forth in Section 5.2 below, the Executive shall be eligible during the Term for an annual cash incentive award based on hisperformance and the performance of the Company in accordance with the management incentive plan as it may be in effect from time-to-time with an annual cap of one hundred and fifty percent (150%) of the Executive's base salary. 

5.2During the Post-CEO Period, the Executive shall be eligible for an annual cash incentive award pursuant to the same formula as noted in Section 5.1 of this

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Agreement, except that the cap on the award payable shall be limited to one hundred percent (100%) of the Executive's Post-CEO Period base salary.

6.STOCK OPTION/GRANT 
6.1Executive shall be eligible to participate in any Stock Option/Grant plans maintained by the Company and any additional or successor plans in effect from time to time.

6.2As of October 26, 2004, the Executive shall be granted an aggregate of 400,000 shares of the Company's Common Stock, par value $.001 per share ("Shares").
6.2.1The Shares shall vest as follows: 10% on October 26, 2004, 10% on November 26, 2004, 10% on December 27, 2004, 10% on January 26, 2005, 30% on the first anniversary of the Effective Date; and 30% on the second anniversary of the Effective Date provided, however, that any Shares not vested on and after the effective date of the Post-CEO Period shall vest at 70% of the original grant.

6.2.2All Shares granted prior to the date of termination of Executive's employment without Cause shall vest 100% if the Executive is terminated without Cause (including termination due to death or Disability).

6.2.3All Shares granted before a Change of Control shall accelerate and become fully vested in the event of a Change of Control.

7.STOCK OPTIONS
The Executive, in accordance with the Company's standard policies shall have the right to exercise any Stock Options previously granted under either the1996 Stock Option Plan and/or the 2002 Long Term Incentive Plan at a date which is not later than the expiration date of the option or the expiration of the later of  one (1) year after the Executive's Normal Retirement Date or the end of the Term of this Agreement including the Post-CEO Period.

8.REIMBURSEMENT OF EXPENSES
The Executive, during the Term including the Post-CEO Period shall be authorized to incur and shall be reimbursed by the Company for all reasonable expenses for the advancement of the Company's business pursuant to standing Company policy at least monthly.

9.MEDICAL BENEFITS ON RETIREMENT
The Executive and/or his spouse, on or after the Executive's  Normal Retirement Date and/or immediately upon termination under paragraphs 11, 13, 14 and/or 16 hereunder, shall be entitled to participate in such post-retirement medical/dental plans that the Company makes available to other retired officers.

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10.OTHER BENEFITS
10.1The Executive shall be eligible to participate in any and all other benefit programs which are, and which may be in the future, generally available to members of the Company's management, including, but not limited to group health, disability, and life insurance benefits, participation in any pension, retirement and/or profit-sharing plans, financial planning, or other perquisites.

10.2The Company shall provide free air transportation on any route maintained by the Company for the Executive and his spouse for the lifetimes of both the Executive and his spouse.

10.3During the Term, the Company shall reimburse the Executive for all medical and dental expenses incurred by the Employee and his spouse.  Expenses for medical care shall be deemed to include all amounts paid with respect to hospital bills, doctor and dental bills and drugs which are not compensated by insurance or otherwise.

11.DISABILITY
If the Executive's services hereunder are terminated due to Disability as defined in the Agreement, the Executive shall receive:

11.1His full salary for the remainder of the Term, offset by any amounts payable from a disability policy maintained by the Company.

11.2Any stock options, stock grants or stock appreciation rights granted to the Executive shall be immediately vested; and,

11.3The Executive and his spouse shall retain the travel benefits noted in Section 10.2.

12.DEATH BENEFITS
12.1In addition to participation in any life insurance plans maintained by the Company, to the extent that the Company's group term life insurance provides a death benefit of less than $1,000,000, the Company shall pay the premium on a universal life insurance policy to be owned by the Executive equal to the difference between the coverage provided by the Company and $1,000,000. Company's premiums need only be sufficient to maintain the face death benefit of the policy.

12.2This insurance policy shall be in lieu of any continuation of salary pursuant to Section 4 of this Agreement, other than accrued but unpaid salary.

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12.3Company shall pay all incentive compensation arising under Section 5 herein if such payment obligation under the terms of the then current incentive compensation plan arose prior to the Executive's death.

12.4The Executive's spouse shall retain the travel benefits noted in Section 10.2.

13.TERMINATION BY THE COMPANY
Company shall have the right to terminate the Executive's service hereunder under the following circumstances provided that the Company timely serves a Notice of Termination:

13.1Upon ten (10) business days service of a Notice of Termination from the Company to the Executive in the event of Disability which has incapacitated the Executive from performing his duties for a period of at least six (6) consecutive months, subject to the provisions of Section 11.

13.2For Cause, as defined in this Agreement, upon immediate service of a Notice of Termination;

13.3Upon immediate service of a Notice of Termination to the Executive where the Board, by a majority vote, elects to terminate the Executive for any reason, other than the reasons noted in Sections 13.1 and 13.2 above.

13.4Upon the death of the Executive, subject to the provisions of Section 12.

14.TERMINATION BY THE EXECUTIVE
Executive shall have the right to terminate his service under this Agreement upon 90 days written notice following the date on which the Executive becomes aware of any of the following events occurring without the consent of the Executive:

14.1The Executive is not elected or retained as Chairman and Chief Executive Officer and a director of the Company during the Term of this Agreement, including any extensions except as otherwise provided herein;

14.2Any assignment of the Executive of any duties other than those reasonably contemplated by, or any limitation of the powers or prerogatives of Executive in any respect not reasonably contemplated by Section  3 of this Agreement, including, but not limited to the creation by the Board of a multi-person Office of the Chairman;

14.3Any removal of the Executive from responsibilities substantially similar to those described or contemplated in Section 3 hereof,

14.4Any reduction in, or limitation upon the compensation, reimbursable expenses or other benefits provided in this Agreement, other than as may be required by valid public law or regulation;

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14.5Any assignment to the Executive of duties which would require him to relocate or transfer his principal place of residence or the transfer of the headquarters of the Company to any location without the expressed written agreement of the Executive.

15.BENEFITS FOLLOWING TERMINATION
15.1If the Executive's employment with the Company is terminated pursuant to Section 13.1, the Executive shall receive the benefits noted in Section 11 of this Agreement.

15.2If the Executive's employment with the Company is terminated pursuant to Section 13.2, this Agreement shall terminate immediately. Any unvested stock options or other benefits shall be immediately forfeited upon the effective date of termination, as shall any accrued but unpaid amounts with regard to salary, bonuses or other benefits.

15.3If the Executive's employment with the Company is terminated pursuant to Section 13.3, the Executive shall be entitled to:
15.3.1A lump sum payment of one year's salary plus the incentive award paid in the year prior to termination;

15.3.2Immediate vesting of any stock options and/or stock grants, to the extent provided in Section 6.2.3 of this Agreement;

15.3.3Immediate vesting of any other benefits provided by the Company consistent with operation of law.

15.3.4Company shall provide at its expense for Executive's lifetime and his spouse's lifetime health and welfare benefits, at least comparable to those benefits in effect on the date hereof or, if greater, immediately prior to the Date of Termination, including but not limited to medical, dental, disability, spouse and dependent care.  At Company's election, health benefits may be provided by reimbursing Executive or his spouse or child's guardian, as the case may be, for the cost of converting group policy to individual coverage, or for the cost of extended COBRA coverage. 

15.3.5The Executive and his spouse shall retain the travel benefits noted in Section 10.2.

15.4If the Executive's employment with the Company is terminated pursuant to Section 13.4, the Executive or his beneficiary or estate shall receive the benefits noted in Section 12 of this Agreement.
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15.5If the Executive terminates this Agreement pursuant to Section 14, he shall be entitled to the same benefits as if the Company had terminated him without cause pursuant to Section 13.3.

15.6If the Executive is terminated by the Company other than for Cause or if the Executive terminates employment for death, disability or pursuant to Section 14, he will receive a pro-rated bonus for the year of termination based upon the number of days worked in the year of termination.

15.7If the Executive terminates this Agreement other than pursuant to Section 14, he shall be entitled to:
15.7.1Accrued but unpaid amounts with regard to salary and benefits;

15.7.2Any previously vested Stock Options and/or Stock Grants;

15.7.3Such other benefits and amounts as the Company shall determine appropriate.

15.7.4No bonus shall be payable pursuant to Section 5 if the Executive terminates employment prior to the end of a year other than pursuant to Section 14.

15.8In the event of termination of Executive's employment for any reason whatsoever, Executive shall not have any rights with respect to any Stock Options that were to be granted pursuant to Section 6.2 after the date of termination of employment.

16.CHANGE OF CONTROL
In the event of a Change of Control as defined in this Agreement: (a) the termination benefits payable pursuant to this Section shall supersede any other termination benefits and shall be in lieu of and not in addition to the termination benefits set forth elsewhere in this Agreement; and (b) any purported termination of employment by the Company of the Executive shall be communicated by a Notice of Termination in accordance with the terms herein.

16.1Any outstanding stock options shall vest 100% at the time of the Change of Control.

16.2The Executive, in his sole discretion, shall have twenty-four (24) months following the Change of Control to elect to terminate this Agreement.

16.3If the Company elects to terminate this Agreement within six months before or twenty four months following a Change of Control for any reason other than death, Disability or Cause, the Executive shall receive termination benefits pursuant to this Section 16.
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16.4If the Agreement is terminated pursuant to this Section 16, Executive shall be entitled to:
16.4.1Immediate vesting of any stock options and/or stock grants made prior to the Change of Control, but not previously vested and all such stock options shall remain exercisable for their entire term;

16.4.2Continued participation in any health or insurance plans maintained by the Company pursuant to Section 15.3.4;

16.4.3The Executive and his spouse shall retain the travel benefits noted in Section 10.2; 

16.4.4Full base salary through the date of termination at the rate in effect at the time that the Notice of Termination is served plus all other amounts to which the Executive is entitled under any benefit or compensation plan at the time such payments are due under the terms of such plans, including but not limited to payments arising under Section 5 even if the payment obligation arises after the date of termination;

16.4.5A lump sum payment equal to the greater of: (i) two-times the sum of the Executive's total salary and bonus during the 12-month period prior to the Change of Control, or (ii) two-times the sum of the average annual salary and average annual bonus paid to Executive during the three (3) years prior to the Change of Control, which shall be paid to Executive in lieu of any other termination benefits under this Agreement other than those specified in this Section 16.

16.4.6If all or any portion of the amounts payable to Executive or his Estate under this Agreement or otherwise are subject to the excise tax imposed by Section 4999 of the Code (or similar state tax and/or assessment), Company shall pay to Executive an amount necessary to place Executive in the same after-tax position as Executive would have been in had no such excise tax been imposed. The amount payable pursuant to the preceding sentence shall be increased to the extent necessary to pay income and excise taxes due on such amount. The determination of the amount of any such additional amount shall initially be made by the independent accounting firm then employed by Company.  If at a later date it is determined (pursuant to final regulations or published rulings of the IRS, final judgment of a court of competent jurisdiction or otherwise) that the amount of excise taxes payable by Executive is greater than the amount initially so determined, then Company (or its successor) shall pay Executive an amount equal to the sum of (1) such additional excise taxes, (2) any interest, fines and penalties resulting from such underpayment, plus (3) an amount necessary to reimburse Executive for any income, excise or other taxes payable by Executive with respect to the amounts specified in (1) and (2) above, including any income, excise or other taxes payable with

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respect to such amounts, and the reimbursement provided by this clause.  Notwithstanding anything in this Section 16 to the contrary, Executive may elect in his sole discretion not to have any portion of any payment be paid or not to have the vesting of any Options accelerated in order to avoid any "excess parachute payment" under Section 280G(b)(1) of the Code.

16.4.7Executive shall not be required to mitigate the amount of any payment provided in this Section 16, nor shall the amount of any payment be reduced by any compensation earned by the Executive as a result of employment by another employer or otherwise.

17.INDEMNIFICATION
In the event Executive is made, or threatened to be made a party to any legal action or proceeding, whether civil or criminal or administrative, by reason of the fact that Executive is, or was, a director or officer of the Company or serves or served any other Affiliate in any capacity at the request of the Company, Executive shall be indemnified by the Company, and the Company shall pay Executive's related expenses when and as incurred, to the full extent permitted by law, if he acted in good faith and in a manner he believed to be in or not opposed to the best interests of the Company and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.

18.REMEDIES
Company recognizes that because of Executive's special talents and opportunities, in the event of termination by the Company, other than for Cause, Company acknowledges and agrees that the provisions of this Agreement, regarding further  payment of base salary, incentives, and vesting and exercisability of options and other benefits constitute fair and reasonable provisions for the consequences of such termination, do not constitute a penalty, and such payments and benefits  shall not be limited or reduced by amounts the Executive might earn or be able to earn from any other employment or ventures during the remaining period of the Agreement. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise.

19.BINDING AGREEMENT
This Agreement shall be binding upon and inure to the benefit of the Executive, his heirs, distributees and assigns, and the Company, its successors and assigns. Executive may not, without the expressed written consent of the Company, assign or pledge any rights or obligations hereunder to any person, firm or corporation. If the Executive should die while any amounts would still be payable to the Executive had he continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with this Agreement to the Executive's estate, or to his Beneficiaries, if such beneficiary designation is so provided.

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20.NO ATTACHMENT
Except as required by law or with the consent of the Company or by laws of descent and distribution or permitted designation, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.

21.ASSIGNMENT
Company shall require any successor (whether direct or indirect, by operation of law, by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company) to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall, at Executive's election, be deemed a material breach of this Agreement. In such event, the Executive shall be entitled to compensation equal to the greater of the benefit payable pursuant to Section 15.5 or Section 16.4. As used in this Agreement, "Company" shall mean the Company as defined above and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.

22.WAIVER
No term or condition of this Agreement shall be deemed to have been waived, nor there any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

23.NOTICE
For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered and acknowledged or delivered by United States registered mail, return receipt requested, addressed, in the case of the Executive to the Executive at: Joseph B. Leonard at his then current primary residence, as the Company may, from time to time be notified, with a copy to Michael Gutt, Gutt Financial Management, 3414 Peachtree Rd., N.E., 103 Monarch Plaza, Atlanta, Georgia 30326, and in the case of the Company, to the attention to the Corporate Secretary of the Company at the principal executive offices of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of a change of address shall be effective only upon receipt.

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24.GOVERNING LAW
This Agreement shall be governed and construed in accordance with the laws of the State of Florida.

25. NON-COMPETITION
The EXECUTIVE recognizes and understands that in performing the duties and responsibilities of his employment as is set forth in this Agreement and pursuant to his employment by the Company prior to the execution of this Agreement, the Executive has occupied and will occupy a position of trust and confidence, pursuant to which the Executive has developed and acquired and will develop and acquire experience and knowledge with respect to various aspects of the Company's business and the manner in which such business is conducted. It is the expressed intent and agreement of  the Executive and the Company that such knowledge and experience shall be used in the furtherance of the Company's business interests. The Executive therefore agrees that during the twelve (12) calendar month period following the termination of this Agreement he will not accept employment with or serve as a paid or unpaid consultant to Southwest Airlines, Alaska Air Group, America West Holding Corporation, Delta Air Lines,  JetBlue Airways Corporation, Hawaiian Holdings, Inc. Frontier Airlines, Inc., Midwest Air  Group, Inc. and/or any firm, partnership, corporation, joint venture or any entity of any sort or kind seeking to create and/or organize and/or receive certification as a U.S. scheduled air carrier.  Although the Executive and the Company regard such a restriction as reasonable for the purpose of protecting the Company and its proprietary rights, in the event that the provisions of this paragraph should ever be deemed to exceed the time and/or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time and/or scope limitations permitted by applicable laws.

26.SEVERABILITY
If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall to the full extent consistent with the law continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall to the full extent consistent with the law continue in full force and effect.

27.ARBITRATION
27.1Any disagreement, dispute, controversy or claim arising out of or in. any way related to this Agreement or the subject matter hereof or the interpretation hereof or any arrangements relating hereto or contemplated herein or the breach, termination or invalidity hereof or the provision or failure to provide for any other benefits on a Change of Control pursuant to any other bonus or compensation plans, stock option plan, stock ownership plan, stock purchase plan, life insurance plan or similar plan or agreement with the Company and or an Affiliate as "change of control: may be 
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defined in such other agreements or plans, which benefits constitute "Parachute Payments" shall be settled exclusively and finally by arbitration. If this Section 27 conflicts with any provision in any such plan or agreement, this provision requiring arbitration shall control.

27.2Arbitration shall be conducted in accordance with the Commercial Arbitration Rules (the "Arbitration Rules") of the American Arbitration Association. The arbitration tribunal shall consist of three arbitrators, one chosen by the Company, one chosen by the Executive and one chosen by the preceding two persons.

27.3The parties shall equally divide all costs of arbitration. 

27.4The arbitration shall be conducted in Orlando, FL or in any other city in the United States of America as the parties to the dispute may designate by mutual written consent.

27.5Any decision or award of the arbitration tribunal shall be final and binding upon the parties to the arbitration proceeding. The parties hereto hereby waive, to the extent permitted by law, any rights to appeal or review such award by any court of tribunal. The parties hereto agree that the arbitration award may be enforced against the parties to the arbitration proceeding or their assets wherever the award may be entered in any court having jurisdiction thereof.

27.6The parties stipulate that discovery may be held in any such arbitration proceeding as provided in the Florida Code of Civil Procedure, as may be amended from time to time.

28.LEGAL FEES
The Company shall pay all legal fees and expenses as incurred which my be incurred by the Executive in contesting or disputing matter under this Agreement, including but not limited to seeking to obtain or enforce any right or benefit provided in this Agreement, which payment shall be made in advance of the final disposition of such contest.

29.ENTIRE AGREEMENT
As of the Effective Date this Agreement contains the full understanding of the parties hereto. This Agreement may not be changed orally, but only by an agreement, in writing, signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought.

	

EXECUTIVE
	 	

AIRTRAN HOLDINGS, INC.

	

/s/ Joseph B. Leonard  10/28/04___
	 	

By:_/s/ Richard P. Magurno______

	

Joseph B. Leonard
	 	

Richard P. Magurno

15EXHIBIT 4.4

 Exhibit 4.4 
  

RIGHTS AGENCY AGREEMENT 
  
 RIGHTS AGENCY AGREEMENT, dated as of [DATE], 2004, by and between EDP – ENERGIAS DE PORTUGAL, S.A., a company incorporated under the laws of
the Portuguese Republic (the “Company”), and CITIBANK, N.A., a national banking association organized under the laws of the United States of America acting solely in its capacity as ADS rights agent hereunder and having an office at
388 Greenwich Street, 14th Floor, New York, NY 10013 (“Citibank”). 
  
 WITNESSETH THAT: 
  
 WHEREAS, the Company is offering new ordinary shares, nominal value
€1.00 per share (the “Shares”), pursuant to the grant of pre-emptive rights (the “Share Rights”) to holders of its shares (“Shareholders”), upon the terms and subject to the conditions
described in the prospectus, dated [DATE], 2004 (the “Prospectus”). Each Share Right consists of (a) one (1) transferable Share Right (a “Primary Share Right”) allowing holders thereof to subscribe for a
number of new Shares (each, a “New Share”) determined by multiplying the number of Share Rights they own by the factor [TBD], which is equivalent to [TBD] New Shares for each Share held as of the relevant record date.
Each Share Right includes an oversubscription right (an “Oversubscription Share Right”) allowing holders thereof to subscribe for an additional number of New Shares in the event that any New Shares (including New Shares in the form
of New ADSs (as hereinafter defined)) are not subscribed for pursuant to the exercise of Primary Share Rights and Primary ADS Rights (as hereinafter defined), in each case as described, and subject to the terms set forth, in the Prospectus setting
forth, inter alia, such offer to purchase New Shares (the “Share Offer”); 
  
 WHEREAS, the Offering (as hereinafter defined) shall include the issuance of transferable rights (such rights, the “ADS Rights”)
to holders of Shares represented by American Depositary Shares (“ADSs”) evidenced by American Depositary Receipts (“ADRs”) issued pursuant to the terms of the Deposit Agreement, dated as of June 16, 1997, as amended
by Amendment No. 1 to Deposit Agreement, dated as of September 8, 2000 (the Deposit Agreement as so amended, the “Deposit Agreement”), by and among the Company, Citibank, as Depositary (the “Depositary”), and all
Holders and Beneficial Owners (as defined in the Deposit Agreement) of ADRs evidencing ADSs issued thereunder, each ADS representing ten (10) Shares of the Company. Each ADS Right consists of one (1) transferable ADS Right (a “Primary ADS
Right”) allowing holders thereof to subscribe for one (1) new ADS (each, a “New ADS”).
Each ADS Right includes an oversubscription right (an “Oversubscription ADS Right”) allowing holders who have validly exercised their Primary ADS Rights to subscribe for an additional number of New ADSs in the event that any New
Shares (including New Shares in the form of New ADSs) are not subscribed for pursuant to the exercise of Primary Share Rights and Primary ADS Rights, in each case as described, and subject to the terms set forth, in the Prospectus setting forth,
inter alia, such offer to purchase New ADSs (the “ADS Offer”, and together with the Share Offer, the “Offering”); 
  

 WHEREAS, upon exercise of their Share Rights and payment of the Share Subscription Amount (as
defined below), holders of Share Rights will be issued New Shares in the amount subscribed for and upon exercise of the ADS Rights and payment of the ADS Subscription Amount (as defined below), holders of the ADS Rights will be issued New ADSs in
the amount subscribed for; 
  
 WHEREAS, in the event the
Offering is oversubscribed pursuant to the exercise of Oversubscription Share Rights and Oversubscription ADS Rights, New Shares will be allocated in the form of New Shares or New ADSs to such exercising holders of Oversubscription Share Rights and
Oversubscription ADS Rights, respectively, subject to the provisions describing proration and the maximum subscription limitation set forth in the Prospectus; and 
  
 WHEREAS, the Company has requested that Citibank act as agent in connection with the ADS Offer, and Citibank is
willing to accept, and does accept, such appointment, solely upon the terms and subject to the conditions set forth, or expressly referred to, herein. 
  
 NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows: 
  

	1.	Definitions 

  
 As used herein, the following terms have the meanings herein specified, and, if applicable, with terms defined in the singular having a corresponding
meaning in the plural and vice versa: 
  
 “Additional
Deficiency” has the meaning ascribed thereto in Section [6] of Schedule [I] attached hereto. 
  
 “ADRs” has the meaning ascribed thereto in the second recital hereof. 
  
 “ADS Custodian” has the meaning ascribed thereto in Section [5] hereof. 
  
 “ADS Offer” has the meaning ascribed thereto in the second
recital hereof. 
  
 “ADS Rights” has the meaning
ascribed thereto in the second recital hereof. 
  
 “ADS
Rights Certificates” has the meaning ascribed thereto in Section [2] of Schedule [I] attached hereto. 
  
 “ADSs” has the meaning ascribed thereto in the second recital hereof. 
  
 “ADS Subscription Amount” means 105% of the U.S. dollar equivalent of the Share Subscription Amount of
€[PRICE], multiplied by ten (10), based on the U.S. dollar to Euro exchange rate on [DATE], 2004 plus U.S. $0.05 per New ADS subscribed, at which holders of ADS Rights may subscribe for New ADSs pursuant to the ADS Offer, as
specified in each ADS Rights Certificate and the Prospectus. For the purpose of determining the ADS Subscription Amount, the applicable exchange rate will be the noon 

  

 2 

 
buying rate on [DATE], 2004 in New York for cable transfers in Euros as certified for customs purposes by the Federal Reserve Bank of New York.

  
 “ADS Subscription Period” means 9:00 a.m.
(New York City time) on [DATE], 2004 through 3:00 p.m. (New York City time) on [DATE], 2004. 
  
 “Agent” has the meaning ascribed thereto in Section [2] hereof. 
  
 “Agreement” means this Rights Agency Agreement, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof. 
  
 “Allocation Date” has the meaning ascribed thereto in Section [10] of Schedule [I] attached hereto. 
  
 “Authorized Representatives” has the meaning ascribed thereto in Section [6(e)] hereof. 
  
 “Broker Letter” has the meaning ascribed thereto in Section
[3] of Schedule [I] attached hereto. 
  
 “Citibank” has the meaning ascribed thereto in the introductory statement hereof. 
  
 “Citigroup” has the meaning ascribed thereto in Section [21] hereof. 
  
 “CMVM” has the meaning ascribed thereto in Section [9]
hereof. 
  
 “Client Letter” has the meaning
ascribed thereto in Section [3] of Schedule [I] attached hereto. 
  
 “Commission” means the United States Securities and Exchange Commission. 
  
 “Company” has the meaning ascribed thereto in the introductory statement hereof. 
  
 “Deficiency” has the meaning ascribed thereto in Section
[6] of Schedule [I] attached hereto. 
  
 “Deposit Agreement” has the meaning ascribed thereto in the second recital hereof. 
  
 “Depositary” has the meaning ascribed thereto in the second recital hereof. 
  
 “DTC” mean The Depository Trust Company or any other
successor institution providing facilities performing substantially similar functions. 
  
 “Domestic Holder” has the meaning ascribed thereto in Section [3] of Schedule [I] attached hereto. 
  
 “Effective Date” means the date on which the Commission declares the Registration Statement effective.

  

 3 

 “Equiserve” has the meaning ascribed thereto in Section [4] hereof. 

 
 “Euro” means the shall mean euros, the currency
introduced at the start of the third stage of the Economic and Monetary Union, or EMU, pursuant to the Treaty establishing the European Economic Community, as amended by the Treaty on European Union. 
  
 “Euronext Lisbon” means the Euronext Lisbon-Sociedade
Gestora de Mercados Regulamentados S.A., the exchange on which the Shares are, and the Shares Rights are expected to be, publicly traded. 
  
 “Expiration Date” means 3:00 p.m. (New York City time) on [DATE], 2004, or such other time and date as may be agreed in writing by
the Company and the Agent. 
  
 “Fee Schedule”
has the meaning ascribed thereto in Section [11] hereof. 
  
 “Indemnitee” has the meaning ascribed thereto in Section [10] hereof. 
  
 “Information Agent” means Georgeson Shareholder located at 17 State Street, 28th Floor, New York, New York 10004. 
  
 “Instruction Booklet” has the meaning ascribed thereto in Section [3] of Schedule [I] attached hereto. 
  
 “Loss” has the meaning ascribed thereto in Section
[10] hereof. 
  
 “New ADSs” has the
meaning ascribed thereto in the second recital hereof. 
  
 “New Shares” has the meaning ascribed thereto in the first recital hereof. 
  
 “NY Account” means the account established by Agent for purposes hereof and registered as “Citibank, N.A.- EDP ADS Rights
Offering”. 
  
 “NYSE” means The New York
Stock Exchange, Inc., the exchange on which the ADSs and the ADS Rights are publicly traded. 
  
 “Offering” has the meaning ascribed thereto in the second recital hereof. 
  
 “Overseas Holders” has the meaning ascribed thereto in Section [3] of Schedule [I] attached hereto. 
  
 “Oversubscription ADS Rights” has the meaning ascribed
thereto in the second recital hereof. 
  
 “Oversubscription Share Rights” has the meaning ascribed thereto in the first recital hereof. 
  
 “Primary ADS Rights” has the meaning ascribed thereto in the second recital hereof. 
  
 “Primary Share Rights” has the meaning ascribed thereto in
the first recital hereof. 
  

 4 

 “Prospectus” has the meaning ascribed thereto in the first recital hereof. 

 
 “Record Date” means the date for determination of the
holders of ADSs entitled to receive ADS Rights which will be 5:00 p.m. (New York City time) on [DATE], 2004, or such later date as may be established by agreement between the Company and the Agent for determination of the holders of ADSs
entitled to receive ADS Rights in respect thereof. 
  
 “Registration Statement” means the Registration Statement on Form F-3 (File No. 333-117209) filed with the Commission on July 7, 2004, as amended from time to time, including all Schedules thereto at the time such
Registration Statement is declared effective under the Securities Act. 
  
 “Securities Act” means the United States Securities Act of 1933, as amended. 
  
 “Services Schedule” has the meaning ascribed thereto in Section [2] hereof. 
  
 “Shareholders” has the meaning ascribed thereto in the
first recital hereof. 
  
 “Shares” has the
meaning ascribed thereto in the first recital hereof. 
  
 “Share Offer” has the meaning ascribed thereto in the first recital hereof. 
  
 “Share Rights” has the meaning ascribed thereto in the first recital hereof. 
  
 “Share Subscription Amount” means €[PRICE] per
New Share, at which holders of Share Rights may subscribe for New Shares pursuant to the Share Offer. 
  
 “U.S. Dollar Payment” means the ADS Subscription Amount multiplied by the number of New ADSs subscribed for pursuant to the exercise of
Primary ADS Rights and/or Oversubscription ADS Rights, as applicable. 
  

	2.	Appointment and Acceptance 

  

	 	a.	The Company hereby appoints Citibank, N.A. to act as “Agent” in connection with the ADS Offer and as such to perform, or cause to be performed, the services of the
Agent identified in Schedule [I] attached hereto (the “Services Schedule”), solely within the terms and subject to the conditions of this Agreement. 

  

	 	b.	Citibank, N.A. hereby accepts the appointment by the Company to act as Agent solely within the terms and subject to the conditions of this Agreement. 

  

	3.	ADS Offer 

  

	 	a.	 Pursuant to the Deposit Agreement and this Agreement, the Company will cause the Agent to distribute to registered holders of record of ADSs one (1) ADS Right for
every ADS held as of the Record Date. No fractional ADS Rights will be issued and fractions of New ADSs arising from the exercise of ADS Rights will 

  

 5 

	 	 
be rounded down to the nearest whole number with no compensation for such fraction. One (1) ADS Right will entitle the holder thereof to subscribe for [one
(1) New ADS] at the ADS Subscription Amount ADS Rights will be evidenced by ADS Rights Certificates. The ADS Offer will be made to holders of ADSs of record on the Record Date by means of, inter alia, the Prospectus to be mailed or
distributed to such holders as described in Section [3] of Schedule [I] attached hereto. The ADS Subscription Period will expire on the Expiration Date. After the Expiration Date, ADS Rights (and the ADS Rights Certificates evidencing
such ADS Rights) not previously exercised will lapse without compensation and such ADS Rights will be void and will have no further value. 

  

	 	b.	Holders of ADS Rights who validly exercised their Primary ADS Rights may subscribe for an additional number of New ADSs that are not subscribed for pursuant to the exercise of
Primary ADS Rights and Primary Share Rights subject to the terms and conditions of the Prospectus. If the aggregate number of additional New Shares available for subscription pursuant to the Oversubscription ADS Rights and Oversubscription Share
Rights equals or exceeds the aggregate number of additional New Shares (including New Shares in the form of New ADSs) subscribed for, the Company will allocate to each holder of ADS Rights who has exercised his/her Oversubscription ADS Rights the
number of additional New Shares in the form of New ADSs subscribed. In the case of oversubscription pursuant to the exercise of Oversubscription Share Rights and Oversubscription ADS Rights, the Company will allocate additional New Shares (the Agent
shall subsequently applying such allocation to the New ADSs) in accordance with the terms and subject to the limitations and conditions set forth in the Prospectus. Holders of ADS Rights must deliver to the Agent the U.S. Dollar Payment for the
additional New ADSs applied for pursuant to the exercise of the Oversubscription ADS Rights at the same time that holders exercise their Primary ADS Rights and deliver the U.S. Dollar Payment for the New ADSs to be issued pursuant to the exercise of
Primary ADS Rights. If holders who have applied to subscribe for additional New ADSs are allocated a smaller number of additional New ADSs than they applied for pursuant to the exercise of Oversubscription ADS Rights, the Agent will as soon as
practicable refund to the applicable holders any excess paid net of amounts otherwise owed to the Depositary in connection with the exercise of Primary ADS Rights. 

  

	 	c.	[Reserved] 

  

	4.	Delegation of Duties 

  
 The Agent may perform its duties hereunder through any agent appointed for such purpose, including, but not limited to, the First Chicago Trust division
of Equiserve, L.P. (“Equiserve”). Such duties may be performed by Equiserve in the State of New Jersey, the State of Rhode Island and the State of Massachusetts, respectively. However, the Agent shall remain a primary obligor with
respect to such delegated duties. 
  

 6 

	5.	[Reserved] 

  

	6.	Responsibility and Liability 

  

	 	a.	The duties, responsibilities and obligations of the Agent shall be limited to those expressly set forth in this Agreement and no duties, responsibilities or obligations of the Agent
shall be inferred or implied under the terms of this Agreement. Except as contemplated in this Agreement, the Agent shall not be subject to, nor required to comply with, (i) any provision of any other agreement or any instrument to which the Company
is a party or to which the Company is subject, or (ii) any direction or instruction from the Company or any entity acting on its behalf; 

  

	 	b.	The Agent shall not be deemed or required to make any representations and shall have no responsibilities as to the validity, sufficiency, value, or genuineness of any New ADSs or
New Shares underlying such New ADSs to be issued in connection with the ADS Offer; 

  

	 	c.	The Agent does not, and shall not be deemed to, assume any responsibility or incur any liability for the actions or omissions to act of any book-entry transfer facility or clearing
agency; 

  

	 	d.	The Agent shall have no obligation to, and shall not, issue and deliver any New ADSs under the terms of the ADS Offer, unless it shall have received confirmation (i) from the
Company that it has accepted the subscription of ADS Rights for New ADSs and that all conditions of the ADS Offer have been satisfied or validly waived, and (ii) the requisite number of New Shares to be represented by the New ADSs to be issued in
the ADS Offer have been duly deposited with the custodian under the Deposit Agreement (the “ADS Custodian”), provided, however, that upon receipt of such confirmation, the Agent shall deliver the New ADSs to the subscribers
therefore as set forth in the Prospectus; 

  

	 	e.	The Agent may rely on, and shall be fully authorized and protected in acting or not acting, in good faith in reliance upon, any certificate, instrument, instruction, opinion,
notice, letter, telegram, telex, facsimile transmission, electronic message (including without limitation, a message received through DTC’s electronic messaging systems) or other document or instrument delivered to it and reasonably believed by
it to be genuine. The Agent may rely on and shall be fully authorized and protected in acting or not acting upon the written and electronic instructions, with respect to any matter relating to its actions covered by this Agreement (or supplementing
or qualifying any such actions), of Authorized Representatives of the Company (as set forth in Schedule [IV] attached hereto, the “Authorized Representatives”); 

  

	 	f.	 The Agent shall not be called upon at any time to, and shall not at any time, advise any person acting under the ADS Offer as to the wisdom of acting thereunder or
as to any security to be received thereunder. The Agent shall not be 

  

 7 

	 	 
liable or responsible for any recital or statement contained in the ADS Offer materials or any other documents relating thereto, except for recitals or
statements provided by the Agent for inclusion therein, so long as such recitals or statements are incorporated in the ADS Offer materials and related documents without alteration, unless such alteration is specifically approved by the Agent or its
counsel; 

  

	 	g.	The Agent shall not be liable or responsible for any delay, failure, malfunction, interruption or error in the transmission or receipt of communications or messages through
electronic means (including, without limitation, the message systems of the applicable book-entry transfer facility), except to the extent such delay, failure, malfunction or error arises out of the Agent’s own negligence;

  

	 	h.	The Agent shall not be liable or responsible for any failure by the Company to comply with any of its obligations relating to the ADS Offer, including, without limitation, its
obligations under applicable U.S. securities laws; and 

  

	 	i.	The Agent is not required under the terms of this Agreement, and nothing contained in this Agreement shall be interpreted in any way to imply any obligation of the Agent, to expend
or risk any of its own funds or to make any financial accommodations in the performance of its duties hereunder, other than customary expenses incurred in connection with the Agent’s services set forth herein. 

  

	7.	Change in the Expiration Date 

  
 Notwithstanding any other provisions of this Agreement, if the Company and the Agent designate any date other than [DATE], 2004 as the Expiration
Date, all other dates set forth in this Agreement will automatically and without notice be changed to the business days occurring nearest to the dates falling the same number of business days before or after such dates as the designated Expiration
Date falls before or after [DATE], 2004. 
  

	8.	Term of Agreement 

  

	 	a.	This Agreement shall terminate upon the earlier to occur of (i) termination of this Agreement by mutual agreement of the Agent and the Company hereto, (ii) termination by the
Company of the ADS Offer, and (iii) in the event of acceptance by the Company of the subscriptions for New ADSs applied for in the ADS Offer, the delivery by the Agent of the New ADSs to holders who have validly subscribed for New ADSs. Upon
termination of this Agreement, the Agent and the Company shall have no further duties hereunder except as otherwise set forth in the following provisions of this Section [8]. 

  

	 	b.	 Upon termination of this Agreement, the Agent shall, if applicable, promptly deliver to the holders entitled thereto and to the Company, as their respective rights
may exist under the terms of the ADS Offer, any funds held under the terms hereof. Upon termination of this Agreement, copies of all information (including all subscription documentation, telegrams, facsimile transmissions and other 

  

 8 

	 	 
material submitted in connection with the ADS Offer) maintained by the Agent for the Company under this Agreement shall be delivered to the Company upon
request. 

  

	 	c.	Notwithstanding anything else contained in this Agreement, the terms of Sections [8, 10, 11, 12, and 14] shall survive termination of this Agreement.

  

	9.	Representations and Warranties 

  
 The Company represents and warrants that: 
  

	 	(i)	it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation, 

  

	 	(ii)	the making and consummation of the ADS Offer and the performance of all transactions contemplated thereby have been duly authorized by all necessary corporate action,

  

	 	(iii)	this Agreement has been duly executed and delivered by the Company by an officer of the Company thereunto duly authorized and constitutes its legal, valid, binding and enforceable
obligation, 

  

	 	(iv)	the ADS Offer does comply, and will be conducted by the Company in compliance, with all requirements of United States and Portuguese law applicable to the ADS Offer,

  

	 	(v)	it has not made to the SEC or any other regulatory authority any representations in respect of the Agent which have not been disclosed in writing to the Agent, and it shall not make
any such representations without the prior written consent of the Agent, 

  

	 	(vi)	it has obtained, on or prior to the date hereof, all requisite approvals from the SEC, and all other applicable regulatory authorities to conduct the ADS Offer in accordance with
the terms set forth in the Prospectus explaining the ADS Offer, other than (i) approvals related to the filing and effectiveness of any amendments to the Form F-3, (ii) approvals related to the filing and effectiveness of the Form F-6, (iii)
approvals related to the issuance of the New Shares, including the approval of such issuance by the Portuguese Securities Market Supervisory Authority (the “CMVM”), and to the listing of the New Shares and Share Rights on Euronext
Lisbon and the listing of the New ADSs on the NYSE, and (iv) such other approvals from regulatory authorities as are described in the Prospectus, 

  

	 	(vii)	to its knowledge (after due inquiry), there is no litigation pending or threatened against it which could adversely affect in a material way the Company’s ability to perform
its obligations hereunder or otherwise in connection with the ADS Offer, 

  

 9 

	 	(viii)	that all registration statements applicable to the Offering of New ADSs or New Shares upon the acceptance of valid subscriptions for New ADSs, including, without limitation, the
Form F-3 and the Form F-6 have been filed with the Commission and any other applicable regulatory authorities as of the date hereof, and no stop orders are in effect with respect to such registration statements as of the date hereof, and each of the
registration statements and the Prospectus do not, or will not, as applicable, as of the Effective Date contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary in order to make the
statements therein, as to the Prospectus in light of the circumstances under which such statements were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the Company or the Company’s representatives by Citibank, as Agent, for use in the Prospectus (as the case may be), and 

  

	 	(ix)	the Company will not accept the subscriptions for New ADSs unless it has obtained the effectiveness of the Form F-3 and the Form F-6 prior to the date thereof.

  

	10.	Indemnification 

  
 The Company agrees to indemnify and defend the Agent and to hold the Agent harmless (including any of the employees, officers, directors, agents,
subsidiaries and affiliates or any of them, each an “Indemnitee” hereunder) from and against any claim, action, judgement, damage, loss, liability, cost, securities transfer tax and expense (including, without limitation, any
reasonable expenses and fees of counsel, each a “Loss” hereunder) which may be incurred, paid or suffered by the Agent or to which the Agent may become subject (a) as a result of any action taken, or any action not taken, in each
case, in good faith upon the instructions of an Authorized Representative of the Company, or (b) arising out of, or in connection with, any actions taken within the terms of this Agreement. Provided, however, that the Agent shall not be entitled to
any indemnification under the terms hereof if the Loss arises from its own negligence or bad faith in the performance of, or its willful failure to perform, its obligations hereunder. The Agent agrees to notify the Company of each assertion of a
claim against any Indemnitee or any action commenced against any such party, within three (3) Business Days (as defined in Schedule [I] attached hereto) following the receipt of notice thereof by the Agent. The obligations of the Company
under this Section [10] shall survive the termination of this Agreement. 
  

	11.	Fees 

  
 For the services provided hereunder the Company agrees to pay to the Agent the fees and reimbursements set forth in the Fee Schedule attached hereto as Schedule [II] (the “Fee
Schedule”). The payment obligations of the Company under this Section [11] shall survive the termination of this Agreement. 
  

 10 

	12.	Interpretation; Disputes; Judgments against Property; Litigation 

  

	 	a.	Interpretation. 

  
 In the event the Agent has any question with respect to the proper interpretation of this Agreement or the duties of any party hereunder or the rights of
(i) the Company or (ii) any holder of ADSs subscribing for New ADSs under the ADS Offer, the Agent may apply in writing to the Company for instructions with respect thereto, and such application may set forth any action proposed to be taken or
omitted by the Agent and the date(s) on or after which such action or omission will be taken, and the Agent will not be liable for any action or omission in accordance with a proposal included in any such application on or after the date(s)
specified therein (which date(s) shall not, without the Company’s consent, be less than five (5) Business Days after the Agent makes such application) unless, prior to taking or omitting to take such action, the Agent has received oral or
written instructions from the Company in response to such application specifying the action to be taken or omitted or, unless the Agent has acted negligently or in bad faith. Any oral instructions from the Company shall be confirmed in writing via
facsimile or other means of electronic transmission from the Company to the Agent or from the Agent to the Company no later than by the close of business in New York City on the Business Day on which such oral instructions are received by the Agent.

  

	 	b.	Disputes. 

  
 In the event the Agent becomes aware of any dispute among the Company and any holders of ADSs, with respect to the proper interpretation of this
Agreement, or the duties of any party hereunder, or the rights or obligations of the Company or of any holders of ADSs subscribing for New ADSs under the ADS Offer, the Agent shall promptly, and in the case of any claim asserted under Section
[12] hereof, within three (3) Business Days, inform the Company in writing of such dispute and the Agent shall not be required to act with respect to the subject matter and parties relating to such dispute and shall not, unless the Agent has
acted negligently or in bad faith, be held liable or responsible for its refusal to act with respect to the subject matter and parties relating to such dispute until (a) the dispute has been judicially settled (and the Agent may, if in its sole
discretion it deems so advisable, but shall not be obligated to, file a suit in interpleader or for a declaratory judgment for such purpose) by final judgment rendered by a court of competent jurisdiction, binding on all parties interested in the
matter and which is no longer subject to review or appeal, or (b) the dispute has been settled by a written document and executed by the Company and, if applicable, binding upon all holders of ADSs subscribing for New ADSs interested in the matter.

  

	 	c.	Judgments; Court Orders. 

  
 If any property is at any time attached, garnished, or levied upon under any court order or in case the payment, assignment, transfer, conveyance, or
delivery of any 

  

 11 

 
such Property shall be stayed or enjoined by any court order, or if any order, judgement or decree shall be made or entered by any court affecting such
Property or any part thereof, then and in any such event the Agent shall be authorized, in its sole discretion, to rely upon and comply with any such order, judgement, or decree which the Agent has been advised in writing by legal counsel of its own
choosing (and reasonably satisfactory to the Company) is binding upon it. If the Agent complies with any such order, judgement, or decree, it shall not be liable to any person or entity by reason of such compliance even though such order, judgement,
or decree may be subsequently reversed, modified, annulled, set aside, or vacated, unless the Agent has acted negligently or in bad faith. 
  

	 	d.	Defending Litigation. 

  
 The Agent agrees to notify the Company within three (3) Business Days in writing of the commencement of any action against the Agent or any Indemnitee for
which indemnification is being or may be sought hereunder if the Company is not a party to such action. Unless the Agent has acted negligently or in bad faith, the failure by the Agent to so notify the Company will not (i) relieve the Company from
its indemnification obligations hereunder unless and to the extent the Company did not otherwise learn of such action and such failure results in the forfeiture by the Company of substantial rights and defenses, and (ii) in any event relieve the
Company from any other obligations to the Agent or any other Indemnitee hereunder. 
  
 The Company shall (except as noted below) be entitled to assume the defense of any third-party claim, legal action or proceeding against the Agent and/or any Indemnitee for which indemnification is or may be sought
hereunder and agrees to pay the fees and expenses of the counsel chosen by it. All reasonable costs and expenses incurred by the Agent in connection with any such third-party claim, action or proceeding shall be covered by the indemnification
obligations of the Company under the terms of this Agreement. 
  
 Notwithstanding the Company’s election to assume the defense of such claim, action or proceeding, the Agent shall have the right to employ separate counsel (reasonably acceptable to the Company) and to participate in the defense of
such claim, action or proceeding, and the Company shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Company to represent the Indemnitees would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such claim, action or proceeding include both the Company and the Indemnitees, and the Agent shall have reasonably concluded that there may be legal defenses available to the
Indemnitees which are different from or additional to those available to the Company (in which case the Company shall not have the right to assume the defense of such claim, action, or proceeding on behalf of the Indemnitees); (iii) the Company
shall not have employed counsel to represent the Indemnitees within a reasonable time after notice of the institution of such action; or (iv) the 

  

 12 

 
Company shall authorize the Agent to employ separate counsel (reasonably acceptable to the Company) at the Company’s expense, unless the Agent has acted
negligently or in bad faith. The Company shall not be liable for the fees and expenses of more than one separate counsel (plus one local counsel in each applicable jurisdiction) under the terms hereof in any single claim, action or proceeding for
all Indemnitees unless the Company consents or unless a bona fide conflict of interest requires separate counsel for particular Indemnitees. 
  
 No settlement shall be reached in any such claim by any Indemnitee, action or proceeding without the consent of the Company (which consent shall not be
unreasonably withheld). 
  
 The provisions of this Section
[12] shall survive the termination of this Agreement. 
  

	13.	Amendments and Assignments 

  

	 	a.	The terms of this Agreement may be waived, amended or supplemented only by agreement in writing duly executed by all parties hereto. The rights and remedies conferred upon the
parties hereto shall be cumulative and the exercise or waiver of any such right or remedy shall not preclude or inhibit the exercise of any additional rights or remedies, nor the subsequent exercise of such right or remedy. 

 

	 	b.	None of the rights and obligations of the parties under this Agreement may be assigned except (i) upon receipt of prior written consent of the other parties to this Agreement or
(ii) as otherwise specifically permitted by Section [3] hereof. Any assignment or delegation in violation of this Section [13(b)] shall be null and void. 

  

	14.	Governing Law; Jurisdiction; Waiver 

  
 This Agreement will be governed by, and construed and interpreted in accordance with, the laws of the State of New York. The parties agree that the
federal and state courts located in the City of New York, State of New York, shall have jurisdiction to hear and determine any suits, actions or proceedings and to settle any disputes between the parties relating to this Agreement and for such
purpose each of the parties irrevocably submits to the jurisdiction of such courts. The Company hereby designates, appoints and empowers [AGENT NAME & ADDRESS], as its authorized agent to receive and accept for and on its behalf and on
behalf of its properties, assets and revenues, service by mail of any and all legal process, summons, notices and documents that may be served in any suit, action or proceeding brought against the Company in any court as described in the preceding
sentence. If for any reason the Company’s authorized agent shall cease to be available to act as such, the Company agrees to designate a new authorized agent in the United States for receiving and accepting service of all legal process on the
terms and for the purposes of this Section [14] reasonably satisfactory to the Agent. The Company agrees that the failure of its authorized agent to give any notice of such service to it shall not impair or affect in any way the validity of
such service or any judgement rendered in any action or proceeding based thereon. The Company irrevocably and unconditionally waives, to the 

  

 13 

 
fullest extent permitted by law, any objection that it may not now or hereafter have to the laying of venue of any actions, suits or proceedings brought in
any court as provided herein, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
The provisions of this Section [14] shall survive notwithstanding the termination of this Agreement. 
  

	15.	Partial Invalidity 

  
 In the event that any provision of this Agreement or the application thereof to any person or circumstances shall be determined by a court of proper
jurisdiction to be invalid or unenforceable to any extent, the remaining provisions of this Agreement, and the application of such provisions to persons or circumstances other than those as to which they are held invalid or unenforceable, shall be
unaffected thereby and such provisions shall be valid and enforceable to the fullest extent permitted by law in such jurisdiction so long as the fundamental relationships among the parties hereunder are not altered. 
  

	16.	Conflicts and Benefits 

  

	 	a.	The Company recognizes that the Agent and any of its direct or indirect affiliates (collectively, “Citigroup”) may engage in transactions and/or businesses adverse
to the Company or in which parties adverse to the Company may have interests. Nothing in this Agreement shall (i) preclude any member of Citigroup from engaging in such transactions or businesses or (ii) obligate any member of Citigroup to (a)
disclose such transactions and/or business to the Company, or (b) account for any profit made or payment received in, or as a part of, such transactions and/or business, provided, however, that any such action does not prejudice or interfere with
the due performance of the Agent’s obligations set forth hereunder. 

  

	 	b.	Nothing in this Agreement is intended, nor shall anything contained in this Agreement be deemed, to constitute (i) a waiver of any right under, or an amendment of, any term of any
other agreement between the Company and the Agent or any other member of Citigroup, or any instrument from the Company to the Agent or any other member of Citigroup, unless such waiver or amendment is specifically acknowledged in writing herein.

  

	 	c.	Nothing in this Agreement is intended to benefit any persons not specifically identified herein. Nothing herein shall be deemed to (i) give rise to a partnership or joint venture or
(ii) establish a fiduciary or similar relationship, among the parties hereto. 

  

	17.	Force Majeure/Damages 

  
 The Agent shall be excused from performance of its obligations under this Agreement and shall not be liable for any losses, damages, or expenses caused by
the occurrence of any contingency beyond its control, including, without limitation, nationalization, expropriations, currency restrictions, work stoppages, strikes, fire, civil unrest, 

  

 14 

 
insurrections, revolutions, riots, rebellions, acts of terrorism, explosions, floods, storms, computer failures, acts of war, acts of God or similar
occurrences. Nor shall the Agent incur any liability if it shall be prevented or forbidden from, or delayed in, doing or performing any act or thing required by the terms of this Agreement, by reason of any provision of any present or future law or
regulation of the United States, Portugal or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint. In no event shall the Agent be
liable or responsible for any incidental, indirect, special consequential or punitive damages for any breach of the terms of this Agreement. 
  

	18.	Entire Agreement 

  
 This Agreement (including the Schedules hereto) sets forth the entire understanding of the parties in respect of the subject matter hereof and supersedes
any and all prior agreements, arrangements and understandings relating thereto. 
  

	19.	Binding Effect 

  
 This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 
  

	20.	Counterparts 

  
 This Agreement may be executed in several counterparts, each of which shall be an original, but all of which shall constitute one and the same agreement.

  

	21.	Titles 

  

	 	a.	All references in this Agreement to Schedules, articles, sections, subsections, and other subdivisions refer to the Schedules, articles, sections, subsections and other subdivisions
of this Agreement unless expressly provided otherwise. The words “this Agreement”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar import refer to this Agreement as a whole as in
effect between the parties and not to any particular subdivision unless expressly so limited. Pronouns in masculine, feminine and neuter gender shall be construed to include any other gender, and words in the singular form shall be construed to
include the plural and vice versa unless the context otherwise requires. 

  

	 	b.	Titles to sections of this Agreement are included for convenience only and shall be disregarded in construing the language contained in this Agreement. 

  

 15 

	22.	Notices 

  

	 	a.	Any notice desired or required to be given by one party to the other in accordance with the provisions of this Agreement may be given in any of the following manners:

  

	 	(i)	by facsimile sent by one party to the other at its address from time to time notified (in accordance with the terms hereof) for the receipt of such facsimile, in which event such
notice shall be deemed to have been received at the time recorded on a receipt of successful transmission. A copy of every such notice shall be sent in writing by pre-paid airmail registered post to the party to whom it is addressed at the address
referred to below but the receipt of such copy shall not be a condition to due notice having been given; 

  

	 	(ii)	in writing sent by pre-paid airmail registered post at the address mentioned below, in which event such notice shall be deemed to have been delivered five (5) Business Days after
the date of posting; or 

  

	 	(iii)	in writing by personal delivery by means of a nationally recognized overnight courier at the address of the party to whom it is addressed as set forth below, in which event such
notice shall be deemed to have been received at the time of delivery. 

  

	 	b.	Each party shall from time to time notify the other of any change to its addresses for the receipt of facsimile and for notices in writing. 

  

	 	c.	Until the Company shall notify the Agent to the contrary in writing, the address of the Company shall be as follows: 

  

	 	(i)	for communications by telephone: [TBD] 

  

	 	(ii)	for communications by facsimile: [TBD] 

  

	 	(iii)	for communications in writing: 

  
 EDP – Energias de Portugal, S.A. 
 Praça Marquê de Pombal, 12 
 1250-162 Lisbon, Portugal 
 Attention: Secretary 
  
 with a copy (which shall not constitute notice) to: 
  
 Cleary, Gottlieb, Steen & Hamilton 
 City Place House 
 55 Basinghall Street 
 London, ENGLAND EC2V 5EH 
 Attention: Ashar Qureshi, Esq.  
 Telecopier No. 44 207 600 1698 
  

	 	d.	Until the Agent shall notify the Company to the contrary in writing, the address of the Agent shall be: 

  

	 	(i)	for communications by telephone: [TBD] 

  

 16 

	 	(ii)	for communications by facsimile: (+1 212) 816-6865 

  

	 	(iii)	for communications in writing: 

  
 Citibank, N.A. 
 388 Greenwich Street,
14th Floor 
 New York, New York 10013 
 Attention: ADR Department 
  
 with a copy (which shall not constitute notice) to: 
  
 Patterson, Belknap, Webb & Tyler LLP 
 1133 Avenue of the Americas 
 New York, New York 10036 
 Attention: Herman H. Raspé, Esq. 
 Telecopier No. 212.336.2222 
  
 [Remainder of page
intentionally left blank] 
  

 17 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their duly
authorized officers as of the day and year above written. 
  

			
	EDP – ENERGIAS DE PORTUGAL, S.A.
		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 
	
	CITIBANK, N.A.
		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 

  

 18 

 Schedule I 
 to 
 the Rights Agency Agreement, 
 dated as of [DATE], 2004 (the “Agreement”), 
 by and between

 EDP – Energias de Portugal, S.A. and Citibank, N.A. 
  

  
 SERVICES SCHEDULE 
  

  

Unless otherwise set forth herein, all capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the
Agreement. All terms and conditions of the Agreement are incorporated herein by reference. 
  
 Definitions 
  

			
	“Book-Entry Transfer Facility”	  	shall mean DTC (as defined below) which provides a means for book-entry delivery of New
ADSs and for the delivery of electronic messages by its Participants (as defined
below).
		
	“Business Day”	  	shall mean any day other than a Saturday, Sunday or a bank holiday in either New York City or Portugal, and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City
time.
		
	“Commencement Date”	  	shall mean, in respect of the ADS Offer, [DATE], 2004, unless otherwise declared by the Company, as permitted by applicable law and subject to applicable regulatory
approvals.
		
	“Participant”	  	shall mean with respect to the ADSs, any broker, dealer, bank, trust company or other nominee shown in DTC’s records as having ADSs credited to its DTC account.

  
 Services 
  
 Citibank, N.A., as the Agent under the Agreement, shall provide the
following services: 
  

	1.	Allocation of ADS Rights 

  
 Immediately after the Record Date, the Agent will allocate ADS Rights to each holder of ADSs as of the Record Date one (1) ADS Right for each ADS owned as
of the Record Date. One (1) ADS Right will entitle the holders thereof to subscribe for [one (1) New ADS] and an additional number of New Shares pursuant to the exercise of 

  

 I-1 

 
Oversubscription ADS Rights subject to the terms and conditions set forth in the Prospectus. 
  

	2.	Preparation of ADS Rights Certificates 

  

	 	a.	The Agent will cause to be prepared, for issuance to holders of record of ADSs as of the Record Date, ADS Rights Certificates substantially in the form attached hereto as Schedule
[V] (the “ADS Rights Certificates”). The Company authorizes the Agent to cause to be prepared ADS Rights Certificates as soon as practicable after the Record Date and to cause to be destroyed any such ADS Rights Certificates
that are not issued as a result of the initial issuance of ADS Rights and any transfer or assignment of all or a portion of the ADS Rights in respect of which any such ADS Rights Certificates were prepared. 

  

	 	b.	The Agent will cause to appear on each ADS Rights Certificate (i) the name of the holder of the ADS Rights to whom such ADS Rights Certificate is issued, (ii) the number of ADS
Rights to which such holder is entitled, and (iii) the certificate number of such ADS Rights Certificate. 

  

	 	c.	The Company authorizes the Agent, in connection with the initial issuance of ADS Rights Certificates or the subsequent issuance of any ADS Rights Certificate, as a result of any
transfer or assignment of all or a portion thereof, to sign ADS Rights Certificates by either the manual or the facsimile signature of a duly authorized officer of the Agent. Until the Agent has signed an ADS Rights Certificate, such ADS Rights
Certificate will not be valid or obligatory for any purpose. 

  

	3.	Issuance, Transfer, Sale and Exercise of ADS Rights 

  

	 	a.	On or prior to the date hereof, (i) the Company will deliver or cause to be delivered to the Agent sufficient copies of the Prospectus, (ii) Cleary, Gottlieb, Steen & Hamilton,
U.S. counsel for the Company, will deliver to the Agent two (2) original copies of a reliance letter addressed to the Agent to the effect that the Agent may rely on its legal opinion addressed to the joint global coordinators of the Offering
(substantially in form of Schedule [IX] attached hereto) to the extent permitted by such reliance letter; and (iii) [LOCAL COUNSEL], Portuguese counsel to the Company, will deliver to the Agent two (2) original copies of a reliance
letter to the effect that the Agent may rely on its legal opinion addressed to the joint global coordinators of the Offering (substantially in form of Schedule [X] attached hereto) to the extent permitted by such reliance letter.

  

	 	b.	 (i) As soon as possible following the Record Date (after receipt of the items listed in Section [3(a)]), the Agent will send under its blanket surety bond:
(x) by first class mail, to each holder of ADSs having an address of record within the United States (each a “Domestic Holder”) on the Record Date: (A) an ADS Rights Certificate evidencing the ADS Rights to which such holder is
entitled pursuant to the ADS Offer, including an Instructions Booklet (as hereinafter 

  

 I-2 

	 	 
defined) relating to, inter alia, the exercise and transfer of the ADS Rights Certificate; and (B) a copy of the Prospectus; and (y) by air mail
(without registration or insurance) to each holder of ADSs having an address outside of the United States, of record (each an “Overseas Holder”) on the Record Date, the documents described in clause (x) above, unless otherwise
directed in writing to the Agent by the Company. 

  
 (ii) As soon as possible following the Record Date (after the Agent’s receipt of the items listed in Section [3(a)]), the Agent will (x) cause the Information Agent to distribute to DTC participants who hold ADSs as of the
Record Date sufficient copies (in the amounts requested by such DTC participants) of the following: (A) the Prospectus; (B) a broker letter substantially in the form set forth in Schedule [VI] attached hereto (the “Broker
Letter”); (C) a client letter substantially in the form set forth in Schedule [VII] attached hereto (the “Client Letter”); and (D) an instruction booklet substantially in the form set forth in Schedule [VIII]
attached hereto (the “Instruction Booklet”); and (y) distribute to DTC, for credit to DTC participants as of the Record Date, the requisite number of ADS Rights (one (1) ADS Right for every ADS held as of the Record Date).

  

	 	c.	In the event that any ADS Rights Certificate is returned to the Agent for any reason and proper delivery thereof cannot be effected on or prior to [DATE], 2004, the ADS
Rights represented by such ADS Rights Certificate will be void and will have no further value. The Agent will furnish to the Company such information as the Company may request with respect to any ADS Rights Certificate that cannot be delivered. The
Agent shall cause the ADS Rights evidenced by ADS Rights Certificates not mailed to registered holders in accordance with Section [3(b)] hereof, to be sold and the aggregate net proceeds of the sale of all such ADS Rights (after subtraction
of applicable fees of up to US$[        ] per ADS Right sold, expenses and applicable taxes) to be distributed to such ineligible holders of ADSs in amounts equal to their pro rata share by means of a check mailed to
the last known address of each such holder. 

  

	 	d.	The Agent will effect transfers and assignments of ADS Rights Certificates (or portions thereof) as directed by the holders thereof, and will send to each transferee or assignee of
ADS Rights Certificates (or portions thereof), by first class mail to a Domestic Holder, and by airmail to an Overseas Holder (without registration or insurance), upon cancellation of such ADS Rights Certificates, a newly issued ADS Rights
Certificate together with the other documents described in clause (b)(i) above. 

  

	 	e.	The Company authorizes the Agent to waive proof of authority to sign (including the right to waive signatures of co-fiduciaries and proof of appointment or authority of any
fiduciary or other person acting in a representative capacity) in connection with the transfer or assignment of ADS Rights Certificates (or portions thereof) evidencing ADS Rights; provided, however, that the signature to the relevant
instrument of transfer or assignment is guaranteed by an eligible 

  

 I-3 

 
guarantor institution which is a member of a Medallion Signature Guarantee Program. 
  

	 	f.	In the event that, prior to the Expiration Date, any person notifies the Agent that the ADS Rights Certificate to which such person is entitled has not been delivered, or has been
lost, stolen or destroyed, the Agent will arrange for the delivery of a new ADS Rights Certificate and the delivery of the other documents described in clause (b)(i) above to any person from whom it has received, prior to the Expiration Date, a duly
executed letter or other communication satisfactory to the Agent indicating the name and address of the registered holder of the lost ADS Rights Certificate, the number of such ADS Rights Certificate, and the number of ADS Rights evidenced thereby,
or has otherwise satisfied the Agent as to such failure of delivery, or lost, stolen or destroyed ADS Rights Certificate in accordance with procedures which are standard to the industry; provided, however, that such issuance may be
delayed by the Agent, in its discretion, pending receipt of an indemnity from such person satisfactory to the Company and the Agent and confirmation that such lost, stolen or destroyed ADS Rights Certificate has not been exercised or transferred.
Upon issuance of such new ADS Rights Certificate, the Agent shall cancel all such ADS Rights Certificates which are claimed not delivered or were lost, stolen or destroyed and shall record such cancellation in the register of ADS Rights to be
maintained by the Agent. 

  

	 	g.	[Reserved] 

  

	 	h.	A holder of ADS Rights may request the exchange of ADS Rights for Share Rights. The Agent may issue Primary ADS Rights and Oversubscription ADS Rights in exchange for Share Rights
upon the due deposit of Share Rights. In connection with the exchange of Share Rights for ADS Rights or ADS Rights for Share Rights (i) the Agent will accept Share Rights deposited with its Custodian (as defined below) and will cause to be prepared
and issued in accordance with Section [2] and [3] hereof, ADS Rights Certificates evidencing the ADS Rights representing the Share Rights being deposited, in accordance with the instructions of, and for the benefit of, the depositing
holder, and (ii) the Agent will accept ADS Rights deposited with it and will cause such ADS Rights to be cancelled against the delivery of the underlying Share Rights in accordance with the instructions of, and for the benefit of, the depositing
holder. In connection with any issuance or cancellation of ADS Rights, the Depositary may, in its own discretion, charge a fee not exceeding US$[        ] per ADS Right issued or cancelled. 

  

	 	i.	If the Agent does not receive instructions to exercise, transfer or exchange any ADS Rights prior to 5:00 p.m. (New York City time) on [DATE], 2004, those ADS Rights will be
void and will have no further value. 

  

 I-4 

	 	j.	The Company hereby instructs the Agent, and the Agent hereby agrees, to treat, for purposes of U.S. tax reporting, the distribution of ADS Rights to holders of ADSs as a
“non-taxable stock dividend” under United States federal income tax law. 

  

	 	k.	The Company and the Agent agree that no fee shall be assessed to holders in connection with (i) the initial distribution of ADS Rights to registered holders of ADSs as of the Record
Date, or (ii) the exercise of the ADS Rights. 

  

	4.	Acceptance of Subscriptions 

  

	 	a.	The Company hereby authorizes and directs the Agent to accept subscriptions for New ADSs on behalf of the Company upon the proper completion and execution of an ADS Rights
Certificate, surrender of the applicable ADS Rights Certificate and delivery of the U.S. Dollar Payment for the New ADSs, in accordance with the terms thereof and hereof. The Company further authorizes the Agent to refuse to accept, in its
reasonable discretion, any improperly completed or unexecuted ADS Rights Certificate. 

  

	 	b.	The Company authorizes the Agent to waive proof of authority to sign (including the right to waive signatures of co-fiduciaries and proof of appointment or authority of any
fiduciary or other person acting in a representative capacity) in connection with any subscription with respect to which: 

  

	 	(i)	the surrendered ADS Rights Certificate is registered in the name of one or more individuals or an executor, administrator, trustee, custodian for a minor or other fiduciary and has
been executed by such registered holder or holders, provided that the New ADSs subscribed for are to be issued in the name of such registered holder or holders; 

  

	 	(ii)	the surrendered ADS Rights Certificate is registered in the name of a corporation and has been executed by an officer of such corporation, provided that the New ADSs subscribed for
are to be issued in the name of such corporation; 

  

	 	(iii)	the surrendered ADS Rights Certificate has been executed by a bank, trust company or broker as agent for the registered holder thereof, provided that the New ADSs subscribed for are
to be issued in the name of such registered holder; and 

  

	 	(iv)	the surrendered ADS Rights Certificate is registered in the name of a decedent and has been executed by a person who purports to act as the executor or administrator of such
decedent’s estate, provided that (A) such subscription is for not more than New ADSs, (B) the New ADSs 

  

 I-5 

 
are to be issued in the name of such person as executor or administrator of such decedent’s estate, (C) the check tendered in payment of such
subscription is drawn for the proper amount and to the order of the Agent, and is otherwise in order, and (D) there is no evidence indicating that such person is not the duly authorized representative which such person purports to be. 
  
 In all cases other than those described in clauses (i) through (iv) above,
the Agent will obtain all necessary proof of authority to sign in connection with the subscriptions for New ADSs, provided, however, that in the event that such proof of authority has not been received on or prior to the Expiration
Date, the Agent shall obtain advice from the Company as to whether any such subscriptions may be accepted. 
  

	 	c.	The Company authorizes the Agent to accept customary letters of indemnification from commercial banks, trust companies or eligible guarantor institutions that are members of a
Medallion Signature Guarantee Program with respect to nonconforming aspects of documents delivered in connection with subscriptions for New ADSs. 

  

	 	d.	On each business day during the ADS Subscription Period, the Agent shall deposit in the NY Account all U.S. dollar amounts received by the Agent on such day in respect of payments
made upon exercise of Primary ADS Rights and Oversubscription ADS Rights. 

  

	5.	Reports by the Agent 

  

	 	a.	From time to time during the period from the first Business Day following the Record Date through the Expiration Date, if requested by the Company to do so, the Agent will advise
the Company and the joint global coordinators of the Offering by telephone or by facsimile transmission as to (i) the total number of New ADSs subscribed for pursuant to the exercise of Primary ADS Rights and Oversubscription ADS Rights and (ii) the
aggregate amount of funds received by the Agent in respect of such subscriptions in U.S. dollars. 

  

	 	b.	Not later than 9:00 a.m. (Lisbon time) on the business day following the Expiration Date, the Agent will advise the Company, in accordance with written instructions to be sent by
the Company and received by the Agent, as to the total number of New ADSs subscribed for pursuant to the exercise and physical delivery of ADS Rights Certificates specifying the number of Primary ADS Rights and Oversubscription ADS Rights exercised
and the aggregate amount of funds received by the Agent in respect of such subscriptions in U.S. dollars. The figure so reported will be final and the Agent will not be authorized to accept subscriptions for any additional New ADSs. In accordance
with Section [22] of the Agreement, the Agent will submit to the Custodian under the Deposit Agreement on behalf of the Depositary and for transmission to the Company a tested telex containing the information specified above.

  

 I-6 

	6.	ADS Subscription Amount 

  

	 	a.	Primary ADS Rights - At or prior to 5:00 p.m. (New York City time), on or about [DATE], 2004, the Agent shall with respect to Primary ADS Rights validly exercised (i)
determine (A) the aggregate ADS Subscription Amount payable to the Company in respect of the total number of New ADSs subscribed for during the ADS Subscription Period upon exercise of the Primary ADS Rights, (B) the aggregate amount of U.S. Dollar
Payments received by the Agent and deposited in the NY Account in respect of such subscriptions, and (C) if the aggregate U.S. Dollar Payments received by the Agent in respect of such subscriptions shall be less than such aggregate ADS Subscription
Amount for the total number of New ADSs subscribed for, determine the amount of additional U.S. dollars necessary to pay such aggregate ADS Subscription Amount in full (the “Deficiency”), and (ii) deposit into the NY Account
immediately available funds in an amount equal to such Deficiency. Each exercising holder of the Primary ADS Rights shall promptly pay its pro rata share of the amount of such Deficiency to the Agent. The Agent will not deliver New ADSs subscribed
for by such holder prior to the receipt by the Agent of such payment. If payment of the amount of any deficiency is not received from a subscriber by the Agent by [DATE], 2004, the Agent shall sell all or a portion of such New ADSs subscribed
for by such subscriber in a commercially reasonable manner, and in an amount sufficient to cover such Deficiency and to cover any costs incurred in selling such New ADSs. In such event, the Agent will then deliver the remaining New ADSs to such
subscriber together with a check in the amount of the excess proceeds, if any, from such sale (after deduction of all applicable fees, expenses and taxes). The Agent will thereupon have the right to reimbursement by the Company with respect to the
amount of any Deficiency not collected as provided above from any such holder after such sale of New ADSs and application of the proceeds thereof (less such costs) to any such amount owed by such holder to the Agent. If the aggregate U.S. Dollar
Payments received by the Agent in respect of such subscription shall be greater than such aggregate ADS Subscription Amount for the total number of New ADSs subscribed for pursuant to the exercise of Primary ADS Rights, the Agent shall, as promptly
as practicable, remit any excess funds (after deduction of applicable expenses) to the applicable exercising holders of Primary ADS Rights. 

  

	 	b.	 Oversubscription ADS Rights – As promptly as practicable following the Allocation Date (as defined in Section [10] hereof), the Agent shall with
respect to Oversubscription ADS Rights validly exercised (i) determine (A) the aggregate ADS Subscription Amount payable to the Company in respect of the total number of Shares underlying the additional New ADSs subscribed for during the ADS
Subscription Period upon exercise of Oversubscription ADS Rights, (B) the aggregate amount of U.S. Dollar Payments received by the Agent and deposited in the NY Account in respect of such subscriptions, and (C) if the aggregate U.S. Dollar Payments
received by the Agent in respect of such subscriptions shall be less than such aggregate ADS Subscription Amount for the total number of additional New ADSs subscribed for pursuant to the exercise of Oversubscription 

  

 I-7 

	 	 
ADS Rights, determine the amount of additional U.S. dollars necessary to pay such aggregate ADS Subscription Amount in full (the “Additional
Deficiency”), and (ii) deliver into the NY Account immediately available funds in an amount equal to such Additional Deficiency. Each exercising holder of the Oversubscription ADS Rights shall promptly pay its pro rata share of the amount
of such Additional Deficiency to the Agent. The Agent will not deliver additional New ADSs subscribed for by such holder prior to the receipt by the Agent of such payment. If payment of the amount of any deficiency is not received from a subscriber
by the Agent by [DATE], 2004, the Agent shall sell all or a portion of such additional New ADSs subscribed for by such subscriber in a commercially reasonable manner, and in an amount sufficient to cover such Additional Deficiency and to
cover any costs incurred in selling such additional New ADSs. In such event, the Agent will then deliver the remaining additional New ADSs to such subscriber together with a check in the amount of the excess proceeds, if any, from such sale (after
deduction of all applicable fees, expenses and taxes). The Agent will thereupon have the right to reimbursement by the Company with respect to the amount of any Additional Deficiency not collected as provided above from any such holder after such
sale of additional New ADSs and application of the proceeds thereof (less such costs) to any such amount owed by such holder to the Agent. If the aggregate U.S. Dollar Payments received by the Agent in respect of such subscription shall be greater
than such aggregate ADS Subscription Amount for the total number of additional New ADSs subscribed for pursuant to the exercise of Oversubscription ADS Rights, the Agent shall, as promptly as practicable, remit any excess funds (after deduction of
applicable expenses) to the applicable exercising holders of Oversubscription ADS Rights.

  

	7.	Subscription Payment 

  
 The Agent shall, promptly upon the opening of business (New York City time), on or about [DATE], 2004, initiate (A) the payment of the ADS
Subscription Amount in respect of the Primary ADS Rights validly exercised and shall, as soon as practicable thereafter and in any event not later than [DATE], 2004, pay to the Company, by electronic transfer of funds to an account designated
by the Company an amount in Euro equal to the aggregate ADS Subscription Amount for all New ADSs subscribed for pursuant to the exercise of Primary ADS Rights during the ADS Subscription Period, and (B) the payment of the ADS Subscription Amount in
respect of the Oversubscription ADS Rights validly exercised and shall, as promptly as practicable on the Allocation Date or thereafter, pay to the Company, by electronic transfer of funds to an account designated by the Company, an amount, in Euro,
equal to the aggregate ADS Subscription Amount for all additional New ADSs subscribed for pursuant to the exercise of Oversubscription ADS Rights during the ADS Subscription Period. 
  

 I-8 

	8.	Deposit of New Shares and Issuance of New ADSs 

  

	 	a.	The Company shall, as soon as practicable after the registration of the New Shares underlying the New ADSs subscribed for pursuant to the ADS Offer, cause to be delivered such New
Shares by credit in a book-entry account maintained by the Custodian in the name of the Depositary or its designated nominee with a financial intermediary registered in the Central de Valores Mobiliários. 

  

	 	b.	The Depositary shall as soon as practicable after the day on which the Company shall cause New Shares to be delivered to the Custodian by credit to its book-entry account pursuant
to paragraph (a) of this Section [8], and following the admission of the New Shares underlying the New ADSs to listing and trading on Euronext Lisbon, thus becoming fully fungible and ranking pari passu with the existing Shares, issue, in
accordance with the terms of the Deposit Agreement, New ADSs subscribed for pursuant to the ADS Offer and (i) in the case of ADS Rights exercised through DTC, make delivery thereof to the applicable DTC participants, and (ii) in the case of ADS
Rights exercised by registered holders of ADS Rights Certificates, mail to each subscriber, in the manner specified by such subscriber, an ADR representing the number of New ADSs for which such subscriber has subscribed. Each ADR will be registered
in the name specified by the subscriber on its surrendered ADS Rights Certificate. 

  

	 	c.	Any ADR requested to be mailed by the subscriber therefor will be mailed by the Agent by first class mail, in each case under its blanket surety bond and within the limits thereof,
protecting the Agent and the Company from any loss or liability arising out of nonreceipt or nondelivery of any such ADR or the replacement thereof. 

  

	9.	Supplies of Documents 

  

	 	a.	The Company shall cause sufficient copies of the Prospectus and ADS Rights Certificate to be furnished to the Agent when the same become available, along with sufficient copies of
the Broker Letter, the Client Letter, and the Instruction Booklet to be distributed by the Agent to holders and to transferees of ADS Rights and New ADSs. 

  

	 	b.	Promptly after the Expiration Date, the Agent shall cause any unused ADS Rights Certificates in its possession to be destroyed and all ADS Rights Certificates that were registered
or assigned and all ADS Rights Certificates that were exercised will be cancelled and destroyed. The Agent will provide to the Company a record of such ADS Rights Certificates having been cancelled and destroyed upon the Company’s request.

  

	10.	Allocation 

  
 Upon receipt from the Company of the requisite information specifying the allocation of the New Shares in respect of subscriptions pursuant to exercise of
Oversubscription Share Rights, the Agent shall (i) allocate New ADSs representing the New Shares allocated to 

  

 I-9 

 
the applicable exercising holders of Oversubscription ADS Rights in accordance with written instructions of the Company delivered to the Agent and signed by
a duly authorized representative of the Company, (ii) take the actions contemplated in Section [    ] and Section [    ] hereof, (iii) promptly after receipt of confirmation of
deposit of the additional New Shares allocated to the Depositary, issue the applicable additional New ADSs, (iv) if no Additional Deficiency exists with respect to the additional New ADSs so issued, deliver such additional New ADSs to the applicable
exercising holder of Oversubscription ADS Rights and remit any excess funds held to the applicable exercising holder of Oversubscription ADS Rights, in each case in the manner described in Section [    ] above, and
(v) if an Additional Deficiency exists, notify the applicable exercising holder of such Additional Deficiency. The date on which the allocation of the Oversubscription ADS Rights is received by the Agent or, in the event such date is not a business
day, the next business day shall be referred to herein as the “Allocation Date”. 
  

	11.	Instructions 

  
 The Agent will be entitled to rely upon any instructions or directions furnished to it in writing by any director or officer to the Company or any
attorney-in-fact for the Company appointed for this purpose pursuant to a power of attorney signed by any director or officer of the Company, and to apply to such individuals for advice or instructions in connection with its duties, and will be
entitled to treat as genuine, and as the document it purports to be, any letter or other document, furnished to it by such individuals. The Agent shall incur no liability or responsibility to the Company for any action taken in reliance on, and in
accordance with, any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument believed by it to be genuine and to have been signed, sent or represented by the proper party or parties. 
  

 I-10 

 Schedule [II] 
 to 
 the Rights Agency Agreement, 
 dated as of [DATE], 2004 (the “Agreement”), 
 by and between

 EDP – Energias de Portugal, S.A. and Citibank, N.A. 
  

  
 Fee Schedule 
  

  
 Please refer to the Fee Schedule attached. 
  

 II-1 

 Schedule [III] 
 to 
 the Rights Agency Agreement, 
 dated as of [DATE], 2004 (the “Agreement”), 
 by and between

 EDP – Energias de Portugal, S.A. and Citibank, N.A. 
  

  
 ADS Rights Offer Documentation 
  

  
 Rights Offer Prospectus, dated [DATE], 2004 
  

Form of ADS Rights Certificate 
  
 Form of Letter to Brokers, Dealers, Banks, Trust Companies, Custodians and Other Nominees 
  
 Form of Letter to Clients 
  
 Form of Instruction Booklet 
  

 III-1 

 Schedule [IV] 
 to 
 the Rights Agency Agreement, 
 dated as of [DATE], 2004 (the “Agreement”), 
 by and between

 EDP – Energias de Portugal, S.A. and Citibank, N.A. 
  

  
 Authorized Representatives 
  

  

					
	 Name

	 	 Title

	 	 Signature

	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

  

 IV-1 

 Schedule [V] 
  
 to 
  
 the Rights Agency Agreement, 
 dated
as of [DATE], 2004 (the “Agreement”), 
  
 by and
between 
  
 EDP – Energias de Portugal, S.A. and
Citibank, N.A. 
  
 FORM OF ADS RIGHTS CERTIFICATE

  
 [to be attached] 
  

 V-1 

 Schedule [VI] 
  
 to 
  
 the Rights Agency Agreement, 
 dated
as of [DATE], 2004 (the “Agreement”), 
  
 by and
between 
  
 EDP – Energias de Portugal, S.A. and
Citibank, N.A. 
  
 FORM OF BROKER LETTER 
  
 [to be attached] 
  

 VI-1 

 Schedule [VII] 
  
 to 
  
 the Rights Agency Agreement, 
 dated
as of [DATE], 2004 (the “Agreement”), 
  
 by and
between 
  
 EDP – Energias de Portugal, S.A. and
Citibank, N.A. 
  
 FORM OF CLIENT LETTER 
  
 [to be attached] 
  

 VII-1 

 Schedule [VIII] 
  
 to 
  
 the Rights Agency Agreement, 
 dated
as of [DATE], 2004 (the “Agreement”), 
  
 by and
between 
  
 EDP – Energias de Portugal, S.A. and
Citibank, N.A. 
  
 FORM OF INSTRUCTION BOOKLET

  
 [to be attached] 
  

 VIII-1 

 Schedule [IX] 
  
 to 
  
 the Rights Agency Agreement, 
 dated
as of [DATE], 2004 (the “Agreement”), 
  
 by and
between 
  
 EDP – Energias de Portugal, S.A. and
Citibank, N.A. 
  
 FORM OF U.S. COUNSEL’S OPINION

  
 [to be attached] 
  

 X-1 

 Schedule [X] 
  
 to 
  
 the Rights Agency Agreement, 
 dated
as of [DATE], 2004 (the “Agreement”), 
  
 by and
between 
  
 EDP – Energias de Portugal, S.A. and
Citibank, N.A. 
  
 FORM OF LOCAL COUNSEL’S OPINION

  
 [to be attached] 
  

 XI-1

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